Decision & OrderI. BACKGROUND George Hersh (“George”) passed away on July 24, 2007. During his life, George owned, developed, and managed commercial and residential real estate in New York and New Jersey. George was survived by his wife of nearly fifty years, Esther Rachel Hersh (“Rachel” or the “Petitioner”), who he met while visiting Israel, and his three children: Mark Hersh (“Mark” or “Respondent”), Brenda Hersh (“Brenda”) and Nancy Hersh (“Nancy”). Tr.1 2895:5-7; 3733:14-19; 4031:7-12. Upon his death on December 7, 2007, Rachel was appointed the executor of George’s estate (the “Estate”). Pet. Ex. 92.The patriarch of the Hersh family, George was a “good businessman” who understood real estate in New York City and who, apparently, kept the family placated and together. Tr. 3775:18-3776:21. Laura Marsh of LaMarco Baron & Orbuch (“LBO”), the firm that served as George’s and Rachel’s accountants, testified that up until the time that George passed away he was an active participant in the management of the various entities that he owned. Tr. 2877:3-2880:10. George was generous with all his children. Tr. 4238:2-4239:19; 4662:21-4668:19. Around 1979 or 1980, he brought Mark into the family real estate enterprise and began to teach him how to manage the properties. Tr. 4674:6-4675:13.Rachel started managing residential real estate around 1982. At that time, George requested that she leave the Hersh family residence in New York City and move upstate to manage properties in Sullivan County, New York owned, in whole or in part, by George and Rachel, including the Motel on the Lake. Tr. 1508:14-23; 3935:19-25; 3944:21-3945:15; 4282:22-4284:21; 4494:10-23. At that time, Mark was 21 years old, and Brenda — Rachel’s and George’s youngest daughter — was in the seventh grade. Tr. 2896:19-2898:21. Rachel testified that she may have been upset about being asked to work upstate away from her children, but that she was sure that George “had a better reason for me to — not to be upset.” Tr. 4283:22-4286:18. She lived upstate by herself until 1999, when she moved back to New York City. Tr. 4494:10-16; 4500:3-10; 4284:2-6.George operated the family business without much regard to typical corporate formalities. For instance, superintendents who worked at the property owned by 229 West 109th Street Realty Corp. would often be paid by different Hersh family owned entities. Tr. 272:3-18. Various vendors who would perform work or provided services at the properties — “vendors that [George] dealt with before he passed away, and he had a certain trust in them” — would be paid in cash and would not give invoices or receipts for their services. Tr. 330:8-25; see also Tr. 390:23-394:14; 1982:23-1986:11 (discussing that vendors, such as oil vendors, would give cash discounts). Tax losses were created or allocated specifically to certain Hersh family properties in order to “deduct those losses against the income” of profitable family entities, such as the St. James Hotel. Tr. 867:17-869:8. In fact, Mark testified that when George was managing the properties, “[t]here weren’t any procedures in place for the management of any of the properties. The whole goal was to make sure the properties were run, make sure the property is running and make sure certain properties gave over tax losses so my parents could take the tax losses and just to make sure there would be no problems, make sure I wasn’t spending time in court for not providing services and make sure the tenants were paying rent.” Tr. 331:6-331:16.There were no formal shareholder meetings or minutes for any of the entities that George owned that are at issue in this litigation. There appear to be no real shareholder agreements or LLC operating agreements governing the entities or their members. Rachel testified that after George passed away she did not recall ever seeing share certificates for any of the entities that George owned. Tr. 3768:10-3769:13. And, when money was loaned to or from these entities, there were no loan documents or promissory notes that would memorialize those loans.In sworn in-court testimony on a previous matter, Rachel stated that she was familiar with George’s and Mark’s business practices, and that she personally participated in conversations with them regarding various co-owned entities in New York City. Resp. Ex. 67 at 5:20-22 and 22:22-23:13. When George passed away, Mark testified that he continued to manage the family’s properties that he was co-managing with George “just as [his] father taught [him] to.” Tr. 332:5-333:16, 396:24-397:9; see also Tr. 166:12-167:12; 178:14-180:22. While Rachel held George’s management style, intelligence, and business acumen in high regard, (Tr. 4159:5-4160:7), she harbored much animosity towards Mark, and testified that she was never compensated (by Mark) for the approximately seventeen years that she lived and worked in upstate New York. Tr. 3737:6-18; 3938:25-3939:17.2On November 18, 2010, Rachel, as executor of the Estate, without any warning to her son Mark, filed a verified petition in Queens County Surrogate Court initiating this proceeding. She asserted claims against her son Mark, alleging, inter alia, breach of fiduciary duty, mismanagement and fraud. During the long pendency between Petitioner’s filing of the original petition to the twenty-nine day trial and post-trial proceedings, a number of issues have been settled, resolved, or abandoned — including Petitioner’s claims concerning the entities 611 Colonial Inc. (“611 Colonial”) and Breman Capital (“Breman”), which Petitioner has abandoned after “determin[ing] that evidence at trial was insufficient to support a claim.” Pet. Reply Br. at pp. 3-4; see also Pet. Br. at p. 2. The remaining entities relevant to this dispute are GM Canmar Residence Corp. (“GM Canmar”), 229 West 109th Street Realty Corp. (“229 West”), 611 West 112th Street Realty Corp. (“611 West”); Elmar Realty LLC (“Elmar”), and JGM Realty LLC (“JGM”).With the exception of 611 West, it is undisputed that Petitioner and Mark share ownership interests in the remaining four entities. But percentage of ownership they each have in GM Canmar, 229 West and 611 West is in dispute. Petitioner claims that she owns all of 611 West, and Mark claims that he owns all of 611 West.II. FACTUAL BACKGROUNDA. GM CanmarGM Canmar owns the real property located at 237 West 107th Street, New York, NY, which is its only asset. Tr. 1873:4-10. GM Canmar’s sole source of revenue is and has been rent paid to it pursuant to a triple net lease for the property.3 George managed GM Canmar until his death in July 2007. Tr. 1518:2-5; 1537:2-1538:10; 3135:16-3136:15.In November 2002, George, on behalf of GM Canmar, executed an eight year triple net lease with the entity, W 107, LLC (the “2002 Triple Net Lease”), which provided that GM Canmar was to receive a total amount of rent of $1,572,000 over an eight-year period. Tr. 1516:5-1518:5; Pet. Ex. 62. In 2010, Mark, on behalf of GM Canmar, executed a similar triple net lease with the entity, Hotel 237 LLC, which was controlled by the same principals as W 107, LLC (the “2010 Triple Net Lease”). Tr. 1246:25-1247:15; Pet. Ex. 63. The 2010 Triple Net Lease was a five-year lease with a tenant option to review for an additional five years, which was exercised by Hotel 237 LLC in 2015. Pet. Ex. 63, at p. 27 62. Pursuant to the 2010 Triple Net Year Lease, GM Canmar is to receive $2,400,000, spread out over a ten-year period. Id. at p. 2.It is undisputed that at the time that George passed away, George owned “30 shares in GM Canmar,” and Mark owned the remaining 70 shares. Tr. 1514:16-1515:3; Resp. Ex. 55 at p. 6, Item 2; Resp. Br. 186; Pet. Reply Br. at p. 130.B. 229 West229 West owns the real property located at 229 West 109th Street, New York, New York which is a nine-story building with thirty-five residential units. Resp. Br. 215; Pet. Ex. 126. Like GM Canmar, George managed 229 West until his death in July 2007. Tr. 2877:13-2881:10; 3135:16-3136:15; 3725:25-3727:5; Resp. Ex. 3 at
18-27; Resp. Ex. 8 at
