NASSAU ACADEMY OF LAW RECEIVERS

Transcription

1 PART 36 OF THE RULES OF THE CHIEF JUDGE NASSAU ACADEMY OF LAW TRAINING FOR RECEIVERS Guardian & Fiduciary Services Office of Court Administration Marita L. McMahon, Deputy Director 25 Beaver Street Suite 1110 New York, New York June, 2010

2 PART 36. APPOINTMENTS BY THE COURT 36.0 Preamble Public trust in the judicial process demands that appointments by judges be fair, impartial and beyond reproach. Accordingly, these rules are intended to ensure that appointees are selected on the basis of merit, without favoritism, nepotism, politics or other factors unrelated to the qualifications of the appointee or the requirements of the case. The rules cannot be written in a way that foresees every situation in which they should be applied. Therefore, the appointment of trained and competent persons, and the avoidance of factors unrelated to the merit of the appointments or the value of the work performed are the fundamental objectives that should guide all appointments made, and orders issued, pursuant to this Part Application (a) Except as set forth in subdivision (b), this Part shall apply to the following appointments made by any judge or justice of the Unified Court System: (1) guardians; (2) guardians ad litem, including guardians ad litem appointed to investigate and report to the court on particular issues, and their counsel and assistants; (3) law guardians who are not paid from public funds, in those judicial departments where their appointments are authorized; (4) court evaluators; (5) attorneys for alleged incapacitated persons; (6) court examiners; (7) supplemental needs trustees; (8) receivers; (9) referees (other than special masters and those otherwise performing judicial functions in a quasi-judicial capacity); (10) the following persons or entities performing services for guardians or receivers: (i) counsel (ii) accountants (iii) auctioneers (iv) appraisers (v) property managers (vi) real estate brokers (11) a public administrator within the City of New York and for the counties of Westchester, Onondaga, Erie, Monroe, Suffolk and Nassau and counsel to the public administrator, except that only sections 36.2(c) and 36.4(e) of this Part shall apply, and that section 36.2(c) shall not apply to incumbents in these positions until one year after the effective date of this paragraph. (b) Except for sections 36.2(c)(6) and 36.2(c)(7), this Part shall not apply to: (1) appointments of law guardians pursuant to section 243 of the Family Court Act, guardians ad litem pursuant to section 403-a of the Surrogate's Court Procedure Act, or the Mental Hygiene Legal Service; (2) the appointment of, or the appointment of any persons or entities performing services for, any of the following: (i) a guardian who is a relative of (A) the subject of the guardianship proceeding or (B) the beneficiary of a proceeding to create a supplemental needs trust; a person or entity nominated as guardian by the subject of the proceeding or proposed as guardian by a party to the proceeding; a supplemental needs trustee nominated by the beneficiary of a supplemental needs trust or proposed by a proponent of the trust; or a person or entity having a legally recognized duty or interest with respect to the subject of the proceeding; (ii) a guardian ad litem nominated by an infant of 14 years of age or over; - 2 -

3 (iii) a nonprofit institution performing property management or personal needs services, or acting as court evaluator; (iv) a bank or trust company as a depository for funds or as a supplemental needs trustee; (v) except as set forth in section 36.1(a)(11), a public official vested with the powers of an administrator; (vi) a person or institution whose appointment is required by law; (vii) a physician whose appointment as a guardian ad litem is necessary where emergency medical or surgical procedures are required. (3) an appointment other than above without compensation, except that the appointee must file a notice of appointment pursuant to section 36.4(a) of this Part Appointments (a) Appointments by the judge. All appointments of the persons or entities set forth in section 36.1, including those persons or entities set forth in section 36.1(a)(10) who perform services for guardians or receivers, shall be made by the judge authorized by law to make the appointment. In making appointments of persons or entities to perform services for guardians or receivers, the appointing judge may consider the recommendation of the guardian or receiver. (b) Use of lists. (1) All appointments pursuant to this Part shall be made by the appointing judge from the appropriate list of applicants established by the Chief Administrator of the Courts pursuant to section 36.3 of this Part. (2) An appointing judge may appoint a person or entity not on the appropriate list of applicants upon a finding of good cause, which shall be set forth in writing and shall be filed with the fiduciary clerk at the time of the making of the appointment. The appointing judge shall send a copy of such writing to the Chief Administrator. A judge may not appoint a person or entity that has been removed from a list pursuant to section 36.3(e). (3) Appointments made from outside the lists shall remain subject to all of the requirements and limitations set forth in this Part, except that the appointing judge may waive any education and training requirements where completion of these requirements would be impractical. (c) Disqualifications from appointment. (1) No person shall be appointed who is a judge or housing judge of the Unified Court System of the State of New York, or who is a relative of, or related by marriage to, a judge or housing judge of the Unified Court System within the fourth degree of relationship. (2) No person serving as a judicial hearing officer pursuant to Part 122 of the Rules of the Chief Administrator shall be appointed in actions or proceedings in a court in a county where he or she serves on a judicial hearing officer panel for such court. (3) No person shall be appointed who is a full-time or part-time employee of the Unified Court System. No person who is the spouse, sibling, parent or child of an employee who holds a position at salary grade JG24 or above, or its equivalent, shall be appointed by a court within the judicial district where the employee is employed or, with respect to an employee with statewide responsibilities, by any court in the state. (4)(i) No person who is the chair or executive director, or their equivalent, of a state or county political party, or the spouse, sibling, parent or child of that official, shall be appointed while that official serves in that position and for a period of two years after that official no longer holds that position. This prohibition shall apply to the members, associates, counsel and employees of any law firms or entities while the official is associated with that firm or entity. (ii) No person who has served as a campaign chair, coordinator, manager, treasurer or finance chair for a candidate for judicial office, or the spouse, sibling, parent or child of that person, or anyone associated with the law firm of that person, shall be appointed by the judge for whom that service was performed for a period of two years following the judicial election. If the candidate is a sitting judge, the disqualifications shall apply as well from the time the person assumes any of the above roles during the campaign for judicial office. (5) No former judge or housing judge of the Unified Court System, or the spouse, sibling, parent or child of such judge, shall be appointed, within two years from the date the judge left judicial office, by a court within the jurisdiction where the judge served. Jurisdiction is defined as follows: - 3 -

