Andiero Partners, L.P. v. Duggan

2007 NY Slip Op 34617(U)
CourtSurrogate's Court, New York County
DecidedJanuary 19, 2007
DocketFile No. 1147/2000
StatusUnpublished
AuthorAnderson, S.

This text of 2007 NY Slip Op 34617(U) (Andiero Partners, L.P. v. Duggan) is published on Counsel Stack Legal Research, covering Surrogate's Court, New York County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Andiero Partners, L.P. v. Duggan, 2007 NY Slip Op 34617(U) (N.Y. Super. Ct. 2007).

Opinion

Andiero Partners, L.P. v Duggan 2007 NY Slip Op 34617(U) January 19, 2007 Surrogate's Court, New York County Docket Number: File No. 1147/2000 Judge: Anderson, S. Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. SURROGATE'S COURT: NEW YORK COUNTY --------- --------- --------- --------- -X Andiero Partners , L.P., JAN 2 2 2007 Plaintif f, File No. 1147/2000 -against-

GLORIA DUGGAN, both individu ally and in her capacity as executrix of the Estate of Robert E. Kelly, ·::: c:., -- , C.' --<. ::.0 Defendan t .- (.fl --;

--------- --------- --------- --------- -x R O T H , S .

In an action transferr ed from the Supreme Court relating to

the estate of Robert E. Kelly, plaintiff Andiero Partners, L.P.

(the "partners hip"}, seeks partial summary judgment on certain

of its claims against Gloria Duggan, individu ally and as

executrix of decedent 's estate, concernin g a $500,000 insurance

policy on decedent 's life. Duggan cross-mov es for various

relief, including summary judgment on the claims against her

individua lly and the disqualif ication of the law firm

represent ing the partnersh ip.

The relevant facts are as follows. Testator died on March

12, 2000, at the age of 62, survived by three children. Under

his will, which was admitted to probate, Mr . Kelly left $100,000

to each of his children and the residue to Duggan, who was named

executrix .

[* 1] At the time of his death, decedent was the general partner

of Andiero, a limited partnership that he established in 1978

for the purpose of investing in securities. The record

establishes that, for at least ten years before decedent died,

the partnership was the owner and designated beneficiary of a

$500,000 insurance policy on his life, paid the annual premiums

for the policy and touted to prospective investors the existence

of such policy (without identifying it specifically) in

Confidential Offering Memoranda dated December 1997 and June

1998.

The reason for the initial purchase of the policy is not

clear from the record. Based on the reference to an insurance

policy on decedent's life in the Confidential Offering

Memoranda, it would appear that the policy was "key man"

insurance intended to protect the partnership in the event of

the death of the general partner. According to Duggan, though,

the policy was intended to secure any debts that decedent might

have owed to the partnership as a result of advances he would

often take against future compensation. It is observed in this

regard, however, that, as the owner and designated beneficiary

of the policy, the partnership would have had no legal

obligation to use the policy's proceeds to satisfy the general

[* 2] partner's indebtedness to it absent an agreement (to which

Duggan makes no reference).

Nonetheless, it is undisputed that, on June 7, 1999,

shortly after he had been diagnosed with pancreatic cancer,

decedent, in his capacity as general partner, assigned ownership

of the policy to himself individually. Upon such transfer,

decedent personally assumed payment of the policy's premiums and

then changed the designation of beneficiary from the partnership

to Duggan.

After decedent's death, Duggan in her individual capacity

collected the proceeds of the policy as beneficiary. The

partnership, claiming that decedent's transfer of the policy had

been improper, commenced an action against Duggan as

representative of the estate (on the theory that decedent's

transfer of the policy was a breach of fiduciary duty and an act

of conversion) and against Duggan individually (on the theory

that she had been unjustly enriched by the policy's proceeds).

The complaint, filed in Supreme Court, New York County, also

included various other claims against Duggan (as executrix) that

are unrelated to the insurance policy and are not at issue on

these motions.

The partnership obtained a temporary restraining order in

[* 3] the Supreme Court prohibiti ng any dispositi on of the policy's

proceeds . Eventual ly a consent order was signed providing for

the proceeds of the policy, less $63,161 that Duggan

acknowled ged she had spent (before the restraini ng order was

issued), to remain under a restrain t pending the outcome of the

proceedin g.

Duggan, in her capacity as executrix , then asked this court

to consent to the transfer of the action {SCPA 501[1]). As part

of the same motion, Duggan also requested the "issuance of

citation in a SCPA 2103 proceedin g for turnover ," alleging that

the partnersh ip was withholdi ng from the estate the proceeds of

an IRA and pension plan of which decedent had designate d the

estate the beneficia ry. Although the court consented to the

transfer of the action, because Duggan's request by motion for

the issuance of a citation was procedur ally defective and did

not initiate a discovery proceedin g, the decision noted that,

notwithst anding Duggan's allegatio ns regarding the IRA and the

pension plan, "she had not yet commenced " such a proceedin g

(Matter of Kelly, NYLJ, Mar. 14, 2002, at 21, col 3).

According ly, no citation issued.

Thereafte r, the partnersh ip's action was transferr ed to

this court (Andiero Partners, L.P. v Duggan, Sup. ct., NY

4 [* 4] County, Mar . 18, 2002, Kahn, J., Index No. 601227/01). Duggan

then answered the complaint (in her fiduciary and individual

capacities) and, as relevant for present purposes, she

interposed a counterclaim as executrix, in essence repeating the

allegations that the partnership was withholding from the estate

the proceeds of the IRA and pension plan.

Although it is not clear from Duggan's counterclaim , the

record shows that the IRA and pension plan held limited

partnership interests that were liquidated after decedent's

death and placed in a segregated account under the partnership 's

control. Why the partnership did not immediately remit such

funds to the custodian of the IRA and trustee of the pension

plan cannot be determined from the record. What can be

determined, however, is that Duggan, as executrix, requested

that the funds be turned over to the estate, but the

partnership, apparently concerned about its liability as

stakeholder, refused, absent some confirmation from the

fiduciaries of the pension plan and IRA that the estate was, in

fact, the designated beneficiary.

After unsuccessfu l settlement negotiations , the partnership

made the instant motion for partial summary judgment on four of

its six causes of action relating to the insurance policy.

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2007 NY Slip Op 34617(U), Counsel Stack Legal Research, https://law.counselstack.com/opinion/andiero-partners-lp-v-duggan-nysurctnyc-2007.