author: Titone, J.

text:
    [663 NE2d 599, 640 NYS2d 443]
    Edward E. Klein, Appellant, v Edwin Eubank et al., Respondents, et al., Discontinued Respondents.
    Argued November 29, 1995;
    decided January 9, 1996

      POINTS OF COUNSEL

      Jay B. Solomon, New York City, for appellant, and Edward E. Klein, appellant pro se.

    I. Petitioner did not lose his Judiciary Law § 475 lien merely because he was not the attorney of record when he commenced the enforcement proceeding. (Rodriguez v City of New York, 66 NY2d 825; Fischer-Hansen v Brooklyn Hgts. R. R. Co., 173 NY 492; Todd v Mutual Factors, 3 AD2d 537, 4 NY2d 759; Morgan v Drewry, S. A. R. L., 285 App Div 1; Matter of Cohen v Grainger, Tesoriero & Bell, 81 NY2d 655; Matter of Burroughs & Brown v Kelsey, 239 App Div 794; Matter of Gutchess, 90 AD2d 663; De Luccia v Village of Monroe, 180 AD2d 897; D’Amico v Nuzzo, 138 AD2d 667; Flores v Barricella, 123 AD2d 600, 69 NY2d 602.) II. Petitioner did not waive his Judiciary Law § 475 lien merely because the agreement confirming his withdrawal did not specifically permit him a lien. (People v Keefee, 50 NY2d 149; Kaplan v Reuss, 113 AD2d 184, 68 NY2d 693.) III. An attorney should not be required to commence a charging lien proceeding upon being discharged to preserve the lien, when there has been no resolution of the underlying case.

      Edwin L. Eubank, New York City, respondent pro se, and Spooner Snipe Eubank & Burnett (Edwin L. Eubank of counsel), for Eubank Group, Inc., and another, respondents.
    I. Petitioner is not entitled to a charging lien on any recovery in the Supreme Court action, under Judiciary Law § 475 or under any other cognizable theory; petitioner is also not entitled to a summary proceeding thereunder on the issue of any compensation due him, but is relegated to a plenary action. (Weinstein v Seidmann, 173 App Div 219; Rodriguez v City of New York, 66 NY2d 825; People v Keeffe, 50 NY2d 149; Shatzkin v Shahmoon, 19 AD2d 658; Theroux v Theroux, 145 AD2d 625; White v White, 107 Misc 2d 551; Levitas v Levitas, 96 Misc 2d 929; Maddaus v Goffen, 2 NY2d 32; Dean v O’Flaherty, 287 NY 586; Corby v Citibank, 143 AD2d 587.) II. There is no assignment, reservation of lien, or other agreement under which a "consensuai” lien in favor of petitioner can be found; and none has ever been asserted by petitioner. (Fairbanks v Sargent, 117 NY 320; Leon v Martinez, 84 NY2d 83; Matter of Cooperman, 83 NY2d 465.) III. There are no equities in petitioner’s favor; in fact the equities are the opposite, consistent with the authorities. (Holmes v Evans, 129 NY 140; Corby v Citibank, 143 AD2d 587; Allen v Rivera, 125 AD2d 278; Goldman v Rafel Estates, 269 App Div 647; Matter of Rieser, 137 App Div 177; Capoccia v Brognano, 126 AD2d 323; LMWT Realty Corp. v Davis Agency, 85 NY2d 462; Bacon v Schlesinger, 171 App Div 503, 224 NY 690.) IV. Petitioner failed to properly answer the motion in the manner specified in CPLR 2214.
   OPINION OF THE COURT

Titone, J.

In this proceeding brought by an attorney to enforce a statutory charging lien, the issues are whether a lawyer who was once but is no longer the attorney of record may invoke the Judiciary Law § 475 lien and whether the protection of that statute is forfeited when the attorney and client mutually consent to the termination of their relationship. We hold that the statutory lien is available even where both of these conditions are present.

Petitioner represented respondents Eubank Group, Edwin Eubank and Ellis Duncan as attorney of record in their efforts to recover a real estate brokerage commission. During the course of this representation, difficulties between petitioner and his clients emerged. After about eight months, petitioner formally withdrew from his representation, and a consent to a change of attorney was executed and filed. Edwin Eubank, who is himself a lawyer, then became the attorney of record.

When the action was settled some 13 months later, petitioner commenced the present proceeding to determine and enforce the Judiciary Law § 475 charging lien to which he believed himself entitled. An escrow fund sufficient to cover petitioner’s claimed fees was deposited with the court. Respondents then moved for summary judgment dismissing the petition, arguing that only the present attorney of record has the right to bring a proceeding to enforce the section 475 lien.

