Matter of Neumann

Matter of Neumann 2024 NY Slip Op 30497(U) January 10, 2024 Surrogate's Court, Bronx County Docket Number: File No. 725P2003/D Judge: Nelida Malave-Gonzalez 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, BRONX COUNTY

January 10, 2024

ESTATE OF ARTHUR J. NEUMANN, Deceased File Nos.: 725P2003/D and 725P2003/E

In this bitterly contested estate, Belinda Neumann-Donnelly

(“Belinda”), the decedent’s niece, filed a motion seeking partial summary

judgment on the remaining branch of her petition pursuant to SCPA 711

requesting that the court remove her father, Hubert G. Neumann (“Hubert”)

as the de facto trustee of the Appointed Neumann Descendants’ Trust

(ANDT), appointing a bank or trust company in his stead. She also asks that

the court reinstate all the directives contained in an order dated February 5,

2019, inter alia, staying him from taking any further actions as trustee, and

vacating partial modifications to said order pursuant to a stipulation and order

respectively dated February 15, 2019 and May 13, 2019. Hubert opposes

removal and requests to consolidate Belinda’s motion with a pending

proceeding seeking to judicially settle his amended intermediate account [* 1]

(File No. 725P2003/E). After several conferences were held with counsel

and a member of the court’s Law Department, the parties stipulated that

Hubert is to continue overseeing and controlling all of the art wheresoever

situated, including ANDT’s own art. Accordingly, Belinda no longer seeks to

remove Hubert from overseeing the ANDT art and its interests in the

Neumann Collection but wants him removed from the day-to-day trust

administration activities and certain investment decisions concerning ANDT.

Belinda and Melissa recently retained new counsel. A motion filed by Hubert

seeking to consolidate Belinda’s removal motion with the trustee’s pending

intermediate accounting proceeding has been held in abeyance (File No.

725P2003/E) pending determination on this motion. The court declines to

determine the summary judgment motion and directs its consolidation with

the pending accounting proceeding for the reasons stated below.

Opposition to Belinda’s motion was also filed by two other

nieces, Belinda’s sisters Melissa F. Neumann (“Melissa”) and Kristina

Neumann, who, along with Belinda, are the lifetime ANDT income

beneficiaries, as well as the guardian ad litem representing Melissa’s infant

daughter Eva Neumann Crichton. Jared Donnelly, Lita N. Crichton and

Lachlan N. Crichton, Belinda’s and Melissa’s children who were previously

respectively represented by the guardians ad litem and have attained

majority, and Miles Donnelly, Belinda’s other adult son, have not separately [* 2]

appeared or taken a position in these proceedings. All of these great nieces

and nephews are discretionary income and principal beneficiaries of ANDT

and its presumptive remainder persons.

In determining this motion the court reviewed, inter alia, the

affidavits of Belinda, her spouse, Jeffrey Donnelly, Hubert Neumann, Kristina

Neumann, Melissa Neumann, the affirmations of Judd Bernstein, John

Morken, Esq., Donald Novick, Esq., Steven R. Finkelstein, Esq., affidavits of

Christopher Gaillard and Darcy Katris, Esq. and the numerous exhibits

thereto. Oral argument was had and the motion was marked “submitted.”

BACKGROUND

Arthur Neumann died on August 22, 2003 without issue. His

spouse predeceased. His sole distributee is his brother Hubert. Arthur’s will,

dated October 25, 2002, nominates Hubert as executor. The will was

admitted to probate by decree and letters testamentary issued to Hubert on

September 23, 2003.

Arthur’s and Hubert’s parents, Morton H. Neumann and Rose

F. Neumann (“Morton” and “Rose”), emigrated from eastern Europe to the

United States over a century ago and established Valmor, a personal

products empire. During their lifetimes they purchased many paintings and

other works or art from established and striving artists. Upon their deaths,

Hubert assumed control of Valmor and various trusts for family members, [* 3]

including ANDT and Hubert’s separate trust, maintained the entire art

collection and acquired additional works of art, all of which have greatly

appreciated in value. The aggregate “Neumann Family Collection” (”the

Neumann Collection”), as depicted by Hubert, is a renowned privately held

art collection of 20th century art. Its value, as well as the extent of ANDT’s

interest in it, remains unknown. All parties herein, who have separate

interests in Valmor and other family trusts that have a stake in the Neumann

Collection, concede that the Neumann Collection is to remain intact and the

art therein is not to be specifically ascribed to ANDT, which also owns

separate artwork. Pursuant to a “so-ordered” stipulation, the identification

and valuation details of the artwork in the proceedings have been redacted

as potentially negatively impacting the provenance and value of the

Neumann Collection and ANDT’s separately owned art.

