Accounting of Peter M. Hoffman

Documents reviewed: 1. Notice of Motion for Summary Judgment by AIIS filed January 31, 2024. 2. Statement of Undisputed Facts in Support of Motion for Summary Judgment filed January 31, 2024. 3. Affirmation in Support of Motion for Summary Judgment with Exhibits A — C filed January 31, 2024. 4. Affirmation in Opposition to Motion for Summary Judgment filed February 12, 2024. 5. Memorandum of Law in Opposition to Motion for Summary Judgment filed February 12, 2024. 6. Affirmation in Reply to Opposition filed February 14, 2024. 7. Affirmation in Opposition to Motion for Summary Judgment filed June 28, 2024. 8. Affidavit in Opposition to Motion for Summary Judgment with Exhibit A filed June 28, 2024. 9. Memorandum of Law in Opposition to Motion for Summary Judgment filed June 28, 2024. 10. Memorandum of Law in Support of Motion for Summary Judgment filed June 28, 2024. 11. Affirmation in Support of Motion for Summary Judgment filed June 28, 2024 12. Reply Affirmation in Support of Motion for Summary Judgment filed July 12, 2024. 1. Notice of Motion for Summary Judgment by AG filed May 13, 2024. 2. Affirmation in Support of Motion for Summary Judgment with Exhibits 1-35 filed May 13, 2024. 3. Memorandum of Law in Support of Motion for Summary Judgment filed May 13, 2024. 4. Affirmation in Opposition to Motion for Summary Judgment filed June 28, 2024. 5. Supplemental Affirmation of Legal Services filed June 28, 2024. 6. Affidavit in Opposition to Motion for Summary Judgment with Exhibit A filed June 28, 2024. 7. Memorandum of Law in Opposition to Motion for Summary Judgment filed June 28, 2024. ORDER/DECISION The last will and testament of Sally Grossman (“SAG”) was accepted for probate on May 13, 2021 (File No. 2021-207). SAG was the beneficiary of a testamentary marital trust (“Trust”) established under the will of her predeceased husband, Albert Grossman, and was granted a power of appointment over the principal remaining in the Trust at her death. SAG served as co-trustee of the Trust with Peter M. Hoffman (“Hoffman”) from her appointment in March 1986 until her death in 2021. Albert Grossman managed the early careers of many of America’s preeminent folk and rock artists, including Bob Dylan, Peter, Paul & Mary, Janis Joplin and The Band. The Trust continues to be funded by royalties from the sale or licensing of their work. During SAG’s lifetime, Hoffman alleges, SAG made distributions from the Trust to herself in excess of $14,500,000. In her will, SAG exercised her power of appointment to designate the American Institute of Indian Studies (“AIIS”) as beneficiary of the principal of the Trust to support the study of Bengali Baul music. Counsel to AIIS reached out to Hoffman, now the Trust’s sole trustee, to discuss his client’s interest in the Trust proceeds. He was promptly rebuffed by Hoffman, who replied that he did not “recognize” SAG’s exercise of the power of appointment because SAG had failed to consult him in exercising the power of appointment and her choice of AIIS. Moreover SAG’s choice to support research into Bengali Baul music, which was certainly not to Hoffman’s taste, would cause “[Albert] to roll over in his grave.” Counsel to AIIS then filed a turnover proceeding under SCPA 2102 on September 27, 2021, seeking the release of Trust funds and an accounting by Hoffman. The Court’s October 13, 2021 order (the “October 13 Order”) granted an adjournment to Hoffman to obtain counsel and barred him from transferring, disbursing or expending Trust assets or the proceeds thereof or income thereon without further order of the Court. Not long after the return date on the order to show cause, the Court received information from AIIS’s attorney which established that Hoffman had been disbarred as an attorney in California in 2017 and convicted in 2018 of federal wire and mail fraud and conspiracy (United States v. Hoffman, 901 F3d 523 [5th Cir 2018]). Because Hoffman failed to notify this Court of his disbarment and criminal convictions — which disqualified him from acting as a fiduciary under SCPA 707(1)[d] and [e] — the Court by its order dated October 21, 2021 removed him as trustee and revoked his letters of trusteeship under SCPA 711 (8), (10) and SCPA 719 (6) and (10). Hoffman was ordered to immediately turn over to the Court all assets of the Trust and to file a petition for final judicial settlement of his account as trustee by November 30, 2021. That accounting, ultimately filed in 2022, is the subject of the present motions for summary judgment filed by AIIS and the AG. MOTION FOR SUMMARY JUDGMENT The AG and AIIS (hereinafter, the “objectants”) seek summary judgment on objections based on Hoffman’s failure to account or to exercise ordinary prudence, breach of fiduciary duties and self-dealing. Objections are also made to the payment of commissions to Hoffman in his capacity as co-executor and co-trustee, violations of the October 13 Order and to payment of Hoffman’s legal fees as expenses of administration. Summary judgment is designed to eliminate from the trial calendar litigation which can be