Introduction

This appeal from the Surrogate’s Court, Westchester County, arises out of the judicial settlement of a trustee’s final account for the Cheryl LaBella Hoppenstein 2005 Trust, established by grantor Reuben Hoppenstein for the benefit of his eldest child, Cheryl, and her five children. The trustee, Reuben’s brother Abraham Solomon Hoppenstein, engaged in two transactions later challenged by beneficiaries: (1) a 2008 loan of $251,534 from the trust to a related 2006 grantor retained annuity trust (the “GRAT”) to fund an annuity payment to the grantor, evidenced by an unsecured note and later satisfied in part by transferring to the trust a 9.375% interest in Taka Amachaya, N.V.; and (2) a 2012 transaction in which the grantor reacquired a 12.5% membership interest in Ohavta, LLC from the trust for $723,000.

After the trustee commenced the accounting proceeding in 2014 (and was later substituted by Joel D. Hoppenstein due to the trustee’s death), the objectants—Cheryl and her five children—lodged eight objections. Three were dismissed on summary judgment. The remaining objections contested the GRAT loan and repayment, the consideration received for the Ohavta transfer, the completeness of the Schedule A inventory, the amount of legal fees, and the trustee’s entitlement to commissions. On the eve of trial, and after filing a note of issue, the objectants served 14 trial subpoenas ad testificandum and duces tecum on family members and nonparty entities; those subpoenas were quashed.

Following a nonjury trial, the Surrogate sustained two objections in part (limiting commissions and disallowing certain disbursements), otherwise dismissed the remaining objections, and judicially settled the account. The Appellate Division affirmed. The decision is significant for its forceful reiteration that trial subpoenas cannot serve as backdoor discovery post–note of issue; its application of the Prudent Investor Act to an intra‑family trust/GRAT financing and acceptance of an illiquid asset in repayment; and its reaffirmation of burdens and standards governing fiduciary accountings, fee awards, and trustee commissions.

Summary of the Opinion

• Trial subpoenas quashed: The court affirmed that 14 trial subpoenas served by the objectants after the note of issue were overly broad and improperly sought materials not timely pursued in discovery or previously denied by motion to compel. Trial subpoenas cannot be used for general discovery or to ascertain whether evidence exists.
• Burden framework in accountings: The trustee made a prima facie showing that the account was accurate and complete by filing the account with a supporting affidavit. The objectants failed to carry their burden to show inaccuracies or omissions with reasonable certainty.
• Prudent Investor Act compliance: The trustee’s decision to loan $251,534 to the GRAT and to accept the GRAT’s Taka interest in repayment was consistent with the Prudent Investor Act (EPTL 11-2.3[b][2]), judged by circumstances at the time, not in hindsight.
• Valuation findings upheld: The Surrogate properly credited the trustee’s witnesses regarding the value of the trust’s 12.5% Ohavta interest and rejected the objectants’ valuation evidence; those credibility determinations were owed deference.
• Legal fees: The Surrogate appropriately apportioned and fixed reasonable attorney’s fees; appellate courts defer to the Surrogate’s fee determinations absent abuse of discretion.
• Trustee commissions: The award of $40,931.30 in trustee commissions under SCPA 2309 was a proper exercise of discretion. Forfeiture requires egregious misconduct such as fraud or disloyalty; the objectants did not make such a showing.

