SILKWOOD v. Robert Silkwood, et al., Third-Party Defendants-Respondents, et al., Third-Party Defendant.

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Supreme Court, Appellate Division, Second Department, New York.

Robert SILKWOOD, etc., et al., Plaintiffs-Respondents, v. Erin C. BUTLER, etc., Defendant Third-Party Plaintiff-Appellant; Robert Silkwood, et al., Third-Party Defendants-Respondents, et al., Third-Party Defendant.

Decided: September 16, 2002

FRED T. SANTUCCI, J.P., MYRIAM J. ALTMAN, SANDRA L. TOWNES and STEPHEN G. CRANE, JJ. Schneider Goldstein Bloomfield LLP, New York, N.Y. (Donald F. Schneider and Harvey N. Goldstein of counsel), for defendant third-party plaintiff-appellant. McCullough, Goldberger & Staudt, LLP, White Plains, N.Y. (Charles A. Goldberger, Patricia W. Gurahian, and Ed Grainger of counsel), for plaintiffs third-party defendants-respondents.

In an action to recover trust assets, the defendant third-party plaintiff appeals from an order of the Supreme Court, Westchester County (LaCava, J.), entered February 1, 2001, which granted the motion of the plaintiffs third-party defendants, Robert Silkwood and Michael E. Sultan, as trustees of the Jeffrey S. Butler and Erin Butler 1984 Children's Trust, to dismiss her objections to the settlement of the account of the plaintiffs third-party defendants.

ORDERED that the order is modified, on the law and as a matter of discretion, by deleting the provisions thereof granting those branches of the motion which were to dismiss the objections with respect to the Rimpau property transaction and the failure of the trustees to account for all of the trusts involved in the 1984 Consolidated Trust;  as so modified, the order is affirmed, without costs or disbursements, and the matter is remitted to the Supreme Court, Westchester County, for a hearing on those objections.

Between 1983 and 1989, the defendant third-party plaintiff, Erin C. Butler (hereinafter Erin), and the third-party defendant, Jeffrey Butler (hereinafter Jeffrey), who were then wife and husband, established certain trusts (hereinafter the 1984 Consolidated Trust) for the benefit of their two children, Emily Butler and Drew Butler.   Erin and Jeffrey divorced in 1993.   In 1995, the trustees of the 1984 Consolidated Trust brought an action against Erin to recover money loaned to her, and Erin asserted various counterclaims.   Ultimately, that litigation was settled by stipulation between the parties (hereinafter the settlement) which, inter alia, required the trustees to provide a full and complete accounting of the 1984 Consolidated Trust from inception through July 30, 1999.   After the accounting was provided, Erin filed objections thereto in the form of a two-page letter to the court.   The trustees moved to dismiss the objections, and in the order appealed from, the Supreme Court granted the motion.

 We agree with the Supreme Court that many of the issues raised by Erin were beyond the scope of the settlement and the accounting.   However, Erin met her burden of producing evidence that the accounting was incomplete and inaccurate with respect to a $200,000 payment from the 1984 Consolidated Trust to Jeffrey pending the sale of real property in Los Angeles (hereinafter the Rimpau property) (see Matter of Tract, 284 A.D.2d 543, 727 N.Y.S.2d 148;  Matter of Schnare, 191 A.D.2d 859, 594 N.Y.S.2d 827). In particular, Erin submitted documentation which reflects that the $200,000 payment was, in fact, a loan to Jeffrey that was never repaid to the 1984 Consolidated Trust, whereas the accounting reflects that this $200,000 was a distribution of trust principal.   Under these circumstances, Erin's objection with respect to the Rimpau property transaction should not have been dismissed.

 Erin also demonstrated that the accounting failed to provide full information regarding the Butler Insurance Holding Trust and Butler Title Holding Trust, despite the fact that the settlement separately included those trusts as part of the 1984 Consolidated Trust.   The trustees' assertions that the Butler Insurance Holding Trust was the same as “various life insurance trusts,” and that the Butler Title Holding Trust did not benefit the beneficiaries of the 1984 Consolidated Trust, are conclusory and unsupported by any documentation.   Accordingly, Erin's objection with respect to the completeness and accuracy of the account in this regard should not have been dismissed.

Erin's remaining contentions are without merit.

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