Surrogate Sall ESTATE OF FRANK CAPOZZA IRREVOCABLE TRUST F/B/O CHRISTIAN CAPOZZA DATED APRIL 26, 1985 (97-2066/E) — In this contested proceeding to judicially settle his account as trustee of the Frank Capozza Irrevocable Trust f/b/o Christian Capozza, dated April 26, 1985 (“the Trust”), petitioner Joseph A. Capozza moves pursuant to CPLR 3212 for summary judgment dismissing the objections filed by objectant Joseph Christian Capozza1. The motion is granted in part and denied in part, as set forth herein. On April 26, 1985, grantor Frank Capozza (“Frank”) created the Trust. Pursuant to its terms, the Trust was for the benefit of Frank’s grandson, objectant Joseph Christian Capozza (“Christian”). The Trust provided for payment of net income from the Trust to Christian at least annually until Christian reaches age 30. Additionally, it provided for the distribution of one-half of the Trust principal to Christian at age 25, and the balance when Christian reached age 30. Finally, the Trust gave the trustee absolute discretion to distribute the Trust assets to Christian in kind (Joseph’s Motion, Exhib. 1). Christian was born on March 29, 1972 (Joseph’s Motion, Exhib. 6, Christian’s EBT, p 14). Therefore, the Trust terminated on March 29, 2002. The Trust named Frank as trustee and his wife, Anna Capozza, as successor trustee. If Anna ceased acting as successor trustee, then he appointed his son, petitioner Joseph Capozza (“Joseph”), Christian’s father, as successor trustee. If Joseph refused to act or ceased to act as trustee, then he appointed Barclay’s Bank as successor trustee. Also, the Trust permitted a trustee to resign by mailing or delivering written notice of such resignation to any co-trustee; the designated successor trustee; and to Frank, if living, and if Frank is not living, to Christian (Joseph’s Motion, Exhib. 1). Frank served as trustee of the Trust from its inception until his death in 1997. Thereafter, Anna served as trustee from the date of Frank’s death until her death in May 2001. After her death, Joseph became trustee of the Trust. However, prior to Anna’s death, Joseph was unaware that he had been named as successor trustee of the Trust (Joseph’s Motion, Exhib. 5, Joseph’s EBT, p 23). During his time as trustee, the only asset of the Trust of which Joseph was aware was a Promissory Note, dated January 1, 1988, payable to the Trust (“the Note”)2 (Joseph’s EBT p 23-24; Joseph’s Motion, Exhib. 4). The obligor on the Note is Somers Realty Co., Inc. (hereinafter “Somers Realty”), a company which Frank and Anna established in the 1980′s (Joseph’s EBT, p 12). Frank executed the Note as President of Somers Realty. It provides that Somers Realty would pay the Trust the sum of $112,498.26 “together with interest thereon at the rate of Eight (8 percent ) percent per annum, which sum is to be paid upon the availability of cash funds by [Somers Realty] in sufficient amount to pay the principal of note and interest accrued thereon” (Joseph’s Motion, Exhib. 4). Somers Realty has never satisfied the Note, and Joseph is unaware of any interest payments made on it (Joseph’s EBT, p 23-24). Joseph never made any formal demands for payment on the Note, but he and his brother, who had been President and CEO of Somers Realty, had “discussions…over the years” prior to his brother’s death in 2009 (id. at 24-25). According to Joseph, he has never possessed or even seen the original Note (id. at p 18). Further, in or about 2001, he distributed the copy of the Note which was in his possession to Christian (id. at p 29-30). According to Christian, he received a copy of the Note from Joseph in February 2002 (Joseph’s Motion, Exhibit 6, Christian’s EBT, p 8-9). Additionally, when he turned over the copy of the Note to Christian, Joseph also informed Christian that he would have nothing further to do with the Trust. Frank, Anna and Joseph were the original shareholders of Somers Realty, and in or about 2017 or 2018, Joseph became its Chairman of the Board. However, he is not involved in its day-to-day operations. Currently, Somers Realty’s other shareholders are Seth Capozza, Matthew Capozza and Sarah Capozza, Joseph’s nephews and niece. Seth and Matthew are also Board members with Joseph (Joseph’s EBT, p 10-15). The Supreme Court Action In or about 2010, Christian commenced an action in Supreme Court, Westchester County (“the Supreme Court action”) against Joseph and Somers Realty. In his first cause of action, he requested that the court direct Joseph to account as successor trustee of the Trust and to direct Joseph to “deliver and make payment to [Christian]…such assets and moneys by way of principal and interest…pursuant to [the] Trust” (Joseph’s Motion, Exhib. 