Opinion
2005-726/C
03-09-2020
Proceeding for advice and direction on the Stipulation of Settlement in the ESTATE OF George W. WONTZ, Deceased.
Richard Mahon, Esq., Catania, Mahon & Rider, PLLC, One Corwin Court, Newburgh, NY 12550, Attorney for Petitioner/Executor Terrence P. Seely, Esq., Law Office of Peter G. Botti, Court Plaza, P.O. Box 388, Goshen, NY 10924-0388, Attorney for Respondents Marsha Morgan and Pauline Scherrer
Richard Mahon, Esq., Catania, Mahon & Rider, PLLC, One Corwin Court, Newburgh, NY 12550, Attorney for Petitioner/Executor
Terrence P. Seely, Esq., Law Office of Peter G. Botti, Court Plaza, P.O. Box 388, Goshen, NY 10924-0388, Attorney for Respondents Marsha Morgan and Pauline Scherrer
Timothy P. McElduff Jr., S.
The following papers were read and considered on this proceeding pursuant to SCPA § 2107, CPLR §§ 2221 and 3001 for advice and direction regarding the "Stipulation and Order Settling Estate" in the Estate of George W. Wontz:
1. Petitioner's Order to Show Cause signed on December 10, 2019, Verified Petition verified on November 14, 2019, Affidavit of George V. Wontz sworn to November 21, 2019, Affirmation of Richard M. Mahon, Esq., dated November 25, 2019, together with the exhibits annexed thereto;
2. Affirmation in Opposition dated January 8, 2020, together with its exhibit;
3. Reply of Respondent Pauline Scherrer verified on January 8, 2020.
BACKGROUND
On November 26, 2018, the parties executed a "Stipulation and Order Settling Estate" after having negotiated the settlement of various claims against the Estate of George W. Wontz and challenges to Petitioner/Executor George V. Wontz's acts as executor (hereinafter, the "Stipulation").
The parties' settlement negotiations had also included conferences with the Court. On December 5, 2018, this Court (Onofry, J.) "so-ordered" the Stipulation.
Section 1 of the Stipulation states as follows:
(a) Upon the sale of the first of the estate's real properties, the Estate Executor, George V. Wontz (hereafter the "Executor") shall pay the sum of $55,000.00 to Marsha Morgan and the sum of $140,000.00 to Pauline Scherrer in full satisfaction of all their respective claims against the estate. In the event the net assets of the first sale are not sufficient to fully satisfy the monies due Pauline Scherrer, she will receive the remaining balance from the sale of the next estate property.
(b) It is understood and agree that none of the estate assets shall be distributable or payment to the Executor personally until such time as Marsha Morgan and Pauline Scherrer receive their respective distribution under this agreement and upon such payment will have no further claim against or share in the Estate.
(See Section 1 of Stipulation, Verified Petition, Ex. A).
As to the expenses relating to the property sales, the Stipulation provided as follows:
Unless otherwise agreed by the parties or their Legal Counsel, any expenses deducted from the sale of Estate real property shall be limited solely to real estate commissions, attorney legal fees for sale, and tax and other necessary closing adjustments.
(See Section 4 of Stipulation, Verified Petition, Ex. A).
By the instant Verified Petition, which is dated almost exactly one year after the Stipulation was signed, the Petitioner/Executor now complains that it is "unfair" that he should have to pay the carrying and maintenance costs of the properties out of his own pocket pending the properties' sale. Petitioner/Executor argues that, while the Estate owns three properties, it has little to no liquid assets until at least one of those properties is sold. The Petitioner/Executor requests that the Court advise, direct and declare that, under the Stipulation, the Petitioner/Executor may pay or otherwise reimburse himself for all of the expenses of carrying/maintaining the properties out of any sale proceeds before paying the agreed settlement payments to Respondents Marsha Morgan and Pauline Scherrer.
Respondents argue that Petitioner/Executor's request is in direct contravention of the terms of the Stipulation and his request for advice/direction/declaration is merely an attempt to change the terms of the negotiated Stipulation. The Respondents note the following: (1) The estate had little to no liquid assets at the time the Stipulation was negotiated; (2) The Petitioner/Executor has failed to hasten the sale(s) by lowering prices or changing brokers over the last 13 months, which the Stipulation permits him to do; (3) Prioritizing the settlement payments to Respondents out of the sale proceeds was a key negotiated term to settle Respondents' claims against Petitioner/Execution for misappropriation of estate funds; and (4) Even after making the settlement payments to Respondents, there would be approximately $378,800.00 left in gross sale proceeds from which the Petitioner/Executor could reimburse himself for the legitimate carrying and maintenance costs required to preserve the properties to the point of sale.