resolved as a matter of law (see Andre v. Pomeroy, 35 NY2d 361 [1974]). The Court’s role on a motion for summary judgment is thus limited to identifying disputed material facts, not resolving them (Sillman v. Twentieth Century-Fox Film Corp, 3 NY2d 395, 404 [1957]). The party moving for summary judgment is tasked with establishing a prima facie case for its cause of action and its entitlement to judgment as a matter of law (Alvarez v. Prospect Hosp, 68 NY2d 320 [1986]). If the moving party fails to meet its burden of proof, summary judgment must be denied “regardless of the sufficiency of the opposing papers” (Vega v. Restani Constr. Corp., 18 NY3d 499, 503 [2012]): the nonmoving party need not persuade the court against summary judgment (Voss v. Netherlands Ins. Co., 22 NY3d 728, 734 [2014]). If, on the other hand, the movant establishes a prima facie case for summary judgment, the burden shifts to the party opposing the motion to proffer admissible evidence of material issues of fact requiring a trial (Alvarez v. Prospect Hosp., 68 NY 2d at 324). Although the party attempting to resist summary judgment is entitled to every favorable inference that can reasonably be drawn from the evidence (In re Estate of Pappas, 2017 NYLJ LEXIS 1938, *6 [Sur Ct NY Cty]), unsubstantiated allegations will be insufficient to defeat a motion for summary judgment (Zuckerman v. City of New York, 49 NY2d 557 [1980]). Hoffman offers his Trust accounting to support his claims for commissions payable to him as co-executor and co-trustee. His accounting petition recites that the period accounted for is March 25, 1999 to December 20, 2021, but the accounting schedules provide financials only for 2021. The affidavit of Willis Vermilyea, who served in management and bookkeeping rolls for SAG and the Trust, was attached to demonstrate how Hoffman’s commissions were calculated. In their memorandum of law, Hoffman’s attorneys acknowledge Hoffman’s inability to account, urging reliance on the affidavit of Willis Vermilyea in lieu of an accounting by their client, who they assert “faithfully served as Trustee for over 25 years.” The Court’s October 21, 2021 order required “a petition for judicial settlement of [Hoffman's] account as trustee.” What Hoffman submitted, however, is a more limited accounting offered expressly for the purpose of determining his commissions. While this accounting may be lacking the financial information required for purposes of Article 22 of the SCPA, the Court finds that it is sufficient to serve as a claim against the estate or the Trust under SCPA Article 18. The Court will therefore first evaluate the documents as a basis for awarding an executor’s or trustee’s commission and then make a determination on the objectants’ motions for summary judgment with respect to the same. After a determination is made as to commissions earned by Hoffman, the Court will turn to an examination of the petition to account to assess the propriety of credits or surcharges against commissions and the payment of Hoffman’s legal fees by the Trust. On review of the papers and deposition testimony offered by the parties, the Court finds that the following facts are undisputed: 1. SAG alone administered the Trust from March 25, 1999 to her death on March 12, 2021 with only occasional review, input or guidance from Hoffman except for review of her annual tax returns. 2. SAG opened a non-interest-bearing account in her own name to receive Trust income and principal; no account was established in the name of the co-trustees. SAG made liberal and frequent distributions to herself from the Trust account, as she determined in her sole discretion, without consultation or approval by her co-trustees. 3. During her term as co-trustee, SAG contacted Hoffman from time to time to discuss “major issues” of Trust administration, such as the sale of Albert Hoffman’s music publishing companies. 4. Vermilyea is in possession of “complete records for all transactions by the Trust from 2013 to the present.” Quickbooks records for the Trust were available beginning in 2012. 5. Hoffman did not maintain records of the Trust until SAG’s death in 2021. 6. Neither Hoffman nor Vermilyea was able to produce bank records, invoices, statements or receipts for the Trust for 1993-2020. 7. Hoffman testified that as co-trustee, his review of Trust finances was limited to the “annual statements for the tax returns or whatever.” He also consulted with SAG on major issues, like audits of royalty payments and sales of Trust assets. 