Executors of Late Father’s Estate Have Standing to Sue Non-Profit and Its Directors

On November 26, 2021, in Epstein v Epstein Teicher Philanthropies, 2021 NY Slip Op 32460(U), Justice Masley held that co-successor executors of an estate that bequeathed money to a charitable organization had standing to sue the nonprofit and its directors for failure to obey the charity’s purpose by donating money to Ohio rather than NY based institutions. The Court explained:

Standing to enforce the terms of a charitable gift is normally limited to the Attorney General, but this general rule does not "designate the Attorney General as the exclusive representative of donors of charitable dispositions." ( Smithers v St. Luke's Roosevelt Hosp. Ctr., 281 AD2d 127, 137 [1st Dept 2001] [citation omitted].) The Attorney General is entitled to sue on behalf of possible beneficiaries or members of a class of beneficiaries for enforcement of the charitable trust to prevent vexatious litigation. (Id.) A plaintiff, having been appointed as a legal representative of a decedent's estate, also has standing to sue the beneficiary for enforcement of the terms of the gift. (Id. at 140-141.) "To hold that, [the special administratrix of the decedent's estate] ... has no standing to institute an action to enforce the terms of the Gift is to contravene the well-settled principle that a donor's expressed intent is entitled to protection." (Id. at 139.) Furthermore, Article 11 of the Estates, Powers and Trusts Law (EPTL) grants fiduciaries of an estate broad powers to maintain or settle a claim on behalf of the estate. (EPTL 11-1.1 [13].) Both provisions operate to protect a donor's expressed intent when making a charitable, testamentary gift.

Here, plaintiffs Karin and Hal were appointed as co-successor executors by the Westchester County Surrogate's Court on July 6, 2020. (NYSCEF 55, Successor Letters Testamentary at 2.) Plaintiffs are not beneficiaries of ETP, nor do they purport to be. Thus, Plaintiffs are accorded the same treatment as the plaintiff in Smithers, who was appointed "Special Administratrix" of the decedent's estate for the purpose of pursuing a claim that the charitable organization did not honor the terms of the gift.

Defendants challenge the applicability of Smithers due to the contractual nature between the plaintiff and defendant in that case. Cases in this jurisdiction that have subsequently relied on Smithers do not read Smithers as narrowly as defendants. (Lucker v Bayside Cemetery, 114 AD3d 162, 171 [1st Dept 2013].) The key distinction between Lucker, which rejected the plaintiffs' standing to bring a personal injury claim on behalf of the decedent, and Smithers, which permitted the wife and Special Administratrix to bring a claim on behalf of the estate to sue to enforce the terms of the donor's gift, was because "Smithers did not involve either beneficiary standing or standing as a family member. Although the plaintiff was the wife of the donor, she was permitted standing as the administrator of the estate of the donor of a charitable donation that had been made subject to explicit restrictions." (Lucker, 114 AD3d at 171.) And, because the Lucker plaintiffs are "relatives acting as relatives," "they fall into the opposite category from Mrs. Smithers." (Id.)

The court is also unpersuaded by defendants' distinction between an unrestricted gift and an endowment fund insofar as it determines whether plaintiffs have standing or not. The documentary evidence defendants offer in support of their 3211 (a)( 1) motion to dismiss does not contradict plaintiffs' contentions that they were appointed as representatives of their father's estate to enforce the terms of the gift. Rather, EPTL 11-1.1 authorizes plaintiffs, in their legal capacity as the representatives to their late father's estate, to bring their causes of action, despite the merits of the claim.3 (EPTL 11-1 .1 [b ][ 13].)

Thus, the court finds that Karin and Hal have sufficiently shown they have standing as co-successor executors to their father's estate to bring their claims. Accordingly, the defendants' motion to dismiss under 3211 (a)(1) and (3) are denied.

The attorneys at Schlam Stone & Dolan form, advise and litigate claims involving nonprofits. Please contact the Commercial Division Blog editors at commercialdivisionblog@schlamstone.com if you or a client have questions concerning nonprofit organizations.