This is a proceeding brought by Pauline Spolan, as executor of the estate of Leonard Spolan, to judicially settle Leonard’s account as the deceased executor of the estate of Martin Spolan. The objectant, Jeffrey Spolan, successor executor of the estate of Martin Spolan, moves for an order granting a preliminary injunction (CPLR 6301) enjoining Pauline and non-party MJB Holding Corp. (“MJB Corp.”) from selling, transferring, mortgaging or encumbering the parcels of real property owned by MJB Corp. located at 83rd Ave., Kew Gardens, New York and at Metropolitan Avenue, Kew Gardens, New York. Jeffrey further seeks an order directing the joinder (CPLR 1001) of other non-parties to this proceeding including Pauline’s daughters, Mindy and Barbara, on the grounds that they have claimed to have ownership interests over a portion of decedent’s shares in MJB Corp. Pauline cross-moves for leave to serve a reply to Jeffrey’s objections to the amended petition (SCPA §302) and also for partial summary judgment dismissing certain objections (CPLR 3212). Jeffrey separately requests in reply papers that the court search the record and grant him partial summary judgment. Decedent Martin Spolan died testate in September 1992 and was survived by his sons, Leonard and Jeffrey. Both sons are the beneficiaries of his will dated July 23, 1986 which was admitted to probate in October 1992. Letters testamentary issued to Leonard and he administered decedent’s estate for approximately twenty-three years until his death on April 20, 2014, after which Jeffrey was appointed successor executor on July 7, 2015. Jeffrey never sought to compel Leonard to judicially settle an account while Leonard was executor, but rather filed a petition on January 17, 2017 to compel Pauline, Leonard’s surviving spouse and executor, to account for Leonard’s actions during his twenty-three year tenure. Pauline did not oppose the petition, and voluntarily filed a petition to judicially settle the account of the deceased fiduciary on May 3, 2017. The account indicates that Leonard did not make any distributions from Martin’s estate while he was executor except for a distribution to himself of an income producing multiple dwelling located at Audley Street, Kew Gardens. Jeffrey, as successor executor and individually, interposed a multitude of objections including, inter alia, that petitioner failed to report the principal and income derived from MJB Corp., a corporation whose stock was allegedly owned entirely by decedent at his death, and which owned income producing properties including a six-story multiple dwelling at 83rd Avenue, Kew Gardens and a one-story commercial strip of stores at Metropolitan Avenue, Kew Gardens. Jeffrey demands a surcharge against Pauline and the turnover of MJB Corp.’s shares of stock together with all income earned since decedent’s date of death in 1992. The branch of Pauline’s cross motion for summary judgment and Jeffrey’s request in reply to search the record and grant him partial summary judgment were denied without prejudice, for the reasons set forth by the court on the record on February 29, 2019. This proceeding, together with the remaining branches of the motion and cross motion, was stayed by decision and order dated April 3, 2019 due to evidence of a related prior action commenced by Barbara against her mother Pauline, her sister Mindy and MJB Corp. in Supreme Court, Nassau County in 2016 (Index No. 605306/2016) specifically involving issues of ownership and waste of MJB Corp. and its real estate holdings. In that action, an apparently binding stipulation of settlement was placed on the record in open court on July 31, 2018 by Barbara, Mindy and Pauline. The stipulation provided that they, as co-owners of MJB Corp., agreed that Pauline and Mindy would sell their shares of MJB Corp. stock to Barbara for an undisclosed amount of money set forth in a sealed mediation agreement. The stipulation further contemplated that Barbara would settle Jeffrey’s claim to partial ownership of shares of MJB Corp. as part of a “global” settlement. Jeffrey’s counsel states through moving papers that his client is “ready, willing and able” to facilitate resolution of their agreement but, alternatively, argues that the agreement is non-binding on his client because Jeffrey