Feeney v. Giannetti (2025): Mandatory Evidentiary Hearings on Receiver Accountings and Reinforced 5-Percent Cap on Commissions

1. Introduction

Feeney v. Giannetti, 238 A.D.3d 991 (2d Dep’t 2025), arose from a decades-long family dispute over a Bayville, New York residence purchased in 1977 by Margaret Giannetti and her brother, Thomas J. Feeney. The litigants were Margaret’s four sons—Thomas, Michael (whose estate is now represented), John, and Kevin Giannetti—and Feeney. After an acrimonious battle that included claims for a constructive trust and counterclaims concerning title, the parties signed a court-so-ordered settlement stipulation (Nov. 16, 2015). The stipulation dictated:

Equal tenancy-in-common title for the four brothers;
Specific “off-the-top” monetary credits to John ($50,000) and Thomas ($35,000);
Responsibility allocations (e.g., Thomas to pay taxes; John to satisfy a home-equity mortgage);
Sale of the property by May 1, 2016, followed by equal division of net proceeds.

Performance collapsed. By 2019 the Supreme Court (Nassau County) appointed attorney Bruce R. Hafner as temporary receiver to sell the home, manage interim affairs, and seek approval of a final accounting.

Hafner sold the property in 2020, filed an amended final report, and requested commissions and legal fees that exceeded the statutory 5 % ceiling when combined. Without holding a hearing, the Supreme Court confirmed the report, fixed Hafner’s compensation at $49,232, and directed distributions inconsistent with the stipulation. John and Thomas appealed.

The Appellate Division reversed and remitted, holding that a contested receiver accounting requires an evidentiary hearing and that commissions/fees must conform to CPLR 8004’s 5 % cap absent proven “special circumstances.”

2. Summary of the Judgment

Order & Judgment Reversed. The Second Department found legal error in confirming the receiver’s account without a hearing in light of live factual disputes.
Compliance with Stipulation Required. The receiver’s failure to honor the stipulated “off-the-top” credits and the improper allocation of insurance costs necessitate reconsideration.
Receiver Compensation. The trial court must conduct a hearing to (a) set commissions as a percentage (≤ 5 %) of sums “received and disbursed,” and (b) ascertain whether “special circumstances” justify any excess payment, mindful that lawyers acting as receivers are expected to perform routine legal services within the commission.
Remittal for Further Proceedings. The cause is sent back to the Supreme Court, Nassau County, for the evidentiary hearing and recalculation consistent with the appellate guidance.

3. Analysis

3.1 Precedents Cited

Laffey v. Laffey Fine Homes Intl., LLC, 192 A.D.3d 878 (2d Dep’t 2021); Bozewicz v. Nash Metal Ware Co., 280 A.D.2d 443 (2d Dep’t 2001); Key Bank of N.Y. v. Anton, 241 A.D.2d 482 (2d Dep’t 1997).
These cases collectively hold that when factual issues exist regarding a receiver’s accounting or distribution, a court must hold an evidentiary hearing before confirmation.
Hallock v. State of New York, 64 N.Y.2d 224 (1984) & its progeny (e.g., Marasco v. ExxonMobil Oil Corp., 224 A.D.3d 738 (2024); Amerally v. Liberty King Produce, Inc., 170 A.D.3d 637 (2019)).
These decisions reiterate that stipulations of settlement are contractual in nature and “not lightly cast aside” absent fraud, mistake, or similar vitiating factors.
Flotteron v. JEL Realty, 58 A.D.3d 677 (2d Dep’t 2009); Silvestre v. Shelley, 30 A.D.3d 401 (2d Dep’t 2006); Friesch-Groningsche Hypotheekbank Realty Credit Corp. v. Semerjian, 232 A.D.2d 448 (2d Dep’t 1996).
These decisions interpret CPLR 8004, limiting a receiver’s commissions to 5 % of funds handled and noting that attorney-receivers are presumed to perform normal legal duties within that cap.
Martini v. Martini, 284 A.D.2d 510 (2d Dep’t 2001); Strober v. Warren Prop. Co., 84 A.D.2d 834 (2d Dep’t 1981).
Both cases deny separate legal fees to a receiver-attorney unless extraordinary circumstances exist.