4 (i) The jurisdiction of a judge of the Court of Appeals shall be statewide. (ii) The jurisdiction of a justice of an Appellate Division shall be the judicial department within which the justice served. (iii) The jurisdiction of a justice of the Supreme Court and a judge of the Court of Claims shall be the principal judicial district within which the justice or judge served. (iv) With respect to all other judges, the jurisdiction shall be the principal county within which the judge served. (6) No attorney who has been disbarred or suspended from the practice of law shall be appointed during the period of disbarment or suspension. (7) No person convicted of a felony, or for five years following the date of sentencing after conviction of a misdemeanor (unless otherwise waived by the Chief Administrator upon application), shall be appointed unless that person receives a certificate of relief from disabilities. (8) No receiver or guardian shall be appointed as his or her own counsel, and no person associated with a law firm of that receiver or guardian shall be appointed as counsel to that receiver or guardian, unless there is a compelling reason to do so. (9) No attorney for an alleged incapacitated person shall be appointed as guardian to that person, or as counsel to the guardian of that person. (10) No person serving as a court evaluator shall be appointed as guardian for the incapacitated person except under extenuating circumstances that are set forth in writing and filed with the fiduciary clerk at the time of the appointment. (d) Limitations on appointments based upon compensation. (1) No person or entity shall be eligible to receive more than one appointment within a calendar year for which the compensation anticipated to be awarded to the appointee in any calendar year exceeds the sum of $15,000. (2) If a person or entity has been awarded more than an aggregate of $75,000 in compensation by all courts during any calendar year, the person or entity shall not be eligible for compensated appointments by any court during the next calendar year. (3) For purposes of this Part, the term "compensation" shall mean awards by a court of fees, commissions, allowances or other compensation, excluding costs and disbursements. (4) These limitations shall not apply where the appointment is necessary to maintain continuity of representation of or service to the same person or entity in further or subsequent proceedings Procedure for Appointment (a) Application for appointment. The Chief Administrator shall provide for the application by persons or entities seeking appointments pursuant to this Part on such forms as shall be promulgated by the Chief Administrator. The forms shall contain such information as is necessary to establish that the applicant meets the qualifications for the appointments covered by this Part and to apprise the appointing judge of the applicant's background. (b) Qualifications for appointment. The Chief Administrator shall establish requirements of education and training for placement on the list of available applicants. These requirements shall consist, as appropriate, of substantive issues pertaining to each category of appointment -- including applicable law, procedures, and ethics -- as well as explications of the rules and procedures implementing the process established by this Part. Education and training courses and programs shall meet the requirements of these rules only if certified by the Chief Administrator. Attorney participants in these education and training courses and programs may be eligible for continuing legal education credit in accordance with the requirements of the Continuing Legal Education Board. (c) Establishment of lists. The Chief Administrator shall establish separate lists of qualified applicants for each category of appointment, and shall make available such information as will enable the appointing judge to be apprised of the background of each applicant. The Chief Administrator may establish more than one list for the same appointment category where appropriate to apprise the appointing judge of applicants who have substantial experience in that category. Pursuant to section 81.32(b) of the Mental Hygiene Law, the Presiding Justice of the appropriate Appellate Division shall designate the qualified applicants on the lists of court examiners established by the Chief Administrator

5 (d) Reregistration. The Chief Administrator shall establish a procedure requiring that each person or entity on a list reregister every two years in order to remain on the list. (e) Removal from list. The Chief Administrator may remove any person or entity from any list for unsatisfactory performance or any conduct incompatible with appointment from that list, or if disqualified from appointment pursuant to this Part. A person or entity may not be removed except upon receipt of a written statement of reasons for the removal and an opportunity to provide an explanation and to submit facts in opposition to the removal Procedure After Appointment (a) Notice of appointment and certification of compliance. (1) Every person or entity appointed pursuant to this Part shall file with the fiduciary clerk of the court from which the appointment is made, within 30 days of the making of the appointment, (i) a notice of appointment and (ii) a certification of compliance with this Part, on such form as promulgated by the Chief Administrator. Copies of this form shall be made available at the office of the fiduciary clerk and shall be transmitted by that clerk to the appointee immediately after the making of the appointment by the appointing judge. An appointee who accepts an appointment without compensation need not complete the certification of compliance portion of the form. (2) The notice of appointment shall contain the date of the appointment and the nature of the appointment. (3) The certification of compliance shall include: (i) a statement that the appointment is in compliance with sections 36.2(c) and (d); and (ii) a list of all appointments received, or for which compensation has been awarded, during the current calendar year and the year immediately preceding the current calendar year, which shall contain (A) the name of the judge who made each appointment, (B) the compensation awarded, and (C) where compensation remains to be awarded, (i) the compensation anticipated to be awarded and (ii) separate identification of those appointments for which compensation of $15,000 or more is anticipated to be awarded during any calendar year. The list shall include the appointment for which the filing is made. (4) A person or entity who is required to complete the certification of compliance, but who is unable to certify that the appointment is in compliance with this Part, shall immediately so inform the appointing judge. (b) Approval of compensation. (1) Upon seeking approval of compensation of more than $500, an appointee must file with the fiduciary clerk, on such form as is promulgated by the Chief Administrator, a statement of approval of compensation, which shall contain a confirmation to be signed by the fiduciary clerk that the appointee has filed the notice of appointment and certification of compliance. (2) A judge shall not approve compensation of more than $500, and no compensation shall be awarded, unless the appointee has filed the notice of appointment and certification of compliance form required by this Part and the fiduciary clerk has confirmed to the appointing judge the filing of that form. (3) Each approval of compensation of $5,000 or more to appointees pursuant to this section shall be accompanied by a statement, in writing, of the reasons therefor by the judge. The judge shall file a copy of the order approving compensation and the statement with the fiduciary clerk at the time of the signing of the order. (4) Compensation to appointees shall not exceed the fair value of services rendered. Appointees who serve as counsel to a guardian or receiver shall not be compensated as counsel for services that should have been performed by the guardian or receiver. (c) Reporting of compensation received by law firms. A law firm whose members, associates and employees have had a total of $50,000 or more in compensation approved in a single calendar year for appointments made pursuant to this Part shall report such amounts on a form promulgated by the Chief Administrator. (d) Exception. The procedure set forth in this section shall not apply to the appointment of a referee to sell real property and a referee to compute whose compensation for such appointments is not - 5 -