was not joined as a party to that action.1 After subsequent motion practice, the Supreme Court, Nassau County (Driscoll, J.) issued a decision and order dated June 11, 2019, compelling Barbara to comply with the terms of the stipulation of settlement placed on the record. In its order, the court made reference to the stipulation which provided, in part, as follows: “…[A]ll interested parties will exchange general releases…for the benefit of all parties, as well as to and from Jeffrey who is a nonparty to this action…he has a Surrogate’s Court action that’s going on right now in Queens County, and this global settlement is going to resolve those issues as well…” The record reflects that the settlement was achieved after consultation with Jeffrey’s attorney and that releases were to be exchanged and covenants not-to-sue provided by all parties as well as Jeffrey. On June 13, 2019, petitioner’s counsel requested that this court schedule a conference “to discuss the impact of Justice Driscoll’s decision.” The request was granted and counsel for the respective parties appeared before this court for a series of conferences for the purpose of effectively discussing the final disposition of this proceeding in light of the above decision and the parties’ failure to enact its terms. The conference schedule was interrupted in March 2020 by new procedural guidelines established due to the Covid-19 pandemic, after which time the court was notified that ongoing settlement discussions among the parties had, in fact, failed to produce a global settlement. The court was also notified that petitioner had commenced a proceeding for contempt against Barbara due to her failure to comply with the settlement, returnable in Supreme Court, Nassau County in February 2021. It became apparent to the court, thereafter, that the remaining branches of the motion and cross motion seeking a preliminary injunction and other relief on procedural issues herein pose no conflict with the prior pending proceeding concerning MJB Corp. and the court-ordered settlement in the Supreme Court, Nassau County. Accordingly, the stay of this proceeding imposed by order dated April 3, 2019 (CPLR 2201) was lifted to the extent that the motion and cross motion were deemed submitted for determination and the parties were accordingly notified. Turning to the branch of Jeffrey’s motion for a preliminary injunction enjoining petitioner from selling, transferring, mortgaging or encumbering the parcels of real property owned by MJB Corp., it is well settled that the moving party has the burden of demonstrating (1) the likelihood of success on the merits, (2) irreparable injury absent granting the preliminary injunction, and (3) a balancing of the equities in its favor (CPLR 6301; see Nobu Next Door, LLC v. Fine Arts Hous., Inc., 4 NY3d 839, 840 [2005]; Aetna Ins. Co. v. Capasso, 75 NY2d 860 [1990]; Vanderbilt Brookland LLC v. Vanderbilt Myrtle Inc., 147 AD3d 1104, 1105-1106 [2d Dept 2017]; Winchester Global Trust Co. Ltd. v. Donovan, 58 AD3d 833 [2d Dept 2009]). The purpose of a preliminary injunction is to preserve the status quo until the case can be adjudicated on the merits (see Uniformed Firefighters Ass’n of Greater New York v. City of New York, 79 NY2d 236 [1992]) and the decision whether to grant or deny a preliminary injunction lies within the sound discretion of the trial court (see Doe v. Axelrod, 73 NY2d 748 [1988]; Goldfarb v. Town of Ramapo, 167 AD3d 1009, 1010 [2d Dept 2018]). Jeffrey argues there is a likelihood of success on the merits because the undisputed evidence establishes that decedent owned MJB Corp. at the time of his death; that Leonard failed to distribute the shares of MJB Corp. equally to Jeffrey and himself pursuant to decedent’s will; and that Pauline will be unable sustain her burden of proving that Leonard had otherwise acquired sole ownership of all shares of MJB Corp. during decedent’s lifetime, citing to Matter of Thomas, 148 AD3d 1764 (2d Dept. 2017). In Thomas, the respondent/fiduciary claimed ownership of certain personal property of decedent, including corporate stock over which the petitioners/beneficiaries were claiming a constructive trust. The Appellate Division held that “where…an asset is not included in the inventory of the estate based upon