Morton executed an inter vivos trust agreement that was

restated on June 30, 1980 and amended multiple times, which is referred to

in the documents as the “amended paternal 1980 trust agreement” (“the

Morton Trust”), which became irrevocable upon Morton’s death on April 8,

1985. At that time, certain assets held by the Morton Trust were placed in

a trust for Arthur’s benefit, the Arthur J. Neumann Trust dated February 16,

1987 (the “Arthur Trust”), of which Hubert is the sole trustee. Upon Rose’s

death on May 13, 1998, a portion of the assets held during her lifetime under [* 4]

the Morton Trust were also placed into the Arthur Trust. Arthur failed to

exercise the power of appointment designating Hubert as trustee of the

Arthur Trust during his lifetime.

However, Arthur’s will exercises a limited appointment over the

Arthur Trust and said trust refers to ANDT and nominated Hubert as its

trustee. Accordingly, Arthur’s residuary estate was technically paid to

Hubert as the de facto trustee of ANDT (hereinafter “trustee”) to be held in

further trust for the benefit of Hubert’s descendants. Arthur’s will also

nominates Melissa as successor trustee, with a limited power of appointment

to designate a bank, trust company or Belinda to serve as co-trustee with

her. Should Melissa not serve, the will nominates Belinda to serve jointly with

a bank or trust company. An individual fiduciary is authorized to replace a

bank or trust company serving as co-trustee with a successor corporate

trustee upon ten days’ notice. Commissions could not be taken with respect

to the works of art and any interest in the stock of a corporation whose

primary assets consist of works of art. Upon the death of all three nieces,

the remaining assets and income in ANDT are to be paid to Hubert’s then

living grandchildren or their issue, should they fail to survive. Adopted or

non- marital issue are excluded as beneficiaries. The final distributions of

trust principal to Hubert’s surviving grandchildren are to be paid upon their

attaining the age of thirty-five, although the entire net income of the trust is [* 5]

to be distributed annually to the income beneficiaries.

BELINDA’S ARGUMENTS

In support of removing Hubert as trustee of ANDT, Belinda

notes that it is uncontroverted that Hubert controls the entire art collection for

the Valmor entities, ANDT, Hubert’s own trust and other family trusts as one

global unit. The [redacted] valuation of the ANDT interests therein is but an

estimate of its approximate relation to the value of all works of art. She

asserts that Hubert believes that the total collection is priceless and the

individual interests of ANDT and its beneficiaries are insignificant in

comparison. When pressed, Hubert begrudgingly sells -art but not enough

to retain comfortable liquidity to pay ANDT expenses or make distributions,

and systematically siphons off ANDT funds for his personal benefit. For

example, she alleges that he spent over $1 million of ANDT funds to acquire

a fifty percent interest in a non income producing townhouse jointly owned

by ANDT and the Hubert Trust and has ANDT pay half of the expenses of

a full-time housekeeper at the townhouse who primarily performs personal

tasks for Hubert and his present companion, Deborah Purden. Hubert pays

Ms. Purden significant funds from ANDT accounts to accompany him to

dinner parties and travel globally with him under the guise of promoting the

Neumann Collection and overpays her for alleged art curatorial services. As

an example of poor fiduciary judgment jeopardizing ANDT’s assets, Hubert [* 6]

wilfully refused to insure the art collection for many years. It was only after

Belinda filed the removal proceeding that he obtained insurance coverage

Belinda continues that, although he had his own trust and

significant personal assets, Hubert also loaned a former girlfriend $1,225,000

to purchase her own apartment from ANDT funds, of which $122,500 was

interest-free. There was no promissory note evidencing the debt. The rest

of the loan was held in a 30-year mortgage at a below-market interest rate.

Because ANDT lacked liquidity, Hubert sold $376,058.98 in stocks held by

ANDT at a loss to make the loan, noting that these stocks would have greatly

appreciated in value had they continued to remain part of ANDT’s portfolio.

