This is a motion for an order of attachment (CPLR 6201[3]).

Before the court are two proceedings to compel an accounting. The decedent, Donald Baum, was the settlor of two inter vivos trusts. Following the commencement of proceedings to compel accountings, Vincent Kearns and Robert Kearns, co-trustees (of the trust created on August 17, 1982) consented to petition for voluntary settlement of their accounts no later than May 25, 2005. As to the second trust (created on August 20, 1982), trustee Robert Kearns consented to petition for voluntary settlement of his account no later than June 8, 2005. To date, the accounts have not been filed.

This application for an order of attachment was brought by order to show cause which included a temporary restraining order prohibiting the sale of certain real property. On the return date of the order to show cause, Robert Kearns filed an answer. A hearing was held on the same date. No testimony was offered and the parties relied upon the papers submitted and upon oral

argument of counsel. At the conclusion of the hearing, the court directed that the temporary restraining order remain in effect pending a decision on this motion.

Petitioners, beneficiaries of the trust, seek an order of attachment against real property in Garden City, New York, which is the residence of Robert Kearns. Petitioners allege that Robert Kearns misappropriated funds from a corporation in which the August 17, 1982 trust has an interest. They argue that an order of attachment is necessary to preserve the proceeds of a sale to satisfy a possible judgment in the accounting proceeding.

The corporation in which the trust has an interest is B.H. Aircraft Company. Robert Kearns was the President of the corporation before his departure in 2001. Petitioners allege that [*2]Robert Kearns misappropriated funds from the corporation. Robert Kearns contends that the allegedly improper transfer was made to form another corporation with the approval of the Board of Directors of B.H. Aircraft Company.

CPLR 6201 provides that an order of attachment may be granted in an action in which "the plaintiff has demanded or would be entitled in whole or in part, or in the alternative, to a money judgment against one or more defendants." Although a proceeding to settle the accounts of a trustee is a proceeding in equity (Magill v Dutchess Bank & Trust Co., 150 AD2d 531 [1989]), an order of attachment may be obtained in an accounting proceeding when the moving party seeks monetary relief (Matter of Chase, NYLJ, Nov. 4, 1998 at 29, col 6; Carpanzano v Gianpietro, NYLJ, May 20, 1997 at 30, col 3).

The petition to settle the account, the account and the objections constitute the pleadings in an accounting proceeding (SCPA 302[1][a]; Matter of Hearns, 214 NY 426 [1915]). These

pleadings are not yet before the court. An order of attachment, however, may be obtained even prior to the service of pleadings (CPLR 6211[a]; 12 Weinstein-Korn-Miller, NY Civ Prac �6210.01).

A trustee who holds, in trust, the stock of a corporation and is an officer of the corporation is liable to the beneficiaries of the trust for depreciation of the estate's shares due to his neglect or misconduct (Matter of Auditore, 249 NY 335 [1928]; General Rubber Company v Benedict, 215 NY 18 [1915]). The liability of the trustee can be made the subject of an objection in an accounting proceeding (Matter of Steinberg, 153 Misc 339 [1934]).

However, allegations of diversion of assets by an officer of the corporation, to his own enrichment, pleads a wrong to the corporation for which a shareholder may sue derivatively, but not individually. (Abrams v Donati, 66 NY2d 951 [1985]; Niles v New York Cent. & H.R.R. Co., 176 NY 119 [1903]). Generally, shareholders derivative actions do not invoke the jurisdiction of the Surrogate's Court (Lincoln First Bank, N.A. v Sanford, 173 AD2d 65 [1991]). The question of diversion of corporate assets should first be litigated in the Supreme Court. Petitioners could then be heard on those objections to the trustee's account which allege the misconduct. Even if the cause of action could first be addressed in an accounting proceeding in this court, petitioners have nevertheless failed to establish the facts necessary to obtain an order of attachment. Prejudgment attachment is a provisional remedy to secure a debt by a preliminary levy upon property of the debtor in order to conserve the property for eventual execution (Sylmark Holdings Ltd v Silicone Zone Intern. Ltd., 5 Misc 3d 285 [2004]). An order of

attachment is a harsh remedy and the statute is strictly construed in favor of those against whom it may be employed (Glazer & Gottlieb v Nachman, 234 AD2d 105 [1996]; P.T. Wanderer Associates, Inc. v Talcott Communications Corp., 111 AD2d 55 [1985]).

In order to obtain an order of attachment, petitioners must demonstrate probable success

on the merits of the underlying action (CPLR 6212[a]; Mineola Ford Sales Ltd. v Rapp, 242 AD2d 371 [1997]).

The affidavit in support of the motion alleges that Robert Kearns misappropriated funds from the corporation and that his transfer of the funds was not authorized by the Board of Directors. At the hearing, however, counsel for petitioners stated that petitioners did not know whether the transfer was authorized by the Board of Directors. In the affidavit, the source of information as to the alleged misappropriation is Vincent Kearns, who is Robert Kearns's brother [*3]and an officer of the corporation. Generally, an affidavit in support of a motion for an order of attachment is insufficient if based upon information and belief (Tri Quality Mechanical Corp. v Chappastream Corp., 138 AD2d 610 [1988]). The affidavit fails to explain why petitioners did not obtain the affidavit of Vincent Kearns (see 12 Carmody-Wait 2d, NY Prac §76:54). For these reasons, the court finds that petitioners have failed to establish a probability of success on the merits.

In addition, petitioners' affidavit lacks sufficient proof that Robert Kearns intends to remove assets from the jurisdiction in order to avoid a judgment (CPLR 6101[3]). Robert Kearns and his attorney state in their affidavits that the real property has been on the market for more than one year. It is currently in contract with a closing date scheduled for June 1, 2005. The affidavits further state that a substantial part of the proceeds of sale must be applied to satisfy an

outstanding mortgage and obligations to Robert Kearns' former spouse in connection with a divorce.

In the affidavit in support of the motion, the source of the information that Robert Kearns intends to relocate to Florida is the attorney for Vincent Kearns. At the hearing, counsel for petitioners stated that Robert Kearns told a process server he intended to remove assets to Florida to avoid a judgment. Petitioners failed to explain why an affidavit was not obtained from the attorney or the process server. In order to satisfy the requirements of CPLR 6201, intent to frustrate the enforcement of a judgment must be established with evidentiary facts as opposed to conclusory allegations (Societe Generale Alsacienne de Banque, Zurich v Flemingdon Development Corp,. 118 AD2d 769 [1986]).

Accordingly, the motion for an order of attachment is denied. The balance of the relief sought is also denied.

Settle order.

Dated: May 24, 2005

John B. Riordan

Judge of the

Surrogate's Court