respondent fiduciary’s assertion that he is the owner of the asset, it is respondent’s [fiduciary's] burden to ‘show a legal and sufficient reason for withholding’ the asset from the estate” (Matter of Thomas, supra at 1765, quoting Matter of Tabler, 30 Misc 172, 181 [1899], affd 54 AD 629 [1900]). Although Thomas is relevant to a fiduciary’s burden of proof at trial concerning an asset omitted from the inventory, it is inapplicable on this motion for a preliminary injunction since this proceeding is in a completely different procedural posture. On an application for provisional relief such as this, the movant bears the burden of proof by establishing “a clear right…under the law and the undisputed facts upon the moving papers” (Emanuel Mizrahi DDS, PC v. Angela Andretta DMD, PC, 170 AD3d 1120 [2d Dept 2019] quoting Hoeffner v. John F. Frank Inc., 302 AD2d 428, 429-430 [2d Dept 2003]; see Saran v. Chelsea GCA Realty Partnership L.P., 148 AD3d 1197, 1199 [2d Dept 2017]). Contrary to Jeffrey’s argument, his clams concerning ownership of MJB Corp. are presently in dispute. Since the contention that the accounting should include the shares of MJB Corp. was first raised by Jeffrey’s counterclaim, those allegations are deemed denied in the absence of a reply addressing them (CPLR 3018 [a]; SCPA §509; see Boxberger v. New York N.H. & H.R. Co., 237 NY 75, 78 [1923]). Jeffrey’s argument that Pauline will be unable to present sufficient evidence to satisfy her burden of proof at trial is insufficient to establish, in the first instance, Martin’s sole ownership of MJB Corp. and, consequently, Jeffrey’s entitlement to relief. Objectant also fails to establish that he will suffer an irreparable injury absent the granting of the injunction. In particular, “[i]rreparable injury, for purposes of equity, has been held to mean any injury for which money damages are insufficient” (McLaughlin, Piven, Vogel v. Nolan & Co., 114 AD2d 165, 174 [2d Dept 1986]; see Di Fabio v. Omnipoint Communications Inc., 66 AD3d 635 [2d Dept 2009); Preizler v. Willoughby Realty LLC, 2020 NY Misc. LEXIS 10720 [Supreme Court, Kings County 2020]). In this case, any potential harm to Jeffrey is not related to the title of the subject realty but, rather, the potential loss of an investment, loss of shares, dividends, income, interest and the like which are all commercial in nature and compensable via the issuance of a money judgment at the conclusion of this proceeding (see Lombard v. Station Sq. Inn Apts. Corp., 94 AD3d 717, 721 [2d Dept 2012]; Broadway 500 W. Monroe Mezz II LLC v. Transwestern Mezzanine Realty Partners II, LLC, 80 AD3d 483, 484 [1st Dept 2011]). Economic loss that is compensable by money damages does not constitute irreparable harm (see EdCia Corp. v. McCormack, 44 AD3d 991, 994 [2d Dept 2007]; 159-MP Corp. v. Redbridge Bedford LLC, 2020 NY Misc. LEXIS 9449 [Supreme Court, Kings Count 2020]). In fact, in further support of this analysis, it appears that Jeffrey was seeking financial compensation as part of the “global” settlement in the related action in Supreme Court, Nassau County. Finally, Jeffrey fails to demonstrate that the absence of a preliminary injunction would cause him greater injury than the injunction would inflict upon the petitioner (see Copart of Conn., Inc. v. Long Is. Auto Realty, LLC, 42 AD3d 420, 421 [2d Dept 2007]; Laro Maintenance Corp. v. Culkin, 255 AD2d 560, 561 [2d Dept 1998]; McLaughlin, Piven, Vogel v. Nolan, 114 AD2d 165, 174 [2d Dept 1986]). Pauline, in her individual capacity, would certainly suffer harm now if a preliminary injunction were to issue since the Supreme Court, Nassau County issued orders on June 11, 2019 and July 31, 2018 requiring her to sell shares of MJB Corp. stock to Barbara. An injunction would frustrate this purpose and, importantly, Jeffrey’s claim is for the value of the stock, not title to the real property it represents. Accordingly, the branch of Jeffrey’s motion for a preliminary injunction is denied. The next branch of objectant’s motion seeks compulsory joinder of all the “purported shareholders” of MJB Corp. to this proceeding including Pauline, Leonard’s children Barbara and Mindy and certain grandchildren, each in their individual capacity and also as trustees of various trusts that were established for