The Supreme Court agreed with respondents’ contention and dismissed the proceeding, holding that the language of the statute suggested that the lien should be confined to the attorney of record at the time the proceeding is brought. The Appellate Division upheld the dismissal on the alternative theory that petitioner’s statutory lien was lost when a consent confirming his withdrawal was filed without any provision preserving his right to a charging lien. Petitioner appealed the dismissal of his petition by leave of this Court. We now reverse.

With respect to respondents’ primary contention, we conclude that an attorney need not be counsel of record at the time the judgment or settlement fund is created in order to be entitled to the lien afforded by Judiciary Law § 475. This Court has previously recognized the right of a discharged attorney to enforce the statutory charging lien (Matter of Cohen v Grainger, Tesoriero & Bell, 81 NY2d 655, 658). Further, contrary to respondents’ contention, Judiciary Law § 475’s use of the present tense to designate "the attorney who appears for a party” (emphasis supplied) as the person entitled to the lien lends no support to their position, since the language in question refers to the time of the lien’s attachment, not its enforcement. Thus, under both the statute and our precedents, an attorney’s participation in the proceeding at one point as counsel of record is a sufficient predicate for invoking the statute’s protection (see, Rodriguez v City of New York, 66 NY2d 825).

Similarly lacking in merit is respondents’ contention that an attorney of record who has withdrawn by agreement is not entitled to enforce the statutory lien and must instead rely on an agreement to be negotiated with the client, either at the time of retention or at the time the withdrawal occurs. It has long been held that attorneys who terminate their representation for just cause continue to be entitled to enforce their liens (e.g., Matter of Dunn, 205 NY 398, 401; Corby v Citibank, 143 AD2d 587; Goldman v Rafel Estates, 269 App Div 647; Suffolk Roadways v Minuse, 56 Misc 2d 6; Matter of Martin, 36 Misc 2d 1020; Kent v Baker, 31 Misc 2d 840). Thus, it is simply inaccurate to state that, as a general proposition, attorneys who voluntarily withdraw always forfeit their statutory charging liens.

People v Keeffe (50 NY2d 149), on which respondents rely, did not overrule the foregoing cases. The Keeffe Court stated in dictum that "[a]n attorney’s charging lien may be lost if he voluntarily withdraws or is discharged for misconduct” (id., at 156 [emphasis supplied]). However, that broadly stated proposition must be read in conjunction with the two cases cited in support, Matter of Dunn (supra) and Fischer-Hansen v Brooklyn Hgts. R. R. Co. (173 NY 492). Those cases merely recite the far narrower proposition that a charging lien is waived by an attorney who without just cause neglects or refuses to proceed with the prosecution of the case (accord, Halbert v Gibbs, 16 App Div 126; Suffolk Roadways v Minuse, supra; Matter of Martin, supra; Matter of Kanfer & Kanter [Polansky], 33 Misc 2d 292; Kent v Baker, supra; Eisenberg v Brand, 144 Misc 878; Tuck v Manning, 53 Hun 455). There is no indication in Keeffe that the. Court intended by its dictum to override or modify the long line of cases holding that attorneys who terminate the attorney-client relationship for just cause continue to be entitled to enforce their liens. Nor is there any suggestion in Keeffe that the Court intended to extend lien forfeiture to the myriad of cases in which the attorney’s representation is discontinued by mutual consent for reasons not rising to the level of misconduct or "just cause” on either side.

While this Court has not expressly addressed the availability of Judiciary Law § 475’s charging lien in these situations, the operative pragmatic and public policy considerations militate against the rule respondents advocate. Attorney-client relationships frequently end because of personality conflicts, misunderstandings or differences of opinion having nothing to do with any impropriety by either the client or the lawyer. Others end because of unexpected conflicts of interests or changes in litigation strategy that require different lawyering skills. In some of those situations, the client may ask the attorney to withdraw. In others, it may be the attorney who initiates the termination process by offering to withdraw in order to avoid embarrassment, avert further conflict, preserve the relationship on a long-term basis or simply save the client from the discomfort of having to fire the attorney. Importantly, in many such cases, the decision to terminate the relationship is the product of a mutual choice.