8. No contemporary annual reports for Trust assets were prepared for the years 1999-2020. CLAIM FOR CO-EXECUTOR’S COMMISSIONS FROM ESTATE OF ALBERT GROSSMAN Several accountings were filed in the Albert Grossman estate. Pursuant to a January 1998 settlement agreement with the AG, Hoffman and his co-executors agreed that the third such accounting (“Third Accounting”) would serve as the final accounting for the Albert Grossman estate. All financial activities after the March 31, 1993 date of the Third Accounting would be accounted for by the co-trustees upon the termination of the Trust. The Court’s March 25, 1999 decree (“1999 Decree”) therefore approved the Third Accounting as the final accounting for Albert Grossman’s estate, nunc pro tunc, and the funding of the Trust with the balance of estate assets on hand after payment of outstanding debts. An accounting decree is conclusive and binding with respect to all issues raised and as against all persons over whom Surrogate’s Court obtained jurisdiction (In re Hunter, 4 NY3d 260, 270 [2005], citations omitted. Under principals of res judicata, an accounting decree is therefore conclusive as to issues that were decided as well as those that could have been raised in the accounting (In re Hunter, 4 NY3d 260 [2005])¹. Hoffman seeks $246,253 for executor commissions earned but uncollected in the Estate of Albert Grossman. As Hoffman himself has acknowledged, the proceedings for the probate of Albert Grossman’s last will and testament were closed by this Court’s final decree dated March 25, 1999. For reasons best known to himself, Hoffman opted not to pay himself the $246,253 awarded to him under the 1999 Decree. Hoffman has made his claim for his executor’s commission 25 years after the Albert Grossman’s estate was closed and fully distributed to the Trust. When a claim is made against an estate after distributions are completed, the claimant must proceed against the testamentary beneficiaries to claw back the excess benefits they received (see, Accounting by Houtman, 2013 NYU LEXIS 1464, *7 [Sur Ct Suffolk Cty], citing EPTL 12-1.3 for the principal that testamentary beneficiaries’ liability for expenses of administration is capped at the value of estate property actually distributed to them). The administration of the estate of Albert Grossman was complex and prolonged. The assets in the estate included a theatre and recording studio, publishing companies, a record company, significant real estate holdings, royalty and licensing income, and publishing, copyright and management interests. There were numerous lawsuits to be prosecuted and defended. However, it is Albert Grossman’s beneficiaries who benefitted from Hoffman’s services as co-executor: these are the parties who should be burdened with payment of the commissions he earned in the administration of the estate. Without question, an executor’s commission earned in the Estate of Albert Grossman should not be charged to Trust beneficiaries like AIIS, whose interest was created 25 years after the estate was closed by judicial decree. There are no material issues of fact with regard to Hoffman’s claim for co-executor commissions. The objectants argue that the commissions are time-barred and seek summary judgment denying Hoffman’s application. While the Court does not agree that the application for commissions is time-barred, Hoffman’s application is nonetheless denied for the reasons stated herein and objectants shall have summary judgment on this issue. Hoffman’s claim for co-executor’s commissions is therefore denied without prejudice to bring a claim against the beneficiaries of the Estate of Albert Grossman independent of these proceedings. CLAIM FOR TRUSTEE’S COMMISSIONS Hoffman seeks, through this accounting proceeding, payment of co-trustee commissions in the amount of $431,673 for the period March 25, 1999 to December 20, 2021. Full commissions are payable at the time of final accounting, based on paying-out principal (Turano and Radigan, New York Estate Administration, 15.04(a)(1) [2024 ed]). Notwithstanding his removal as trustee, Hoffman has the right to be heard on the issue of his commission (Matter of Johnson, NYLJ 6/2/23, at 17, col. 2 [Sur Ct Richmond Cty]). New York courts have consistently held that statutory commissions must be awarded in the absence of bad faith, breach of trust or mismanagement, neglect of duty, misconduct, disregard of fiduciary duties, or other comparable acts of malfeasance or nonfeasance (Estate of Judith N. Doman, 2011 NYLJ LEXIS 7907, *19 [Sur Ct Suffolk Cty], citing, among others, Matter of Farone, 162 AD2d 828, 829 [3d Dept 1990]). The objectants have the burden of proving that Hoffman should be denied commissions on the basis of his alleged malfeasance (Estate of Judith N. Doman, 2011 NYLJ LEXIS 7907, *17, citing Matter of Schaich, 55 AD2d 914). Commissions have been denied or reduced by surcharge where a trustee: (1) flagrantly and deliberately breaches their fiduciary duties or displays complete indifference towards the execution of their duties (Matter of Schweiger Family Trust, 2017 NYLJ LEXIS 2775 [Sur Ct Suffolk Cty]); (2) does not act in good faith, or acts recklessly (Estate of Judith N. Doman, 2011 NYU LEXIS 7907 [Sur Ct Suffolk Cty]); or (3) fails to exercise independent judgment (In re Manny, 2010 NYLJ LEXIS 4508, *15-16 [Sur Ct Westchester Cty]); or (4) engages in self-dealing, giving rise to a presumption of impropriety (Estate of Naumoff, 301 AD2d 802, 803 [3d Dept 2003]); or (5) fails to manage the assets with the “diligence and prudence which an ordinary [person] would exercise in his [their] own affairs” (Matter of Shambo, 169 AD3d 1201, 1205 [3d Dept 2019]); or (6) violates