10, &27). In his second cause of action, he alleged that Somers Realty had breached the Note, and he requested that the court declare that Somers Realty holds assets sufficient to satisfy the Note in constructive trust for Christian’s benefit (id. at &28-33). He later filed an Amended Complaint in which he also requested that the court remove Joseph as trustee of the Trust and appoint a successor trustee. Somers Realty and Joseph filed a joint Answer, which also set forth several affirmative defenses, in the Supreme Court action (Joseph’s Motion, Exhib. 11), and then they served a discovery demand upon Christian (Joseph’s Motion, Exhib. 12). According to Joseph’s counsel, Christian failed to respond to that discovery demand “or otherwise move forward with the prosecution of the Supreme Court action” (Friedman Affirmation in Support of Motion, &15). Christian’s counsel concedes that after Joseph and Somers Realty served their discovery demand, the action “was not litigated any further. There was no adjudication of the matter” (Corrao Affirmation in Opposition to Motion, &13). Several years later, in December 2016, Christian’s attorney wrote to Joseph, demanding that he provide an accounting for the Trust (Joseph’s Motion, Exhib. 13). Although the Trust, by its terms, terminated on March 29, 2002, Joseph responded by letter dated August 28, 2017, in which he informed Christian that he was resigning as trustee of the Trust (Joseph’s Motion, Exhib. 15). The Surrogate’s Court Proceedings In or about February 2018, Christian filed a proceeding in this court to compel Joseph to account as trustee of the Trust and for related relief (Joseph’s Motion, Exhib. 16). By Order dated November 20, 2018, this court directed Joseph to account as trustee of the Trust (Joseph’s Motion, Exhib. 17). In or about December 2018, Joseph filed this proceeding to judicially settle his account as trustee and for related relief (Petitioner’s Motion, Exhib. 3). In Schedule A, he lists the Note as the only asset received. In Schedule C, he lists no paid administration expenses, and in Schedule C-1, and he lists commissions of $2,300.98 as the only unpaid administration expense. In Schedule E (Distributions of Principal), he states that on May 14, 2001, he distributed the Note to Christian (Joseph’s Motion, Exhib. 3). Christian’s Objections Christian has filed Verified Objections to the Account, asserting 10 objections therein (Petitioner’s Motion, Exhib. 2)3. Specifically, his objections are as follows: (1) Schedule A — that Joseph acquired the Note on May 8, 2001 (Objection #1); (2) Schedule E — that Joseph distributed the Note to Christian on May 14, 2001 (Objection #2); (3) Schedule E — that Joseph lacked the authority to distribute the Note to Christian on May 14, 2001 (Objection #4); (4) That Joseph served without bond (Objection #5); (5) That Joseph has not filed any federal or state trust tax returns (Objection #6); (6) That Joseph had not rendered any prior accountings (Objection #7); (7) That Joseph had not made any distributions to Christian, pursuant to the terms of the Trust (Objection #8); (8) That Joseph “mismanaged the Trust property” (Objection #9); (9) That Joseph breached his fiduciary duty by failing to take any action to enforce the Note (Objections #10-12); and (10) That Joseph failed to name NYS Department of Taxation and Finance, Somers Realty Corp. and Barclays Bank as interested parties to this proceeding. Christian requests that the court direct Joseph to reimburse him for the principal and unpaid interest due on the Note; that the court deny Joseph any attorney’s fees, disbursements and commissions; that the court surcharge Joseph for Christian’s legal fees, disbursements and other costs; and that the court surcharge Joseph for the waste in value of the Trust assets due to his failure to enforce the terms of the Note. Joseph’s Motion for Summary Judgment