6 anticipated to exceed $750. (e) Approval and Reporting of Compensation Received by Counsel to the Public Administrator. (1) A judge shall not approve compensation to counsel to the public administrator in excess of the fee schedule promulgated by the administrative board of the public administrator under SCPA 1128 unless accompanied by the judge's statement, in writing, of the reasons therefor, and by the appointee's affidavit of legal services under SCPA 1108 setting forth in detail the services rendered, the time spent, and the method or basis by which the requested compensation was determined. (2) Any approval of compensation in excess of the fee schedule promulgated by the administrative board of the public administrator shall be reported to the Office of Court Administration on a form promulgated by the Chief Administrator and shall be accompanied by a copy of the order approving compensation, the judge's written statement, and the counsel's affidavit of legal services, which records shall be published as determined by the Chief Administrator. (3) Each approval of compensation of $5,000 or more to counsel shall be reported to the Office of Court Administration on a form promulgated by the Chief Administrator and shall be published as determined by the Chief Administrator Publication of Appointments. (a) All forms filed pursuant to section 36.4 shall be public records. (b) The Chief Administrator shall arrange for the periodic publication of the names of all persons and entities appointed by each appointing judge, and the compensation approved for each appointee

7 PART 36 OF THE RULES OF THE CHIEF JUDGE: AN EXPLANATORY NOTE Part 36 of the Rules of the Chief Judge creates a system that broadens the eligibility for appointment to a wide range of applicants well-trained in their category of appointment, establishes procedures that promote accountability and openness in the selection process, and insulates that process from appearances of favoritism, nepotism or politics. 1. APPLICABILITY Part 36 governs ten categories of primary appointments and six categories of secondary appointments (' 36.1 [a]), as set forth below. A. GUARDIANS Part 36 applies to guardians appointed for: 1) incapacitated persons pursuant to Mental Hygiene Law article 81; 2) minors pursuant to Surrogate=s Court Procedure Act article 17 or Civil Practice Laws and Rules article 12; and 3) the mentally retarded or developmentally disabled pursuant to Surrogate=s Court Procedure Act article17-a (' 36.1 [a][1]). If a person is appointed guardian upon a ward=s nomination or a party=s proposal, appointment is exempt from Part 36 (' 36.1 [b][2][i]). A guardianship where the appointee is a nonprofit institution, department of social services, or other public agency with legally recognized duties or interests is exempt from Part 36 (' 36.1 [b][2][i], [iii]). Guardianships in proceedings for the termination of parental rights (see Social Services Law ' 384-b, Surrogate=s Court Procedure Act ' 403-a, Family Ct. Act article 6) are also exempt, since only persons or entities authorized by law may be appointed guardian in such proceedings (' 36.1 [b][2][i], [vi]). B. GUARDIANS AD LITEM Part 36 applies to guardians ad litem appointed under the general provisions of Surrogate=s Court Procedure Act ' 403 and Civil Practice Laws and Rules 1202, including guardians ad litem appointed to investigate and report to the court on particular issues (' 36.1 [a][2]). Where a court appoints counsel or assistants to guardians ad litem, these appointees also are governed by the rules. If appointed a guardian ad litem upon the nomination of an infant of 14 years of age or over, the appointee is exempt ( 36.1[b][2][ii]). Similarly exempt is a physician whose appointment as a guardian ad litem is necessary where emergency medical or surgical procedures are required (' 36.1 [b][2][vii]). C. LAW GUARDIANS Privately paid law guardians who are appointed in domestic relations matters in those Departments of the Appellate Division where authorized are subject to the provisions of Part 36 (' 36.1 [a][3]). Law guardians appointed and paid from public funds are exempt (' 36.1 [b][1]). (As a general rule, Part 36 applies only to appointees compensated at the expense of private parties, and not those compensated from public funds such as appointments pursuant to Family Court Act 243, Surrogate=s Court Procedure Act ' 403- a, 407, Judiciary Law 35, and County Law article 18-B.) D. COURT EVALUATORS, ATTORNEYS FOR ALLEGED INCAPACITATED PERSONS, COURT EXAMINERS In proceedings for the appointment of guardians for incapacitated persons pursuant to article 81 of the Mental Hygiene Law, the court may appoint an attorney for the alleged incapacitated person (Mental Hygiene Law ' 81.10) or appoint a court evaluator as an independent witness to investigate and report to the court (Mental Hygiene Law ' 81.09). These appointments are governed by Part 36 (' 36.1 [a][4], [5]), except that a nonprofit institution appointed court evaluator is exempt (' 36.1 [b][2][iii]). The Mental - 7 -