their duty of “undivided and undiluted loyalty” to those whose interests they protect by failing to treat all legatees in like manner by making distributions impartially and without favor (Matter of Shambo, 169 AD3d at 1205; Estate of Muller, 24 NY2d 336, 344 [1969]). Hoffman, by his own admission, wholly deferred to SAG to administer the Trust as she saw fit, believing it was her right to do so. He acquiesced in her unrestrained appropriation of Trust funds. He did not insist that Trust monies be held in a separate account, titled in the co-trustees, as required by EPTL 11-1.6. Revenues and expenses alike were run through SAG’s personal account without classification as principal or income. Trust assets valued at over $2,900,000 were sold during Hoffman’s trusteeship. None of the net proceeds were reinvested by the Trust. Instead, they were deposited into the bank account maintained by SAG at zero interest and withdrawn at her unbridled discretion. When co-trustees are appointed, one of them may delegate the exercise of a trust power to a fellow trustee, particularly if the latter has an expertise in some particular aspect of the trust management, but delegation does not “give a trustee the right to abdicate his [or her] duty to be personally ‘active in the administration of the trust’” (In re Goldstick, 177 AD2d 225, 238 [1st Dept 1992], quotations omitted). A trustee who charts a course of passive acquiescence to their co-trustee’s decision-making thus remains subject to their fiduciary duty to properly manage a trust (Matter of HSBC Bank USA, N.A., 96 AD3d 1655, 1658 [4th Dept 2012]). Hoffman testified that he “didn’t have control of [the Trust] bank account,” but his passive acceptance of SAG’s willy-nilly spending neither absolves him of his fiduciary duties, nor protects him from the consequences of his grievous inaction (In re Goldstick, 177 AD2d at 238-239). By permitting SAG unfettered access to interest and principal, Hoffman favored the interests of SAG over the interests of parties entitled to the Trust remainder, jeopardizing their interest in the Trust remainder. In so doing, Hoffman violated his fiduciary duty to treat all beneficiaries impartially and without favor or prejudice (In re Boll, 2021 NYLJ LEXIS 529 [Sur Ct Albany Cty]; see also, Matter of Wallens, 9 NY3d 117 [2007]). Ultimately, Hoffman’s acquiescence did not serve SAG’s interests either, as both Hoffman and Vermilyea testified that in her later years, SAG struggled to pay bills as the distributions from the Trust waned. Of equal import, Hoffman did not maintain contemporaneous records of the Trust’s annual receipts of income and principal: as he testified, he “didn’t consider it [his] job” to maintain records. The absence of financial records has a direct impact on the calculation of Hoffman’s commissions because he cannot identify with certainty the annual amount of paying out principal or property under SCPA 2309(1), which renders him incapable of calculating his commission under SCPA 2309(2). Nor can Hoffman identify the amount of income received or collected by the Trust on a year-by-year basis for 1999-2022, as required for allocation purposes under SCPA 2309(3) and (4)². Hoffman relies on Vermilyea’s calculations “in hindsight” to deduce the annual value of principal in the Trust. Since Vermilyea did not have complete records for the years 1999-2013, he attempted to extrapolate the annual value of principal from the limited information available to him, consisting principally of the proceeds from sales of Trust property and tax returns on Trust income. Vermilyea ultimately valued Trust assets by imputing future income to each Trust asset for every year it was owned by the Trust. These assets, which constitute the principal of the Trust, were the real estate holdings, management companies, the Bearsville recording studio/ restaurant/theatre complex and music publishing companies. Vermilyea’s valuation of the “GGM³ Management Contract” for 1999-2021 is illustrative. He started with the amount of a purchase offer received for GGM Management in 2021: $1,925,000. Having determined that GGM Management was worth $1,925,000 in 2021, Vermilyea then calculated the value for the preceding year, 2020, by adding the 2020 income ($134,334.21) to the 2021 purchase offer. This yielded a 2020 value for GGM Management of $2,059,334. Vermilyea then added cumulative annual income to the value of GGM Management for the years 2006-2020, with the result that the 2006 value of GGM Management was now determined to be a whopping $3,249,970. Valuing GGM Management for the years 1999-2005 was more problematic, since Vermilyea did not have income records for those years. To back-fill the income figures for 1999-2005, Vermilyea took the GGM Management’s average annual income for subsequent years (2006-2008⁴), adding $58,735.21 to each year beginning in 1999 and ending in 2005. Applying this methodology, GGM Management was valued at $3,424,782 in 1999. Notably, Vermilyea makes no reference to the Third Accounting’s March 1993 valuation of GGM Management at $250,275. Ultimately GGM Management