New York State Court of Claims

New York State Court of Claims

BENNETT IRREVOCABLE TRUST v. THE STATE OF NEW YORK, #2003-015-314, Claim No. 106293, Motion Nos. M-66191, CM-66239


Court of Claims lacks subject matter jurisdiction over claim seeking equitable relief attendant to State's levy on alleged trust asset to satisfy tax liability of grantor of the Trust. Claimant should have initiated an article 78 proceeding to challenge State Tax Department in action.

Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
Motion number(s):
Cross-motion number(s):
Claimant's attorney:
Guy Law OfficeBy: Carl F. Guy, Esquire
Defendant's attorney:
Honorable Eliot Spitzer, Attorney General
By: Michael W. Friedman, EsquireAssistant Attorney General
Third-party defendant's attorney:

Signature date:
February 24, 2003
Saratoga Springs

Official citation:

Appellate results:

See also (multicaptioned case)


Defendant's cross-motion to dismiss the claim for lack of subject matter jurisdiction is granted and claimant's[1] motion for a change of venue from the Albany District of the Court of Claims to the Syracuse District is denied as moot. Claimant Carl F. Guy asserts on the motion that he is Trustee for the Bennett Irrevocable Trust UTA dated 10/4/96 and amended 4/15/97. Attached to his motion papers is what appears to be a Trust Agreement dated April 15, 1997 which specifies that the Trustee is one Gary J. Rotella. Also attached is a document purporting to be the appointment of Carl F. Guy, Esq., 850 Fay Road, Syracuse, New York as Successor Trustee to Gary R. Rotella. This document appears to have been signed before a notary public in Oneida County, New York on August 20, 1998 by Gwen K. Bennett. The signer, who is not otherwise identified therein, asserts that she is the guardian of all minor children of the Trust grantors and alleges that she is exercising the power to appoint a Successor Trustee granted her as guardian under Article X of the Trust dated October 4, 1996 as amended April 15, 1997. Claimant's appointment as Successor Trustee on August 20, 1998 occurred approximately 16 months after the Trust was purportedly "amended" in April, 1997. The Court notes, however, that the copy of the Trust Agreement included in claimant's motion papers makes no reference to the October 4, 1996 Trust Agreement nor does its language suggest that it serves to amend any pre-existing agreement as stated in the Appointment of the Successor Trustee.

Be that as it may, the April 15, 1997 document references the Trust property as being "listed and described on the attached Schedule A" which includes as item #1 "Proceeds of 36' Culver held in Escrow" [in the amount of $44,309.50] by Alan S. Burstein, Esquire. Schedule A also contains as item #2 an additional sum of $79,749.26 described as "Proceeds of 'Lady Kathleen' held in Escrow" by attorney Burstein. Only the proceeds from the sale of the 36' Culver yacht appear to be at issue in this claim (see paragraphs 3, 4 and 5 of the claim).

Without specifying the date of either occurrence, claimant alleges in the claim that the Culver yacht was transferred to the Irrevocable Trust prior to its sale (see claim, para 3) and that the proceeds were deposited in a Key Treasurer Indexed Money Account Number 1416004360[2]. The claim further alleges that on some unspecified date the defendants[3], after finding Edmund T. Bennett to be a responsible person of Olympus Property Management Corp. (Olympus), issued a tax compliance levy to Key Bank, N.A. in the amount of $45,224.83 based on a June 24, 1997 warrant identified as E-012227391-WOO1-8 against Edmund T. Bennett Individually and as a responsible person of Olympus. It appears that in February 2001 Key Bank satisfied the levy from a Key Certificate of Deposit Account (No. 1416004360) titled to Alan S. Burstein as Escrow Agent for Edmund T. Bennett. Claimant by letter dated March 29, 2001 sought return of the funds insisting that the monies were assets of the Trust not subject to the Tax Department's warrant and levy. It is not clear whether claimant received a written response to his March 29, 2001 demand but he served a notice of intention to file a claim dated June 25, 2001. The claim itself was served and filed June 28, 2002 alleging an accrual date of April 1, 2001. Claimant has moved to change venue from the Albany District to the Syracuse District.

The claim demands the following relief:
WHEREFORE, the Plaintiff demands a judgment that this Court declare:

A. That said tax levy be adjudged void and canceled of record.

B. That due and proper refund of all monies paid, with due and proper interest be allowed and be decreed to be paid to the Plaintiff.

C. That there is no leviable interest in the Trust property, being held in escrow or otherwise, for the purposes of satisfying any alleged obligation to the Defendants of Edmund T. Bennett, Olympus Property Management Corporation, or BFG.