Under respondents’ formula, attorneys who voluntarily withdraw in these situations would be penalized by the loss of a valuable statutory protection — the charging lien. The social or jurisprudential benefits of imposing such a penalty are not readily apparent, but the negative consequences that would flow from such a rule may easily be discerned. A rule making the charging lien unavailable to attorneys who voluntarily withdraw would introduce a strong economic deterrent to the amicable settlement of attorney-client disputes. Concomitantly, rather than encouraging attorneys to bow out graciously when a significant difference of opinion or other reason for withdrawal arises, such a rule would give attorneys with an interest in their clients’ claims every incentive to perpetuate the relationship until they are able either to negotiate a lien agreement or to provoke the client into terminating without "just cause.” Respondents’ proffered rule would thus foster contentious relations between attorneys and their clients.

Inasmuch as this outcome is neither commanded by precedent nor suggested by the statutory language, we decline to embrace it. Instead, we hold that where an attorney’s representation terminates and there has been no misconduct, no discharge for just cause and no unjustified abandonment by the attorney, the attorney’s right to enforce the statutory charging lien is preserved without the need to resort to further negotiations or enter into new stipulations with the client. This rule will leave the attorney and client free to end their relationship without the additional complicating factor of the need to arrange for the protection of the attorney’s continuing and legitimate interest in the client’s cause of action.

Applying this approach to the present case, we conclude that the lower courts’ grant of summary judgment in respondents’ favor was improper and that a hearing should be held on the question of petitioner’s entitlement to enforcement of his statutory charging lien. Although there was a claim that petitioner had abandoned his employment without just cause, that factual claim was vigorously disputed. Indeed, petitioner contended that he had not abandoned the relationship at all, but rather had withdrawn because both parties had "seen and felt the need to terminate.” Further, petitioner argued, the termination was the result of respondents’ unreasonable demands and, consequently, any "abandonment” the court found would have to be deemed supported by "just cause” on petitioner’s part. Under the traditional principles governing attorney-client relationships, petitioner’s entitlement to a Judiciary Law § 475 lien depends on the proper resolution of these allegations.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the matter remitted to Supreme Court for further proceedings consistent with this opinion.

Chief Judge Kaye and Judges Simons, Bellacosa, Smith, Levine and Ciparick concur.

Order reversed, etc.


source: Caselaw Access Project

license: Public Domain

text:
    [663 NE2d 602, 640 NYS2d 446]
    In the Matter of Doris Duke, Deceased. Bernard Lafferty et al., as Preliminary Coexecutors of Doris Duke, Appellants; Alexander D. Forger et al., as Temporary Administrators of the Estate of Doris Duke, et al., Respondents; Dennis C. Vacco, as Attorney-General of the State of New York, Respondent.
    Argued November 28,1995;
    decided January 11, 1996

      POINTS OF COUNSEL

      Stern & Greenberg (Herbert J. Stern, of the New Jersey Bar, admitted pro hac vice, of counsel), Willkie Farr & Gallagher, New York City (Ira H. Lustgarten of counsel), Katten Muchin & Zavis (Howard L. Weitzman, Lee Ann Watson and Dawn M. Canty, of the Illinois Bar, admitted pro hac vice, of counsel), and Nixon, Hargrave, Devans & Doyle, New York City (Adam B. Gilbert of counsel), for Bernard Lafferty, appellant.
    I. An evidentiary hearing is required and supported findings of fact must be made. (Matter of De Belardino, 47 AD2d 589; Matter of Lantz, 182 AD2d 452; Logan v Zimmerman Brush Co., 455 US 422; Santosky v Kramer, 455 US 745; Matter of Bosco, 106 Misc 2d 454; Reilly v United States, 863 F2d 149; Joint Anti-Facist Comm. v McGrath, 341 US 123; Greene v McElroy, 360 US 474.) II. The "facts” as recited in the order of removal are disputed and, in any event, do not require removal. (Matter of Goldstick, 177 AD2d 225, 183 AD2d 684; Rogers v United States, 697 F2d 886; Matter of Friscia, 136 AD2d 46; McCloskey v Schroder Banking Corp., 7 Misc 2d 501; People v Eichen, 168 Misc 276; United States v All Funds Presently on Deposit or Attempted to be Deposited, 832 F Supp 542; Matter of Rubin, 168 Misc 81; Matter of Dolansky, 196 Misc 802; Matter of Badore, 73 Misc 2d 471; Matter of Flood, 236 NY 408.) III. Appellant Lafferty’s alleged conduct and fitness have not and are not endangering the safety or impeding the administration of the estate. (Matter of Rosenberg, 213 App Div 167; Matter of Tysen, 245 App Div 845; Matter of Sperrle, 47 Misc 2d 1084; Matter of Flood, 236 NY 408; Matter of Fishman, 115 Misc 2d 871; Matter of Palmquist, 73 Misc 2d 587.) IV. The Surrogate exceeded the scope of her authority under SCPA 702. V. The case should be remanded to a different Surrogate. (Matter of Shantal M. K., 68 AD2d 482; People v Zappacosta, 77 AD2d 928.)