was sold in 2022 for $1,925,000, about $1,500,000 less than the value Vermilyea assigned to it for 1999. In another application of Vermilyea’s unique methodology, he calculated the value of Bearsville Records at $4,262,109 in 1999. It sold in 2012 for $1,372,000. Valuation of property in a trust is to be determined in the manner directed by the Court (SCPA 2309[9]). The Court finds no precedent for the valuation methods employed by Vermilyea⁵. Vermilyea’s unique methodology runs counter to the directives of SCPA 2309, which requires that income be distinguished from principal each year so that the trustee commissions can be calculated on each value at the divergent statutory rates. By adding income to principal, for example, Vermilyea artificially inflates the value of principal, which is commissionable at a higher rate than income. The Court finds that the valuations offered by Hoffman in opposition to the objectants’ motion are not supported by clear and accurate records and accounts. In the absence of clear and accurate records and accounts, all adverse presumptions are made against Hoffman’s accounting and other pleadings and all doubts are to be resolved adversely against him (Matter of Ellen H., 2024 NY Misc LEXIS 1094 [Sur Ct Broome Cty]; see, also, Estate of Mink, 91 AD3d 1061, 1064 [3d Dept 2012]). Vermilyea’s valuations are rejected as founded in speculation and dubious methodology, not facts. In relying on Vermilyea’s work, Hoffman has failed to counter the objectants’ motion for summary judgment with evidence in admissible form sufficient to establish the existence of material issues of fact. The “mere conclusions, expressions of hope or unsubstantiated allegations or assertions” offered by Hoffman are insufficient for this purpose (Zuckerman v. New York, 49 NY2d 557, 598 [1980]). There being no proof offered by Hoffman of the existence of material issues of fact and objectants having made out a prima facie case for denial of Hoffman’s claim for commissions for 1999-2020, objectants are entitled to summary judgment denying Hoffman’s application for trustee commissions (Stonehill Capital Management, LLC v. Bank of the W., 28 NY3d 439, 448 [2016]). As to Hoffman’s calculation of commissions for the year 2021, the Court finds that Hoffman has provided the necessary information and back-up documentation to establish his entitlement to a trustee’s commission for 2021, the only year in the life of the Trust in which he was actively engaged in administering the Trust. AIIS, which does not object to payment of a commission for 2021, calculates Hoffman’s commission to be $10,595, which the Court adopts for purposes of this decision. HOFFMAN ACCOUNTING A fiduciary’s duty to account is fundamental. So central is the duty to account that every petitioner is required to state under oath that they will “duly account.” Maintaining clear and accurate accounts of the estate is essential to fulfilling the duty to account (Matter of Jewett, 145 AD3d 114, 115 [3d Dept 2016], citations omitted). A party petitioning for judicial settlement of their account has the burden of proving that they have fully accounted for the entire estate (Matter of Schnare, 191 AD2d 859, 860 [3d Dept 1993], Iv den 82 NY2d 653 [1993]). As a rule, the accounting fiduciary makes a prima facie showing of completeness and accuracy by filing an account supported by an affidavit prepared pursuant to SCPA 2209 (Estate of Judith N. Doman, 2011 NYU LEXIS 7907, *16-17A [Sur Ct Suffolk Cty 2011]). The Court’s October 21, 2021 order required Hoffman to produce a petition for final judicial settlement of his account as trustee. Hoffman’s relinquishment of all decision-making authority to SAG, his co-trustee, and his failure to maintain records render him incapable of accounting. These deficiencies are apparent from a plain reading of the accounting, which purports to cover the years 1999-2021, but provides financial details only for 2021. By Hoffman’s own testimony, the shortcomings in his accounting are not susceptible of cure. The Court, however, has little choice but to accept his accounting as “complete and accurate” — as Hoffman has affirmed under oath — for the sole purpose of advancing this proceeding to objections, decision and disposition (Matter of Schnare, 191 AD2d at 861). When an accounting is contested, an objectant is tasked with making an initial showing that the accounting is inaccurate or incomplete or offer proof that the fiduciary improperly exercised their duties (Matter of Campione, 58 AD3d 1032, 1034 [3d Dept 2009], citations omitted; Estate of Rubin, 30 AD3d 668, 669 [3d Dept 2006]). If the objectant makes such a showing, the accounting fiduciary is charged with offering an affirmative showing, by a fair preponderance of the evidence, that the account is accurate and complete (Matter of Schnare, 181 AD2d 859, 860). Fiduciaries earn their commissions by service to an estate or trust and its beneficiaries (Matter of Spiak, 208 AD3d 1482, 1488 [3d Dept 2022]). Where no services are rendered, no commission is earned (Matter of Drier, 245 AD2d 787, 788 [3d Dept 