each other. CPLR 1001 [a] provides as follows: Persons who ought to be parties if complete relief is to be accorded between the persons who are parties to the action or who might be inequitably affected by a judgment in the action shall be made plaintiffs or defendants. When a person who should join as a plaintiff refuses to do so he [she] may be made a defendant. The policy of the statute is to limit the scope of indispensable parties to those cases where the determination of the court will adversely affect the rights of non-parties (see Castaways Motel v. Schuyler, 24 NY2d 120, 125 [1969]; Spector v. Toys “R” Us, Inc., 12 AD3d 358, 359 [2d Dept 2004]; Matter of Schulz v. De Santis, 218 AD2d 256, 259-260 [3d Dept 1996]; see generally Weinstein, Korn & Miller, New York Civil Practice, CPLR 1001.00 [David L. Ferstendig ed., LEXISNEXIS Matthew Bender 2d Ed]). As a starting point, the parties interested in a judicial accounting filed by the fiduciary of a deceased fiduciary are described in SCPA §2207 [4] as follows: [4] On a petition filed by a fiduciary of a deceased fiduciary there shall be brought in the persons who would be necessary parties to the proceeding commenced by the deceased fiduciary for a judicial settlement of his [her] accounts and also if a successor of the deceased fiduciary has been appointed, such successor of his fiduciary. As per the statute, the persons necessary for this accounting are Pauline Spolan, as fiduciary of the deceased executor Leonard, and Jeffrey Spolan individually and as successor executor herein. Pauline, Barbara and Mindy, both in their individual capacities and as trustees of various trusts, are not beneficiaries to Martin’s estate and, thus, would not have been necessary parties to a proceeding commenced by the deceased fiduciary, Leonard. Jeffrey argues that these individuals ought to be joined because they are now in possession of shares of MJB Corp. that had belonged to decedent at the time his death in 1992. As the fiduciary of a deceased fiduciary, however, Pauline is only charged to account for property in her possession that the deceased fiduciary collected for the estate or that she collected in her status as fiduciary of the deceased fiduciary (see e.g. Matter of Wilkinson, 152 AD2d 585 [2d Dept 1989]; Estate of Celia Faggen, 2009 NYLJ LEXIS 5507 [Sur Ct, New York County]). The governing statute, SCPA §2207 [2], states: (2) A fiduciary of a deceased fiduciary may voluntarily account for the acts and doings of the deceased fiduciary and for the property of the estate which had come into possession of the latter, whether or not such property has come into the hands of the fiduciary of the deceased fiduciary, provided however, that the fiduciary of the deceased fiduciary shall not be accountable for such property except to the extent that he [she] shall have assets of the estate of the deceased fiduciary. [emphasis added] Accordingly, Jeffrey actually undermines his argument for joinder by alleging in his counterclaim that Leonard failed to collect these assets on behalf of the estate. It is further undisputed that Pauline has neither collected them on behalf of decedent’s estate nor chosen to voluntarily account for them. Jeffrey next argues that joinder is necessary because Pauline, Mindy, Barbara and other family members, in their individual capacity and as trustees of certain trusts, are now acting as putative owners of MJB Corp. Although the court certainly has authority to determine upon proper evidence what property should have been additionally included in the accounting by a fiduciary of a deceased fiduciary (see e.g. Seaward v. Davis, 198 NY 415 [1910]; Jolan v. Johnson, 73 AD2d 858 [1st Dept 1980], affd 52 NY2d 950 [1981]; see generally, 7 Warren’s Heaton on Surrogate’s Court Practice §98.07 [3] [2021]), Pauline is merely a custodian and is not charged with taking on the duties of the deceased fiduciary to collect additional assets since she has no authority to otherwise commence or maintain new actions or proceeding relating to the estate (EPTL 11-3.4; see Turano & Radigan, New York Estate Litigation, §6.06 [LexisNexis Matthew Bender] [2018]).2 Resolution of Jeffrey’s claims in this regard do not lie with Pauline, who is accounting for the deceased fiduciary, but with