D. That declaratory judgment be entered determining that the Plaintiff is not subject to the state tax levy, and that the Defendants may not assess and endeavor to collect taxes upon the Trust property of the Plaintiff.

E. For such other and further relief as the Court may deem just, proper, and equitable in the circumstances, together with the costs and disbursements of the above-entitled actions.
The Attorney General opposed the change of venue motion and cross-moved to dismiss the claim for lack of subject matter jurisdiction contending that the declaratory relief requested in the claim is beyond this Court's subject matter jurisdiction. In his opposition to the cross-motion the claimant alleges that declaratory judgment is only one form of relief requested in the claim which also seeks money damages "in the amount of 'all monies paid, with due and proper interest.' "

At the outset the Court must determine whether it has subject matter jurisdiction over this claim which claimant concedes seeks both equitable relief and money damages. This determination is informed by the Appellate Division, Third Department's decision in Ozanam Hall of Queens Nursing Home v State of New York, 241 AD2d 670 where the Court (at 671) stated:
Fundamentally, although 'in determining claims for money damages against the State, the Court of Claims may apply equitable considerations and perhaps, to some extent, may grant some sort of incidental equitable relief' (Psaty v Duryea, 306 NY 413, 417), that court's primary jurisdiction is limited to actions seeking money damages against the State in appropriation, contract or tort cases (see, Court of Claims Act § 9 [2]; Psaty v Duryea, supra, at 416; Sidoti v State of New York, 115 AD2d 202, 203). As such, the Court of Claims has 'no jurisdiction to grant strictly equitable relief * * * with the return of the money to follow as a consequence of the equitable relief, if granted' (Psaty v Duryea, supra at 416-417). The question, then, is '[w]hether the essential nature of the claim is to recover money, or whether the monetary relief is incidental to the primary claim' (Matter of Gross v Perales, 72 NY2d 231, 236).
In this case any money judgment is necessarily dependent upon a determination that the Tax Department levy was void and should be cancelled; that the money seized was the property of the Trust and as such was not subject to levy by the defendant to satisfy a judgment against Edmund T. Bennett, one of the grantors of the Trust, either individually or as a responsible person of Olympus Property Management Corp. Thus, it appears that any pecuniary recovery by claimant would be incidental since the claim is essentially a challenge to either the Tax Department's original levy or its refusal to return to the Trust the money seized to satisfy a judgment against Olympus. That determination should have been challenged by commencement of a CPLR article 78 proceeding over which Supreme Court unquestionably has jurisdiction (Heron v Division of Taxation of Dept. of Taxation & Fin. of State of N.Y., 209 AD2d 989, lv denied 85 NY2d 809; see, Harvard Fin. Servs. v State of New York, 266 AD2d 685; Matter of Gross v Perales, 72 NY2d 231; 236; Pauk v Board of Trustees of City Univ. of N.Y., 68 NY2d 702). Furthermore, it is settled that the Court of Claims lacks jurisdiction over declaratory judgment actions except in the narrow circumstances authorized by Court of Claims Act § 9 (9-a) (see, CPLR 3001; Wikarski v State of New York, 91 AD2d 1174; Fehlhaber Corp. v State of New York, 69 AD2d 362; see also N.Y. Const., art VI § 6; Court of Claims Act § 9; Ouziel v State of New York, 174 Misc 2d 900). It has also been held that this Court does not have jurisdiction to enforce a trust "even if the State is alleged to be a recipient of funds improperly diverted from the trust" (see, Higgins-Kieffer, Inc. v State of New York, 165 Misc 2d 425).

Since the Court lacks subject matter jurisdiction the claim is dismissed. The dismissal renders moot claimant's motion to change venue and claimant's motion is, accordingly, denied.

February 24, 2003
Saratoga Springs, New York

Judge of the Court of Claims

The Court considered the following papers:
  1. Notice of motion dated December 20, 2002;
  2. Affidavit of Carl F. Guy sworn to December 20, 2002 with exhibits;
  3. Notice of cross-motion dated January 8, 2003;
  4. Affirmation of Michael W. Friedman dated January 8, 2003 with exhibit;
  5. Affirmation in opposition of Carl F. Guy dated January 10, 2003 with exhibit.

[1]While there are two nominal claimants references to claimant in the singular refer to Carl F. Guy.
[2]Documents submitted on the motion identify the account bearing that number as a Key Certificate of Deposit Account. The account documents do not make any reference whatsoever to the Trust.
[3]Therein named as New York State Department of Taxation and Finance, New York State Tax Compliance Division and the State of New York.