Hubert also charged ANDT for petty personal expenses such as polishing

silver and cleaning bathrooms throughout the house and the cost to buy new

pants in Paris because he failed to adequately pack for a trip abroad. He

misappropriated significant ANDT funds to pay his personal legal fees and

disbursements for himself and his girlfriend in other litigations to which

neither ANDT nor Hubert as its trustee were parties. He misused his position

as chief operating officer of Valmor to transfer funds to himself from Valmor,

which owns assets in excess of $500 million and is indebted to ANDT for

over $100,000 and committed tax fraud utilizing ANDT, placing it at grave

risk by failing to distribute shares of stock in Valmor and declaring fictitious

debts and loans. He depleted Rose’s estate by undervaluing Valmor stock [* 7]

and fraudulently transferring it to a marital trust, and delayed distributing it to

Rose’s own trust. Belinda urges that all of these self-serving transactions

were detrimental to the interests of ANDT and its beneficiaries.

Belinda appears to have had a good relationship with

Hubert prior to the death of her mother Dolores, from whom Hubert was

estranged for many years. Belinda was the primary beneficiary and

nominated executor of Dolores’ last will and testament dated March 4, 2015,

which disinherited Hubert and left modest shares to Melissa and Kristina.

Hubert and Melissa mounted a probate contest in Dolores’ estate, also

involving Kristina, that resulted in a jury verdict in favor of Belinda. Hubert

unsuccessfully attempted to enjoin the sale of a valuable painting by Dolores’

estate at Sotheby’s that was individually owned by Dolores by

misrepresenting that it was part of the Neumann Collection. Belinda avers

that as a result of the probate litigation, Hubert commenced retaliating

against her in 2018, refused to make distributions from ANDT to her or for

her children’s education and wrongly opined that they had to first deplete

their individual trusts. In contrast, Hubert made significant distributions to

Melissa and Melissa’s children during this time period because she sided

with Hubert in the probate contest. He belatedly made several distributions

for Belinda’s daughter’s private school tuition but does not pay for the

college expenses of her two sons. [* 8]

Belinda concludes that, although the Morton Trust directs a

trustee to consider all other income and resources of a beneficiary seeking

a distribution, the ANDT instrument does not require consideration of a

beneficiary’s financial circumstances. Significantly Article VII § 5 of the

Morton Trust Instrument, which is incorporated by reference in the ANDT

Instrument, directs that the use of funds for the income beneficiaries shall be

given priority over the conservation of the trust estate for the benefit of the

remainder beneficiaries. In contrast, Hubert is warehousing the ANDT

assets and ignoring the income beneficiaries’ interests.

Belinda’s former attorneys corroborate that Hubert, acting in his

capacity as ANDT trustee, ignored the Morton and Arthur Trust mandates

that the use of funds for the income beneficiaries (Belinda, her two sisters

and the grandchildren/grand nieces and nephews) should be given priority

over the preservation of the trust estate for the benefit of the remainder

beneficiaries. Accordingly, he is obligated to use ANDT funds for the income

beneficiaries’ health, education, support and maintenance, which takes

precedence to preserving the Neumann Collection for the remainder

beneficiaries. Notwithstanding this mandate, Hubert improperly requires

consideration of a beneficiary’s financial condition prior to making

distributions for the purposes permitted in the ANDT instrument, but does not

take financial wherewithal into consideration when making permissible [* 9]

distributions to enable the purchase of art.

In 2010 Hubert improperly transferred undivided 50% interests

in both the Trust art and the townhouse to ANDT and the Hubert Trust.

These transfers gave Hubert, in his capacity as trustee and primary income

beneficiary of the Hubert Trust, the power to veto any sales of art necessary

to fund distributions to ANDT’s beneficiaries. By giving himself this control,

he breached his duty of loyalty and created an inherent conflict of interest.

Counsel urges that in the event that Hubert is removed as trustee, Melissa

should likewise be disqualified from serving as successor trustee because

her animus towards Belinda exceeds Hubert’s. Moreover, Hubert has

separately “funneled” significant sums to her in the past several years.

Melissa is undoubtedly the successor Trustee of the Hubert Trust, and she

and her children are beneficiaries of Hubert’s estate. Accordingly, Melissa

is motivated to continue to preserve an intact Neuman Collection at Belinda’s

and Belinda’s children’s expense. In further support of allegations of

Hubert’s retaliation against Belinda and her family, counsel annexes exhibits

concerning New York County Family Court and Criminal Court proceedings

resulting in the issuance of orders of protection against Hubert.

