Matter of Nicholson 2024 NY Slip Op 31771(U) May 20, 2024 Surrogate's Court, New York County Docket Number: File No. 2013-1194/C Judge: Rita Mella 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. New York County Surrogate's Court DATA ENTRY DEPT.
M,W 2 0 2024 SURROGATE'S COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ------------------------------------------------------------------------x In the Matter of the Accounting of James A. Nicholson and Justin M. Nicholson, as Co-Executors of the Last Will DECISION and ORDER and Testament of
RONALD A. NICHOLSON, File No.: 2013-1194/C Deceased. ------------------------------------------------------------------------x MELLA, S.:
The following papers were considered in deciding this discovery-related motion:
Papers Considered: Numbered:
Objectant's Notice of Motion to Compel Answers of 1, 2 Co-Executor James A. Nicholson, dated July 31, 2023; Affirmation of Jason E. Zakai, Esq., dated July 31, 2023 with Exhibits
Memorandum of Law in Support of Motion to Compel, 3 dated July 31, 2023
Affidavit of James A. Nicholson in Opposition, dated August 16, 2023, with Exhibits 4
Affirmation of Anne C. Bederka, Esq., in Opposition, 5 dated August 18, 2023, with Exhibits
Affirmation of Quincy Cotton, Esq., in Opposition, dated 6 August 18, 2023, with Exhibits
Memorandum of Law in Opposition to Motion, dated 7 August 18, 2023
Reply Memorandum of Law in Further Support of Motion, dated 8 September 6, 2023
At the call of the calendar on November 14, 2023, the court denied the motion of
Patricia Nicholson (Patricia) to compel Co-Executor James Nicholson (James) to answer four out
of five categories of questions that he had been directed not to answer by counsel at his SCP A
2211 examination in this Executors' accounting in the estate of Ronald Nicholson. Regarding a
[* 1] fifth category of questions related to James's sale of his personal interest in certain tax shelters,
the court deferred its ruling based on the parties' representations during oral argument that they
were close to resolving that issue.
Background
Decedent died on February 26, 2013, survived by his wife, Patricia, and three children,
James, Leslie and Justin. As pertinent here, decedent provided in his will for his residuary estate
to be held in a trust for the income benefit of Patricia with remainder upon her death to his
children (Marital Trust). He nominated James and Justin as Co-Executors and Co-Trustees of
the Marital Trust. Letters Testamentary and of Trusteeship issued to them on March 27, 2013.
Three years after decedent's death, James and Justin commenced the instant accounting to which
Patricia has objected. She alleges, among other things, that certain actions by James and Justin
as Executors, and later as Trustees of the Marital Trust, improperly impaired or limited her
interests in the Marital Trust. 1
Patricia examined James over two days, pursuant to SCPA 2211, about his administration
of decedent's assets. For context, it is important to note that, for years, James assisted in the
management of decedent's significant real estate holdings. James also had his own real estate
investments apart from those in which his father had an interest. When James' s counsel
instructed him not to answer certain lines of questions, Patricia made the instant motion to
compel him to answer questions regarding the following: 1) James's role in the 2011 refinancing
of estate entity, Gaslight Village Associates LP, and his knowledge of how those refinancing
proceeds were to be used, 2) the compensation James received for personal business activities he
I The Marital Trust is the subject of a separate contested accounting. 2
[* 2] conducted at estate entity Bay Management Corp., 3) whether James's relationship with real
estate investor Burton Kassell affected the estate's ability to purchase additional partnership units
in Greenhouse II Associates LLP, an entity in which the estate owns an interest, and 4) James's
relationship with Ale Maley, LLC, which was substituted as the General Partner for Back Bay
Associates, LP, an entity indirectly owned by the estate. There is no dispute that all of the areas
into which Patricia seeks to inquire involve matters prior to decedent's death (and thus are
outside the accounting period), or concern James's personal business activities.
Discussion
The statutory mandate that all matters "material and necessary" which bear on the
controversy be disclosed (CPLR 3101) is construed liberally, but a party is not entitled to
"unlimited, uncontrolled, unfettered disclosure" (State Farm Mut. Auto. Ins. Co. v RLC Med.,
P.C., 150 AD3d 1034, 1035 [2d Dept 2017} [internal quotations marks and citations omitted];
Matter of Eckert, 60 Misc 3d 1007 [Sur Ct, Queens County 2018] [court has broad power to
regulate discovery]). The party seeking discovery must demonstrate that the material sought is
relevant or could properly lead to relevant evidence (see State Farm Mut., 150 AD3d at 1035;
see also Brennan v Demydyuk, 196 AD3d 1113, 1114 [4th Dept 202l][noting that "the pleadings
determine the scope of discovery in a particular action"]). Within this framework, SCPA 2211 [2]
provides that, in an accounting, a "fiduciary may be examined ... as to any matter relating to his
or her administration of the estate" (see Matter ofJane D. Ritter Rev Trust, 147 AD3d 757, 758
[2d Dept 2017]).
