February 27, 2009
Eric Penzer, at the New York Trusts & Estates Litigation Blog, posted the newsthat the New York County Surrogate ruled last week that Leona Helmsley‘s 5-8 billion dollar Charitable Trust need not limit its beneficience to dogs.
Ms. Helmsley had already tried to leave 12 million dollars, from her Will, to a trust for her dog’s benefit. But Surrogate Renee Roth reduced the amount of that trust to 2 million because one can only leave money in an estate for the benefit of an animal to the extent that that money can actually go toward the care of the animal.
But her much larger $5-8b Charitable trust contained language in its mission statement that the trust should “provide for the care of dogs and such other charitable activities as the trustees shall determine.”
The Surrogate ruled that since the mission statement indicated that the trust funds may be used for “such other charitable activities as the trustees shall determine,” the instructions that the trust be used “for the care of dogs” is non-binding, precatory language, and the trustees may use their discretion to distribute the funds to causes that would benefit needy human beings.
The rule regarding the non-enforceability of language that merely expresses a preference or a hope by a Decedent in a Will or Trust was explained in Matter of Samuelson, 110 AD2d 183, 187 (2d Dept 1985). The Appellate Division stated that it is well established that “precatory language contained in a will is merely an expression of the testator’s wish or desire and is not legally binding on the person to whom the wish or desire is directed… Thus, the named party ‘can carry out the wish and desire of the testator or not as he sees fit.’ ” (citations omitted).
Most of us do not have multi-billion dollar estates to dispose of, but many of us do want to see that our property is disposed of appropriately and that the surviving members of our family are cared-for properly. Our office has a large Wills, Trusts & Estates practice, so I have been able to see a wide variety of situations arise, including decisions about whether to include this kind of “precatory language” in a will or other testamentary document. So give us a call!
Picture of Leona Helmsley and her beloved dog, Trouble, courtesy of abcnews.com.
February 26, 2009
Our office does a lot of criminal defense work, so I am always interested in developments in 4th Amendment Search and Seizure law.
Last month, the Supreme Court made it more difficult for a defendant to have evidence suppressed in its decision in the case of Herring v. U.S. In that case, police consulted clerks in a neighboring county regarding the existance of an arrest warrant for Mr. Herring. They had not updated their system to reflect that an arrest warrant against Herring was not current. In reliance on the arrest warrant that they thought existed, police arrested Herring and found drugs and a gun. Herring moved to suppress the evidence against him because it was found in the course of an arrest that was not supported by a valid warrant.
In an opinion by Justice Scalia, the Supreme Court ruled that “the exclusionary rule serves to deter deliberate, reckless, or grossly negligent conduct, or in some circumstances recurring or systemic negligence.” However, the Court held that the quirky failure of the clerks in the neighboring county to update the warrant system was not “so objectively culpable as to require exclusion.”
The Fourth Amendment Blog reported on the Illinois Appellate Court case of People v. Morgan from two weeks ago where the police tried to rely on Herring to avoid the exclusion of certain evidence of drug crimes that the police found while executing an invalid search warrant at Morgan’s home. There, the police relied on a list of search warrants that was up to three days old, rather than following their own procedure of printing out an updated list of valid search warrants every day.
Quite appropriately in my opinion, the Illinois appellate court reversed the trial court’s decision not to suppress the evidence. It held that Herring’s ruling was not applicable to the facts surrounding the search of Morgan’s home.
In Herring, the error in updating the warrant records was made by a clerk, not by the authors actually executing the warrant, as was the case with Morgan. Since the mistake was not made by police officers, exclusion of the evidence couldn’t meaningfully deter the not-systematically-negligent conduct of those non-police officers.
In Herring, the officers’ reliance on the warrant was not negligent because they were told it was valid by the clerk. But the officers were negligent in Morgan because they used an up to three day old warrant list without even attempting to verify the continued validity of the search warrant against Morgan.