OPPOSITION TO REMOVAL

Hubert counters that the Neumann Collection contains over

2,000 works owned by various Neumann family members. Approximately 60 [* 10]

to 70 percent of the art is owned by ANDT and the Hubert Trust in equal

shares. As trustee of both trusts, he is obligated to maintain the entire art

collection. Hubert realizes that he must “consider family first” and has never

lost sight of the individual interests. Hubert denies that distributions ceased

to two of Belinda’s children as a result of the litigation in Dolores’ estate. In

fact, he spent $800,000 of his own personal assets to fund trusts for

Belinda’s two sons that now respectively have $324,00 and $450,000 prior

to making distributions for their benefit from the ANDT. Commencing in

2020, he made annual distributions for the education of Belinda’s infant

daughter. There were additional distributions totaling $300,000 each to

Belinda, Melissa and Kristina in 2022.

Hubert urges that he does not harbor hostility toward Belinda.

While he is saddened by her rancor, his requesting financial disclosure as a

predicate for distributions is to ascertain the beneficiaries’ wealth in

accordance with trust mandates. The petty accusations concerning charging

ANDT for de minimis personal expenditures pale in comparison to the fact

that Belinda and her family lived with Hubert in the townhouse rent-free for

over six years and were well aware that ANDT assets paid for its acquisition

and maintenance. Hubert asserts that the First Department expressly held

that he is permitted as a beneficiary and trustee of the Morton Trust to live

there rent-free and doing so does not constitute a distribution of income or [* 11]

principal to him. The townhouse is a valuable ANDT asset and, like the

artworks, has substantially increased in value. It was expressly purchased

to display the Neumann Collection to auction houses, artists, art critics and

historians and it engenders relationships and viewings advantageous to the

ANDT beneficiaries because it cultivates demand for the artwork. His

companion, Ms. Purden, was an art consultant for Morton and Rose in 1982,

and has acted as a curator for Neumann Collection since the late 1990s.

Her services have been indispensable in securing and increasing ANDT’s

assets.

The original decision not to insure the art collection was made

in consultation with Belinda and her sisters who concurred that the art was

secured in various locations. Instead of having to sell other rapidly

appreciating art works, the saved premiums were used to purchase

additional art for ANDT. In any event, all of the art is now insured. Hubert

also avers that he never used ANDT funds to pay the legal fees in Dolores’

probate litigation or personal legal bills. The lawsuit seeking to enjoin the

sale of the painting in Dolores’ estate was brought on behalf of the Neuman

Collection, which includes the ANDT art.

The allegations of tax fraud concerning the sale of two works

of art by ANDT that should have been ascribed to the Hubert Trust and

Valmor are likewise false given that Hubert has a much greater stake in his [* 12]

own trust and Valmor. In any event, Hubert always appropriately consulted

with counsel and accountants when making financial decisions.

In further opposition, Hubert’s attorney affirms that nothing

novel has occurred since the court reinstated Hubert’s powers and authority

as ANDT trustee. In accordance with this court’s orders, Hubert has faithfully

submitted monthly reports to Belinda’s counsel detailing the administration

expenses of ANDT made during the prior month and notice of legal fees and

sale of art. Should Hubert be suspended from making business decisions

or authority to act on the day to day trust activities, ANDT and its

beneficiaries will be irreparably harmed. Belinda has commenced 18 actions

against Hubert and her sisters in various forums seeking similar relief.

Additionally, the removal of Hubert as ANDT trustee would subvert Arthur’s

intent, as well as that of Rose and Morton, especially since there is no

showing of misconduct that endangers ANDT. Under Hubert’s helm, the

ANDT assets have prodigiously appreciated in value, benefitting all

beneficiaries. The potential damage to ANDT by installing a successor

trustee lacking Hubert’s experience and contacts would irreparably damage

its rare, irreplaceable assets.

In further opposition, counsel submits an affidavit from Darcy

Katris, Esq., one of Hubert’s estate attorneys, that there was a delay in

distributing assets from Rose’s trust to the ANDT and Hubert trusts because [* 13]

of tax issues. Also annexed is the affidavit of Christopher Gaillard, Chairman

of an art appraisal and advisory company, confirming that because the ANDT

and Hubert’s Trust have different beneficiaries, Hubert prudently distributed

50% interests in the artwork owned by Rose’s marital trust to each trust,

ensuring that the trusts were equal in value because artworks appreciate at

different rates. He also opines that all art works, whether belonging to

Valmor, ANDT or the Hubert Trust, are sold at auction as part of the

Neumann Collection, which enhances their value by assuring potential

bidders of their quality and provenance.

