Plaintiff in Deutsche Bank National Trust Company v. Sidden:
Aldridge Pite LLP, by Douglas S. Thaler
Plaintiff in Queen's Park Oval Asset Holding Trust v.
Matthews: Schiller, Knapp, Lefkowitz & Hertzel, LLP, by
Kari R. Smith, Esq.
Salvatore J. Modica, J.
above-captioned two cases are combined solely for the purpose
of this Memorandum Decision, raising a common issue on these
two otherwise unrelated mortgage foreclosure actions. They
both have a common denominator in that the movants, the
mortgagors, seeks the appointment of a substitute referee for
various grounds. In both of the cases combined for decision,
this Court's independent research shows that the judge,
now retired, who appointed both of the referees, selected an
attorney as the referee who did not qualify as not being on
the Part 36 List of eligible fiduciaries.
importance of the issue, since it is hard to find any
reported decisions discussing New York's institution of a
"Part 36" List of eligible fiduciaries in several
denominated categories, has led to this Memorandum Decision.
This decision demonstrates the pitfalls of going beyond the
Part 36 List in appointing a fiduciary, such as a referee,
although a judge is well within her or his rights in doing so
- - if done properly, as discussed herein.
of the Rules of the Chief Judge 922 NYCRR Part 36) governs
the following judicial appointments made by justices and
judges of the Unified Court System of new York State:
guardians; guardians ad litem, including their counsel and
assistants; privately paid law guardians where authorized;
court evaluators; attorneys for alleged incapacitated
persons; court examiners; supplemental needs trustees;
receivers; referees, e.g., a referee to sell property - -
excluding referees who perform quasi-judicial functions such
as those who hear and report [CPLR 4201], hear and determine
[CPLR 4301], or supervise discovery [CPLR 3104]; secondary
appointees of guardians and receivers, e.g., attorney,
accountant, appraiser, etc.; and certain public
administrators and counsel to public administrations in
certain regions. See, "The Rules of the Chief Judge Part
36: Questions and Answers, " found at
December, 2011, New York State's Commission on Fiduciary
Appointments issued an important report found at
Report's introduction even candidly indicates that
"[o]ver 130 years ago, Benjamin Cardozo's father,
Manhattan Supreme Court Justice Albert Cardozo, was harshly
criticized and ultimately forced to leave the bench in large
part because of his repeated appointment of relatives and
political cronies as fiduciaries." Id. The late
Judith S. Kaye, Chief Judge of the New York Court of Appeals
observed: ""[P]ublic confidence in the courts is
put at risk when judicial appointments are based on
considerations other than merit. Simply put, the public must
have faith that the courts operate free of favoritism and
beautifully written and scholarly article,
"Understanding Fiduciary Duty, " (Fla. B.J., March
2010, at 20, 22), Florida lawyers John F. Mariani,
Christopher W. Kammerer, and Nancy Guffey-Landers, Esqs.,
discuss the fiduciary duty:
The most basic duty of a fiduciary is the duty of loyalty,
which obligates the fiduciary to put the interests of the
beneficiary first, ahead of the fiduciary's self
interest, and to refrain from exploiting the relationship for
the fiduciary's personal benefit. This gives rise to more
specific duties, such as the prohibition against
self-dealing, conflicts of interest, and the duty to disclose
material facts. Perhaps the most famous description of the
duty of loyalty is by Chief Judge Benjamin Cardozo in
Meinhard v. Salmon, 249 NY 458, 464, 164 N.E. 545,
Many forms of conduct permissible in a workaday world for
those acting at arm's length, are forbidden to those
bound by fiduciary ties. A trustee is held to something
stricter than the morals of the market place. Not honesty
alone, but the punctilio of an honor the most sensitive, is
then the standard of behavior.
In addition to a duty of loyalty, a fiduciary also owes a
duty of care to carry out its responsibilities in an informed
and considered manner and to act as an ordinary prudent
person would act in the management of his or her own affairs.
If the fiduciary has special skills, or becomes a fiduciary
on the basis of representations of special skills or
expertise, the fiduciary is under a duty to use those skills.
Mariani, Christopher W. Kammerer, Nancy Guffey-Landers,
"Understanding Fiduciary Duty, " Fla. B.J., March
2010, at 20, 22 (footnote references omitted).
from Cardozo's famous statement in Meinhard,
made in 1928, for the New York Court of Appeals, the Supreme
Court of Florida, one year earlier, in Quinn v.
Phipps, 93 Fla. 805, 113 So. 419 (1927), articulated,
with equal polish:
Stripped of all embellishing verbiage, it may be confidently
asserted that every instance in which a confidential or
fiduciary relation in fact is shown to exist will be
interpreted as such. The relation and duties involved need
not be legal; they may be moral, social, domestic or
personal. If a relation of trust and confidence exists
between the parties (that is to say, where confidence is
reposed by one party and a trust accepted by the other, or
where confidence has ...