Matter of Kagan

Matter of Kagan 2024 NY Slip Op 32442(U) July 12, 2024 Surrogate's Court, New York County Docket Number: File No. 2020-353/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 Coult DATA ENTRY DEPT.

JUL' 12 2024 SURROGATE'S COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -----------------------------------------------------------------------x In the Matter of the Application to Enforce a Judgment Against the Estate of DECISION and ORDER

IRVING KAGAN, File No.: 2020-353/C Deceased. -----------------------------------------------------------------------x In the Matter of the Application of Rafic Saadeh for a Decree Revoking Letters of Administration Issued to Michael Kagan and the Appointment of the New York County Public Administrator as Administrator d.b.n. of the Estate of File No.: 2020-353/D/E

IRVING KAGAN,

Deceased. -----------------------------------------------------------------------x MELLA,S.:

In companion proceedings in the Estate of Irving Kagan, Rafic Saadeh (Petitioner), a

creditor of the estate, seeks 1) leave to execute on a money judgment obtained against the estate

in the Federal District Court, Southern District of New York (Judgment Proceeding); and 2) an

order revoking the Letters of Administration issued to Michael Kagan (Michael) pursuant to

SCPA 711 (2) and (3) and appointing the Public Administrator of the County of New York as

Administrator d.b.n. (Removal Proceeding).

Background

Decedent Irving Kagan died on January 12, 2020, survived by two sons, Michael and

Joshua. Limited Letters of Administration issued to Michael on February 3, 2020, which

restrained Michael from compromising any cause of action without further order of this court

pursuant to EPTL 5-4.6. The letters were subsequently amended on September 30, 2020, to also

reflect that the value of decedent's personal property does not exceed the sum of $10,000. This [* 1]

valuation was confirmed by the inventory of assets Michael filed with the court on January 13,

2023.

Based upon decedent's failure during his lifetime to repay a $130,000 loan Petitioner had

extended to decedent in July of 2017, Petitioner filed a claim against the estate, dated March 16,

2020, pursuant to SCPA 1803. He then initiated litigation against the estate in federal court to

recover the debt (Federal Court Litigation) and on September 27, 2021, that court awarded

Petitioner a default judgment against the estate (Judgment) in the total amount of $178,265.02,

with post-judgment interest to accrue at the statutory rate. After obtaining the Judgment,

Petitioner filed the Judgment Proceeding 1 and the Removal Proceeding. On January 3, 2024, this

court issued an order in each proceeding setting a deadline for the filing of a verified answer or

objections. Michael filed objections in the Removal Proceeding, but none of the Respondents,

including Michael, filed a responsive pleading in the Judgment Proceeding. 2

Petitioner contends that through discovery conducted in the Federal Court Litigation,

decedent's estate had two principal assets: a house in Pennsylvania and a cause of action in the

United Kingdom for legal fees owed to decedent, who was an attorney (the UK Litigation). Both

of the instant proceedings allege that Michael acted in contravention of his limited letters and to

the detriment of the estate and its creditors by 1) causing the estate to borrow funds in order to

1 Petitioner requests in the Judgment Proceeding the entry of a decree pursuant to CPLR 5208, which addresses execution of a judgment upon the death of a judgment debtor by leave of the court. Because Petitioner initiated litigation to recover the unpaid loan against the estate and its personal representative after decedent's death, enforcement of this judgment against the estate is governed by EPTL 11-4.6.

2 Respondent 200 W. 60th Street Associates, LLC, an alleged estate creditor, filed an "Affirmation of Objection" on January 9, 2023. However, the document was defective. The court noted the defect in its January 3, 2024 Order regarding the filing of responsive pleadings but the defect was not cured. 2

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proceed with the UK Litigation, 2) entering into a settlement agreement in the UK litigation and

an agreement with UK counsel directing that any proceeds from the UK Litigation be paid to

third-party lenders and not to the estate, and 3) selling the Pennsylvania home for a below market

price and incurring additional debt with respect to that sale. Michael, for his part, challenges

Petitioner's allegations and avers that he acted within the scope of his authority and that any

action he has taken as Administrator was in the best interests of the estate.

Discussion

The court addresses first the Judgement Proceeding. Pursuant to SCPA 509,

uncontroverted allegations in a petition constitute "due proof of the facts therein stated."

Nonetheless, Petitioner is still required to make a prima facie showing of entitlement to the relief

sought "by proof beyond the four comers of the ... petition if the proof arriving from

Respondents' default does not amount to such a case" (Matter of Zhuang, NYLJ, October 8,

2021, at 17, col 2 [Sur Ct, NY County]; Matter of Yankowitz, NYLJ, August 15, 2005, at 36, col

2 [Sur Ct, Westchester County]).