Jeffrey, perhaps through other proceedings instituted in his role as successor fiduciary against those individuals or entities alleged to possess estate assets (EPTL 11-1.1 [b][12]). Accordingly, the joinder of Pauline, Leonard’s children Barbara and Mindy and certain grandchildren, each in their individual capacity and also as trustees of various trusts established for each other, is not necessary for complete relief to be accorded to the parties herein or those potentially affected inequitably by the decree, and the branch of the motion for compulsory joinder is denied. For her part, Pauline cross moves for leave to serve a reply to Jeffrey’s objections. The objections include counterclaims3 seeking, inter alia, the turnover of the shares of MJB Corp. together with income earned from the date of decedent’s death in 1992, as well as a surcharge against Pauline. The proposed reply includes several affirmative defenses. It is routine pleading practice in civil litigation that a reply is served in response to a counterclaim (CPLR 3011). The CPLR applies to the Surrogate’s Court except where the SCPA provides for other procedure (SCPA §102). In this vein, SCPA §302 (1)(b) provides that aside from the petition, answer or objections, and the account, “[t]here shall be no other pleadings unless directed by the court.” The real import of SCPA §302 (1)(b) is to preclude the service of a reply to objections in Surrogate’s Court without court permission, or unless otherwise required by the SCPA.4 It is within the court’s discretion whether to permit a reply (see generally, 1 Warren’s Heaton on Surrogate’s Court Practice, §5.06 [2021]). Pauline argues that she ought to be permitted to serve a reply pleading because there are legitimate affirmative defenses to the objectant’s counterclaims seeking the turnover of shares of stock of MJB Corp. and all income derived therefrom since 1992, including the statute of limitations, laches, estoppel and waiver. In opposition, Jeffrey argues that a reply pleading should not be permitted because the affirmative defense of the statute of limitations was waived when Pauline failed to raise it in the prior proceeding to compel the accounting, citing Matter of Singer, 30 AD3d 211 (1st Dept 2006). In Singer, the Appellate Division affirmed the Surrogate’s Court denial of an accounting trustee’s motion to dismiss the objections to the accounting as time barred by the statute of limitations. The underlying facts of Singer appear in the trial court decision (Matter of Singer, 12 Misc 3d 621 [Sur Ct, New York County 2006]), wherein the Surrogate explained the rationale behind her decision. In Singer, the court had initially granted a petition by the beneficiary of a trust to compel the trustee to account. The trustee filed her account and the beneficiary filed objections thereto. Thereafter, the trustee moved to dismiss all objections on the basis that her need to account for questioned activities was barred by the six-year statute of limitations (CPLR 213). The trustee argued that her resignation as fiduciary more than six years before the grantor brought her petition to compel amounted to a “repudiation” of the trust from which the six-year limitations period had run. The Surrogate’s decision, insofar as it is pertinent here, found that even if there had been a clear repudiation 5 by the trustees resignation, the trustee waived the statute of limitations defense when she failed to assert it at the first opportunity, to wit, in response to the beneficiary’s petition to compel the account. Additionally, the Surrogate rejected the trustee’s argument that the six-year limitations defense could not have been raised until the accounting objections themselves were known. The Appellate Division affirmed the order of the Surrogate (Matter of Singer, 30 AD3d 211 [1st Dept 2006]), agreeing that the trustee waived her statute of limitations defense and finding that the six-year limitations defense is not measured by any particular acts allegedly committed by a fiduciary in violation of her fiduciary duties (i.e.: failure to properly value trust assets, conflict of interest and self-dealing, improper investments, loans and gifts, improper payment of legal and accounting fees etc…) but, rather, from the time of the trustee’s repudiation. The