In the Matter of Eugene P. Gold, deceased
Categories
Attorneys and Parties
Brief Summary
This probate dispute concerns the construction and enforcement of an in terrorem clause in a will under SCPA 1420 [Surrogate's Court Procedure Act provision authorizing a proceeding to construe a will], specifically whether a beneficiary forfeited rights under the will by allegedly challenging related estate arrangements and whether the executor herself may have violated the same clause by withholding specifically bequeathed corporate shares.
The Surrogate's Court, Nassau County, converted Cheryl Gold and Amy Kaufman's motion to dismiss under CPLR 3211(a)(7) [rule allowing dismissal for failure to state a cause of action] into a motion for summary judgment and granted summary judgment dismissing Kenneth Gold's cross-petition to construe the in terrorem clause.
The Appellate Division reversed the order granting summary judgment dismissing Kenneth Gold's cross-petition.
The appellate court held that Cheryl Gold and Amy Kaufman failed to make a prima facie showing that no triable issue of fact existed as to Kenneth's claim that Cheryl, as executor, violated the in terrorem clause by failing to turn over Eugene Gold's shares in the family corporations. Because in terrorem clauses are strictly construed and the testator's intent must be determined from the surrounding circumstances, summary judgment was improper.
Background
Eugene P. Gold died in 2013, survived by his daughters Cheryl Gold and Amy Kaufman and his son Kenneth Gold. Eugene's wife, Grace K. Gold, had predeceased him, and Eugene had served as executor of Grace's estate. Grace's will created a trust over which Eugene held a limited power of appointment in favor of Grace's descendants. Eugene's will, as amended by three codicils and admitted to probate in 2016, exercised that power by directing $2 million each to Cheryl and Amy, with the remaining trust balance to Eugene's descendants per stirpes. Eugene's will also specifically bequeathed his shares in Doral Fabrics, Inc., and Potomac Mills, Inc., to Kenneth. The will contained an in terrorem clause barring direct or indirect opposition to probate or the validity of any portion of the will. After Eugene's death, Kenneth attempted to rescind his prior waiver and consent to probate of Grace's will and challenged Grace's capacity, also seeking letters of limited administration under SCPA 702 [Surrogate's Court Procedure Act provision concerning letters of limited administration] with respect to Grace's estate. In a related appeal, the Appellate Division previously affirmed the dismissal of Kenneth's challenge. Cheryl then petitioned under SCPA 1420 to construe Eugene's in terrorem clause, claiming Kenneth's attack on Grace's will violated Eugene's will because invalidating Grace's trust would undermine Eugene's testamentary plan. Kenneth later cross-petitioned under SCPA 1420, asserting that Cheryl and Amy themselves violated the in terrorem clause by refusing to transfer the family-corporation shares bequeathed to him and by failing to fund certain testamentary trusts under Grace's will.
Lower Court Decision
The Surrogate's Court determined that Kenneth's turnover request for Potomac Mills, Inc., shares could not be resolved until the in terrorem clause was construed. It then converted Cheryl and Amy's dismissal motion into one for summary judgment and, by order dated May 14, 2020, granted summary judgment dismissing Kenneth's cross-petition to construe the in terrorem clause.
Appellate Division Reversal
The Appellate Division reversed and denied the converted motion for summary judgment. Viewing the facts in the light most favorable to Kenneth as the nonmoving party, the court held that Cheryl and Amy did not establish the absence of material factual issues. The court emphasized that in terrorem clauses are enforceable but disfavored and therefore must be strictly construed. Because resolving whether Cheryl or Kenneth violated the clause required a proper construction of the clause in light of Eugene's intent and the surrounding circumstances, triable issues of fact remained, particularly regarding Cheryl's alleged refusal to transfer the corporate shares specifically left to Kenneth.
Legal Significance
The decision reinforces New York's rule that in terrorem clauses, though enforceable, are narrowly construed and cannot support summary judgment unless the movant conclusively shows that the beneficiary's or fiduciary's conduct falls within the clause. It also underscores that disputes over a will's no-contest clause may require factual development where the testator's intent and the practical effect of a fiduciary's conduct on testamentary gifts are contested.
A fiduciary seeking to enforce or rely on an in terrorem clause cannot obtain summary judgment merely by alleging a forfeiture; where the clause's meaning and the testator's intent remain uncertain, and where withholding a specific bequest may itself implicate the clause, the issue must proceed beyond summary judgment.