of the case to the White Plains Division of this Court.
Plaintiff cross-moves for an order granting her leave to amend
the complaint, and disqualifying defendants' counsel from
representing any party to this litigation.
Through February 25, 1981, Pleasant Valley Textiles Inc.
("Textiles") was a New York corporation, having as its sole
shareholders Judell and plaintiff's decedent, Joseph R. Snyder
("Snyder"). Judell and Snyder each held a 50% interest in
Textiles. On February 25, 1981, Snyder died leaving a will
(the "Will") appointing plaintiff Executor, and appointing
plaintiff and Sheldon Snyder, decedent's son, trustees (the
"Trustees") with respect to the residuary estate, consisting
of, among other things, decedent's intangible personal
property. Will art. THIRD. The Will grants the residuary
estate to the Trustees and directs them to hold it in a
separate trust for the remainder of plaintiff's life, with
payments of income and/or principal to be made to plaintiff in
accordance with the provisions of article THIRD of the Will.
Through December 22, 1988, defendant Finishing was a New
York corporation engaged in the business of textile
processing, having as its shareholders Turetzky and Textiles.
On that date the directors and shareholders of Finishing
unanimously agreed to adopt a liquidation plan for Finishing
which, among other things, created the Liquidating Trust. In
accordance with Finishing's liquidation plan, Turetzky
received one unit of beneficial interest in the Trust, and
Textiles two units. By agreement dated December 28, 1988 by
and between Finishing, Judell and Turetzky, Finishing's
liquidation plan was effectuated.
By separate agreement dated December 28, 1988, by and
between Textiles, Judell and plaintiff as Executor of
decedent's estate (the "Transfer Agreement"), Textiles also
adopted a plan of liquidation. In accordance with the Transfer
Agreement, Textiles' shareholders surrendered their shares
which were redeemed and cancelled by Textiles in exchange for
two units of beneficial interest in the Liquidating Trust.
On December 28, 1988, Finishing paid to Turetzky, through an
entity called LST Realty, the sum of $120,000 in connection
with the sale of certain of Finishing's assets. In January
1989, plaintiff executed an instrument purporting to assign to
herself "all the right, title and interest of the Estate of
Joseph R. Snyder in and to the [Liquidating Trust] and all
other assets remaining in the name of the said estate . . . as
sole beneficiary under the [Will]" (the "Assignment").
Affidavit of Judith Snyder sworn to on May 10, 1990 ("Snyder
Aff."), Exhibit "4". Plaintiff sues individually, and
derivatively on behalf of Finishing, the Trust and all
shareholders of Finishing and owners of beneficial interest in
the Trust, to recover such $120,000 payment.
Defendants contend that plaintiff has no standing to
maintain this action in her individual capacity and argue that
title to the unit of beneficial interest of the Trust
belonging to the Estate of Joseph R. Snyder (the "Unit of
Beneficial Interest") remains property of the Estate.
According to defendants, in order for plaintiff properly to
maintain this action at all, she must sue in her capacity as
Executor. Defendants contend that as Executor, plaintiff
should be deemed a citizen of New York rather than Florida,
thereby destroying this Court's diversity jurisdiction.
Plaintiff relies on the Assignment to establish her
entitlement to bring this derivative action in her individual
capacity as a resident of the State of Florida, contending
that as a result of the Assignment, she acquired all right,
title and interest in and to the Unit of Beneficial Interest.
Diversity of Citizenship
In 1988, Section 1332 of Title 28 was amended to eliminate
confusion as to
whose citizenship controlled in cases involving personal
representatives. Section 1332 now provides:
the legal representative of the estate of a
decedent shall be deemed to be a citizen only of
the same state as the decedent, and the legal
representative of an infant or an incompetent
shall be deemed to be a citizen only of the same
state as the infant or incompetent.
28 U.S.C. § 1332(c)(2) (1988). Thus the effectiveness of the
Assignment is indeed in issue. If the Assignment is effective
to vest in plaintiff all right, title and interest in and to
the Unit of Beneficial Interest, plaintiff establishes
diversity of citizenship since she would be entitled to
prosecute this action in her individual capacity as a citizen
of the State of Florida, the affairs of the Estate and her
obligations as Executor having been discharged. If the
Assignment is ineffective to vest such right, title and
interest in plaintiff, plaintiff retains only a beneficial
interest in the Estate (under the Will's art. THIRD) and her
obligations as Executor endure. There appears to be no dispute
that decedent was a resident of the State of New York at the
time of his death. Plaintiff, as Executor,*fn2 would be deemed
a citizen of the State of New York for jurisdictional purposes
under Section 1332(c). The Court must therefore determine the
effectiveness of the Assignment in order to address defendants'
Though defendants dispute the fact of the assignment, the
Court will resolve this and other disputed issues of fact in
plaintiff's favor for purposes of this motion to dismiss. The
Court therefore assumes the instrument evidencing the
assignment to have been executed as indicated on its face. The
effect and impact of the Assignment as it relates to the
question of subject matter jurisdiction, however, is a
question of law for the Court. Though the parties draw various
conclusions from the fact of the Assignment, neither party
draws upon the best authority for determining the
effectiveness of the Assignment, the Will itself.
The Will provides, in relevant part:
FIRST: (A) I give to my children, SHELDON SNYDER
and ROBERT SNYDER, all my jewelry, clothing and
articles of personal adornment to be divided
amicably between them as they might agree. . . .
(B) I give to my wife, JUDY SNYDER (hereinafter
referred to as "my wife"), if she survives me,
all my tangible personal property not disposed of
under paragraph "(A)" of this Article, together
with all insurance policies thereon, if any. . ..
SECOND: I give to my wife, if she survives me, an
amount equal to the lesser of:
(A) the maximum marital deduction allowable in
the federal estate tax proceeding relating to my
estate, reduced by the total of all amounts
allowed as a marital deduction in said proceeding
with respect to property which passes or has
passed to my wife under other provisions of this
Will or apart from this Will, or
(B) the maximum effective marital deduction . ..