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Nuts & Bolts of SCPA 2103 Proceedings

Gail M. Boggio, Esq.

McCarthy Fingar LLP

11 Martine Avenue

White Plains, New York 10606

914-946-3700

 

 

Nuts and Bolts of 2103 Proceedings

 

 

I.          Proceeding by fiduciary to discover property withheld or obtain information

 

Purpose of a 2103 proceeding is to permit a fiduciary to marshal estate assets

Consists of:

            Inquiry Stage

                        Turnover Stage

 

II.        Statute of Limitations

 

•           Discovery proceeding is in the nature of replevin or conversion and absent fraud is subject to the three year statute of limitations

 

•           Breach of fiduciary duty is subject to six year statute of limitation

 

III.       Who may bring a proceeding

 

            2101(a) May be commenced by a fiduciary, creditor or person interested

                        Executor

                        Administrator

Preliminary executor

                        Temporary Administrator

 

What if the fiduciary has a conflict or is unwilling to bring a 2103 proceeding ((conflict of interest) person who has the property or information regarding the property is the fiduciary or fiduciary does not investigate or refuses to investigate although requested)?

                        Apply for limited or restricted letters of administration pursuant to SCPA §702 or SCPA §902 for temporary administration

                                    Distributee

                                    Beneficiary

                                    Financial institution acting as a stake holder

 

 

            Right to bring a proceeding under 2103 not absolute

 

2101(b) May be entertained by the court or may be reserved for determination in an accounting or other proceeding or the court may decline to entertain the proceeding.  All proceedings shall be deemed entertained unless rejected by the court in writing within 15 days of submission.

 

Reasons for court to reject proceeding:

                        No subject matter jurisdiction

                        No personal jurisdiction over necessary parties

                        Lack of standing

                        Another proceeding or action pending in Surrogate’s Court or other court

                        Court’s discretion

 

Jurisdiction over Respondent

                        Lives in NY

                        NY Domiciliary

                        Committed an act or omission in NY

 

 

Procedure for bringing a 2103 proceeding:

 

IV.       Option 1

Inquiry Stage Then Turnover

 

A.        When fiduciary is not certain respondent has possession of estate property or when fiduciary believes respondent has information concerning estate property

 

Not all cases require inquiry stage

 

By petition alleging that a third party respondent has money, personal property or information relating to the decedent’s assets – based upon knowledge or “information and belief” and such property should be paid or delivered to the fiduciary

 

  1. Elements of Petition:

1.   Identify Decedent

2.   Identify the property at issue

3.   Recite when the fiduciary was appointed

4.   Set forth facts to support the position that respondent is in possession or control of estate property or had knowledge about such property

5.   No requirement to allege facts that the estate owns the property that is the subject of the inquiry

6.   Allegations sufficient to justify the inquiry to recover estate assets or administer the estate

7.   Relief

      •     Must request an inquiry or examination

      •     Injunctive relief – maintain the status quo

-          TRO

-          Likelihood of success

-          Probable injury

-          Balance of the equities

-          Unique property

-          Irreparable harm

 

            C.        Supporting affidavit may accompany petition

 

            D.        Order directing the respondent to appear and be examined ORDER TO ATTEND

                                    Court’s subpoena power

 

            Certified copy of the order is served on respondent together with requisite subpoena fee under CPLR 8001

                                    Personal service in NY

                                    No long arm jurisdiction outside of NY

 

Failure to serve order properly and tender proper subpoena fee is a jurisdictional defect subject to dismissal of proceeding or supplemental order and proper service

 

E.         On return date of Order to Attend Court may require inquiry to commence on the return date of the order

                                    Not in Westchester

 

F.         Respondent may make motion to dismiss proceeding – rarely given during inquiry stage

 

G.        No discovery during inquiry stage

 

Scope of inquiry is very broad

                                    Licensed fishing expedition

 

Dead Man Statute is not a barrier to the examination, however may be used at a trial in the turnover stage of the proceeding

 

After Inquiry Stage the information serves as a basis for seeking recovery of the property or determination that asset does not belong to the estate.

 

H.        No requirement that respondent file and answer during inquiry stage

                        1          may appear and not file an answer

                        2          answer the petition

                        3          answer petition and claim title to the property

                        4          answer and admit possession without claiming title

                        5          answer and turnover property to the estate

 

I.          At the end of inquiry the petitioner MUST demand that the property be turned over and that respondent file an answer

 

If respondent claims possession and ownership he MUST file a verified answer to the 2103 petition

 

 

V.        Option 2:

Turnover Stage

 

A.        Convert to Turnover Stage at conclusion of Inquiry Stage -once issue joined by filing of a verified answer

 

B.        Fiduciary certain Respondent has property

 

C.        If Petitioner skips the Inquiry Stage, then Petitioner must make factual allegations supporting the Petitioner’s position that the respondent has assets belonging to the estate and demand respondent turn over such assets to the fiduciary

 

D.        If no Inquiry Stage then court issues a citation to show cause why person alleged to be in possession of the property should not deliver the property or its proceeds or value

No subpoena fee required

 

            E.         Injunctive relief would be sought by a separate order

 

                        Either party may demand jury trial

 

Ultimate Relief:

                                    Direct delivery of property to the fiduciary

                                    Injunctive relief

                                    Constructive trust

 

F.         No discovery until issue has been joined.  Normal discovery rules under CPLR would apply, including party and non-party depositions, document production, demands for bill of particulars and other disclosure devices