Joseph now moves pursuant to CPLR 3212 (b) for summary judgment dismissing Christian’s objections to the account. Christian opposes the motion. It is well settled that on a motion for summary judgment, the movant must establish a prima facie case of its entitlement to judgment as a matter of law by submitting admissible evidence demonstrating the absence of any triable issue of fact (see Erikson v. J.I.B. Realty Corp., 12 AD3d 344 [2004]; Taub v. Balkany, 286 AD2d 491 [2001]). “Failure to make such a showing requires denial of the motion regardless of the sufficiency of the opposing papers…. Moreover, [s]ince summary judgment is the procedural equivalent of a trial, any doubt as to the existence of a triable issue, or where the material issue of fact is ‘arguable’, the motion should be denied” (Peerless Ins. Co. v. Allied Building Prods. Corp., 15 AD3d 373, 374 [2005] [internal quotes and citations omitted]). Once the moving party makes the required showing, the burden shifts to the party opposing the motion to produce evidentiary proof to establish the existence of material issues of fact which require a trial (see Alvarez v. Prospect Hosp., 68 NY2d 320 [1986]; Boz v. Berger, 268 AD2d 453 [2000]). “In an accounting proceeding, the party submitting the account has the burden of proving that he or she has fully accounted for all the assets of the estate, and this evidentiary burden does not change in the event the account is contested. While the party submitting objections bears the burden of coming forward with evidence to establish that the account is inaccurate or incomplete, upon satisfaction of that showing the accounting party must prove, by a fair preponderance of the evidence, that his or her account is accurate and complete” (Matter of Schnare, 191 AD2d 859, 860 [citations omitted] [1993], lv denied 82 NY2d 653 [1993]; see Matter of McAlpine, 85 AD3d 1185 [2011]; Matter of Robinson, 282 AD2d 607 [2001]). Generally, the submission of the account, together with an affidavit attesting to its accuracy, establishes a prima facie case for summary judgment (see Matter of Rudin, 6 Misc 3d 1015 [A]; Matter of Romano, 8 Misc3d 1010 (A) [2005]), shifting the burden to the Objectant to raise a triable issue of fact. Initially, Joseph argues that the objections to his account should be dismissed because they are barred by: (1) the Statute of Limitations; and (2) the doctrine of “prior action pending”. With respect to the first argument, he contends that he openly repudiated his role as trustee in 2001 or 2002, more than six years before the Supreme Court action, when he distributed the copy of the Note to Christian and informed him that he would not have anything further to do with the Trust. With respect to the second argument, he relies upon the Supreme Court action, which seeks the same relief against him as in this proceeding. The petitioner may well have repudiated his role as trustee more than six years before the Supreme Court action. In fact, pursuant to its terms, the Trust terminated on March 29, 2002, when Christian turned age 30. However, Joseph waived the affirmative defense of statute of limitations by failing to raise it in response to Christian’s proceeding to compel him to account (Matter of Singer, 30 AD3d 211 [1st Dept., 2006]; see also Tydings v. Greenfield, Stein & Senior, LLP, 11 NY3d 195 [2008]). Similarly, the doctrine of “prior action pending” pursuant to CPLR 3211 (a)(4) is an affirmative defense, which is waived by failing to raise it in a pre-answer motion to dismiss or in an Answer (Charlton v. U.S. Fire Ins. Co., 223 AD2d 404, 405 [1st Dept., 1996]; Pueblo Med. Treatment, P.C. v. State Farm Mut. Auto. Ins. Co., 12 Misc.3d 147[A] [Appellate Term, First Dept., 2006]). Applying the same rationale stated in Matter of Singer (supra), the court concludes that Joseph should have raised this as a defense to Christian’s proceeding to compel him to account, and that by failing to do so, he waived this defense. Therefore, the court denies those branches of Joseph’s motion which seeks summary judgment dismissing Christian’s objections to his account based upon these affirmative defenses. The court now turns to Christian’s specific objections to Joseph’s account. The court grants Joseph’s motion for summary judgment insofar as it dismisses