The court found that Patricia failed to meet her burden to establish that the subject
matters about which she sought to question James were "material and necessary" to the issues
[* 3] raised in the accounting. Specifically, she did not demonstrate that discovery concerning matters
outside of the accounting period (February 26, 2013 through July 31, 2015) would be relevant to
James's administration of the estate, which is the subject of this instant accounting (see Matter of
Rich, 117 AD3d 1103 [3d Dept 2014] [court refused to allow pre-death discovery, limiting
discovery to accounting period]; see also Matter of Voice, 35 Misc 2d 225 [Sur Ct, Nassau
County 1962] [pre-death business activities not properly within accounting to be compelled]).
Nor did Patricia establish a basis to question James about his personal finances and business
dealings (see Matter of Model/, NYLJ, Oct 11, 2013, at 44 [Sur Ct, NY County] [court refused
to allow SCP A 2211 examination into matters entirely unrelated to account and conduct as
trustee]). Contrary to Patricia's contention, the cases upon which she relied were plainly
distinguishable and did not stand for the proposition she claimed, namely that the management of
decedent's assets prior to the accounting period and information regarding James's personal
financial information and business dealings were discoverable in this proceeding.
In addition, although Patricia sought to compel James to answer questions concerning the
financial interests of third-parties such as Burton Kassell and entities that neither James nor the
estate controls, manages or has an ownership interest in, she did not establish how inquiries into
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Matter of Nicholson 2024 NY Slip Op 31771(U) May 20, 2024 Surrogate's Court, New York County Docket Number: File No. 2013-1194/C Judge: Rita Mella 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. New York County Surrogate's Court DATA ENTRY DEPT.
M,W 2 0 2024 SURROGATE'S COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ------------------------------------------------------------------------x In the Matter of the Accounting of James A. Nicholson and Justin M. Nicholson, as Co-Executors of the Last Will DECISION and ORDER and Testament of
RONALD A. NICHOLSON, File No.: 2013-1194/C Deceased. ------------------------------------------------------------------------x MELLA, S.:
The following papers were considered in deciding this discovery-related motion:
Papers Considered: Numbered:
Objectant's Notice of Motion to Compel Answers of 1, 2 Co-Executor James A. Nicholson, dated July 31, 2023; Affirmation of Jason E. Zakai, Esq., dated July 31, 2023 with Exhibits
Memorandum of Law in Support of Motion to Compel, 3 dated July 31, 2023
Affidavit of James A. Nicholson in Opposition, dated August 16, 2023, with Exhibits 4
Affirmation of Anne C. Bederka, Esq., in Opposition, 5 dated August 18, 2023, with Exhibits
Affirmation of Quincy Cotton, Esq., in Opposition, dated 6 August 18, 2023, with Exhibits
Memorandum of Law in Opposition to Motion, dated 7 August 18, 2023
Reply Memorandum of Law in Further Support of Motion, dated 8 September 6, 2023
At the call of the calendar on November 14, 2023, the court denied the motion of
Patricia Nicholson (Patricia) to compel Co-Executor James Nicholson (James) to answer four out
of five categories of questions that he had been directed not to answer by counsel at his SCP A
2211 examination in this Executors' accounting in the estate of Ronald Nicholson. Regarding a
[* 1] fifth category of questions related to James's sale of his personal interest in certain tax shelters,
the court deferred its ruling based on the parties' representations during oral argument that they
were close to resolving that issue.
Background
Decedent died on February 26, 2013, survived by his wife, Patricia, and three children,
James, Leslie and Justin. As pertinent here, decedent provided in his will for his residuary estate
to be held in a trust for the income benefit of Patricia with remainder upon her death to his
children (Marital Trust). He nominated James and Justin as Co-Executors and Co-Trustees of
the Marital Trust. Letters Testamentary and of Trusteeship issued to them on March 27, 2013.