8 Hygiene Legal Service, which may serve as attorney for an alleged incapacitated person or court evaluator, is also exempt (' 36.1 [b][1]). If a guardian is appointed pursuant to article 81 of the Mental Hygiene Law, the court may also assign a court examiner to audit and report on accountings required to be filed in such guardianship proceedings (Mental Hygiene Law '' 81.30, 81.31). Court examiners are designated by the Presiding Justice of each Department of the Appellate Division (Mental Hygiene Law ' 81.32), and, upon designation, must comply with all the provisions of Part 36 ( 36.1 [a][6]; 36.3 [c]). E. SUPPLEMENTAL NEEDS TRUSTEES Supplemental needs trustees (see Omnibus Budget Reconciliation Act of 1993 (42 USC 1396p[d][4], EPTL ' , SSL ' 366 [2][b][2][iii], 18 NYCRR ' ) may be appointed in a number of contexts in Supreme Court or Surrogate=s Court, e.g., in infants= compromise orders, or in proceedings under article 17-A of the Surrogate=s Court Procedure Act or article 81 of the Mental Hygiene Law. When selected by the court and appointed by judgment or order, a supplemental needs trustee is subject to the provisions of Part 36 (' 36.1 [a][7]), unless the appointee is a bank or trust company (' 36.1 [b][2][iv]), or is appointed upon nomination by the beneficiary, or by the proponent, of the trust (' 36.1 [b][2][i]). F. RECEIVERS Part 36 applies to receivers almost without exception (' 36.1 [a][8]). In rare cases where the choice of receiver would be dictated by law, such an appointee would be exempt (' 36.1 [b][2][vi]). G. REFEREES Referees are treated differently under Part 36 depending on the purpose for which they are appointed. Under articles 31 and 43 of the Civil Practice Laws and Rules, referees, sometimes called Aspecial masters@, are often used in a quasi-judicial capacity to supervise discovery or conduct trials in civil actions or proceedings. No matter what their title, if referees are used to perform a judicial function, they are exempt from Part 36 (' 36.1 [a][9]). Referees appointed for all other purposes are governed by the rules. These appointments are usually for the purpose of performing an act outside of court, e.g., conducting the sale of real property in a mortgage foreclosure action or supervising a labor union election. Referees to compute the value of, and sell, real property in the ordinary mortgage foreclosure action, and who receive compensation of $750 or less, are subject to all of the provisions of Part 36 preliminary to appointment, including the disqualification provisions of section 36.2 (c), the limitations based on compensation of section 36.2 (d), and list enrollment under section Upon appointment, however, these referees are not required to file the notice of appointment or certification of compliance that all other Part 36 appointees must file (' 36.4 [d]). They and the court are also excepted from filing a statement of approval of compensation pursuant to Judiciary Law ' 35-a (1) (a) and 22 NYCRR ' 26.1 (a) (see section 5.B. infra), because the $750 total compensation results from two separate appointments which are below the statutory threshold of $500 for each appointment (up to $250 for computation; $500 for sale). H. SECONDARY APPOINTMENTS OF GUARDIANS AND RECEIVERS: COUNSEL, ACCOUNTANTS, APPRAISERS, AUCTIONEERS, PROPERTY MANAGERS, REAL ESTATE BROKERS When a guardian or receiver subject to the provisions of Part 36 seeks to retain counsel, or an accountant, appraiser, auctioneer, property manager or real estate broker, the retained professional becomes a Part 36 appointee ( 36.1[a][10]). The guardian or receiver must request that the judge appoint such a professional (' 36.2 [a]), and the professional must comply with all the provisions of Part 36, including those governing list enrollment (' 36.3), disqualification and limitation based on compensation (' 36.2), and all filing requirements (' 36.4)

9 I. PUBLIC ADMINISTRATOR AND COUNSEL TO PUBLIC ADMINISTRATOR Certain sections of Part 36 apply to the appointment of a Public Administrator within the City of New York and for the counties of Westchester, Onondaga, Erie, Monroe, Suffolk and Nassau and counsel to the public administrator. Those sections include the disqualifications due to family relationship, employment, former employment, political party office or judicial campaign office found in section 36.2 (c) and the approval of compensation reporting requirements found in section 36.4(e). 2. APPROVED LISTS: APPLICATION, ENROLLMENT, USE All persons or entities whose appointments are governed by Part 36 (' 36.1 [a][1] [10]), and who are not exempt under section 36.1 (b), must be enrolled on an approved list established by the Chief Administrator of the Courts (' 36.3 [c]) from which all names for appointment must be selected (' 36.2 [b][1]), except when good cause exists to appoint outside the list (' 36.2 [b][2]). In those exceptional circumstances, the court must make a finding of good cause, in writing, and file its finding with the fiduciary clerk, who has the duty of supervising the filing of all papers in the Part 36 appointment process (see 36.2 [b][2]; 36.4 [a][1], [b][1]-[3]). A copy of the finding also will be sent to the Chief Administrator of the Courts ( 36.2[b][2]). A person or entity not appointed from an appropriate list still must comply with all the other provisions of Part 36, e.g., the appointee must not be disqualified from appointment under section 36.2(c) or (d) and must file all Part 36 forms pursuant to section 36.4, but any education and training requirements may be waived (' 36.2 [b][3]). At no time may a court appoint a person or entity removed from a list for cause (' 36.2 [b][2]). (See ' 36.3 [e] for the procedure for removal upon the Chief Administrator=s determination of unsatisfactory performance or conduct incompatible with appointment from a list.) To enroll on a list maintained by the Chief Administrator of the Courts, an applicant must have completed the required training for each category of appointment for which enrollment is requested (' 36.3 [b]). Once all required training is completed, an application must be submitted on the application form promulgated by the Chief Administrator (UCS-870) (' 36.3 [a]). Court examiners for proceedings under article 81 of the Mental Hygiene Law and privately paid law guardians in domestic relations actions first must be approved by the Appellate Division before being eligible for placement on a list. Section 36.3 (d) provides for biennial re-registration, which will permit the Chief Administrator to keep all lists current. 3. DISQUALIFICATIONS The following persons are disqualified from appointment ( 36.2 [c]): a. a judge or housing judge of the Unified Court System, or a relative of, or a person related by marriage to, a judge or housing judge of the Unified Court System within the fourth degree of relationship; b. a judicial hearing officer in a court in a county in which he or she serves as a judicial hearing officer; c. a full-time or part-time employee of the Unified Court System; d. the spouse, brother/sister, parent or child of a full-time or part-time employee of the Unified Court System at or above salary grade JG24, or its equivalent: 1) employed in a judicial district where the relative is applying for appointment or 2) with statewide responsibilities; e. a person who currently serves, or has served within the last two years (commencing January 1, 2003), as chair, executive director, or the equivalent, of a state or county political party; the spouse, brother/sister, parent or child of such political party official; or a member, associate, counsel or employee of a law firm or entity with which such political party official is currently associated; f. a former judge or housing judge of the Unified Court System who left office within the last two years (commencing January 1, 2003) and who is applying for appointment within the jurisdiction of prior judicial service, as defined by section 36.2(c)(5) of the Rules of the Chief Judge; or the spouse, brother/sister, parent or child of such former judge; - 9 -