1997](commission denied when fiduciary’s conduct is tainted by “dereliction, complete indifference or other comparable acts of misfeasance”). Even if Hoffman’s accounting was accurate and complete, his misconduct (self-dealing, violation of the Prudent Investor Act, breach of fiduciary duties and violation of the Court’s October 13 Order) — as further elaborated below — would provide ample grounds for the denial of commissions (Matter of Witherill, 37 AD3d 879 [3d Dept 2007]). The Court finds that there are no material issues of fact with regard to Hoffman’s inability to account and his decades-long neglect of his fiduciary duties. Having come forward with prima facie evidence supporting denial of commissions, objectants are entitled to summary judgment on this issue. Hoffman’s application for commissions as co-trustee is therefore denied. OBJECTIONS TO ACCOUNTING The AIIS and AG objections to the Hoffman accounting focus on his failure to account, violation of the October 13 Order, failure to exercise ordinary prudence in accordance with the Prudent Investor Act (EPTL 11-2.1(a)[1](c), breach of his fiduciary duties and self-dealing. By way of relief, the objectants seek return of improper commissions payments and payments in violation of the October 13 Order; denial of commissions; surcharge; and allocation of their attorney fees to Hoffman pursuant to Matter of Hyde, 15 NY3d 179 [2010] and SCPA 2110. Failure to Account: Hoffman, through his accountant, asserted that $6,985,725.61 in Trust distributions were made to SAG during 2000-2020. Hoffman has proffered no records of distributions to SAG from the Trust account, nor has he tendered Trust bank records, invoices or receipts for the for the years 1999-2020. As previously noted, it was incumbent upon Hoffman to maintain clear and accurate records, absent which “all presumptions…and all doubts are to be resolved adversely to [him]” (Carbone v. Betz (In re Carbone), 101 AD3d 866, 869 [2d Dept 2012]). The objectants met their burden of proof by establishing that the accounting is inaccurate and incomplete and that Hoffman improperly exercised — or failed to exercise — his fiduciary duties as trustee (Matter of Campione, 58 AD3d 1032, 1034 [3d Dept 2009]). Hoffman has failed to counter objectants’ motion with evidence that the account is factually accurate and complete by a fair preponderance of the evidence (Matter of Schnare, 181 AD2d 859, 860). The Court finds that the accounting proffered by Hoffman is neither accurate nor complete as to the years 1999-2020. The objectants AIIS and the AG are therefore entitled to summary judgment dismissing Hoffman’s petition for final judicial accounting of the Trust. Violation of October 13, 2021 Order: Hoffman has admitted spending $36,107.26 in violation of the October 13 Order. Included in these expenditures were $25,075.83 in attorneys’ fees and a payment of $10,613.43 to Vermilyea for his calculation of commissions. The objectants’ motion for summary judgment on Hoffman’s willful violation of the Court’s October 13 Order is granted. Hoffman will be ordered to return $35,692.26 to the Trust beneficiary with interest at the statutory rate. Failure to Exercise Ordinary Prudence. A surcharge for violation of Prudent Investor Act (EPTL 11-2.1(a)[1](c) is appropriate when there is a showing of negligence on the part of a fiduciary and the “absence of diligence and prudence which an ordinary [person] would exercise in [their] own affairs” (Estate of Blaine, 209 AD3d 1124, 1126 [3d Dept 2022], quoting Matter of Lovell, 23 AD3d 386, 387 [2d Dept 2005]) Hoffman failed to exercise the “ordinary prudence” required of him under the Prudent Investor Act (EPTL 11-2.1(a)[1](c) and under the terms of Al Grossman’s will by failing to invest Trust funds in interest-bearing accounts as required under EPTL 11-2.3, to control the withdrawals of his co-trustee SAG or to properly allocate royalty proceeds between Trust principal and income on an annual basis. Instead, Hoffman abandoned his duties as co-trustee, permitting SAG to deposit Trust monies in a non-interest bearing checking account under her sole control. Co-fiduciaries are, of course, regarded in law as one entity. Hoffman’s protestations that he passively relied on the judgment of his co-trustee SAG does not diminish or displace his fiduciary duty to AIIS (Estate of Saxton, 274 AD2d 110, 120 [3d Dept 2000]), nor does it absolve him of liability for its breach (Zimmerman v. Pokart, 242 A.D.2d 202, 203 [1st Dept 1997]), citations omitted.) The Court finds that in failing to supervise and guide the conduct of his co-trustee in the administration of the Trust, Hoffman violated his fiduciary duty to SAG and to the beneficiaries entitled to the remainder of the Trust. Hoffman is subject to further surcharge on the basis of his failure to meet the standards of the Prudent Investors Act (EPTL 11-2.1(a)(1)[c]). As Hoffman has raised no material issues of fact with respect to the management or investment of Trust funds, the objectants are entitled to summary judgment on this objection. Breach of Fiduciary Duties. The objectants argue