3.2 Court’s Legal Reasoning

The Second Department went back to first principles:

Due Process in Receiverships. A receiver’s accounting—especially one challenged on factual grounds—is an adjudicative act that can affect substantive property rights. Under Laffey and similar precedent, parties are entitled to a hearing to confront and test evidence (e.g., alleged “interference” costs, proper distribution figures).
Enforceability of Stipulations. Because the 2015 stipulation operated as a contract, the receiver and lower court were bound to its terms unless legally invalidated. Omitting the $50,000 and $35,000 “off-the-top” credits and reallocating insurance premiums contravened that contract and could not be approved without factual findings or a ruling on contract invalidity.
Statutory Cap on Commissions (CPLR 8004).
- The legislature capped commissions at “not exceeding five percent of sums received and disbursed.”
- Commissions are normally the receiver’s sole compensation; a receiver who is also an attorney is “expected to perform customary legal duties” within that fee.
- Only “special circumstances” warrant exceeding 5 %, and those must be developed on the record.
- The trial court erred in simultaneously awarding 5 % of the sale price plus hourly legal fees that almost doubled Hafner’s compensation without findings of special circumstances.
Remittal as Remedy. Because fact-specific determinations (credits, insurance allocation, misconduct costs, special circumstances) remained, the appellate court could not fix figures itself and therefore returned the matter.

3.3 Impact of the Judgment

Feeney v. Giannetti pushes New York receivership jurisprudence forward in several respects:

Procedural Safeguards. Trial courts must now treat contested receiver accountings like mini-trials, ensuring live testimony and documentary proof before confirmation.
Receiver Compensation Discipline. The decision re-affirms that the 5 % statutory ceiling has real teeth. Expect enhanced scrutiny of hybrid “commission + hourly fees” applications.
Contract Integrity. Where a receivership emanates from a stipulation, the receiver’s distribution plan must mirror the stipulation unless a court first sets it aside on recognized contract-law grounds.
Guidance to Practitioners. Attorneys asked to serve as receivers (or to oppose receiver accountings) can leverage this precedent to demand hearings, challenge fee structures, and enforce settlement terms.
Reduction of Post-Settlement Litigation. By insisting on adherence to settlement terms and proper accounting procedure, the decision may deter parties from protracting intra-family or closely-held-entity disputes.

4. Complex Concepts Simplified

Receiver: A neutral individual (often an attorney) appointed by a court to take custody of property, manage it, and sometimes liquidate it, preserving value while litigation is pending.
Accounting: The detailed report a receiver files, listing all money received, expenses paid, and recommendations for distributing remaining funds.
“Off-the-Top” Credits: Specific sums that must be paid out of gross sale proceeds before calculating each party’s proportional share—similar to preferred payments.
CPLR 8004: A New York statute prescribing how a receiver is compensated—generally up to 5 % of all money the receiver handles.
Constructive Trust: An equitable remedy where a person holding property is deemed a trustee for another, to prevent unjust enrichment.
Stipulation of Settlement: A binding agreement made between litigants (often in open court), resolving disputes and typically “so-ordered” by the judge; treated like a contract.

5. Conclusion

Feeney v. Giannetti underscores the judiciary’s dual commitment to enforcing private settlement contracts and guarding statutory limits on court-appointed fiduciaries. The Second Department’s insistence on an evidentiary hearing before confirming a receiver’s disputed accounting, coupled with its rigorous reading of CPLR 8004, provides a clarion blueprint for lower courts statewide:

Do not shortcut due-process protections in receivership confirmations;
Honor the letter of settlement stipulations absent a valid basis for rescission; and
Scrutinize receiver fee requests against the statutory 5 % benchmark, requiring proof of “special circumstances” for any excess.

As post-settlement monitoring and enforcement continue to occupy a growing share of civil dockets—particularly in closely held family or business contexts—the appellate court’s guidance will shape fiduciary practice and litigant expectations well beyond Nassau County.