Litigation in Accounting Proceedings in Estates & Trusts

Frank W. Streng, Surrogate’s Court Lawyers
by Frank W. Streng on 11/17/1998


Westchester Women’s Bar Association

Trusts & Estates Section

November 17, 1998



Donald S. Klein, Esq.

7-11 South Broadway

White Plains, NY  10601

Tel. No. 914-686-6120


Frank W. Streng, Esq.

McCarthy, Fingar, Donovan,

Drazen & Smith, L.L.P.

11 Martine Avenue

White Plains, NY  10606

Tel. No. 914-946-3700



Litigation In Accounting Proceedings

In Estates And Trusts




I.          Overview of Why Litigation Proceeds


II.         Compulsory Accounting as First Step – SCPA 2205


            A.        Procedures


            B.         Service of Citation – Personal vs. Mail – changes on service by mail (SCPA 307)


            C.        Return Date of Citation


                        1.         If respondent appears

                                    a.         requests for adjournments

                                    b          30 day order

                                    c          60 day order

                                    d          90 day order

                                    e          other alternatives


                        2.         If respondent fails to appear


                                    a.         30-day order


            D.        Court Order


                        1.         Personal service on respondent


                        2.         De facto executor compelled to account (Matter of King, NYLJ 2/11/92,

p. 26, col. 2)


III.       Contempt or Removal


            A.        Procedures for Contempt – SCPA 606, 607; Judiciary Law 750 et seq


                        1.         Civil or criminal (Matter of Rogers, NYLJ 12/23/86, p. 13, col. 1)


                        2.         Civil – mere act of disobedience (Torah v. Kesher International Trading

                                    Corp., AD2d, 667 NYS2d 759)


                        3.         Personal service of OSC


            B.         Personal Service of Compulsory Accounting Order


                        1.         Generally required, but if actual knowledge of order, Court can grant

                                    (Matter of Von Krieger, NYLJ 4/29/96, p. 29, col. 3)


            C.        Return Date of OSC of Contempt Application


            D.        Warrant of Arrest


E.         Legal Fees for compulsory accounting proceedings or contempt – Court can grant “reasonable legal fees” (Matter of Weissman, NYLJ

            5/12/98, p. 27, col. 4)


F.         Trial for contempt


            1.         If no triable issue, no trial required (Guilinao v. Carlisle, 236

                        AD2d 364, 653 NYS2d 635)


            2.         Self-incrimination – not available (Matter of Ottinger, NYLJ 3/13/92,

                        p. 28, col. 5)


G.        Removal – SCPA 711


            1.         Failure to comply with Court order (SCPA 711(3)


2.         Procedures for removal proceedings


3.         Other grounds for removal, including if a fiduciary is “otherwise unfit for the execution of the office.” (SCPA 711 (8)


4.         “Entertainment” of proceedings and consideration of issues in estate looking at the “big picture”


IV.       Accounting Filed


            A.        Format of accounting and compliance with uniform rules and local court rules


            B.         Duty to Obtain Jurisdiction


                        1.         Change in Court Rules – 207.40


            C.        Return Date of Process


                        1.         Time to file objections – change in Rule 207.41


            D.        Disclosure Before or After Objections


                        1.         SCPA 2211 vs. CPLR Art. 31


            E.         Review of Accounting – what to look for


            F.         Objections to Accounting


                        1.         Form


                        2.         By whom


                                    a.         Even Court (Matter of Stortecky, 85 NY2d 518)


                                    b.         Objectant must be adversely affected (Matter of Weiss, NYLJ

                                                12/20/91, p. 32, col. 2 citing Matter of Ayvarian, 153 Misc2d 467)


            G.        Procedures Thereafter


                        1.         Disclosure


                        2.         Conferences


                        3.         Note of Issue/Statement of Readiness/Order framing issues


                        4.         Trial – non-jury


                                    a.         Burden of proof


                                                i.          Accounting party has burden fully accounted, then

                                                            objectant must come forward with evidence to

                                                            establish inaccurate or incomplete (Matter of

                                                            Schnase, AD2d, 594 NYS2d 827 [3rd])


                                                ii.          Party claiming there should be more assets has burden

                                                            of proof (Matter of Castaldo, AD2d, 603 NYS2d 32,

                                                            affirming NYLJ 2/10/92, p. 30, col. 1)


            H.        Likelihood of Success – Potential Results


                        1.         Surcharge


                                    a.         Single or multiple objectants and interests


                                    b.         Self-dealing (Matter of Hirschhorn, NYLJ 4/29/98, p. 30, col. 3)


                                    c.         Take and state account (Matter of Griffin, 187 AD2d 592, 489

                                                NYS2d 933, for facts see 174 AD2d 780)


                                    d.         Investments


                                                i.          Losses (Matter of Janes, 90 NY2d 41, affirming 223

                                                            AD2d 20, 643 NYS2d 972)


                        2.         Denial of Commissions


                                                a.         Delay in paying taxes (Matter of Scott, 234 AD2d 551, 651 NYS2d 592)


                        3.         Attorneys’ Fees of Fiduciary


                        4.         Attorneys’ Fees of Objectant


                        5.         Attorney-Fiduciary – liable for accountant fees (Matter of Weisenfeld,

                                    NYLJ 6/25/90, p. 28, col. 2; Matter of Tortora, 7/19/95, p. 26, col. 2)