The mistake that led to the out-of-date warrant in Herring was merely negligent, and therefore would not be meaningfully deterred by excluding the evidence obtained in the course of executing that warrant. But in Morgan, Exclusion of the evidence would lead to meaningful deterrence because it will motivate officers to be careful to use up-to-date warrant lists, as per their own department’s policy.
Herring was not meant, by the Supreme Court, to give carte blanche approval of police negilgence in the execution of warrants and should not be used that way. Society’s need for order and protection from criminals is essential, but the power to invade private homes and detain people is a great and awesome power, and thus it comes with a heavy burden of responsibility to exercise that power with great care.
Picture courtesy of fbi.gov.
February 25, 2009
The ABA Model Rules of Ethics for lawyers formerly stated that when an attorney moves from one firm to another, all of the clients of the attorney’s former firm who have an adverse relationship with any of the client’s in the attorney’s new firm create a “conflict of interest” for the new firm’s continuing representation of its “conflicting” client. This imputed conflict was presumed to exist even when the new attorney had no meaningful knowledge about his former firm’s client. The only way to remove the conflict was to obtain written consent from the new attorney’s former client and the new firm’s client with the adverse relationship to the old firm’s client.
But now, with the ABA’s new rule, when an attorney joins a new firm, the firm is only required to screen the conflicted attorney from any involvement or fee in relation to clients of the new firm that have an adverse relationship to clients of his old firm. Furthermore, the screening process works even where the new attorney has material and relevant information about his former client. The new firm is only required to give notice of the conflict to both the current client and the adverse client, with an explanation of the screening proceedures that it is using. It need not obtain the adverse clients’ consent.
The interesting question will be whether the New York State Bar Association will be able to successfully make the conflicts rules in New York as lenient as they are in the new ABA Model Rules. New York’s proposed rules take effect on April 1st. Here is the proposed “Imputation of Conflicts of Interest” rule from the NYS Bar Association’s web site. It appears that New York’s new legal ethics rules will not incorporate this newest change in the ABA’s Model rule regarding imputations of conflicts of interest.
I was looking for an answer to my question regarding the likelihood that New York will adopt the new, more lenient, ABA Model Rules regarding imputed conflicts of interest. Therefore, I sought out someone familiar with these developments in the ethics rules for lawyers in New York. So I sent an inquiry regarding this question to Steven C. Krane of Proskauer Rose. Mr. Krane was instrumental in drafting the new rules for the New York State Bar Association and he is speaking about the effects of New York’s adoption of the substance of most of the ABA Model Rules for the Brooklyn Bar Association on March 10th.
He responded that “[i]n Feb 2008, the NYSBA proposed a screening rule that was narrower than 109. The proposal was presented to the NY courts last year and rejected in December. While it is possible that the recent ABA action may prompt reconsideration of that decision by the NY courts, it is doubtful.” (emphasis & links added)
According to Mr. Krane, if the New York Appellate Division was not even willing to approve of screening rules that were more stringent than those just adopted by the ABA, it would be even more unlikely that they would approve of the ABA’s current rules, which are even more permissive with regard to screening “conflicted” attorneys.
Cartoon courtesy of Stu’s Views.
February 24, 2009
The Brooke Astor Estate is in the news again. Gerry W. Beyer, of the Wills, Trusts and Estates Prof Blog, reported that this coming Monday, March 2, the trial against Mrs. Astor’s son Tony, will begin.
It is alleged that while Tony Marshall was guardian for his mother, he swindled millions of dollars from Mrs. Astor, who was suffering from Alzheimers until her death in August, 2007. For more information, see The Battle for Mrs. Astor, Vanity Fair, October 2008.
Elliot Schlissel, my employer, was consulted by National Public Radio for the program, All Things Considered on November, 27, 2007 regarding this matter. He can be heard starting at about minute marker 1:50 in this report on NPR.
Picture of Tony Marshall courtesy of CNN
February 13, 2009
Live Nation, a major concert promoter, and Ticketmaster, a major concert ticket seller, have agreed to merge, according to the Wall Street Journal. And the Wall Street Journal Law Blog reported that the U.S. Department of Justice announced on Wednesday that they are indeed launching an investigation into whether the merger violates anti-trust laws. These rules are aimed at preventing companies from forming monopolies which stifle competition and allow them to overcharge for their products or services free from the constraints of market competition.
