In re Federico

2023 NY Slip Op 51418(U)

In the Matter of an Intermediate Judicial Accounting by Kathryn Federico and Sharon Vigne, as the Prior Cotrustees of the Anthony D. Aloisi Irrevocable Trust, dated May 24, 1999, and and the Estate of Anthony D. Aloisi.

Filed No. 2015-296/C

Surrogate's Court, Putnam County

October 20, 2023

Unpublished Opinion

Kurzman Eisenberg Corbin & Lever, LLP

Attn Lisa M. Capone, Esq.

Attorneys for Objectants Anita DeMarco & Linda Bucchi

One North Broadway

Kathryn M. Federico

Petitioner, Pro Se

Sharon O. Vigne

Petitioner, Pro Se

Belowich & Walsh, LLP

Attn: Joanna Sandolo, Esq. & Daniel G. Walsh, Esq.

Attorneys for Alou Corp.

HON. ANTHONY R. MOLÉ, SURROGATE

In accordance with CPLR 2219 (a) and 22 NYCRR 207.7, the following papers were read and considered on the motion of the Respondent-Objectants ANITA DeMARCO and Linda Bucchi (mot. seq. no. 3), requesting an order awarding them partial summary judgment on the following branches of their motion: (a) sustaining their objections to the intermediate judicial accounting of the Petitioner-Cotrustees Kathryn Federico and Sharon Vigne; (b) surcharging the Petitioner-Cotrustees as fiduciaries in an amount to be determined at an inquest; (c) denying the Petitioner-Cotrustees commissions; (d) making determinations that the following "were ultra vires, ^[1] in bad faith, contrary to the law, contrary to the plain language of the Irrevocable Trust, unenforceable, void, and/or voidable, and should be vacated": (i) the "Amendment" to "The Anthony D. Aloisi Irrevocable Trust," dated May 23, 2011; (ii) the "Revocation of the Trust Agreement," dated August 30, 2011; (iii) the purported conveyance of 139 Teakettle Sprout Road, Mahopac NY 10541 by Deed, executed August 30, 2011, by the Petitioner-Cotrustees of "The Anthony D. Aloisi Irrevocable Trust," to the deceased Anthony D. Aloisi, individually; and (iv) the purported conveyance of said real property was in contravention of the terms of the Trust to Alou Corp., as evidenced by the "Bargain and Sale Deed," dated October 28, 2011; and (e) awarding counsel fees to the Respondent-Objectants in accordance with Matter of Hyde (15 N.Y.3d 179 [2010]):

Papers:

Notice of Motion; Memorandum of Law in Support; Affirmation in Support, Exhibits A-BB; Affidavit of Linda Bucchi (with Exhibits A-D); Affidavit of Michael Levinson

"Affirmation in Opposition" of Petitioners, ^[2] Exhibits 1-17

Alou Corp.'s Affirmation in Opposition, Exhibits 1-18; Affidavit of Scott Frey; Alou Corp.'s "Reply to Objections with Affirmative Defenses"

Reply Memorandum of Law in Further Support; Reply Affirmation in Further Support

In this contested proceeding to judicially settle the intermediate account of Kathryn Federico and Sharon Vigne (collectively referred to as petitioners hereinafter), as the cotrustees of the trust created by Anthony D. Aloisi (decedent) respondents Anita DeMarco and Linda Bucchi (collectively referred to as the objectants hereinafter) move for, among other associated relief, partial summary judgment on their objections to petitioners' accounting.

Upon review of the aforesaid papers, this Court finds and determines as follows:

Background and Procedural History

This case presents somewhat thorny issues that may arise about a trust and civil procedure which the Court must grapple with on this motion. The facts are sharply contested in this contentious litigation between four sisters and a third-party corporation - namely, Alou Corp. (hereinafter referred to as Alou).

Recitation of the long and complex procedural and factual background of this case is important. Based on prior proceedings and motion practice in this accounting proceeding, the Court incorporates its previous decisions by reference herein.

Petitioners and the objectants are the children of decedent. In 1999, decedent, as the grantor/settlor, created "The Anthony D. Aloisi Irrevocable Trust" (the "trust"), ^[3] which consists of the real property known as 139 Teakettle Sprout Road in the Town of Mahopac (the subject property) - the main corpus in the trust and its sole principal asset. Decedent simultaneously deeded the subject premises to the objectant Linda Bucchi as trustee, since she was appointed as such per "Article II" of the trust. Some important provisions of the trust warrant referencing at the outset insomuch as they affect important ancillary issues on this motion.

