In the Matter of Bacchetta, 2010 NY Slip Op 51021(U) (N.Y. Surr. Ct. 6/9/2010)

Edmund A. Calvaruso

Mary C. Bacchetta died September 13, 2007, leaving a Last Will and Testament, dated February 4, 1994, appointing John R. Parrinello, Esq. as Executor. At the time of her death, Ms. Bacchetta had an ownership interest in 3740 Ridge Road West, Greece, New York, a property known as Elm Ridge Center ("Elmridge Plaza"). Elmridge Plaza was owned by Elmridge Associates, LLC ("Associates"), whose managing member with one percent interest was Elmgroup Management, Inc. ("Elmgroup"). Ms. Bacchetta owned 49 shares of Elmgroup. The other 51 shares of Elmgroup were owned by Patrick J. Basset and entities under his control ("the Basset Group"). Ms. Bacchetta also owned Talco Contracting, Inc., a 49.5% owner of Associates.

Prior to Ms. Bacchetta's death, two actions were commenced in Monroe County Supreme Court against Mr. Bassett and the companies he controls: Talco, et al. v. Basset, et al. (Index No. 11813-06), and Parrinello, as Executor of the Estate of Mary C. Bacchetta v. Basset, et al. (Index No. 11588-08). Both actions alleged that the Basset Group breached its fiduciary duty to Associates by self-dealing and overpayment for services. On March 26, 2010, these actions were settled by written agreement of the parties whereby the Estate agreed to discontinue all lawsuits between the Estate and the Basset Group, and surrender all interest in Associates and therefore in Elmridge Plaza, and in exchange, the Basset Group agreed to pay the Estate one million dollars. This settlement involved no admission of liability by either party.

On April 14, 2010, the Honorable Kenneth R. Fisher, Justice of the Supreme Court, granted a Cross Motion by Mark Moretti, Esq. approving the settlement. Thereafter, John R. Parrinello, as Executor of the Estate brought the instant Petition for Advice and Direction requesting that this Court issue a Decree, pursuant to section 2107 of the Surrogate's Court Procedure Act, approving the agreement of the parties, permitting the Estate to divest itself of its ownership interest in Elmridge Center, and allow the Executor to execute the necessary releases to discontinue the pending actions against the Basset Group. In the Order approving the settlement, Judge Fisher also ordered that the Order itself, and any associated pleadings and documents "filed with the New York Supreme Court, County of Monroe and County Clerk of Monroe County" be sealed and deemed confidential. Order, Index No. 11588-09 (April 26, 2010).

At the return date for the instant Petition, Mark Moretti, Esq. made an unopposed oral Motion to also have the Surrogate's Court files sealed. No formal pleadings have been submitted with regard to this request. In response to the Court's two requests for additional support for the oral Motion to seal the file, Mr. Moretti has submitted two letters.

A court may not order sealing of its records except upon a finding of good cause. 22 NYCRR § 216.1[a]. This anti-sealing' rule was enacted in part to, "curtail the disfavored practice where sealing became a condition of settlement and courts were not sufficiently protective of the public interest in the openness of court proceedings." In re Estate of Hofmann, 188 Misc 2d 841, 729 NYS2d 821, 826 (NY Sur. NY Co. 2001). This policy of the courts reflects "a longstanding recognition of the importance of allowing public access to court records in order to protect the general right of the public to have open court proceedings," (Id., at 825) a right that has traditionally been strongly supported by this Court. See Matter of the Guardianship of Max and Marian Farash, Index No. 1997LT00023/B (Sur. Ct. Monroe Co. October 5, 2007) ("The Court is, however bound by the presumption of open, public courts, and compelled by its own belief in the salutary role played by the public in the administration of justice, to insure that records of proceedings are sealed only where a showing of good cause can be sustained."). The determination of good cause' requires the Court to balance the public's interest in disclosure against the benefit derived by the parties by preventing public access to the records. "The mere preference for confidentiality is clearly not sufficient to tip the balance, nor is the desire of a corporation to protect its reputation, stature, or image." In re Estate of Hofmann, 729 NYS2d at 826 (internal citations omitted); In re Petrowski, 20 Misc 3d 860, 862 NYS2d 901 (N.Y.Sur. Kings Co. 2008).

The primary argument offered by Mr. Moretti in support of his Motion to seal the file is that despite the lack of an admission of liability on the part of the Basset Group, tenants of Elmridge Center may infer that they are the victims of overcharging or other wrongdoing, leading to potential future litigation. The protection of an ancillary corporate party from the remote chance of a future monetary harm is not cause enough for this Court to block public access to its records. Further, due to the Estate's relinquishment of all interest in Elmridge Center, an inference could just as easily be made that the Estate was simply bought out by the Basset Group due to internal management disputes.

Based on the foregoing, the Court finds that good cause for sealing the record has not been established. However, the Court will keep the records in chambers for two weeks to allow the parties, if they wish, to apply for an order from the Appellate Division with regard to the sealing of these records. See, e.g. In re Petrowski, 20 Misc 3d 860, 862 NYS2d 901, 904 (N.Y.Sur. Kings Co. 2008).

Further, the Court finds that extraordinary circumstances exist such that Section 2107 of the Surrogate's Court Procedure Act grants this Court jurisdiction to grant the relief requested by the Estate's Petition for Advice and Direction, and approve the settlement.

Therefore, in accordance with the above decision it is hereby

ORDERED, ADJUDGED and DECREED, that the Motion of the Basset Group to seal the files of the Monroe County Surrogate's Court for the Estate of Mary C. Bacchetta is denied; and it is further

ORDERED, ADJUDGED and DECREED, that John R. Parrinello, as Executor of the Mary C Bacchetta Estate and, the sole Director of Talco Contractors, Inc., is authorized in such capacities to approve the execution, delivery and performance of the acts by Executor necessary for the disposition of the estate's interests in Elmridge Associates, LLC, and ElmGroup Management, Inc. under the "Amended Agreement" terms of which this Court finds to be in the best interest of the Estate; and it is further

ORDERED, ADJUDGED and DECREED, that pursuant to Section 2107 of the Surrogate's Court Procedure Act, compensation to the Estate shall be accepted and disposed of by John R. Parrinello, as Executor under the Amended Agreement; and it is further

ORDERED, ADJUDGED and DECREED, that pursuant to Section 2107 of the Surrogate's Court Procedure Act, that John R. Parrinello, as Executor of the Mary C. Bacchetta Estate and sole Director of Talco Contractors, Inc., may execute, deliver and perform in such capacity a Release, Stipulation of Discontinuance or other document necessary for the discontinuance of certain causes of action by the Estate or entities controlled by it, against Patrick J. Basset, and other entities under his control, pursuant to the Agreement entered into by the parties dated March 26, 2010.