opinion significantly also affirmed the principal that such defense had to be raised at the “earliest opportunity.” Tellingly, the Surrogate had ruled that the time to raise an affirmative defense that an accounting was time-barred was at the moment an accounting was sought in the proceeding to compel such account. The Appellate Division affirmed this rationale acknowledging its usefulness for judicial economy. What the Surrogate’s Court and the Appellate Division did not opine on, however, is the procedural and factual scenario presented at bar. Namely, if an accounting is compelled well within the applicable six year period, whether the accounting fiduciary can raise, by reply, statute of limitations defenses that may apply to certain individual objections. Singer is of little precedential value in resolving this query. Nor has the court’s research revealed any other appellate authority squarely on point. While in Singer the fiduciary moved to dismiss the objections to the account based upon expiration of the six-year statute of limitations as set forth in CLR 213, in this matter there is no dispute that the underlying accounting was timely sought. Petitioner now is seeking leave in her cross motion to file a reply pleading to some of Jeffrey’s particular objections. To accept Jeffrey’s legal theory that such relief is time barred would endorse a procedural mechanism that would compel an accounting party to blindly assert specific statute of limitations defenses in a petition without knowing what particular objections might be filed. In essence, this would twist pleading procedure into an illogical knot. Contrary to objectant’s contention, Matter of Singer does not compel such a result. There is nothing in that case, or simple rationale for that matter, that can be construed to prohibit a reply pleading in a timely filed accounting from containing affirmative defenses to objections sounding in conversion or fraud or any other alleged breach that may be time barred. In fact, an accounting fiduciary is duty-bound to raise available affirmative defenses such as the statute of limitations, if appropriate, under penalty of surcharge, since an objectant would be prohibited from obtaining turnover of personal property and assets if its claim is time-barred (see Matter of Skeele, 16 AD3d 1157 [4th Dept 2005]). To the extent Jeffrey avers that the proposed reply pleading should be disallowed because it lacks merit, an evidentiary showing of merit is neither required by statute when seeking leave to serve a reply (SCPA §302 [1]), nor is it required by case precedent. Indeed, even on a motion to amend an existing pleading, courts no longer require a party to make an evidentiary showing of merit (see Watkins-Bey v. MTA Bus Co., 174 AD3d 553 [2d Dept 2019]; Stein v. Doukas, 128 AD3d 803 [2d Dept 2015]; see also Great Lakes Motor Corp. v. Johnson, 156 AD3d 1369 [4th Dept 2017]); NYAHSA Servs., Inc.,Self-Insurance Trust v. People Care Inc., 156 AD3d 99 [3d Dept 2017]; Cruz v. Brown, 129 AD3d 455 [1st Dept 2015]). Additionally, reliance on the “meritorious” nature of the proposed defenses is fundamentally untenable since such a determination would require the court to engage in the process of fact finding and legal conclusions which is inappropriate at this juncture in the proceeding. Accordingly, the court discerns no prejudice to the objectant and, in the interests of justice and exercise of its discretion, finds petitioner should be permitted to serve a reply to the objectant’s counterclaims (SCPA §302 [1] [b]; see e.g. Estate of Anna Knight, NYLJ, November 8, 1994 at 26, col 4 [Sur Ct, Suffolk County]; see also generally e.g., Matter of Foote, 1 AD2d 671 [2d Dept 1955]; Matter of Unger, 259 AD 823 [1940]; Matter of Davis (In Re Kauffman), 29 Misc 2d 471 [Sur Ct, Westchester County 1961]; see generally, 1 Warren’s Heaton on Surrogate’s Court Practice, §5.06 [2021]). Accordingly, the branch of the cross motion for leave to serve a reply is granted. The proposed reply, in the form as annexed to the cross motion papers, is deemed served upon the objectant. This matter shall be set down for a further conference before this court on September 22, 2021 at 10 AM via Microsoft TEAMS… This is the decision and order of this Court. Dated: August 27, 2021