The question is whether such a merger would actually violate anti-trust laws. The U.S. Dept. of Justice’s website lists three elements of an anti-trust violation:
To establish a criminal violation of Section 1 of the Sherman Act, the government must prove three essential elements:
- That a combination or conspiracy existed;
- That this combination or conspiracy was an unreasonable restraint of trade or commerce; and
- That the trade or commerce restrained was interstate or international in nature or affected interstate or foreign trade.
The government has the burden of proving all three of these elements. The main test the courts have used to determine whether an agreement between former competitors constitutes an “anti-competitive” violation of the Sherman Act is the “Rule of Reason” test. According to the U.S. DOJ:
Under the Rule of Reason, the courts must undertake an extensive evidentiary study of (1) whether the practice in question in fact is likely to have a significant anticompetitive effect in a relevant market and (2) whether there are any procompetitive justifications relating to the restraint. Under the Rule of Reason, if any anticompetitive harm would be outweighed by the practice’s procompetitive effects, the practice is not unlawful.
Tickets do seem expensive enough already when Ticketmaster charges a $12.25 fee for selling you each ticket plus another $2.50 for the privilage of printing out that ticket on your own printer. However, although I may not understand their business models fully, each company does different things. Live Nation primarily promotes the concerts (though they do also sell tickets) while Ticketmaster is the broker who sells the tickets. If they were both primarily ticket sellers, I would understand the problem better. It seems as if Ticketmaster already has a virtual monopoly on ticket sales, though there is some competition.
Perhaps someone can explain how this merger could lead to higher ticket prices. Live Nation is talking about purchasing Ticketmaster. We’re not discussing Ticketmaster purchasing  Tickets.com after all. So I’m not clear on how there will be fewer competitors in terms of ticket sales after this merger takes place…
February 12, 2009
In this lecture, given in September of last year, Justice Antonin Scalia speaks about what makes good legal writing. He is certainly known as an excellent and clear writer, even by those who disagree with him politically and in terms of judicial philosophy. He wrote an excellent book as well, called Making Your Case: The Art of Persuading Judges (which I have read, though I’m not sure it shows on this blog). He got the award, which he is accepting in this speech, in recognition of his “Lifetime Achievement in Legal Writing.” The video come in two parts. Enjoy.
February 11, 2009
It has recently been reported that Governor Paterson is suggesting that one way to boost revenue to New York State is by changing New York State law to allow supermarkets, Bodegas, and the like to begin selling wine. He hopes that through liquor licensing fees from those supermarkets, to collect an additional $150 million over three years.
Due to my diligent reporting work for the Elliot Schlissel New York Law Blog, I had read about and was familiar with the facts of Gov. Paterson’s proposal when I strolled into a local liquor store on Friday to buy some wine. I was talking with the owner of the store, as I was checking out, she asked me to sign a petition to ask Gov. Paterson not to pursue this plan, as it would put many liquor store owners out of business. I said I wasn’t sure that I would sign it, so she asked me if I supported the proposal.
I told her that I hadn’t made up my mind for sure, and so I didn’t want to sign the Petition without thinking out the issue. I suggested that initially I liked the idea because it would mean not having to make a separate trip to a liquor store. I also pointed out that 35 states are already allow grocery stores to sell wine, and things seem to be going well in those states so I asked her what the arguments were against the plan.
Her were a few of her main arguments:
She said that in the old days, much of the liquor store business was in selling liquor, and not wine. But today, she said 60%-70% of the business is in selling wine. If most of that business would go to the grocery stores and bodegas, it would put the majority of the liquor stores out of business.
Furthermore, the only way those who are left could survive is by “going boutique” and selling only specialty or very expensive wines that can’t be bought in regular grocery stores, which is not necessarily the direction these small business owners want to go.
She argued that the Paterson plan wouldn’t accomplish it’s goals long term in any case because of the loss of tax revenue due to the closing of 1,000+ liquor stores and the laying off of over 4,000 people that would result from those closings.
