Matter of Lee
153 A.D.3d 831
| N.Y. App. Div. | 2017Background
- Decedents Frank A. Lee (d.1968) and Jane E. Lee (d.1981) established four trusts (two testamentary, two inter vivos); petitioners are beneficiaries (granddaughter and great‑grandchildren).
- Bank of New York Mellon (BNY) served as trustee or cotrustee until Merrill Lynch Trust Company (Merrill Lynch) succeeded as trustee in Dec 2001–Jan 2002.
- When BNY resigned, petitioners executed releases in favor of BNY; all four trusts terminated on the death of Frank A. Lee, Jr. in 2008.
- In 2009 petitioners executed releases in favor of Merrill Lynch after informal accountings and counsel advice.
- In Dec 2013 petitioners sought judicial accountings of the trusts against both BNY and Merrill Lynch; both respondents moved to dismiss based on the releases and statute of limitations. The Surrogate’s Court granted the motions; petitioners appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of releases executed in favor of BNY | Releases are invalid because beneficiaries lacked counsel and were not informed of legal effect | BNY argues the releases bar claims | Releases as to BNY were not proved valid because BNY failed to show beneficiaries knew the releases’ legal effect, but dismissal upheld on statute‑of‑limitations grounds |
| Accrual and timeliness of accounting claims against BNY | Claims timely or tolled | BNY argues claims accrued when it was succeeded (2001–2002) and are time‑barred (six‑year SOL) | Claims accrued upon Merrill Lynch’s succession; six‑year limitation expired before 2013 filing, so claims time‑barred |
| Tolling / equitable estoppel / fraud to avoid SOL | Petitioners assert fraud/tolling or equitable estoppel | BNY denies fraud and contends doctrines do not apply | Court found no tolling for fraud and equitable estoppel did not apply |
| Validity of releases executed in favor of Merrill Lynch | Releases invalid for lack of full disclosure and improper terms | Merrill Lynch contends releases followed negotiations and counsel advice and are valid settlements barring a formal accounting | Releases to Merrill Lynch were valid: petitioners received informal accountings, had counsel, negotiated terms, and released Merrill Lynch; dismissal proper |
Key Cases Cited
- Matter of Lifgren, 36 A.D.3d 1042 (discussing beneficiary duty to object to informal accountings)
- Matter of Hunter, 4 N.Y.3d 260 (principles on settling fiduciary accounts and obligation to object)
- Tydings v. Greenfield, Stein & Senior, LLP, 11 N.Y.3d 195 (statute of limitations for accounting claims)
- Spallholz v. Sheldon, 216 N.Y. 205 (accrual rules for fiduciary accounting claims)
- Matter of Birnbaum v. Birnbaum, 117 A.D.2d 409 (factors for validating releases by beneficiaries)
- Centro Empresarial Cempresa S.A. v. América Móvil, S.A.B. de C.V., 17 N.Y.3d 269 (principles on settling disputes and counsel involvement)
- Matter of James, 287 N.Y. 645 (validity of informal settlements between trustees and beneficiaries)