10 g. an attorney currently disbarred or suspended from the practice of law by any jurisdiction; h. a person convicted of a felony for which no certificate of relief from disabilities has been received; i. a person convicted of a misdemeanor for which sentence was imposed within the last five years and for which no certificate of relief from disabilities, or waiver by the Chief Administrator of the Courts, has been received; or j. a person who has been removed from an appointment list of the Chief Administrator of the Courts for unsatisfactory performance or conduct incompatible with appointment. The disqualifications for disbarred or suspended attorneys (see paragraph [g], supra) and convicted criminals (see paragraphs [h] and [i], supra) apply to any appointments under section 36.1 (a), even if otherwise exempted under the rules pursuant to section 36.1 (b). Additionally, there are three disqualifications that do not limit list enrollment, but may render an enrollee disqualified from appointment due to the circumstances of a particular case. These disqualifications are: 1) receivers or guardians, or persons associated with the law firm of a receiver or guardian, are prohibited from being appointed counsel to the receiver or guardian (' 36.2 [c][8]); 2) counsel to alleged incapacitated persons in Mental Hygiene Law article 81 proceedings are prohibited from being appointed guardian, or counsel to the guardian, for an incapacitated person they have represented (' 36.2 [c][9]); and 3) court evaluators in Mental Hygiene Law article 81 proceedings are prohibited from being appointed guardian for an incapacitated person in a proceeding in which they served as court evaluator (' 36.2 [c][10]). In the first and third of these disqualifications, exceptions may be made. If there is a compelling reason, such as savings to the estate of the receivership or guardianship, the receiver or guardian may be appointed counsel. Similarly, if there are extenuating circumstances, such as the unavailability of others to be appointed guardian and a familiarity and trust developed between court evaluator and incapacitated person, a court evaluator may be appointed guardian upon a written finding by the court of extenuating circumstances. There is also a disqualification relating to judicial campaign activity. This does not prevent list enrollment, but limits appointment by a judge for whom the enrollee acted as campaign chair, coordinator, manager, treasurer or finance chair in a campaign for a judicial election that took place less than two years prior to the proposed appointment (' 36.2 [c][4][ii]). If the candidate is a sitting judge, the disqualification also applies to a person who assumes any of the above roles during the campaign for judicial office. Included in this disqualification are the spouse, brother/sister, parent or child of the campaign official, or anyone associated with the campaign official=s law firm. 4. LIMITATIONS ON APPOINTMENTS BASED UPON COMPENSATION Subdivision (d) of section 36.2 establishes two additional disqualifications from appointment, not related to list eligibility, but based upon anticipated or previously awarded compensation. These restrictions do not limit compensation per se, but use compensation as a basis for determining availability for future appointment. There are no exceptions to the application of these limitations, unless the court determines the appointment is necessary to maintain continuity of representation of the same person or entity in further or subsequent proceedings. A. THE $15,000 RULE Section 36.2 (d)(1) prohibits appointees from receiving more than one appointment in the same calendar year (i.e., January 1 to December 31) for which compensation in excess of $15,000 is awarded in that calendar year or anticipated to be awarded in any calendar year. Two examples illustrate the rule. 1) If appointed as attorney for an alleged incapacitated person in 2003, and compensation of, for example, $20,000 for that appointment is awarded or anticipated to be awarded in that same year, then the appointee is precluded from receiving another appointment in 2003 for which compensation in excess of $15,000 is anticipated either in 2003 or in any single future year. 2) If appointed as guardian in 2003, for which an annual commission of, for example, $20,000 is anticipated to be awarded in the following year (2004), the appointee is precluded from receiving another appointment in 2003 for which compensation in excess of $15,000 is anticipated to be awarded either in 2003 or in any single future year