Analysis

Precedents Cited and Their Influence

• Capacity Group of NY, LLC v Duni, 186 AD3d 1482 (2d Dept 2020) and Bottini v Bottini, 164 AD3d 556 (2d Dept 2018); Wahab v Agris & Brenner, LLC, 106 AD3d 993 (2d Dept 2013): These cases anchor the proposition that a subpoena duces tecum is not a vehicle for general discovery or to explore whether discoverable material exists. It must target specific, material documents relevant to issues to be tried. The Second Department applied these authorities to affirm quashing 14 trial subpoenas that were both overly broad and transparently aimed at reopening discovery after a note of issue and after an unsuccessful motion to compel. The message is that trial subpoenas cannot circumvent discovery deadlines and orders.
• Matter of Giacobbe, 232 AD3d 790 (2d Dept 2024); Matter of Berk, 209 AD3d 1014 (2d Dept 2022); Matter of Hersh, 198 AD3d 766 (2d Dept 2021): These decisions restate the standard of review after a nonjury trial: the Appellate Division’s authority is as broad as the trial court’s on factual matters, but deference is owed to credibility assessments because the trial judge observed the witnesses. That deference was pivotal in upholding the Surrogate’s valuation determinations for the Ohavta interest and the overall weighing of testimony.
• Matter of Holterbosch, 216 AD3d 783 (2d Dept 2023); Matter of Elaine Langer Trust, 179 AD3d 1061 (2d Dept 2020); Matter of Doman, 110 AD3d 1073 (2d Dept 2013); Matter of Rudin, 34 AD3d 371 (1st Dept 2006): These cases supply the burden‑shifting framework in fiduciary accountings. The accounting party must fully account; filing an account with an affidavit is prima facie evidence of completeness. Objectants then must produce evidence showing inaccuracies or omissions with reasonable certainty; if they do, the accounting party must prove accuracy by a fair preponderance. Here, the trustee met the initial burden, and the objectants did not carry theirs.
• Matter of Wellington Trusts [JPMorgan Chase Bank, N.A.–Sarah P.], 165 AD3d 809 (2d Dept 2018): This case applies the Prudent Investor Act to fiduciary investment decisions, emphasizing that prudence is assessed at the time decisions are made, considering risk/return objectives for the portfolio as a whole. The court cited Wellington in concluding that lending to the GRAT and accepting the Taka interest as repayment were prudent in light of then‑perceived prospects of the asset.
• Matter of Petrocelli, 307 AD2d 358 (2d Dept 2003): Establishes that alleged omissions in an account must be shown with “reasonable certainty.” The objectants’ speculation that additional assets belonged in Schedule A failed to meet this threshold.
• Matter of Verdeschi, 63 AD3d 1084 (2d Dept 2009); Matter of Hersh, 198 AD3d 766 (2d Dept 2021): Both reinforce the primacy of the trial court’s credibility and valuation findings, which the Second Department again honored in upholding the Surrogate’s acceptance of the trustee’s valuation witnesses over the objectants’ experts regarding Ohavta.
• Matter of Greenfield, 127 AD3d 1189 (3d Dept 2015); Matter of Linder, 153 AD3d 1343 (2d Dept 2017); Matter of Brody, 202 AD3d 781 (2d Dept 2022); Matter of Gluck, 279 AD2d 575 (2d Dept 2001): These cases delineate that the Surrogate bears ultimate responsibility to fix reasonable attorney’s fees, evaluating time, labor, skill, and benefit to the estate or trust. The appellate court defers to that discretion absent an improvident exercise—deference applied here in upholding fee apportionment.
• SCPA 2309; Matter of Pavlyak, 139 AD3d 1338 (3d Dept 2016); Matter of Lasdon, 105 AD3d 499 (1st Dept 2013): These authorities govern trustee commissions and when forfeiture is warranted. Forfeiture is reserved for egregious conduct—fraud, gross neglect, intentional harm, sheer indifference, or disloyalty. The Second Department relied on these standards to affirm a commission award of $40,931.30, rejecting the objectants’ bid for forfeiture.

Legal Reasoning

The Second Department’s analysis proceeds along four doctrinal tracks: (1) the permissible scope of trial subpoenas after a note of issue; (2) the burden framework and standards of proof in fiduciary accountings; (3) the application of the Prudent Investor Act to challenged investment/loan decisions; and (4) discretion in fee fixation and trustee commissions.

First, on the subpoenas, the court reaffirmed that a subpoena duces tecum is for securing specific, identified documents material to issues to be tried—not for general discovery or to determine whether discoverable materials might exist. When, as here, parties serve a flurry of expansive trial subpoenas after filing a note of issue, and when those subpoenas seek materials previously denied in discovery or never timely requested, they will be quashed. This prevents parties from sidestepping discovery deadlines and ensures orderly trial preparation consistent with CPLR disclosure rules and Surrogate’s Court practice.

Second, on the accounting, the trustee satisfied his initial burden by filing the account with a supporting affidavit, which constitutes prima facie proof of completeness and accuracy. The objectants then bore the onus to present evidence demonstrating inaccuracies or omissions. The Surrogate found, and the Second Department agreed, that the objectants did not establish with reasonable certainty that Schedule A omitted assets, nor did they demonstrate that the consideration for the Ohavta transaction was inadequate. The appellate court emphasized deference to the Surrogate’s credibility determinations, especially as between competing valuation witnesses.

Third, the court applied the Prudent Investor Act to uphold the trustee’s 2008 loan to the GRAT and subsequent acceptance of the GRAT’s Taka interest in partial repayment. The trustee’s decision was judged by the circumstances at the time and the portfolio’s risk‑return objectives. Testimony credibly established that Taka was then viewed as a significantly appreciating investment—“a very smart investment”—and the GRAT’s structure made that asset the likely repayment source. The court declined to second‑guess the trustee’s judgment with hindsight merely because subsequent value was less than the note, aligning with the Act’s ex ante prudence standard.

Fourth, as to fees, the Surrogate weighed the familiar factors—time, effort, skill, benefit—and apportioned fees accordingly. The Second Department, recognizing the Surrogate’s superior vantage to assess the record, found no abuse of discretion. On commissions, the court sustained an award under SCPA 2309 after the Surrogate limited them, rejecting forfeiture because the objectants failed to prove fraud, gross neglect, intentional harm, disloyalty, or sheer indifference.