Where a judgment creditor seeks to execute on a judgment against estate assets, EPTL

11-4.6 provides that such judgment creditor must obtain leave of this court (see Margaret V.

Turano, Practice Commentaries, McKinney's Cons Laws of NY, EPTL 11-4.6). This mechanism

protects other creditors who may have rights prior to or equal to the judgment creditor,

particularly when there are insufficient assets to satisfy all claims in full (see SCPA 1811; Grant

v Adler, 30 AD2d 657 [l st Dept 1968]; Matter of Fernandez, 79 Misc 2d 455,456 [Sur Ct, New

York County 1974]). In fact, an order granting leave to execute on a judgment is presumptive

evidence that there are sufficient assets on hand to satisfy the judgment (see SCPA 602). To

obtain leave of this court, Petitioner is required to make a threshold showing that the assets

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which are, or should be, in the fiduciary's hands are sufficient to satisfy the debt and that

payment will not adversely affect other creditors of equal or higher status (see A-fatter of Warren,

105 App Div 582, 587 [1st Dept 1905]; Matter of Dimou, 149 Misc 83, 87 [Sur Ct, Kings County

1933]; Matter qf reldman, NYLJ, April 17, 1992, at 27, col 1 [Sur Ct, New York County]). If

any doubt exists as to whether a Petitioner has made such a showing, the court may require an

accounting to determine the condition of the estate (Matter qfNikas, NYLJ, April 5, 1995, at 1,

col 3 [Sur Ct, New York County]; Matter of Dimou, 149 Misc at 87, citing Matter of

Congregational Unitarian Socy., 34 App Div 387, 389 [1st Dept 1898] [court affirmed an order

directing an accounting prior to granting leave to execute on a judgment]).

Petitioner here is not a preferred claimant as the judgment was obtained after decedent's

death and therefore is not entitled to any greater preference than other valid claims of the same

class (see SCPA 1811 [3]; Matter qfKlupt, 65 Misc 2d 822 [Sur Ct, Nassau County 1971]

uudgment against estate obtained after decedent's lifetime has no greater preference than any

other valid claim against estate]). Based upon the allegations in the petition, the court is unable

to determine whether the estate is solvent, or whether there are any New York assets to satisfy

the judgment, and therefore cannot grant, on this record, leave to execute on the judgment.

Petitioner has failed to make the required threshold showing that, even if there are suflicient

assets to pay the debt, enforcing the judgment would not prejudice other creditors.

It is well established that the court has broad authority to direct a fiduciary to account

when it appears to be in the best interests of the estate (SCPA 2205, 2206; Matter of Stortecky v

Mazzone, 85 NY2d 518 [ 1995]). Under these circumstances, the court concludes that it is in the

best interests of the estate to order Michael, as Administrator, to account. Accordingly, he is

directed to file his account, together with a petition for its judicial settlement, and any other

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submissions required to obtain the issuance of a citation in the accounting proceeding, within 60

days of the date that this Decision and Order is served upon him, with notice of entry. Michael

shall then cause citation to be issued and service to be made, without undue delay, on all persons

interested in the accounting proceeding pursuant to SCPA 2210. Petitioner's request for leave to

execute on his judgment is denied without prejudice to seeking such relief in the accounting

proceeding or in a separate proceeding providing the necessary threshold information.

As for the Removal Proceeding, Petitioner relies upon the same allegations as he does in

the Judgment Proceeding, arguing that Michael is unfit to serve because he has exceeded the

authority of his letters, improvidently managed estate assets and lacked candor with this court

and Petitioner while doing so (SCPA 711 [2] and [3 ]).

Upon careful review of the petition and Michael's Objections, the court concludes that

Petitioner's concerns and allegations are more appropriately addressed in the context of a hearing

in an accounting proceeding, which Michael has been directed to file. This is particularly so

given that Petitioner's allegations are all disputed by Michael and, even if proven to be true,

those allegations do not identify an immediate or present hann to the estate that would require

removal or suspension of the Administrator at this time (see SCPA 711; Matter of Margolin,

NYLJ, June 12, 2020, at 19, col 1 [Sur Ct, New York County]). For these reasons, the Removal

petition is denied without prejudice to Petitioner's pursuit of such claims or seeking appropriate

relief in the accounting proceeding.

This decision constitutes the order of the court.

Clerk to notify.

Dated: July 12, 2024 S~ATE 5

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