[*1]
| Matter of Hendershot |
| 2007 NY Slip Op 51576(U) [16 Misc 3d 1125(A)] |
| Decided on August 20, 2007 |
| Sur Ct, Monroe County |
| Calvaruso, J. |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be published in the printed Official Reports. |
Sur Ct, Monroe County
In the Matter of the Estate of Burton Hendershot, Deceased.
|
2005-324/C
Warren B. Rosenbaum, Esq., for William F. Roberts, Executor/petitioner/movant
Robert B. Koegel, Esq., for Kenneth Podgers, proposed additional respondent
James J. Piampiano, Esq., for James M. Liese, respondent
Edmund A. Calvaruso, J.
Prior to his death, the decedent Burton Hendershot ran an apple hauling business. He was hospitalized with cancer in December of 2004 and died January 9, 2005. During his illness, his business was continued by his colleague and friend, James Liese (the respondent, hereinafter "Liese"), allegedly acting under decedent's direction. Also during the decedent's illness, most of his trucking equipment was transferred to Liese. Decedent's executor, William Roberts, (hereinafter "executor" or "petitioner") has questioned the validity of these transfers. Liese argues that the transfers were valid gifts to himself by the decedent, and Liese's subsequent sale of the equipment to Mr. Kenneth Podgers ("Podgers") was also a valid transfer of title.
The executor has brought a discovery proceeding, SCPA 2103, against Liese to determine whether the equipment was validly gifted to Liese by the decedent. In his proceeding, the executor also seeks information to determine whether there was a [wrongful] transfer of decedent's business itself, and resultant transfer of business "goodwill". Currently before the court is a motion by the executor to amend his discovery petition to add Podgers as an additional respondent. In response, Podgers has filed a motion to dismiss. CPLR 3211. These motions are the subject of this decision.
Opinion
Discovery proceedings, SCPA 2103, are designed to be an information-gathering vehicle for a fiduciary attempting to garner information as to potential estate assets. The proceeding can be used for any type of property (even assets that were transferred prior to a decedent's death, SCPA 2103(1)(a)), for any information gathering purpose, even against a non-party to the estate. As such, they have been called "fishing expeditions", Matter of Rosencrantz, 5 Misc 2d 308 (1956), [*2]but are supposed to be broad in nature so as to allow a fiduciary to perform his or her duty to marshal estate assets even if impeded by a reluctant or non-cooperative person whose knowledge is relevant to the fiduciary's task.
Discovery proceedings are bifurcated; the first stage is the "inquisitorial" stage, and the second stage is the "trial" stage. The inquiry phase anticipates that petitioners' pleadings will be non-specific, for it is through the inquiry itself that the executor is able to obtain sufficient detail regarding the nature and location of the subject property. In re Tesser's Estate, 4 Misc 2d 712 (1957). "Petitioners need only set forth allegations sufficient to justify an inquiry, as long as the discovery proceeding itself is not being used for the purpose of discovering or obtaining evident to be used in another proceeding." Estate of Valentin, 234 NYLJ 21 (August 1, 2005). An inquisition is over once (1) the fiduciary has obtained enough information to proceed to a request for the delivery/return of the assets, (2) the fiduciary is satisfied that the assets do not belong to the estate, or (3) the respondent claims possession, in which case s/he must file an answer and the issue proceeds to the trial phase automatically. See, generally, Warren's Heaton on Surrogate's Courts §64; Harris, New York Estates: Probate, Administration and Litigation, 5th Ed. v.2 §22.
Here, Podgers is arguing that the executor's motion should be dismissed because the executor already has sufficient information to make a determination that the assets in question legitimately belong to Podgers. Podgers argues that there is no basis to include him in this litigation, saying, essentially, that he has nothing new to add to the evidence. The executor responds that discovery petitions need only allege that there is a reason to believe that the respondent might have information pertaining to estate assets, and he argues that there are many questions of fact remaining.
Podgers's argument is similar to the argument employed by the respondents in the Patenotre estate, 16 Misc 2d 64 (1956) and the Granowitz estate, 150 AD2d 446 (1989). In Patenotre, the argument for dismissal was deemed to be without merit because there was information yet to be gleaned in order for the fiduciary to proceed to the trial phase of the proceeding. In Granowitz, the Appellate Division upheld the Surrogate's denial of the dismissal motion, agreeing that there were additional facts to obtain in order for the fiduciaries to complete their duty to marshal assets. Granowitz at 446. Comparatively, in Estate of Van Patten, 190 AD2d 322 (1993), the Surrogate did dismiss a discovery proceeding, and this decision was upheld by the Appellate Division. Notably, however, in the Van Patten case, the discovery proceeding was dismissed after the inquiry stage, only after the inquiry turned up no issue of fact as to the validity of decedent's of intervivos gifts.
Despite Podgers's assertion to the contrary, there remains much that is unknown about the decedent's assets and the alleged transfers, and his presence in this proceeding is important to the determination of whether the executor has a cause of action. To grant his motion to dismiss would be against the weight of precedent stating that discovery proceedings are to be given "broad latitude", and the statute is to be "liberally construed", In re Lifschutz' Will, 54 Misc 2d 289 (1967). Furthermore, granting the motion would circumvent the purpose of SCPA 2103 [*3]which was to "provide a vehicle through which the fiduciary can obtain information needed to determine the assets of the estate or the value of the assets of the estate, as well as to effectuate a return of the property to the fiduciary" Matter of Laflin, 128 Misc 2d 348, 349 (1985). SCPA 2103 enables the executor to receive information efficiently to remove question about the status of estate assets. See, In re Tesser's Estate, 4 Misc 2d 712 (1957).
Clearly, there is a potential dispute over the title to the hauling equipment but before the executor can determine whether to pursue this issue further, he needs to garner more information from the parties involved in the transfers. Additional parties can be brought in to the proceeding if the papers show the necessity of the addition. In re Korowitz's Estate, 120 NYS2d 498 (1953). Podgers is the current possessor of much of the disputed property and therefore his relevance to this proceeding is very high, in fact almost mandated. Without Podgers, any determination made as to the title of the property cannot be deemed conclusive, which necessitates his presence. In re Patenotre's Estate, 6 Misc 2d 64 (1956). Since he is claiming title to the assets (see, Podgers's affidavit, dated 6-12-07, pg 4), he will presumably file an answer in the inquiry proceeding, SCPA 2104(1) &(2), which will quickly move this litigation to the next stage where his defense of being a bona fide purchaser for value can be determined.
The motion to dismiss filed by Kenneth Podgers is denied. The motion to amend the petition filed by the executor is hereby granted. Kenneth Podgers is hereby added as a necessary party to the discovery proceeding filed by Executor William Roberts. Proposed citation to Kenneth Podgers is to be submitted by petitioner's counsel and will be issued by this court accordingly. SCPA 2103(4).
So ordered.
August 20, 2007Edmund A Calvaruso
Hon. Edmund A. Calvaruso, Surrogate