11 B. THE $75,000 RULE Section 36.2 (d) (2) establishes a limitation on appointments based on an annual, aggregate amount of compensation. For calendar year 2007 and thereafter, if compensation is awarded in an aggregate amount of more than $75,000 during any calendar year (no matter what year the appointment was made), the appointee will be ineligible for any compensated appointments during the next calendar year. It is the year of the award of compensation, and not the year of its actual receipt, that activates the application of the rule. Like its $15,000 counterpart, the $75,000 rule is a limitation on appointments, and not on compensation; nothing in the $75,000 rule prevents a court=s award, or an appointee=s receipt, of total compensation exceeding $75,000 in any calendar year. Excess compensation in one year simply prevents compensated appointments in the following year. 5. PROCEDURE AFTER APPOINTMENT A. COMBINED NOTICE OF APPOINTMENT AND CERTIFICATION OF COMPLIANCE Part 36 appointees must complete and file with the fiduciary clerk within 30 days of appointment a twopart form containing a notice of appointment and certification of compliance (' 36.4 [a][1]), which will be sent to the appointee by the court immediately after appointment. If the appointee cannot certify qualification for appointment in the certification of compliance section of the combined form, or cannot accept appointment for any other reason, the appointee must immediately notify the court (' 36.4 [a][4]). The notice of appointment contains the date and nature of the appointment (' 36.4 [a][2]), and the certification of compliance certifies that the appointee is not disqualified from service and is not otherwise precluded by any limitation based on compensation (' 36.4 [a][3][i]; see ' 36.2 [c], [d]). The appointee must list all appointments received during the current calendar year (' 36.4 [a][3][ii]), report the amount of compensation awarded for each (' 36.4 [a][3][ii][b]), or, if not awarded, the total amount of compensation anticipated for each (' 36.4 [a][3][ii][c][i]), and separately identify appointments for which compensation is anticipated to exceed $15,000 in any calendar year (' 36.4 [a][3][ii][c][ii]). The appointee must also list all appointments for which compensation was awarded in the year immediately preceding the current calendar year (' 36.4 [a][3][ii]) and report the amount awarded for each (' 36.4 [a][3][ii][b]). For all appointments, the name of the appointing judge must be given (' 36.4 [a][3][ii][a]). There are two exceptions to this procedure. Although exempt from the application of Part 36 (see ' 36.1 [b][3]), uncompensated appointees must still file the combined notice and certification form, but need only complete the notice of appointment section of the form (' 36.4 [a][1]). This will allow uncompensated fiduciary activity to be recorded and appropriately recognized. The other exception applies to referees to compute the value of, and sell, real property. Although subject to the application and list process of Part 36 (see ' 36.1 [a][9]), referees to compute and sell are relieved from the obligation to file the combined notice and certification form for appointments where total compensation is not anticipated to exceed $750 (' 36.4 [d]). B. APPROVAL OF COMPENSATION Judges who approve compensation of more than $500 are required to file a statement of approval of compensation with the Office of Court Administration pursuant to Judiciary Law 35-a (1)(a) and 22 NYCRR Part 26. Whenever a court is requested to approve compensation in excess of $500 for a Part 36 appointee, a statement of approval of compensation on a form promulgated by the Chief Administrator of the Courts must be submitted for signature to the approving judge. The statement must contain a confirmation signed by the fiduciary clerk that the combined notice of appointment and certification of compliance form was filed (' 36.4 [b][1]). No judge may approve compensation of more than $500 without this statement and the signed confirmation of the fiduciary clerk (' 36.4 [b][2]). Additionally, every approval of compensation in excess of $5000 must contain the judge=s written statement of the reasons for such approval (' 36.4 [b][3]). After signing the order awarding compensation and the statement of approval of compensation, the judge must file a copy of the order and the original statement with the

12 fiduciary clerk. The fiduciary clerk will then forward the statement of approval of compensation to the Office of Court Administration for entry of the amount of compensation in its database under the name of the appointee. This will keep the database current for periodic publication under section The rules cite the standard for judicial approval of compensation, viz., fair value for all services rendered that are necessary to the performance of the appointee=s duties ('36.4 [b][4]). This determination remains in the sound discretion of the court and depends on the factual circumstances of each case. 6. REPORTING LAW FIRM COMPENSATION Section 36.4 (c) obligates law firms to report, in writing, to the Chief Administrator of the Courts whenever total compensation in a single calendar year is $50,000 or more for Part 36 appointments of law firm members, associates or employees. The report of compensation received by law firms is to be filed on form UCS-876 on or before March 31st following the calendar year reported. The reporting of law firm compensation is for informational purposes only. Limitations based on compensation apply only to the individual appointee, not the firm, and the appointment and compensation of one person in the firm are only considered in certifying the availability of that individual for appointment and do not affect the availability for appointment of any other person in the firm. 7. PUBLICATION The notice of appointment and certification of compliance, statement of approval of compensation, and report of compensation received by law firms, filed pursuant to section 36.4, are public records, and the names of appointees and of appointing judges, and the amounts of approved compensation, are subject to periodic publication by the Chief Administrator of the Courts ('36.5)

13 FIDUCIARY RESPONSIBILITIES OF A RECEIVER AND COMPLIANCE WITH PART 36 Managing Inspector General of Fiduciary Appointments Office of the Inspector General New York State Unified Court System 26 Broadway, 10th floor New York, NY Fiduciary a person holding the character of a trustee, or a character analogous to that of a trustee, in respect to the trust and confidence involved in it and the scrupulous good faith and candor that it requires. A person having a duty required by his undertaking to act for another s benefit. (Black s Law Dictionary) The first three rules of fiduciary responsibility: A It s not your money 2 It s not your money iii- IT S NOT YOUR MONEY! 2. Part 36 of the Rules of the Chief Judge sec. 36.3(e) The Chief Administrator may remove any person or entity from any list for unsatisfactory performance or any conduct incompatible with appointment from that list, or if disqualified from appointment pursuant to this Part. A person or entity may not be removed except upon receipt of a written statement of reasons for removal and an opportunity to provide an explanation and to submit facts in opposition to the removal. The Office of Court Administration s Inspector General through its Managing Inspector General for Fiduciary Appointments, is responsible for supervising and conducting investigations of fiduciary appointment matters and for providing information and recommendations for resolution of complaints. The Managing Inspector General is involved in developing policy; reviewing records and reports and advising judges and non judicial personnel on the implementation of procedures relating to fiduciary appointments. Complaint Investigation Report & Recommendation Tentative Removal Letter Response Final decision