Counsel notes that where there is a pending accounting

proceeding, the courts are extremely reluctant to remove a fiduciary until the

conclusion of the proceeding to avoid multiple tracks of litigation involving the

same subject matter. Accordingly, he requests that the removal proceeding

be held in abeyance pending resolution of the accounting proceeding, as it

would also offer appropriate recourse to Belinda for her numerous unjustified

grievances. Removal without a hearing is appropriate only when the

fiduciary’s misconduct is established by undisputed facts or concessions.

Here, all of the facts are disputed and it is uncontroverted that all of the

ANDT assets are well taken care of and secured, they have appreciated over

eight times after Rose’s death under Hubert’s stewardship and there is no

showing of harm. [* 14]

Counsel also urges that there is no retaliation or animosity

towards Belinda. In fact, she and her family occupied two floors of the

Riverside Drive townhouse rent-free and Hubert distributed approximately

$550,000 in cash and over $1,000,000 in art to Belinda prior to this litigation,

greatly exceeding the amounts paid to Kristina and Melissa during this time

period. Belinda and her husband commenced proceedings in the New York

County Family and Criminal Courts against Hubert only after he requested

that they leave the townhouse. In fact, Hubert had to file an eviction

proceeding against Belinda and her family, and both the Family Court and

Criminal Court proceedings were dismissed.

Counsel rebuts the assertion that reimbursement is appropriate

only for the storage, maintenance and insurance of art. Since Arthur’s will

is silent on that issue, the Morton Trust Agreement controls, in that in

addition to receiving reasonable compensation for services as trustee,

reimbursement may be made for all proper expenses incurred in the

management, protection and distribution of the trust estate, including agents’

and attorneys’ fees. Counsel concludes that Hubert halted distributions for

Belinda’s adult children because ANDT distributions are not mandatory and

depend on the financial circumstances of all of Hubert’s descendants.

Belinda’s impending wealth from her mother’s estate was also taken into

account, and Hubert’s repeatedly asking for financial documents was not in [* 15]

any way related to litigation commenced by Belinda. In any event, counsel

avers that Belinda’s claims are barred by the doctrines of estoppel,

ratification and laches.

In further opposition, Melissa’s attorney notes that there is

nothing in Belinda’s application supporting Hubert’s removal or that Melissa

should be by-passed as successor trustee despite Arthur’s testamentary

intent that she should serve in that capacity. Even if the application were

granted, there is no other trustee who could effectively manage the complex

trust assets even on a temporary basis. Should Hubert step down or be

incapable of continuing to serve, Melissa is fully qualified by reason of her

excellent education and experience as an active art collector and financial

manager.

The guardian ad litem originally appointed for Melissa’s infant

daughter and a son who has since attained majority, affirms that his wards

are remainder persons and have significant interests that may be affected

by the relief sought herein. He urges that any change of Trustee, even on an

interim basis, would wreak havoc on the Trust and the beneficiaries and a

corporate or individual trustee would lack the expertise, time and willingness

to deal with such a considerable and unique trust corpus. This would

jeopardize his wards’ substantial remainder interest in the trust and likely

cause chaos in a market already affected by world events. Moreover, the [* 16]

ANDT assets have grown exponentially under Hubert’s stewardship, and

there is no showing of fact that the trust or its assets are in danger of loss or

dissipation. Finally, there is a pending accounting proceeding and should

Belinda prevail in any of her allegations, monetary relief is available.

BELINDA’ S REPLY

Belinda’s former attorney affirms that after refusing to pay any

distributions for years, Hubert only commenced making them in 2022 as a

quid pro quo for Belinda’s withdrawing a motion seeking to suspend him for

all purposes. In fact, Hubert remains hostile to her. In any event, Belinda

does not request consolidation, and the removal and accounting proceedings

are on different time tracks.

As a fiduciary is held to a much higher standard than an

ordinary litigant, a showing of self-dealing or gross misconduct, including a

conflict of interest, is sufficient to warrant the suspension of a fiduciary

without any additional showing of irreparable harm. Hubert has not fully

complied with the court’s directives. He is only permitted to pay normal trust

administration expenses and give notice of any payment exceeding $10,000

within seven days and of legal fees within 72 hours. Although Hubert

furnished monthly reports, he failed to timely disclose nearly $2.8 million in

ANDT payments during the past three years. He recently made substantial

capital improvements to the townhouse, including creating a garden. Since [* 17]

Hubert only sold two works of art owned by ANDT since 2019, removing him

as trustee should not interfere with ANDT’s art “business.”