"Article IV (2)" - titled "Provisions for Grantor During Grantor's Lifetime" - states, as relevant here, that "[n]otwithstanding any other provision of th[e] trust, during the lifetime of the [decedent], the Trustee shall have no discretion whatsoever to pay to or apply for the benefit of the [decedent] or any of the principal of th[e] trust." "Article VII" of the trust - entitled "Trust Estate to Grantor's Beneficiaries" - provides, among other things, that it "shall be paid over and distributed... in equal shares to the [decedent's] children, per stirpes" upon decedent's death. And Article XIX - titled "Power of Appointment" - provides in pertinent part that "[t]he [decedent] may at any time... alter, amend[,] or modify Article VII... upon such terms or conditions, in such manner, and at such time or times as the [decedent] shall direct and appoint in writing or by a will, specifically referring to any exercising of these powers, provided, however, that these powers shall not be exercisable to any extent for the benefit of the [decedent], his... estate, his... creditors[,] or the creditors of his... estate."

Of significance here, decedent had the power to appoint successor trustees pursuant to "Article XVI" of the trust. And to that end, he did so twice as will be outlined. That provision, titled "Grantor During Lifetime to Designate Substitute or Successor Trustee" provides, in relevant part, that decedent during his lifetime "may name a substitute or successor trustee... by delivery to any Trustee herein a notice naming the substitute or successor trustee and indicating an intent to replace the Trustee named"; and "[u]pon receipt of such notice[,] the Trustee... shall pay over, deliver, assign, transfer[,] or convey to such substitute or successor Trustee ([who] accepts the appointment as Trustee), the Trust Estate and make a full and proper accounting to the [decedent], whereupon the Trustee... shall be discharged and have no further responsibility under this trust." That provision continues that "[u]pon the failure of the Trustee to make such conveyance[,] the [decedent] may apply to the court having jurisdiction of this trust and such court may compel the conveyance by the Trustee" and the successor trustee "upon acceptance of this trust and the Trust Estate shall succeed to and possess all [of] the rights, powers and duties, authority and responsibility conferred upon the Trustee [that was] originally named."

Decedent exercised provision "Article XVI" by changing trustees twice. First in August of 2002, decedent appointed his son, Anthony D. Aloisi, Jr. (Tony), as the successor trustee. Such was memorialized by an "Amendment" that modified "Article II" of the trust. This document was signed on August 2, 2002 by Tony and decedent. Thereafter, Tony transferred the subject property to himself as the trustee by deed dated March 7, 2003 (the 2003 deed). That document states that "[t]he purpose of this deed is to clarify for the Town of Carmel the change of Trustee of the... Trust."

In April of 2007, decedent again exercised his power to appoint a substitute trustee by removing Tony as the substitute trustee and replacing him with petitioners, Federico and Vigne, as the successor cotrustees. As was done previously, an Amendment, dated April 24, 2007, was signed by petitioners and decedent for purposes of changing the fiduciaries and modifying "Article II" of the trust. A few days later, petitioners transferred the subject property to themselves in their capacity as successor cotrustees. This was memorialized by a quit claim deed dated April 24, 2007 (the 2007 deed) - which has identical language in the document as the 2003 deed about the purpose of the indenture to reflect the change of trustees from Tony to petitioners.

Thereafter, decedent endeavored to sell the subject property and consulted with his attorney to assist him in revoking the trust. Although petitioners consented to revoke the trust, the objectants and decedent's son Jack opposed revocation of the trust. In a letter dated March 9, 2011, decedent's then-counsel, Mr. George H. Roberts, Esq., sent a letter to objectants' and Jack's counsel, stating therein that he had "informed" decedent that he can validly revoke the trust" if all beneficiaries of the trust agree to terminate" it (emphasis supplied). The letter reflects that decedent wanted to sell the subject premises due to a Town mandate that it be "restored to an occupancy for a one family house," which he believed would entail "considerable expense[s] and... curtail future income." The letter further states that decedent made a proposal that if the objectants and Jack consented to the revocation, decedent would pay $5,000 to each beneficiary from the net proceeds when the premises was sold. Notwithstanding, the objectants and Jack rejected the proposal and did not consent.

Faced with a dilemma where all of the trust beneficiaries had not consented to terminating the trust, decedent then sought to further change the trust, by removing nearly of all the remainder beneficiaries except for petitioners, and thus removing the objectants as trust beneficiaries. Decedent executed an Amendment, dated May 23, 2011, to this effect which provided, among other things, that the trust's assets were to be divided equally to petitioners upon decedent's...