14 Case law: Kraham v. Lippman (NYLJ 6/19/2006) Lawyer-politician s claim that Chief Judge s rules violate her political association right dismissed; Silverstein v. New York State Office of Court Administration (14 Misc. 3d 300) Referee filed Article 78 proceeding challenging decision to remove her name from the Part 36 fiduciary list, Supreme Court, Kings County held that removal was not arbitrary or capricious. 3. Use appointing order as checklist: Oath, Bond, and Notice to Attorn, collect rents, lease vacancies, manage property (repairs, insurance, taxes), and evict non paying tenants. 4. Title on Receivership Account, type of account 5. Bookkeeping and accounting software 6. Secondary appointments v. employees 7. Brokers and fee splitting 8. Know the statutory and case law for getting paid 9. Impartiality Receiver is an officer of the court and not an agent for the party that procured his or her appointment. 10. Accountings and Discharge

15 Part 36 Appointments in Foreclosure Actions [A]ll this is quite obscure (but at the same time very important) 1 Part 36 citation: 22 NYCRR 36.0, et seq. is the web site for Guardian & Fiduciary Services. The application for enrollment on the Part 36 list, information about Part 36 and updates may be obtained there. Appointment of Referees: o Part 36 applies to the appointment of referees, other than special masters and those otherwise performing judicial functions in a quasi-judicial capacity. 36.1(a) (9). o Part 36 applies to the referees in foreclosure actions; includes both the referee to compute and the referee to sell. o Foreclosure referees must be on the Part 36 list. o To enroll on the Part 36 list, applicant must submit application to Office of Court Administration. Applicant must be eligible and not be disqualified by reason of personal relationships, employment or political party office of self or relatives. Disqualifications are found at 36.2 (c). o Referee must be in compliance with the Part 36 limitations on compensation, i.e., the $75,000 rule: referee may not accept a new compensated appointment if he/she was awarded a total of more than $75,000 in aggregate Part 36 compensation in the prior calendar year (d) (2). o Foreclosure referees must be attorneys admitted to practice in New York courts. CPLR R 4312 o There are 2 different referee appointments: Referee to Compute (RPAPL 1321)and Referee to Sell. (RPAPL 1351) Appointment of Guardians ad Litem (GAL) and Military Attorneys: o Part 36 applies to guardians ad litem appointed in foreclosure actions. 36.1(a)(2). o GALs must be on the list and eligible to accept the appointment. 1 Bergman, Referee Fees: Courts Clarify Issue of Extra Payment, NYLJ, March 29, 2006, at 5, col

16 o Statutory authority for appointment of a GAL is found in CPLR 1201, 1202, o Compensation of GAL is found in CPLR GAL must submit affidavit of services. o Statutory authority for the appointment of Military Attorneys in foreclosure actions is governed by the New York State Soldiers' and Sailors' Civil Relief Act found in the New York Military Law 303. o Part 36 does not apply to the appointment of a Military Attorney. o Military attorney does not have the power to waive any right of the person for whom he is appointed or bind him by his acts. Military Law 303 (1) Appointment of Receivers. o Part 36 applies to receivers appointed in foreclosure actions (a) (8). o Part 36 also applies to those persons performing the following services for receivers (commonly known as secondary appointees ): counsel, accountant, auctioneers, appraisers, property managers, real estate brokers (a) (10). o Those secondary appointees of a receiver also must be on the list (or the judge must file reasons for non-list appointment on form UCS-872.5). Judge must make the secondary appointment (i.e., issue a court order of appointment naming the appointee). 36.2(a). o Statutory authority for receiver appointment in foreclosure actions is found in RPAPL 1325 and CPLR Art 64. CPLR 8004 governs commissions of receivers. Part 36 Paperwork o Usual Part 36 paperwork includes UCS-872 (Notice of Appointment and Certification of Compliance) and UCS-875 (Statement of Approval of Compensation). o Foreclosure referee is exempt from the Part 36 paperwork ONLY if total compensation from both the reference to compute and the reference to sell is not anticipated to exceed $ (d). 2 CPLR 1204 reads as follows: Compensation of guardian ad litem. A court may allow a guardian ad litem a reasonable compensation for this services to be paid in whole or part by any other party or from any recovery had on behalf of the person whom such guardian represents or from such person s other property. No order allowing compensation shall be made except on an affidavit of the guardian or his attorney showing the services rendered

17 o If combined total compensation for foreclosure referee exceeds $750, forms UCS-872 and UCS-875 may be required. Fiduciary clerk in the county or district may be able to give advice. o 36.4 (d) does NOT raise the compensation of foreclosure referees; it merely affects the paper-work requirements of Part 36. Compensation of the referee to compute is governed by CPLR 8003(a). 3 o Compensation for referee to compute is $50 per day: unless a different compensation is fixed by the court, or unless a different compensation is fixed by the consent in writing of all parties not in default for failure to appear or plead. o Currently, many courts, in the order of reference, are ordering compensation in the amount of $250 for the referee to compute. o For part 36 purposes, for the referee to compute, typically, the Order of Reference will be the award of compensation. If additional compensation is sought or approved, then a separate order approving the additional compensation is required. o CPLR requires that the order of reference (or a stipulation for a reference) shall determine the basis and method of computing the referee s fee and provide for his/ her payment. That is, the basis and method of computing the referee's fees should be fixed in advance. o If more than the statutory compensation to compute ($50 per day, per CPLR 8003(a)) is sought, referee must either apply to the court for a greater sum before his duties are undertaken, or secure agreement of the parties before or after the computation. o Courts have queried the fairness of the practice of the plaintiff-mortgagee proffering or agreeing to additional compensation for the referee. In the vast majority of foreclosure actions, referees are appointed upon the default of the owner, but it is the owner who will ultimately bear the 3 Subdivision (a) of CPLR 8003 reads as follows: Generally. A referee is entitled, for each day spent in the business of the reference, to fifty dollars unless a different compensation is fixed by the court or by the consent in writing of all parties not in default for failure to appear or plead. 4 Subdivision (1) of CPLR 4321 reads as follows: An order or a stipulation for a reference shall determine the basis and method of computing the referee's fees and provide for their payment. The court may make an appropriate order for the payment of the reasonable expenses of the referee. Unless the court otherwise orders or the stipulation otherwise provides, such fees and expenses of the referee shall be taxed as costs