As for self-dealing, Hubert used ANDT funds to pay his

girlfriend for personal tasks such as accompanying him to parties and

vacations and for his own personal legal fees in litigating against auctioning

art in Dolores’ estate. He also used ANDT assets to fund a loan to a former

girlfriend, a portion of which was interest-free, and sold securities belonging

to ANDT at a loss to fund that loan. He transferred money from Valmor to

the Hubert trust at a time when Valmor owed ANDT $112,257. With respect

to Melissa’s suitability as a trustee, counsel notes that, despite being

depicted as having a solid business background, she is in fact a medical

doctor with a busy practice and is “too busy to assume the additional

obligations of ANDT trustee.”

ORAL ARGUMENT

In addition to the arguments by counsel highlighting the

contentions in their documents, the guardian ad litem for Melissa’s infant

daughter notes that it is ANDT’s remainder persons who are ultimately

bearing the cost of the multitude of litigations herein and those in New York

County. Hubert has grown the corpus of ANDT exponentially to his ward’s

benefit. Counsel notes that the loan to the girlfriend was paid in full with

interest, and there was no loss to ANDT. Because it has such a [* 18]

sophisticated corpus, there is no bank trust department or individual who is

going to properly manage the assets and, in any event, a replacement

fiduciary would seek millions of dollars in compensation for trying to do so.

The guardian ad litem avers that none of the remainder persons or other

income beneficiaries want the court to change the fiduciary. Separate

counsel for Melissa and Kristina urge that Hubert has credibly managed

ANDT, and that it is Belinda who has created the alleged hostility and does

not recognize that there are other beneficiaries. In any event, counsel for

Hubert and the other beneficiaries concur that there are issues of fact

precluding summary judgment and there should be a full evidentiary hearing.

DISCUSSION AND DETERMINATION

Summary judgment cannot be granted unless it clearly appears

that no material issues of fact exist (see Phillips v Joseph Kantor & Co., 31

NY2d 307 [1972]; Glick & Dolleck, Inc. v Tri-Pac Export Corp., 22 NY2d 439

[1968]). The movant must make a prima facie showing of entitlement to

judgment as a matter of law, tendering sufficient evidence in admissible form

to demonstrate the absence of any material issue of fact (see Alvarez v

Prospect Hosp., 68 NY2d 320 [1986]; Friends of Animals, Inc. v Associated

Fur Mfrs. Inc., 46 NY2d 1065 [1979]). When the movant has made out a

prima facie case, the burden shifts to the party opposing the motion to

produce evidentiary proof in admissible form sufficient to establish the [* 19]

existence of material issues of fact (see Zuckerman v City of New York, 49

NY2d 557 [1980]). Summary judgment is a drastic remedy which requires

that the party opposing the motion be accorded every favorable inference

and issues of credibility may not be determined on the motion but must await

the trial (see F. Garofalo Elec. Co. v New York Univ., 300 AD2d 186 [1 st Dept

2002]).

As a general rule, the testator’s selection of a fiduciary must be

given deference and the power of the court to remove a fiduciary chosen by

the testator should be exercised only upon a clear showing of serious

misconduct that endangers the welfare of the estate; it is not every breach

of fiduciary duty that will warrant removal (see Matter of Duke, 87 NY2d 465,

474 [1996] citing Matter of Israel, 64 Misc 2d 1035 [Sur Ct, Nassau County

1970]; Matter of Leland, 219 NY 387 [1916]; see also Matter of Aoki, NYLJ,

Apr. 19, 2023 at 7, col 3 [Sur Ct, NY County 2023]; Matter of Miller, 48 Misc

2d 815 [Sur Ct, NY County 1965]). A potential conflict of interest between

a fiduciary and a party interested in the estate does not warrant the denial of

letters to or removal of, a fiduciary unless it interfered with the proper

administration of the trust (see Matter of Rothman, 183 AD3d 553 [2 nd Dept

2020]; Matter of Rudin, 15 AD3d 199 [1 st Dept 2005]; Matter of Shaw, 186

AD2d 809 [2nd Dept 1992]).