that Hoffman breached his fiduciary duties, citing his admitted failure to actively participate in the administration of the Trust, thereby permitting SAG to exercise carte blanche access to its assets and jeopardizing the interest of the parties entitled to the Trust remainder. Hoffman also violated EPTL 11-1.6(a) and SCPA 719(7) by permitting his co-trustee to commingle Trust funds with her personal funds and by failing to create and maintain a separate bank account titled in the co-trustees’ names. There being no material issue of fact with respect to Hoffman’s misconduct, and Hoffman having failed to otherwise prove his entitlement to commissions, the objectants’ motions for summary judgment are granted on the grounds of breach of fiduciary duty and are entitled to a surcharge against Hoffman therefor. Self-Dealing: Shortly after SAG’s death in March 2021, Hoffman began to make regular withdrawals from the Trust bank account. Between April and September 2021, Hoffman’s withdrawals and wire transfers to an LLC owned by him amounted to $80,400. These funds, he alleged were for “extraordinary services as trustee.” During her lifetime, SAG transferred $50,000 paid to Hoffman’s wife, at his request, for unspecified consulting services. The Court finds that these payments were unauthorized advances on Hoffman’s commissions as trustee. Payment of advance commissions without leave of the Court under SCPA 2310 may subject the fiduciary to surcharge (Turano, McKinney’s Practice Commentaries to SCPA 2310 [2013]; Matter of Moro, 10 Misc3d 1075(A)[Sur Ct Nassau Cty 2006]). Hoffman does not deny that he failed to obtain Court approval for $130,400 in payments as compensation for his fiduciary services. The objectants’ motion for summary judgment on the issue of self-dealing is granted. Hoffman will be required to return these funds to the Trust with interest. LEGAL SERVICES A trustee is entitled to reasonable counsel fees incurred in administering the trust (Matter of Ellen C. Stark Charitable Trust, 223 AD3d 951, 953 [3d Dept 2024], citing EPTL 11-1.1 [b] [22]). It is well settled, however, that legal services that do not benefit an estate or trust should not be paid for from trust assets (Matter of Ellen C. Stark Charitable Trust, 223 AD3d at 953; Matter of Shambo, 169 AD3d 1201, 1208 [3d Dept 2019]). Conduct which advances the self-interest of the trustee and does not further the interest of the trust itself (such as litigation to defend the entitlement to commissions) can be grounds for imposing the expense of legal fees on the trustee in their individual capacity (Estate of Frederic H. Williams, 2002 NYLJ LEXIS 253 [Sur Ct Suffolk Cty]). The objectants assert that the legal fees incurred by Hoffman in connection with his claim for executor’s commissions are not chargeable against the Trust. The Court agrees: like his executor’s commissions, Hoffman’s claim for legal services in support of his quest for executor’s commissions must be sought from the beneficiaries of the Estate of Albert Goodman. The denial of legal fees shall be without prejudice to Hoffman to seek such fees in an independent proceeding against such beneficiaries. Hoffman’s accounting was intended and designed solely to support his claim for commissions. Accordingly, the legal fees he incurred in the preparation of his accounting are not properly chargeable to the Trust. These fees are personal to Hoffman, since they served his interests and not the interests of the Trust. Also personal to Hoffman are the services in appellate and Federal courts seeking the reversal of this Court’s orders of removing him, denying him access to Trust funds and ordering him to account (In re Final Account for Estate of Kenney, 2019 NYLJ LEXIS 3069, *21 [Sur Ct Albany Cty]: legal fees incurred in an unsuccessful defense resulting in removal for misconduct are the removed trustee’s personal obligation; see, also Matter of La Corte, 7 AD3d 909, 911 [3d Dept 2004]). The Court approves payment of legal fees attributable to the preparation of the accounting for 2021, which are chargeable to the Trust as expenses of administration. The Court will require that Hoffman remove from Schedule C of his accounting any legal fees associated with his defense or appeal of this Court orders in this proceeding. ALLOCATION OF AIIS ATTORNEY FEES The AG cites Matter of Hyde, 15 NY3d 179 [2010] and SCPA 2110(2) for proposition that legal fees incurred by a beneficiary in proceedings to remove or sanction a fiduciary may be ordered payable by the fiduciary. The Hyde decision encouraged trial courts to engage in a multi-factored review of the competing equities in SCPA 2110(2) proceedings. Of the seven (7) factors provided by way of illustration, the following are relevant here: (a) the possible benefits of the outcome of the proceeding to individual beneficiaries; (b) the extent of a beneficiary’s participation in the proceeding; (c) the good or bad faith of the objecting beneficiary; and (d) whether there was justifiable doubt regarding the fiduciary’s conduct. Matter of Hyde, 15 NY3d at 186-187, citations omitted. Addressing