She suggested that Long Island wineries would be hurt because grocery stores would only carry the big name wine brands, but not the local brands.
I hear what she’s saying, but I still have certain doubts. Certainly, one major function of government is to promote the feasibility of doing business in the State, but I’m just not sure that it is proper for the government to be the one making the choice about which businesses should prosper and which ones shouldn’t. Who’s to say that the liquor store owners have any more right to run their businesses the way they want than bodega or grocery store owners? Why should New York State be the one to make that decision? Shouldn’t the State get out of the way by allowing anyone who wants to sell wine to sell it and thus allow entrepreneurs and their customers make these decisions by voting with their feet and their dollars?
Picture courtesy of the NY Times.
Professor Volokh at The Volokh Conspiracy reported on a New York County Surrogate’s Court case, which granted “surviving spouse” status to a “husband” whose same-sex marriage was performed in Canada. In the case of In re Estate of Ranftle, a man married another man in Quebec and they moved to Manhattan. One of them died, leaving his husband and three siblings.
The question was whether New York should recognize the Canadian same-sex marriage as valid for the purpose of giving the surviving husband the decedent’s entire estate, where the decedent died without a Will. Had he left an inheritance to his husband in a Will, this would not have been an issue. But since he did not, his property passes pursuant to New York State intestacy law under EPTL 4-1.1.
The Surrogate ruled that, pursuant to the general presumption of the validity of foreign marriages, New York should recognize any marriages performed in a foreign jurisdiction unless the marriage violates some major public policy or “Natural Law.” Case law in New York has established that this exception only applies in cases of marriages involving incest between close relatives. Also, it argued that since all that was at stake in this case was the distribution of property, there was no reason to go outside of the generally held principal of recognizing foreign or out-of-state marriages.
Interestingly, Prof. Volokh also pointed out an interesting case from 1948 in California, In re Bir’s Estate, where a man who married two wives died, where he had married both wives legally in India, where polygamy was legal at the time. The California court held that in the case of recognizing a polygamous marriage, if all that’s at stake is the distribution of property, the public policy against polygamous marriages would not cause that state to actively not recognize that marriage.
I wonder what would happen if a man married two wives today in a country where that is legal, and then moved to New York. But let’s say the issue is not related to the distribution of his property. What if the husband got a job working for New York City or State government and the issue was whether both of his wives could receive health benefits as a spouse under his insurance plan?
February 9, 2009
Paul L. Caron at the TaxProf Blog reported on an interesting 3rd Circuit case, Eshelman v. Agere Systems, Inc. Basicially, an employer fired an employee in violation of the Americans With Disabilities Act (the “ADA”). The District Court, the trial court, held that the employer had to pay not only the back pay it owed to the employee, but also had to pay an additional amount to cover her additional taxes. Since the lump-sum back-pay payment would put the employee into a higher tax bracket than she would have otherwise been in had she been continuously employed the whole time, the District Court ruled that the employer had to pay the additional amount the employee would have to pay in taxes.
The 3rd Circuit affirmed this ruling, holding that the only way the employee could be “made whole” for the pay she should have received but didn’t because she was fired illegally, was to have her additional taxes paid by the employer as well. Otherwise, because of the higher tax rate that she would have paid at the time of the back-pay payment, she would end up with less than she would have, if she’d been paid smaller amounts over a longer period of time.
Giving an employee back pay, but forcing her to pay extra taxes because of it, reminds me of the time Oprah Winfrey gave everyone in her audience both a new car, and an obligation to pay income taxes on the receipt of that car. They had to either come up with up to $7,000 of their own money to pay for the income taxes on the car, forfeit the right to get the car, or sell the car (at a used car price) to pay the taxes, and keep the difference.
Thanks but no thanks. I can definitely see the logic behind awarding an employee an additional amount to pay the higher-bracket taxes on the back pay. If you’re going to give someone money or something of monetary value, whether as a gift or because you have to, it’s only fair that you also pay the additional tax liability you’re causing the person by giving the gift/money!