      Cravath, Swaine & Moore, New York City (Thomas D. Barr, George J. Gillespie, III, and Daniel L. Mosley of counsel), and Maureen Scannell Bateman for United States Trust Company of New York, appellant.
    I. The facts the Surrogate purports to rely on are disputed. (Matter of Walsh, 143 Misc 223, 236 App Div 809; Matter of Rothko, 43 NY2d 305; Matter of Marsh, 179 AD2d 578; Matter of Shaw, 186 AD2d 809; Matter of Nelson, 125 Misc 2d 451; Matter of Berri, 130 Misc 527; Birnbaum v Birnbaum, 73 NY2d 461; Matter of Durston, 297 NY 64; Matter of Ryan, 291 NY 376.) II. Since the Surrogate’s Court’s order of removal is based on disputed and plainly wrong facts, it must be reversed; a hearing must be held and supported findings of fact made prior to any removal. (Matter of Monroe, 142 NY 484; Matter of McDonald, 160 App Div 86, 211 NY 272; Matter of Farber, 98 AD2d 720; Matter of Scott, 49 App Div 130.) III. A fiduciary may be removed only if its conduct endangers the safety or impedes the administration of the estate. (Matter of Greenidge, 134 AD2d 592; Matter of Vermilye, 101 AD2d 865; Matter of Farber, 98 AD2d 720; Matter of Rosenberg, 213 App Div 167; Matter of Thieriot, 117 App Div 686, 188 NY 589; Matter of Getz, 198 Misc 218; Matter of Berri, 130 Misc 527; Matter of Monroe, 142 NY 484; Matter of Tysen, 245 App Div 845; Metropolitan Trust Co. v Stallo, 166 App Div 639.)

      Milbank, Tweed, Hadley & McCloy, New York City (Russell E. Brooks, Charles G. Berry and David R. Gelfand of counsel), for Alexander D. Forger, respondent.
    I. The Surrogate’s removal of appellant Lafferty was a proper exercise of her discretion in light of the undisputed evidence of his misconduct. (Matter of Grossman, 157 Misc 164, 250 App Div 503; Matter of Harris, 169 Misc 943; Towers World Airways v PHH Aviation Sys., 933 F2d 174, 502 US 823; Matter of Kramer, 127 Misc 485, 220 App Div 816; Birnbaum v Birnbaum, 73 NY2d 461; Emerson v Bowers, 14 NY 449.) II. The Surrogate’s removal of appellant Lafferty without a hearing was consistent with the sound discretion vested in her pursuant to the statutory scheme governing disposition of decedents’ estates. (Irving Trust Co. v Day, 314 US 556; Metcalfe v Union Trust Co., 181 NY 39; United States v Perkins, 163 US 625; Matter of Delano, 176 NY 486, affd sub nom. Chanler v Kelsey, 205 US 466; Adelman v Adelman, 58 Misc 2d 803; Matter of Bergdorf, 206 NY 309; Matter of Flood, 236 NY 408; Matter of Drubin, 29 Misc 2d 1062; Matter of Thompson, 75 Misc 2d 508; Matter of Pati, 151 AD2d 1006.) III. The Surrogate’s appointment of the limited temporary administrator is not an issue on this appeal. (Neumann v Metropolitan Med. Group, 153 AD2d 885.)

