Matter of Nicholson

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

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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

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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

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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

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