ANALYSIS
A. The procedural basis for Petitioner's application to the Court
Petitioner/Executor has made his request for relief to the Court pursuant to SCPA § 2107, CPLR § 3001 and/or CPLR § 2221.
SCPA § 2107, the commonly referred to proceeding for "advice and direction" of the Surrogate's Court, provides as follows:
1. Whenever the value of property of an estate is uncertain or dependent upon the time and manner of sale thereof a fiduciary may apply by petition to the court for advice and direction as to the propriety, price, manner and time of sale thereof.
2. The court may entertain applications by a fiduciary to advise and direct in other extraordinary circumstances such as complex valuation issues, or tax elections, or where there is conflict among interested parties, but need not entertain jurisdiction if to do so would be merely to substitute the court's judgment for that of the fiduciary.
3. A substantial compliance with the authorization so given shall relieve the fiduciary from any objection that the estate suffered a loss on account of the action taken under court advice and direction.
CPLR § 3001 states that, "The supreme court may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed." Notwithstanding the reference to the Supreme Court, the Surrogate's Court also has the power to issue declaratory judgment relief, provided that the matter affects the settlement of the affairs of the decedent. In re Estate of Dolloff , 49 Misc 3d 440, 451 (Sur. Ct., Erie Co., 2015) ; Private Client Group v Markey , No. 342393, 2010 WL 1821993 (Sur. Ct., Nassau Co., 2010) ; see also SCPA §§ 201(3), 209(10).
CPLR § 2221 concerns motions to reargue or renew a prior order based upon the court's previous misapprehension of the facts or the law (i.e., reargument) or upon new evidence that was justifiably not presented on the prior application which would now change the result (i.e., renewal). "Resettlement" is different. "Resettlement of an order is a procedure designed solely to correct errors or omissions as to form, or for clarification. It may not be used to effect a substantive change in or to amplify the prior decision of the court". Foley v. Roche , 68 AD2d 558, 566 (1st Dept. 1979) ; see, e.g., Lewis v. Lewis , 269 AD2d 429, 430 (2d Dept. 2000) (holding that the motion for "resettlement" was improperly designated inasmuch as the plaintiff was not simply attempting to have a qualified domestic relations order conform to the stipulation, but was seeking to have the terms of the stipulation amended and, as such, the motion was actually one to vacate the so-ordered stipulation of settlement); see also Kiker v. Nassau Cty., 85 NY2d 879, 881 (1995) (trial and appellate courts have the discretion to cure mistakes, defects and irregularities of a clerical or ministerial nature that do not affect substantial rights of parties).
The only statutory reference to "resettlement" appears in CPLR § 5517(a)(2).
Here, the Verified Petition does not present an "extraordinary circumstance" that warrants the Court's advice and direction pursuant to SCPA § 2107. The Petitioner/Executor agreed to pay the Respondents their settlement payments out of the sale proceeds, in first priority, after a limited list of sale-related expenses. (See Sections 1 & 4 of the Stipulation, Verified Petition, Ex. A). This arrangement was reached in order to settle the Respondent's claims that the Petitioner/Executor had already misappropriated $58,845.00 of estate funds in order to pay his own, personal tax liabilities. The Petitioner/Executor makes no showing of any "extraordinary circumstance" or change in circumstance from the date of the Stipulation to the date of the Verified Petition. The Petitioner/Executor also fails to explain why none of three properties have been sold during the last year, despite his power to set the pricing and conduct the sale pursuant to his fiduciary duties.
The Stipulation does not restrict the Petitioner/Executor from lowering sale prices in order to get the properties sold in a timely, yet fiscally responsible, manner. (See Section 3 of the Stipulation, Verified Petition, Ex. A).
Instead of seeking advice and direction on how to fulfill the terms of the Stipulation, the Petitioner/Executor is seeking advice and direction on how he may permissibly change the terms of the Stipulation.
Under CPLR § 3001, the Petitioner/Executor fails to identify a "justiciable controversy" concerning the terms of the Stipulation. See CPLR § 3001. The Petitioner/Executor is not seeking to resolve the meaning of a disputed term, but rather, to absolve himself from the application of an express term.