Objections #1, #5, #6, #7, #8, and #13. With respect to Objection #1, Christian has failed to raise a triable issue of fact as to whether Joseph obtained the Trust property (i.e., the Note) on May 8, 2001. With respect to Objection #5 (that Joseph served without bond), nothing in the Trust instrument required him to file a bond. With respect to Objection #6, Christian has presented no evidence that Joseph was required to file any Federal or State tax returns on behalf of the Trust. With respect to Objection #7, Joseph’s failure to render any prior accountings fails to raise a triable issue of fact as to whether the current account is complete and accurate. With respect to Objection #8, Christian has failed to raise a triable issue of fact as to whether there was any distributions, other than the one listed in account, which Joseph could have made. As to Objection #13, neither New York State Department of Taxation and Finance, Somers Realty nor Barclays Bank are interested parties to this proceeding. With respect to Objections #2 and #4, which concern Joseph’s distribution of a copy of the Note to Christian on May 14, 2001, and whether the Trust authorized him to distribute the Note on that date, the record is clear that Joseph distributed a copy of the Note to Christian on a date other than May 14, 2001, but sometime before Christian’s 30th birthday. Therefore, a triable issue of fact exists as to the date on which Joseph distributed a copy of the Note to Christian. With respect to Joseph’s distribution of a copy of the Note, as opposed to the original Note, the court determines that this fails to raise a triable issue of fact as to whether Joseph’s account is complete and accurate. Joseph testified that he never saw or possessed the original Note, and Christian did not refute this. Further, Joseph’s failure to obtain the original Note would not necessarily preclude Christian’s enforcement of it in an action against Somers Realty (see Chamberlain v. Amato, 259 AD2d 1048 [4th Dept., 1999]), and to the extent that the absence of the original Note is fatal to Christian’s claim, it would be fatal to an action by Joseph against Somers Realty to recover on the Note. The court also concludes that triable issues of fact exist as to Objections #10-12 (i.e., whether Joseph breached his fiduciary by failing to attempt to enforce the Note during the time that he served as trustee of the Trust). More specifically, no evidence in the record establishes if Somers Realty breached its obligation to pay the Note, and if so, when that breach occurred and when (or whether) the Statute of Limitations to enforce the Note would have expired (see Goldman v. Turner, 858 F. Supp. 49 [USDC, SDNY; 1994] [where the defendant's obligation to pay on a note depended on the happening of a future contingent event, the Statute of Limitations began to run when that condition was fulfilled]). If Somers Realty did, in fact, breach its obligation to pay the Note, and the Statute of Limitations to enforce the Note expired during the time that Joseph acted as trustee, he could be surcharged for breach of fiduciary duty for failing to enforce the Note before the Statute of Limitations expired. Because neither Joseph nor Christian has submitted any evidence on this issue to the court, the court denies Joseph’s motion insofar as it seeks to dismiss Objections #10-12. The issue of whether Somers Realty breached its obligation to pay the Note has been raised in the Supreme Court action. Further, because Somers Realty is not a party to this proceeding, the court is reluctant to make a factual determination on that issue and, if so, when the Statute of Limitations began to run on a claim against it. To do so would leave open the possibility of inconsistent results on this issue because Somers Realty would not be bound by this court’s determination on those issues. Further, based on the papers submitted, this court can only conclude that neither party filed a Note of Issue in the Supreme Court action, and therefore, that it is still pending (see Lopez v. Imperial Deliv. Serv., Inc., 282 AD2d 190 [2d Dept., 2001]). Accordingly, the court determines that it is best to hold this proceeding in abeyance pending resolution of the Supreme Court action. This constitutes the Decision and Order of the Court.