      McCarter & English, New York City (Rodney N. Houghton, Gerard G. Brew and John R. Drosdick of counsel), Simpson Thacher & Bartlett (Joseph Kartiganer and Michael Chepiga of counsel), and Howarth and Smith (Don Howarth and Suzelle M. Smith, of the California Bar, admitted pro hac vice, of counsel), for Harry B. Demopoulos, respondent.
    I. Appellants disregarded the high standards of conduct required of fiduciaries. (Meinhard v Salmon, 249 NY 458; Matter of Donner, 82 NY2d 574; Cooper v Jones, 78 AD2d 423; Matter of Rothko, 43 NY2d 305; Matter of Rubin, 147 Misc 2d 981, 172 AD2d 841; Matter of Marks, 137 AD2d 756, 71 NY2d 807; Matter of Goldstick, 177 AD2d 225, 183 AD2d 684.) II. The Surrogate correctly found that the facts in the report of the limited temporary administrator required immediate revocation of the letters issued to appellants. (Matter of Kramer, 127 Misc 485, 220 App Div 816; Matter of Grossman, 157 Misc 164, 250 App Div 503; Matter of Roeben, 171 Misc 548, 259 App Div 866, 285 NY 807; Matter of Sandrock, 49 Misc 371, 120 App Div 898, 189 NY 557; Matter of Cady, 36 Hun 122, 103 NY 678; Matter of Dolansky, 196 Misc 802; Matter of Murdoch, 22 Misc 2d 168; Matter of Pugarelli, 10 Misc 2d 456; Matter of Santoro, 18 Misc 2d 980; Matter of Burke, 129 Misc 2d 145.) III. The SCPA did not require a hearing. (Matter of Flaum v Birnbaum, 191 AD2d 227; Matter of Drimmer, 97 AD2d 792; DePicabia v Chester Natl. Bank, 50 AD2d 812; Board of Curators, Univ. of Mo. v Horowitz, 435 US 78; Cleveland Bd. of Educ. v Loudermill, 470 US 532; Mathews v Eldridge, 424 US 319; Parham v J. R., 442 US 584; Goss v Lopez, 419 US 565.) IV. There are no grounds for recusal. (Matter of Billings, 120 AD2d 663; Matter of Smith, 84 AD2d 664; McGinty v Laurino, 95 AD2d 847.)

      Davis Polk & Wardwell, New York City (Daniel F. Kolb of counsel), for Morgan Guaranty Trust Company of New York, respondent.
    I. This Court has insisted upon the undivided loyalty of fiduciaries. (Matter of Donner, 82 NY2d 574; Meinhard v Salmon, 249 NY 458; Birnbaum v Birnbaum, 73 NY2d 461; City Bank Farmers Trust Co. v Cannon, 291 NY 125.) II. Testatrix’s original intent to select a corporate fiduciary does not excuse United States Trust’s conflict. (Matter of Foss, 282 App Div 509; Matter of Rothko, 43 NY2d 305; Matter of Horowitz, 297 NY 252; Matter of Durston, 297 NY 64.) III. Removal of United States Trust pursuant to SCPA 719 did not require a hearing. IV. Removal was necessary to permit untainted administration of the estate.

      Raymond, J. Dowd, New York City, for Ann Bostich and others, respondents.
    The dissent’s reliance in the court below on the Attorney-General is misplaced. (Meinhard v Salmon, 249 NY 458.)

      Dennis C. Vacco, Attorney-General, New York City (John H. Carley, Victoria Graffeo, Pamela A. Mann and Susan A. Glover of counsel), respondent pro se.

    Charity will be best served by a judicial accounting proceeding. (Cooper v Jones, 78 AD2d 423.)
   OPINION OF THE COURT

Titone, J.

On October 28, 1993, Doris Duke died, leaving an estate valued at over $1 billion. Duke bequeathed a large portion of her estate to charity. Bernard Lafferty, described as her assistant and confidant, was named in Duke’s will as the lone individual coexecutor of her estate. Exercising discretionary authority granted solely to him in the will, Lafferty selected United States Trust as the corporate coexecutor.

The dispute before this Court concerns the propriety of the Surrogate’s summary removal of both coexecutors for misconduct pursuant to SCPA 719. While section 719 grants a Surrogate the authority to summarily remove fiduciaries, we conclude that the Surrogate abused her discretion by removing these executors without affording them a hearing under the unique circumstances of this case.

I.

On November 1, 1993, United States Trust and Lafferty filed a petition for probate of Doris Duke’s will and were issued preliminary letters testamentary (see, SCPA 1412). In January 1995, after United States Trust and Lafferty applied for leave to distribute certain bequests, counsel for several interested parties moved for the coexecutors’ removal, submitting an affirmation containing sensational allegations of misconduct, including charges of kidnapping, murder, waste, commingling of estate assets and substance abuse by Lafferty. Because of the magnitude of the estate and the seriousness of the allegations, the Surrogate requested suggestions from counsel for "an accelerated procedure for preliminary inquiry into the issue[s].” In response, the coexecutors denied the allegations and suggested that a Referee be appointed to determine whether there was any reason to take further action against them.

On January 20, 1995, the Surrogate rejected the suggestion to appoint a Referee, noting "the inevitable delays, squabbles over evidence and witnesses, and time and resources which would be consumed by a formal hearing.” She also declined to authorize Dr. Demopolous, a named executor under a codicil to a prior will, to investigate the preliminary coexecutors’ conduct, citing the potential for bias. Instead, referring to SCPA 702 (8), (9) and (10), the Surrogate issued limited letters of temporary administration to Richard Kuh, an attorney in private practice, authorizing him to "examine the allegations of misconduct, examine the affairs of the estate, conduct interviews to the extent deemed necessary, and report to the Court within 45 * * * days as to the need, if any, for further action” (emphasis added).