Three years after decedent's death, James and Justin commenced the instant accounting to which
Patricia has objected. She alleges, among other things, that certain actions by James and Justin
as Executors, and later as Trustees of the Marital Trust, improperly impaired or limited her
interests in the Marital Trust. 1
Patricia examined James over two days, pursuant to SCPA 2211, about his administration
of decedent's assets. For context, it is important to note that, for years, James assisted in the
management of decedent's significant real estate holdings. James also had his own real estate
investments apart from those in which his father had an interest. When James' s counsel
instructed him not to answer certain lines of questions, Patricia made the instant motion to
compel him to answer questions regarding the following: 1) James's role in the 2011 refinancing
of estate entity, Gaslight Village Associates LP, and his knowledge of how those refinancing
proceeds were to be used, 2) the compensation James received for personal business activities he
I The Marital Trust is the subject of a separate contested accounting. 2
[* 2] conducted at estate entity Bay Management Corp., 3) whether James's relationship with real
estate investor Burton Kassell affected the estate's ability to purchase additional partnership units
in Greenhouse II Associates LLP, an entity in which the estate owns an interest, and 4) James's
relationship with Ale Maley, LLC, which was substituted as the General Partner for Back Bay
Associates, LP, an entity indirectly owned by the estate. There is no dispute that all of the areas
into which Patricia seeks to inquire involve matters prior to decedent's death (and thus are
outside the accounting period), or concern James's personal business activities.
Discussion
The statutory mandate that all matters "material and necessary" which bear on the
controversy be disclosed (CPLR 3101) is construed liberally, but a party is not entitled to
"unlimited, uncontrolled, unfettered disclosure" (State Farm Mut. Auto. Ins. Co. v RLC Med.,
P.C., 150 AD3d 1034, 1035 [2d Dept 2017} [internal quotations marks and citations omitted];
Matter of Eckert, 60 Misc 3d 1007 [Sur Ct, Queens County 2018] [court has broad power to
regulate discovery]). The party seeking discovery must demonstrate that the material sought is
relevant or could properly lead to relevant evidence (see State Farm Mut., 150 AD3d at 1035;
see also Brennan v Demydyuk, 196 AD3d 1113, 1114 [4th Dept 202l][noting that "the pleadings
determine the scope of discovery in a particular action"]). Within this framework, SCPA 2211 [2]
provides that, in an accounting, a "fiduciary may be examined ... as to any matter relating to his
or her administration of the estate" (see Matter ofJane D. Ritter Rev Trust, 147 AD3d 757, 758
[2d Dept 2017]).
The court found that Patricia failed to meet her burden to establish that the subject
matters about which she sought to question James were "material and necessary" to the issues
[* 3] raised in the accounting. Specifically, she did not demonstrate that discovery concerning matters
outside of the accounting period (February 26, 2013 through July 31, 2015) would be relevant to
James's administration of the estate, which is the subject of this instant accounting (see Matter of
Rich, 117 AD3d 1103 [3d Dept 2014] [court refused to allow pre-death discovery, limiting
discovery to accounting period]; see also Matter of Voice, 35 Misc 2d 225 [Sur Ct, Nassau
County 1962] [pre-death business activities not properly within accounting to be compelled]).
Nor did Patricia establish a basis to question James about his personal finances and business
dealings (see Matter of Model/, NYLJ, Oct 11, 2013, at 44 [Sur Ct, NY County] [court refused
to allow SCP A 2211 examination into matters entirely unrelated to account and conduct as
trustee]). Contrary to Patricia's contention, the cases upon which she relied were plainly
distinguishable and did not stand for the proposition she claimed, namely that the management of
decedent's assets prior to the accounting period and information regarding James's personal
financial information and business dealings were discoverable in this proceeding.
In addition, although Patricia sought to compel James to answer questions concerning the
financial interests of third-parties such as Burton Kassell and entities that neither James nor the
estate controls, manages or has an ownership interest in, she did not establish how inquiries into
these matters involved James's activities as co-Executor within the accounting period. Under
these circumstances, the comt found that compelling James's answers would not be "material
and necessary" to the objections and, instead, would lead discovery far afield from the issues
raised in the Executors' account, resulting in "delay and prolixity," which is to be avoided (Allen
v. Crowell-Collier Publishing Co., 21 NY2d 403, 406 [1968]; see also Matter of Hoppenstein,
187 AD3d 469 [1st Dept 2020] [affirming grant of protective order where discovery demands
[* 4] went beyond the issues raised by accounting objections]).
For these reasons, the court, in its discretion and in consideration of the record before it
and the other arguments made by the parties, denied Patricia's motion to compel as to the four
categories of questions set forth above (see generally Andon v 302-304 Mott St. Assoc., 94 NY2d
740, 747 [2000] [courts exercise their discretion to determine the scope of discovery on the facts
and circumstances of each case]). As to the fifth category, in view of the fact that, in the time
since the oral argument, no party has notified the court that the parties' efforts to resolve the
motion as to that issue had failed, that part of the motion seeking to question James as to the sale
of his personal interest in certain tax shelters is now denied, without prejudice.
This decision, together with the transcript of the November 14, 2023 proceedings,
constitutes the order of the court.
Dated: May 20, 2024 1:t':j.OGATE
[* 5]