Impact and Practice Implications

• Sharp limits on trial subpoenas in Surrogate’s proceedings: Litigants cannot use trial subpoenas to reopen discovery or cure earlier strategic omissions. After a note of issue, trial subpoenas must be narrowly tailored to specific, identified documents demonstrably material to issues for trial. Attempts to subpoena family members and their entities to fish for new valuation or asset information will be quashed if untimely or overbroad.
• Reaffirmed burdens in accountings: Trustees can meet their prima facie burden through a properly prepared account and affidavit. Objectants must marshal concrete evidence—valuation analyses, transactional documents, bank records—showing inaccuracies or omissions with reasonable certainty. Speculation or inference is insufficient.
• Prudent Investor deference to context and timing: The decision underscores that intra‑family transactions (e.g., trust loans to a family GRAT and acceptance of illiquid assets in repayment) are not inherently imprudent. They will be evaluated under the portfolio‑level, ex ante prudence framework, emphasizing contemporaneous rationale and documentation. Hindsight underperformance alone will not establish imprudence.
• Valuation disputes turn on credibility: Where the Surrogate credits one side’s valuation witnesses and rejects the other’s, the Second Department will rarely intervene absent clear error. Practitioners should select qualified experts, ensure reliable methodologies, and present clear, non‑conclusory opinions tailored to the specific asset and valuation date.
• Attorney’s fees and commissions are durable on appeal: The Surrogate’s fee determinations and commission awards—particularly when the Surrogate articulates the factors considered—are entitled to deference. To defeat commissions, objectants need proof of egregious misconduct, not mere disagreements over investment outcomes or valuation judgments.
• Practice pointer for discovery: Where nonparty family entities and affiliates may hold relevant records, counsel should pursue timely disclosure via CPLR and SCPA discovery, and, if necessary, turnover proceedings, well before the note of issue. Preserve issues through proper motions rather than hoping to resurrect them via trial subpoenas.

Complex Concepts Simplified

• Judicial settlement of account: A Surrogate’s Court proceeding in which a fiduciary (here, a trustee) presents a detailed account of all trust receipts, disbursements, investments, and distributions for judicial approval.
• Subpoena ad testificandum vs. subpoena duces tecum: The former compels a witness to testify; the latter compels production of documents. A subpoena duces tecum is not a discovery tool to see what might exist; it must seek specific, material items.
• Note of issue: A filing that certifies a case is ready for trial. After it is filed, discovery is typically closed; parties cannot thereafter engage in broad discovery under the guise of trial subpoenas.
• GRAT (Grantor Retained Annuity Trust): An estate‑planning vehicle where the grantor transfers assets to a trust but retains a right to fixed annuity payments for a term. Any remainder passes to beneficiaries if the assets outperform the annuity hurdle. Here, the trust loaned funds to the GRAT to make an annuity payment, expecting repayment from the GRAT’s asset (Taka).
• Prudent Investor Act (EPTL 11‑2.3): New York’s standard requiring trustees to invest as a prudent investor would, considering the trust’s purposes, terms, distribution requirements, and other circumstances. Prudence is measured at the time of the decision, in the context of the portfolio as a whole, not by hindsight results.
• Schedule A (Inventory): The portion of an account listing initial trust assets or those received during the accounting period. Objectants claiming omissions must prove missing items with reasonable certainty.
• Equivalent value: In related‑party transactions (e.g., selling a trust asset back to the grantor), the trustee must obtain fair and reasonable consideration. Valuation evidence typically involves expert appraisals or financial statements.
• SCPA 2309 (Trustee commissions): The statute setting how trustees are compensated (commissions) based on principal and income handled, subject to reduction or forfeiture only for serious misconduct (e.g., fraud, disloyalty).
• Standard of review after nonjury trial: The Appellate Division can review facts and law but defers to the trial judge’s credibility findings because the judge observed the witnesses testify.

Conclusion

Matter of Cheryl LaBella Hoppenstein 2005 Trust fortifies two enduring themes in New York Surrogate’s Court practice. Procedurally, it puts a firm lid on attempts to deploy trial subpoenas as de facto discovery after a note of issue or to revisit matters already resolved by discovery rulings. Subpoenas must be specific and material; they are not fishing licenses.

Substantively, the decision reaffirms the burdens and deference built into fiduciary accountings and investment oversight. A trustee’s properly supported account creates a presumption of accuracy; beneficiaries must rebut it with concrete proof. Investment decisions—including intra‑family loans to GRATs and acceptance of illiquid assets in repayment—are judged under the Prudent Investor Act based on what was reasonable at the time, not by retrospective performance. The Surrogate’s determinations on valuation, fees, and commissions, grounded in credibility assessments and statutory criteria, will stand absent a clear abuse or proof of egregious misconduct.

For trustees and counsel, the case underscores the premium on contemporaneous documentation of investment rationale, fair‑value support for related‑party transactions, and rigorous preparation of the account with an affidavit. For objectants, it is a reminder to pursue timely, targeted discovery and to marshal reliable evidence that meets the “reasonable certainty” standard. As such, the opinion provides a practical, clarifying guidepost for fiduciary litigation in New York, particularly where estate‑planning structures like GRATs intersect with trust investment decisions and family‑owned assets.