In re Mercer

141 A.D.3d 594

35 N.Y.S.3d 692

2016 N.Y. Slip Op. 05502

In the Matter of Norman J. MERCER, deceased.

BNY Mellon, N.A., et al., appellants;

Howard Mercer, et al., respondents.

Supreme Court, Appellate Division, Second Department, New York.

July 13, 2016.

Moritt Hock & Hamroff LLP, Garden City, NY (Alexander D. Widell, William P. Laino, and Stephen E. Turman of counsel), for appellants.

Novick & Associates, P.C., Huntington, NY (Donald Novick and Albert V. Messina, Jr., of counsel), for respondents Howard Mercer and Georgia L. Mercer, as executor of the estate of David Mercer.

MARK C. DILLON, J.P., SHERI S. ROMAN, ROBERT J. MILLER, and HECTOR D. LaSALLE, JJ.

In a probate proceeding, in which BNY Mellon, N.A., Martin D. Newman, and Carol M. Mercer, the co-executors of the estate of Norman J. Mercer, petitioned for the judicial settlement of their account, the co-executors appeal, as limited by their notice of appeal and brief, from so much of an order of the Surrogate's Court, Suffolk County (Czygier, Jr., S.), entered March 30, 2015, as denied those branches of their motion which were for summary judgment dismissing certain objections to the account.

ORDERED that the order is modified, on the law, by deleting the provision thereof denying that branch of the petitioners' motion which was for summary judgment dismissing the objections insofar as they are based upon transactions or valuations made by the petitioners prior to November 24, 2009, and substituting therefor a provision granting that branch of the motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

The decedent, Norman J. Mercer, died on November 20, 2007, survived by his wife, Carol M. Mercer, and three children from a prior marriage. The decedent's two sons (hereinafter together the Mercer sons) filed joint objections to the propounded probate of a September 21, 2004, will, and January 29, 2007, codicil, both of which reflected a testamentary scheme providing Carol with lifetime enjoyment of the bulk of the decedent's approximately $8 million estate, and appointed her, Martin D. Newman, and the Bank of New York, now known as BNY Mellon, N.A., as co-executors of the estate (hereinafter collectively the appellants).

The Mercer sons' objections to probate were settled by an agreement effective November 24, 2009 (hereinafter the Settlement), wherein the appellants and the Mercer sons agreed that the propounded instruments would be admitted to probate in return for an outright payment to the objectants of the sum of $1.5 million, to be made with estate funds in the nature of an “inheritance,” at the Mercer sons' request. The Settlement also resolved a pending action commenced by the Mercer sons in the United States District Court for the Eastern District of New York (hereinafter the Federal Action) against the appellants, both individually and in their representative capacities as trustees of two retirement trusts created under a postnuptial marital agreement between the decedent and Carol.

On May 9, 2011, the appellants filed a petition for the judicial settlement of their account. In July 2011, the Surrogate's Court appointed a guardian ad litem to represent infant beneficiaries having an interest in the estate along with unborn persons having a contingent interest in the remainder of one or more testamentary trusts created under the propounded will. Both the guardian ad litem and the Mercer sons filed objections to the account.

On a prior appeal, this Court awarded summary judgment to the appellants dismissing the Mercer sons' objection which challenged the individual appellants' use of estate funds to pay the legal fees incurred in defending the federal action (see Matter of Mercer, 113 A.D.3d 772, 979 N.Y.S.2d 608 ). This Court stated on the prior appeal:

“the Settlement sought to ‘resolv[e] any and all claims and disputes raised or which could have been raised by any party, to date ’ with respect to the contested probate proceeding and the Federal Action, ‘including claims relating to the administration of [the decedent's] probate estate created by [the decedent's] will’ (emphasis supplied). Thus, Paragraph 14 provided for the mutual release of obligations ‘including but not limited to any claims and causes of action ... that [the parties] have asserted against each other or claims they could have asserted in the above referenced lawsuits to date, provided however that the parties understand and agree that [the objectants] are not releasing their rights to inherit under the Will, Codicil and [Marital] Agreement after Carol dies ... with respect to [the decedent's] probate estate’ (emphasis supplied). Paragraph 23 similarly provided that the Settlement set forth the parties' ‘entire agreement and understanding ... in respect to ... all claims that were or could have been made by any of the parties in any proceeding in the Surrogate's Court, Suffolk County ’ (emphasis supplied)” (id. at 774, 979 N.Y.S.2d 608 ).

We explained that “[i]n negotiating the Settlement, the [Mercer sons] were represented by experienced attorneys who had full knowledge of the claims that caused the appellants to incur legal fees in the Federal Action,” and found that their “belated challenge to the use of estate funds to pay the appellants' legal fees in the Federal Action fits squarely in the category of claims that they released in the Settlement, which ‘could have [been] asserted in the above referenced lawsuits to date’ or ‘could have been made by any of the parties in any proceeding in the Surrogate's Court, Suffolk County’ ” (id. at 774–775, 979 N.Y.S.2d 608 ).

After this Court issued the decision and order on the prior appeal, the appellants moved, inter alia, for summary judgment dismissing the Mercer sons' remaining objections and nine of the guardian ad litem's objections to the account. The appellants argued, inter alia, that certain objections should be...