With regard to CPLR § 2221, the Petitioner/Executor's application does not contain the grounds for a motion to reargue or to renew under that statute, nor does his application constitute a mere request for "resettlement" of the Stipulation. The Petitioner/Executor's application seeks to alter the priority of payment of the sale proceeds and shift the risk of recovering sale proceeds from the Petitioner/Executor to the Respondents. Therefore, the application seeks a substantive change to the Stipulation rather than a mere correction. Similar to Lewis , supra , this substantive change would require that the Stipulation be vacated or reformed; however, the Petitioner/Executor does not offer a basis upon which to vacate or reform the Stipulation.
B. The court's power to interpret and affect contracts
A stipulation of settlement is a contract subject to principles of contract interpretation. Cohen-Davidson v. Davidson , 291 AD2d 474, 475 (2d Dept. 2002).
Clear and complete writings should generally be enforced according to their terms. Wallace v. 600 Partners Co., 86 NY2d 543, 548 (1995). "Whether a writing is ambiguous is one of law to be resolved by the courts. The rules governing the construction of ambiguous contracts are not triggered unless the court first finds an ambiguity." Wallace v. 600 Partners Co., 86 NY2d at 548 (internal citations omitted).
"A court may not write into a contract conditions the parties did not insert by adding or excising terms under the guise of construction, and it may not construe the language in such a way as would distort the contract's apparent meaning." Cohen-Davidson v. Davidson , 291 AD2d 474, 475 (2d Dept. 2002). In other words, when adjudicating the rights of parties to a contract, courts may not fashion a new contract under the guise of contract construction. Slatt v. Slatt , 64 NY2d 966, 967 (1985).
Furthermore, "a court is not free to alter a contract to reflect its personal notions of fairness and equity." White v. Cont'l Cas. Co. , 9 NY3d 264, 267 (2007). Stated another way, "a court cannot reform an agreement to conform to what it thinks is proper, if the parties have not assented to such a reformation." Cohen-Davidson v. Davidson , 291 AD2d 474, 475 (2d Dept. 2002).
Here, the Petitioner/Executor seeks to alter or add to the terms of the Stipulation, not due to any alleged ambiguities, but through the procedural devices of seeking the "advice and direction" of the Surrogate's Court and/or declaratory judgment relief. There being no alleged or actual ambiguities with the terms of this Stipulation, the Court is powerless to rewrite the parties' contract, no matter the procedural device selected by the Petitioner/Executor. Even if the Court were to see more fairness or equity in the Petitioner/Executor's proposed reformation of the Stipulation's terms, fairness or equity, alone, does not empower the Court to alter the Stipulation, especially since the Respondents do not consent to Petitioner/Executor's proposed reformation. White, supra; Cohen-Davidson, supra .
C. The effect of the Stipulation being "so-ordered" by the Court
The fact that the Stipulation was "so ordered" by the court does not alter the analysis. A court that has "so-ordered" a stipulation of settlement has deemed its terms to be reasonable and has bound itself to enforce those terms. Tepper v. Tannenbaum , 83 AD2d 541, 541 (1st Dept. 1981) ; Stein v. Severino , 41 Misc 2d 209, 210 (Sup. Ct., Nassau Co., 1963). If one of the parties wishes to relieve themselves of one or more of those terms, the court has the power to do so, but only under the traditional grounds upon which to vacate or reform a contract, e.g., where the contract was induced by fraud, procured by duress, based upon mutual mistake of fact, etc. Stein v. Severino , 41 Misc 2d 209, 210 (Sup. Ct., Nassau Co., 1963). As discussed supra , the Petitioner/Executor does not offer or establish any such grounds to vacate or reform the Stipulation.
Under Stein , any objection as to the Stipulation's "fairness" by the Petitioner/Executor has already been rejected or overruled by virtue of the Stipulation being "so-ordered" by the Court.
CONCLUSION
For the foregoing reasons, this Court finds that the Stipulation and Order Settling Estate in this matter, executed on November 26, 2018 and so-ordered on December 5, 2018, is unambiguous and enforceable as written.
Accordingly, Petitioner/Executioner's Verified Petition, verified on November 14, 2019, is denied with prejudice.
This constitutes the Decision and Decree of the Court.