Hubert Neumann is not only the de facto trustee of ANDT but [* 20]

trustee of the Hubert Trust, President of Valmor and the sole manager of the

Neumann Collection. Upon the assent of all parties, the art therein,

estimated in excess of a billion dollars, is treated as one global unit and

Hubert is to remain its custodian with authority to make all business

decisions, inter alia, concerning its situs, maintenance, sale and acquire

additional works of art. With this mandate, removal at this juncture with

sharply disputed issues of fact and without a full evidentiary hearing is

inappropriate (see SCPA 711, 719; Matter of Bolen, 166 AD3d 1367 [3 rd Dept

2018]; Matter of Mercer 119 AD3d 689 [2 nd Dept 2014]) and may cause

irreparable harm to ANDT and the other family holdings. That is not to say

that Hubert is not accountable for his actions concerning ANDT. There is a

pending amended accounting proceeding covering the period from August

22, 2013 through December 31, 2018, a time line that covers many of the

allegations raised by Belinda as to Hubert’s fitness to serve as trustee.

Where there are common issues of law or fact, the discovery needed is

nearly the same, the parties are identical, and the interests of judicial

economy and litigant resources will be served, the court may consolidate

these proceedings to avoid unnecessary cost or delay (see SCPA 501 [2] [a];

Matter of Mercer, 119 AD3d at 689; Matter of Moran, 166 AD3d 1176 [3 rd

Dept 2018]).

Accordingly, on this state of the record, this decision constitutes [* 21]

the order of the court declining to determine that branch of Belinda’s

summary judgment motion seeking to remove Hubert as trustee of ANDT

and, sua sponte, consolidating said motion with Hubert’s pending amended

intermediate accounting proceeding (File No. 725P2003/E) (see SCPA 501

[2] [a]; Matter of Leyden, NYLJ, Apr. 15, 2019 at 22, col 6 [Sur Ct, NY County

2019]; Matter of Tsangaris, NYLJ, Sep. 14, 2020 at 17, col 2 [Sur Ct,

Westchester County 2020]). This will afford the parties complete discovery

to enable determination of removal and the extent of surcharge, if any.

The court has concerns over the lack of distributions in the

trust. It was only after many conferences were held with counsel and a

member of the court’s Law Department that Hubert made the noted

distribution to the three nieces in 2022. However, at a recent conference

Hubert refused to discuss distribution whatsoever despite strong requests

from Belinda’s and Kristina’s attorneys. It is inconceivable that a trust with

these significant assets does not generate regular distributions benefitting

the income beneficiaries. As counsel noted, the 2022 distributions

represented a fraction of one percent of the value of the trust’s assets.

Although Hubert employs the mantra that he does not want to facilitate “trust

babies” that is not the case here. Hubert is the beneficiary of his own

substantial trust and has diligently attended to the Neumann Collection.

Belinda and Melissa are highly educated with gainful careers. They also [* 22]

have six children enrolled in private schools and universities and incur

significant tuition costs. Kristina’s attorney notes that her client is ill and

needs assistance. Given these facts, it is demeaning to have to implore the

trustee to make distributions. Moreover, failure to make distributions might

give rise to an inference of hostility interfering with the administration of the

trust (see Matter of Epstein, 202 AD3d 669 [2 nd Dept 2022]). Where a

discretionary power involves the ongoing exercise of judgment concerning

the needs of the beneficiaries for the distribution of income or principal, the

courts have appointed a co-trustee to make such decisions (see Matter of

Alpert, 129 AD2d 444 [1 st Dept 1987; Matter of Seidman, 58 AD2d 72 [2 nd

Dept 1977]; Matter of Horner, NYLJ, Mar. 21, 1996 at 29, col 3 [Sur Ct, NY

County 1996]).

Counsel for the respective parties are directed to appear for a

virtual conference with Laura Adams, Court Attorney-Referee to be held on

the court’s Teams platform at 3 p.m. on Wednesday, January 31, 2024 to

address outstanding issues, schedule discovery and submissions in the

accounting proceeding and discuss distributions. If the issue of distributions

cannot be satisfactorily resolved, the court will consider appointing one or

more co-trustees of ANDT with limited authority to effectuate the same, who

may be granted additional authority to address other trust administration [* 23]

deficiencies that might arise. .

The Chief Clerk shall mail a copy of this decision and order to

respective counsel.

Proceed accordingly.

______________________________ HON. NELIDA MALAVÉ-GONZALEZ SURROGATE

[* 24]