In issuing this order, the Surrogate indicated that Kuh’s investigation was to be "informal and expeditious,” but otherwise gave Kuh broad discretion in the procedures he would employ to gather information. The Surrogate also advised the parties that Kuh "is not going to be a fact-finder” and noted that concerns about the Kuh report should be raised, "if they exist, during the period you have to respond to [it].”

Kuh’s report and its supplement, which were filed with the Surrogate, are based on interviews with over 50 persons. However, because the report did not contain sworn statements and the identities of the witnesses contacted were largely undisclosed, counsel for the coexecutors objected to its use on due process grounds, arguing that they were unable to test its veracity. The coexecutors additionally submitted substantive written responses, which included affidavits from Lafferty and three senior officers of United States Trust, as well as from 30 estate employees, friends, physicians and advisors of Doris Duke, that raised factual disputes about the information contained in the Kuh report.

On May 22, 1995, after reviewing the submissions, the Surrogate made an order summarily removing Lafferty and United States Trust. In her opinion, the Surrogate divided the Kuh report’s disclosures into two classes: those that are undisputed and those "that rely upon factual allegations that are disputed.” As to Lafferty, the Surrogate concluded that undisputed facts established four grounds for removal as a fiduciary: (1) commingling of estate and personal assets, based on his use of estate residences and credit cards; (2) waste of estate assets, shown by his unauthorized use and destruction of Duke’s Cadillac; (3) improvidence and want of understanding, shown by Lafferty’s lavish personal spending habits and limited literacy; and (4) substance abuse. As to United States Trust, the Surrogate concluded that it had been guilty of misconduct in failing to "rein in” Lafferty’s misconduct. Further, according to the Surrogate, United States Trust created a conflict of interest by giving Lafferty an unsecured loan of approximately $825,000, and had also engaged in its own acts of waste by retaining the services of nonresident alien employees and thereby incurring interest and penalties to be charged to the estate. The Surrogate concluded that "the full panoply of undisputed actions demonstrates such a serious lack of understanding of appropriate fiduciary responsibility that immediate removal of both fiduciaries is warranted as a matter of law.” The Surrogate replaced Lafferty and United States Trust with Alexander D. Forger, an attorney, and Morgan Guaranty Trust Company as the temporary individual and corporate co-executors.

A divided Appellate Division affirmed. Although the majority rejected the Surrogate’s characterization of the facts on which she relied as "undisputed,” it concluded that summary removal was proper because "the unfitness of the coexecutors was established by a combination of documentary proof and the coexecutors’ own concessions,” and that no triable issue of fact was raised by the totality of the submissions. (220 AD2d, at 241.)

Finding merit in the position taken by the coexecutors and the Attorney-General, who represents the charitable beneficiaries of Duke’s will, the two-Justice dissent concluded that removal of the designated executors without an evidentiary hearing was an extraordinary and unwarranted measure since "it has yet to be established that the estate has sustained any loss, much less been placed in jeopardy.” (220 AD2d, at 244.) The dissenters initially noted that because no hearing had been held, there was no factual record for appellate review and no "proof of serious misconduct, which the law requires to justify supplanting the decedent’s choice of executors.” (Id., at 242.) The dissent also concluded that the language in the SCPA authorizing a Surrogate to revoke letters issued to a fiduciary "without a petition or the issuance of process” means "only that no formal notice is required to bring on a hearing for removal * * * [and] does not mean that the dismissal of an executor by the Surrogate may rest on less than compelling grounds * * * [or] that such action may be based on a record that is less than adequate to permit appellate review.” {Id., at 243.)

That two-Justice dissent on a question of law serves as the predicate for this Court’s jurisdiction of the coexecutors’ appeal. We share the dissenters’ concern over the state of the record and the Surrogate’s summary disposition of this fact-laden controversy — a view strongly echoed in the Attorney-General’s submissions to this Court. Accordingly, we now reverse and remit to the Surrogate for limited further proceedings.

II.