these factors in order, the Court finds that the benefit to AIIS from these proceedings is substantial, in that Hoffman will be required to return to the Trust the funds he removed without authorization or justification. AIIS first brought this dispute to the Court in a reverse turnover proceeding under SCPA 2210(2) and has participated, through its counsel, in all phases of litigation, including discovery and motion practice. AIIS had a good faith basis for filing objections to Hoffman’s accounting. Having presented undisputed facts in support of their objections, the argument of AIIS are not “completely unsupported” (Matter of Rudin, 34 AD3d 371 [1st Dept 2006]). The legal issues raised went to the heart of Hoffman’s fiduciary duties: they were neither “spurious” nor “groundless” (Matter of Speyer, 2014 NY Misc. LEXIS 4870 [Sup Ct NY Cty]), nor was their resolution “needlessly” prolonged or complicated (Matter of Antin, NYLJ, Apr. 11, 2016, at 21, col 4 [Sur Ct NY Cty]). Nor has the parties’ motion practice following Hoffman’s removal been protracted, as in some cases where Hyde is invoked (see, eg, Matter of Cook, 177 AD3d 1214, 1217 [3d Dept 2019](5 years of litigation, including extensive discovery and a trial); and Estate of Korn, 2020 NY Misc. LEXIS 82 [Sur Ct NY Cty](45 objections, followed by an 11-day trial). AIIS, with the support of the AG, has offered material facts in support of its objections chargeable to Hoffman personally under the principals of SCPA 2210(2) and Matter of Hyde, 15 NY3d 179 [2010]. Hoffman’s redirection of his Court-ordered accounting petition from a fact-based financial history of the Trust, as required under SCPA Article 22, to a document created solely to obtain approval of his commissions cannot pass without comment. It is emblematic of Hoffman’s utter disregard for his fiduciary duties that he has offered an accounting crafted for his benefit alone. In this final expression of his duties, Hoffman utterly disregarded his fundamental duty to offer the accounting owed to this Court, the AG and to AIIS. Matters raised by the parties and not addressed herein have been examined and found to be either without merit or otherwise disposed of by this decision. IT IS, THEREFORE, ORDERED, DECIDED and DECREED that the application of Peter M. Hoffman for executor’s commissions in the Estate of Albert B. Grossman is denied without prejudice to commence an action against the beneficiaries of the Estate of Albert B. Grossman pursuant to EPTL 12-1.1; and it is further ORDERED, DECIDED and DECREED that the application of Peter M. Hoffman for commissions as trustee of the testamentary trust created under the last will and testament of Albert B. Grossman is denied; and it is further ORDERED, DECIDED and DECREED that the motion for summary judgment by the Office of the New York Attorney General and the American Institute of Indian Studies to deny the petition of Peter M. Hoffman for judicial settlement of his account is granted; and it is further ORDERED, DECIDED and DECREED that the American Institute of Indian Studies shall submit to the Court for its determination under SCPA 2110 their attorneys’ affirmation of legal services in connection with SCPA 2102 turnover proceedings brought by them under File No. 2021-207 and in this proceeding within 30 days of the date of this order/decision; ORDERED, DECIDED and DECREED that Peter M. Hoffman shall, within 60 days of the date of this order/decision, file an amended petition for judicial accounting with the following amendments: term of the accounting to be limited to the period beginning January 1, 2021 and ending January 31, 2022; Schedule C of the petition amended as follows: all charges for legal and accounting services to be deleted, with the exception of fees paid to Michael Moriello, Esq.; Schedule I to be amended to reflect $10,595 for trustee commissions for the year 2021 and it is further ORDERED, DECIDED and DECREED that no later than 90 days from the date of this decision/order, Peter M. Hoffman shall remit the sum of $115,692.26 to counsel for the American Institute of Indian Studies, which sum represents the return of unauthorized advance payments of trustee commissions ($80,400) and transfers made in violation of the Court’s October 13, 2021 order ($35,692.26), together with interest thereon from the date of unauthorized payment or transfer at the annual rate under CPLR 5004; and it is further ORDERED, DECIDED and DECREED that no later than 30 days from this Court’s order fixing and determining the legal fees incurred by the American Institute of Indian Studies in its turnover proceeding and this accounting proceeding, Peter M. Hoffman shall remit to counsel for the American Institute of Indian Studies the amount of legal fees chargeable to him pursuant to SCPA 2110(2). This constitutes the order/decision of the Court. All papers, including this Order/Decision, are hereby entered and filed with the Clerk of the Surrogate’s Court. Counsel is not relieved from the applicable provisions of CPLR Section 2220 relating to service and notice of entry. Dated: October 11, 2024