The opinion of the court was delivered by: MICHAEL B. MUKASEY
MICHAEL B. MUKASEY, U.S.D.J.
This is a motion for summary judgment by plaintiff Hedda Schoonderbeek von Kaulbach, who seeks a declaration that the agreement she signed to establish a trust is unenforceable. Her summary judgment motion in a companion case, Keoseian v. Schoonderbeek, et al., 763 F. Supp. 1253, was granted in an opinion reported as Keoseian v. Von Kaulbach, 763 F. Supp. 1253 (S.D.N.Y. 1991), aff'd mem., 956 F.2d 1160 (2d Cir. 1992). Familiarity with that opinion is assumed for current purposes. Von Kaulbach argues that the Foundation Trust agreement is not enforceable because it lacks notarial validation required by German law, or in the alternative because it constitutes a promise to make a gift in the future, and therefore is unenforceable under New York law. She argues also that if it was once enforceable, it has been validly revoked.
For the reasons set forth below, the motion for summary judgment is granted.
The Foundation Trust agreement requires von Kaulbach to donate 75% of her net legacy under her sister Quappi Beckmann's will to the Max Beckmann Foundation, an entity not yet formed. The idea to create the Foundation apparently originated with defendant Richard Keoseian and was approved by defendant Perry Rathbone; defendant Frederic P. Houston drafted the agreement in the summer of 1986, when von Kaulbach initially decided to contest Quappi's 1982 will. That will left most of Quappi's estate to her companions rather than to her sister von Kaulbach, as her 1975 will had. Von Kaulbach, 763 F. Supp. at 1254.
According to defendants Houston and Keoseian, von Kaulbach on several occasions stated that she neither liked nor wanted the Max Beckmann paintings that comprised the bulk of her sister's estate. Not only did this create litigation strategy problems for von Kaulbach by making it appear more probable that Quappi decided voluntarily to leave her estate to her companions rather than to her sister, but according to Houston it also cast doubt on whether von Kaulbach would be willing to press the will litigation to conclusion. Houston believed that creating a Max Beckmann Foundation would solve the problem by bringing into existence an entity that would receive either the paintings or the proceeds from their sale, and therefore would have an interest in pursuing the litigation. He believed that if von Kaulbach irrevocably conveyed to the Foundation her interest in the estate, then the trustees would have standing to pursue the litigation in her stead if her enthusiasm waned. Keoseian, Houston and Rathbone were nominated as the trustees of the proposed Foundation, with Keoseian designated also its Executive Director. Houston and Keoseian aver that von Kaulbach's execution of the Foundation Trust agreement was an important basis for their decision to undertake the will contest. The document did not call for the establishment of the foundation unless and until von Kaulbach prevailed in that contest.
Keoseian and Houston presented the document, entitled "The Foundation Trust," to von Kaulbach in Germany, along with Breed, Abbott & Morgan's retainer agreement. Houston avers that he reviewed the Foundation Trust agreement paragraph by paragraph with von Kaulbach, and then line by line explained its most important terms. (Houston Dep. at 36-37) The Foundation Trust agreement provided in relevant part as follows:
Hedda further agrees specifically . . . (c) to notify the Executors at an appropriate time, or as requested by the Trustees, that the Executors shall divide the net proceeds of the legacies payable or deliverable to Hedda [75% to the Foundation and 25% to her] . . . .
(Seltzer Aff. Exh. C) Houston also discussed with her the Breed, Abbott retainer agreement. (Id. at 37) These discussions took place at four meetings with von Kaulbach, each lasting 1 1/2 to 2 hours.
Von Kaulbach then signed both agreements in the presence of Houston, Keoseian and the United States Consul in Munich. The Consul certified that von Kaulbach, Keoseian and Houston personally appeared before him and executed the Foundation Trust agreement after he informed them of its contents and they acknowledged to him that they executed it freely and voluntarily "for the uses and purposes therein mentioned." (Zirin Aff. Exh. 3)
In November 1987, von Kaulbach signed a document entitled "Revocation of Document Entitled 'The Foundation Trust,'" which states in relevant part:
(Zirin Aff. Exh. 4) The document was sent to Keoseian, who told Houston and Rathbone of its contents.
Keoseian, through his lawyer, rejected the revocation in a letter which states in part: "Should the executors not voluntarily turn over to the Foundation Trust 75% of [von Kaulbach's] legacy, then . . . a plenary suit will be instituted on behalf of the Foundation Trust . . . to compel the Executors to turn over 75% of [her] legacy to it." (Seltzer Aff. Exh. A) In response, von Kaulbach brought this action to void the Foundation Trust agreement.
Defendant Keoseian raises as an affirmative defense a previously filed suit in Surrogate's Court, New York County, in which the validity of the Foundation Trust agreement is an issue. He invokes the familiar rule that when there are two competing lawsuits, "the first suit should have priority, 'absent the showing of balance of convenience in favor of the second action,' or unless there are special circumstances which justify giving priority to the second." William Gluckin & Co. v. International Playtex Corp., 407 F.2d 177, 178, 160 U.S.P.Q. (BNA) 513 (2d Cir. 1969) (quoting Remington Products Corp. v. American Aerovap, Inc., 192 F.2d 872, 873, 91 U.S.P.Q. (BNA) 312 (2d Cir. 1951)).
The suit in Surrogate's Court is an accounting proceeding brought by the temporary administrators of the Estate of Mathilde Beckmann. As evidence that the issue has been raised in the accounting proceeding, Keoseian cites Schedule J of the accounting, where the temporary administrators, one of whom is von Kaulbach's lawyer in this case, state that there is a document which purports to create a "Foundation Trust," but that von Kaulbach has disavowed any intention to transfer assets to any such foundation, and that "the temporary administrators believe issues relating to the validity of this document are not part of this proceeding." (Zirin Aff. Exh. 5) Plaintiff contends that the schedule is purely informational, and does not show that the parties to the accounting have joined issue before the Surrogate as to the validity of the Foundation Trust agreement.
Even if this issue has been raised before the Surrogate, I need not dismiss this case. Special circumstances justify continuing this action, whatever the issues in the accounting proceeding before the Surrogate. First, this case is closely related to Keoseian v. Schoonderbeek, supra, which was heard and decided here without objection. Second, von Kaulbach is not a party to the ...