We begin our analysis with SCPA 719, which provides that a Surrogate "may” suspend, modify, or revoke letters testamentary without service of process on the fiduciary, in certain enumerated circumstances. Respondents contend that if a fiduciary may be removed without notice under that provision, it follows that a hearing is not required before the statute’s authority may be invoked. While the Surrogate is clearly granted the exceptional authority to summarily remove executors without the formality of commencing a separate proceeding, the authority to exercise the ultimate sanction summarily is not absolute. The Surrogate may remove without a hearing only where the misconduct is established by undisputed facts or concessions (see, DePicabia v Chester Natl. Bank, 50 AD2d 812; Matter of Grossman, 250 App Div 503, 504), where the fiduciary’s in-court conduct causes such facts to be within the court’s knowledge (see, 2 Warren’s Heaton, Surrogates’ Courts, § 20.11 [3] [a], at 20-129 [6th ed]; Matter of Flaum v Birnbaum, 191 AD2d 227, 228) or where facts warranting amendment of letters are presented to the court during a related evidentiary proceeding (see, Matter of De Beixedon, 262 NY 168).

By contrast, issuance of a decree without a hearing under section 719 will constitute an abuse of discretion where the facts are disputed, where conflicting inferences may be drawn therefrom (see, Matter of Farber, 98 AD2d 720), or where there are claimed mitigating facts that, if established, would render summary removal an inappropriate remedy. In other words, where it is clear that the full factual picture has not yet been painted, "immediate action should [not] be taken without the fiduciary being heard” (2 Warren’s Heaton, op. cit, § 20.11 [3] [c], at 20-130). In such circumstances, an opportunity to be heard and to present or contest relevant evidence would properly follow (see, e.g., Matter of Irwin, 60 AD2d 885; Matter of Bosco, 106 Misc 2d 454).

Upon finding a fiduciary’s violation of section 719, the Surrogate is vested with discretion to select among a number of courses of relief, the most serious of which is revocation of letters and removal of the fiduciary (see, Stolz v New York Cent. R. R. Co., 7 NY2d 269, 273). Removal of a fiduciary constitutes a judicial nullification of the testator’s choice and may only be decreed when the grounds set forth in the relevant statutes have been clearly established (Matter of Leland, 219 NY 387, 392). Accordingly, the rule has long prevailed that "courts are required to exercise the power of removal sparingly and to nullify the testator’s choice [of executor] only upon a clear showing of serious misconduct that endangers the safety of the estate; it is not every breach of fiduciary duty that will warrant removal [of an executor]” (Matter of Israel, 64 Misc 2d 1035, 1043, citing Matter of Braloff, 3 AD2d 912, affd 4 NY2d 847).

III.

In this case, the fiduciaries had notice that the Surrogate was considering action pursuant to SCPA 719. Thus, the pivotal question here is whether the Surrogate’s failure to afford the coexecutors a hearing prior to their removal constituted an abuse of discretion. We conclude that it was.

Turning first to the procedures employed by the Surrogate here, we preliminarily note that the propriety of the Surrogate’s novel grant of limited letters testamentary to Mr. Kuh, under the authority of SCPA 702, is not before us since an appeal by the coexecutors on that issue was abandoned. However, even assuming that Kuh’s appointment was technically permitted under the broad language of section 702 (10) for preliminary investigative purposes, the information contained in the Kuh report is woefully inadequate as a predicate for judicial action. The report contained no sworn statements, and its sources remained largely undisclosed. As a consequence, it had little worth as an evaluative tool, since it did not give the Surrogate a record from which to make her own factual findings. Notably, in this case, the Surrogate had not delegated her fact-finding authority pursuant to SCPA 506, which provides for the appointment of a Referee — a process that includes certain evidentiary safeguards. Although her reasons for doing so — concern for delay and waste — are valid in the abstract, the interests of procedural fairness would have been better served if the Referee-appointment authority had been invoked. When a Referee is appointed, the compensation and allowable expenses are fixed by statute (see, SCPA 506 [5]). Although the Kuh report yielded little usable information, the costs associated with its completion by a private attorney, including disbursements and experts’ fees, are likely to exceed those associated with a reference, and have been estimated at over $600,000.

Additionally, the Surrogate did not delineate the function that the report would serve. In fact, the terms of the limited letters issued to Kuh, which directed him to alert the Surrogate "to the need, if any, for further action,” themselves suggested that something more — such as a hearing — would take place before the Surrogate would act on the information Kuh gathered.

Given that fundamentally flawed procedure, the information contained in the Kuh report — upon which the Surrogate primarily relied in removing the coexecutors — provided an insufficient factual predicate for the grant of summary relief pursuant to SCPA § 719. Similarly, given the uncertainty surrounding the Surrogate’s intended use of the Kuh report, the coexecutors’ failure to dispute certain allegations contained therein did not automatically present the Surrogate with "conceded” facts that obviated the need for a hearing. On the contrary, the coexecutors persistently disputed the disclosures contained in the report, and sought an opportunity to defend themselves. Additionally, none of the traditional circumstances that justify the grant of summary relief were present here: the Surrogate had no independent knowledge of any statutory grounds for removal, no facts had been presented to the Surrogate in a related evidentiary proceeding, and the Kuh report did not provide a proper factual predicate for such ex parte judicial action. Indeed, the Attorney-General strongly urges this Court to reject the Surrogate’s summary disposition and remit for further proceedings, citing the inherent unfairness of removing fiduciaries without proper pleadings or a hearing on these contested facts.

To be sure, certain facts establishing sanctionable misconduct, such as waste, were contained in the coexecutors’ own affidavits and documentary proof submitted to the Surrogate in response to the Kuh report. Nonetheless, given the numerous factual controversies concerning the coexecutors’ fitness for their posts, and the fact that the fiduciaries were denied any reasonable opportunity to present mitigating facts that may have affected the Surrogate’s choice of relief, summary removal of the testatrix’s chosen executors under SCPA 719 without a hearing and based largely on the untested hearsay assembled here was an abuse of discretion. Accordingly, we reverse and remit for further limited proceedings to address whether any of" the disputed allegations of misconduct against the fiduciaries are established by a proper factual predicate, and, if substantiated, whether removal or some other less severe sanction may provide adequate redress for those wrongs (see, Matter of Vermilye, 101 AD2d 865, 866).

Given the serious allegations of misconduct that have been levelled against both coexecutors and have taken the probate proceedings off course for a period in excess of two years, the Surrogate’s decision, in the interests of efficiency and economy, to determine the dispute without a hearing, though erroneous, was understandable. On remittal, those goals would best be served by conducting a limited evidentiary hearing that is tightly controlled by the Surrogate and confined to particular factors, which, if fairly proven, would warrant any sanction within the Surrogate’s extensive powers.

Accordingly, the order of the Appellate Division should be reversed, with costs payable out of the estate, and the matter remitted to Surrogate’s Court, New York County, for further proceedings in accordance with this opinion.

Chief Judge Kaye and Judges Simons, Bellacosa, Smith, Levine and Ciparick concur.

Order reversed, with costs to all parties appearing separately and filing separate briefs payable out of the estate, and matter remitted to Surrogate’s Court, New York County, for further proceedings in accordance with the opinion herein.

      . The will also contained a default provision appointing United States Trust as corporate executor in the event that Lafferty did not exercise his appointment power. Under the will, Lafferty also had exclusive authority to remove the corporate coexecutor.

      . The term "may [w]hen used in [the SCPA], in relation to an act to be performed by the court, means in the discretion of the court” (SCPA 103 [38]).

      . "Process” is defined as "[c]itation, order to show cause, subpoena and any other mandate of the surrogate’s court by which jurisdiction is obtained of a party” (SCPA 103 [43]).

      . SCPA 719 expressly permits a decree changing letters testamentary to be issued without process where there has been a default in appearance or disobedience to a court order (SCPA 719 [1], [3]), where the fiduciary has absconded and cannot be served (id., 719 [2]), where the fiduciary has been convicted of a felony, judicially committed or declared incompetent (id., 719 [6]), where he commingles estate funds with his own (id., 719 [7]), or "[w]here any of the facts provided in [section] 711 are brought to the attention of the court.” (Id., 719 [10].)

      . Pursuant to SCPA 702 (10), the Surrogate may grant limited letters testamentary authorizing the holder to engage in "any other purpose or act deemed by the court to be appropriate or necessary in respect of the affairs of the estate, the protection thereof or to the proper administration thereof.”

      . A Referee may be appointed "to report to the court upon the facts or upon a specific question of fact or upon the law and the facts” (SCPA 506 [1]) The Referee conducts a reference "in the same manner as a court trying an issue without a jury” (id,., 506 [3]). Within 30 days of the completion of the hearing, the Referee shall file a report containing "the facts found and the conclusions of law” (id., 506 [1], [3]). A transcript of the testimony taken at the hearings and exhibits shall be filed with the Referee’s report (id., 506 [3]).

      . The parties do not claim that any impediment prevented the Surrogate from appointing a Referee. In fact, the coexecutors requested that a Referee be appointed to investigate the allegations of fiduciary misconduct.

      . Unfortunately, these proceedings to litigate the propriety of the coexecutors’ conduct and their summary removal will ultimately deplete the estate’s residuary funds by the enormous sums expended in connection with the provision of legal representation for the coexecutors and the completion of the Kuh investigation. What has been lost in the process is the interest of the beneficiaries — mostly charities — whose bequests have thereby been diminished.