18 additional fees paid to the referee, not the consenting or agreeing plaintiff who will pass such payments along as disbursements recoverable against the proceeds of sale or in a deficiency judgment against the defaulting property owner. See, NYCTL Trust V Kahan, 10/31/2005 N.Y.L.J. 19, (col. 3) (Kings Sup 2005) (Demarest, J). o If a court awards additional compensation to the referee to compute, per CPLR 8003 (a), must the compensation order be made in advance? Appellate Division, 2 nd Judicial Department, has consistently held if referee is to be compensated at other than the statutory rate under CPLR 8003 (a), such compensation must be determined in advance. 5 1 st, 3 rd and 4 th Departments have permitted courts to fix a greater compensation than the statutory rate at the conclusion of the reference nd Department cases involving compensation of referees pursuant to CPLR 8003 (a): Pittoni v Boyland 278 A.D.2d 396; 717 N.Y.S.2d 646; 2000 N.Y. App. Div. LEXIS (2 nd Dept 2000) Issue was referee s compensation in an accounting action. Court held: where there is no stipulation by the parties, nor a specific rate set forth by the court in the order of reference, a referee's fee is limited to the statutory rate of $ 50 per day, also citing Matter of Charles F., 242 AD2d 297; Scher v Apt, 100 AD2d 582). In re Popper 242 A.D.2d 297; 660 N.Y.S.2d 594; 1997 N.Y. App. Div. LEXIS 8260 (2 nd Dept 1997). Citing Majewski v Majewski, 221 AD2d 420 and Neuman v Syosset Hosp. Anesthesia Group, 112 AD2d 1029, 2 nd Department held that because the record did not contain any agreement concerning the referee's compensation which was made prior to the referee's performance of his duties, the referee's fee must be limited to the statutory fee of $50 per day rather than the $3,000 the referee requested. Majewski v. Majewski A.D.2d 420; 633 N.Y.S.2d 1019; 1995 N.Y. App. Div. LEXIS (2 nd Dept 1995). Supreme Court s order indicated the court would determine an appropriate fee for the referee upon referee s submitting an affidavit of services. 2 nd Department approved the extra compensation for referee distinguishing this situation from that in Scher v Apt (100 AD2d 582), Neuman v Syosset Hosp. Anesthesia Group (112 AD2d 1029), and Kolomick v Kolomick (133 AD2d 69), where the court orders of reference were silent as to the Referees' compensation, thus limiting them to the statutory fee of $50 per diem. Scher v. Apt, 100 A.D.2d 582: 100 A.D.2d 582, 473 N.Y.S.2d 521, 1984 N.Y. App. Div. LEXIS 17560, (2 nd Dept 1984). Issue was whether a referee can be awarded, upon completion of the reference, a fee which exceeds the statutory per diem rate of compensation when there is no stipulation by the parties and no specific rate set forth by the court in the order of reference. Appellate Division held that absent an order or stipulation with specific directions on the matter of referee's fees, referee s fee is set at the statutory rate. 6 3 rd Department case re CPLR 8003(a): Blake Terrace Assoc v Sommers 176 A.D.2d 394; 574 N.Y.S.2d 101; 1991 N.Y. App. Div. LEXIS (3 rd Dept 1991) Under the circumstances of this case, it is our view that Supreme Court was free to exercise its discretion to fix a compensation different from that resulting from application of the statutory rate to nine days of work. While we recognize that the basis or method for computing the Referee's compensation is to be set forth in the order or stipulation of reference we agree with the Fourth Department that CPLR 8003 (a) authorizes the court to fix a fee fairly compensating the Referee even at the conclusion of the reference (see, Matter of O'Dwyer v Robson, 103 AD2d 1036; but see, Kolomick v Kolomick, 133 AD2d 69 (2d Dept); Neuman v Syosset Hosp. Anesthesia Group, 112 AD2d 1029 [2d Dept); Scher v Apt, supra (2d Dept)). Given the complexity of the issues involved, the volume of testimony

19 Compensation of the referee to sell is governed by CPLR 8003 (b). 7 o Property must be sold for referee to be entitled to $500. According to the statute, if no sale actually takes place, there is no entitlement to the full $500. o For Part 36 purposes, for the referee to sell, the award of compensation should be in the Order and Judgment of Foreclosure or in a separate order made after a motion by the referee. o If the referee to sell received or retained compensation in excess of statutory rates ($500 upon sale), court approval is mandatory (CPLR 8003 [b]). Referee must obtain judicial approval in order to retain more than $500 after the sale. Best practice may be for referee to make a motion for additional fees and for court to issue order awarding those extra fees. All compensation, including compensation in excess of $500 for the referee to sell, should be listed in the Report of Sale. adduced at the hearing and the thoroughness of the Referee's report, we cannot conclude that a fee of $ 2,300, amounting to roughly $ 42 per hour, was excessive or unreasonable. 4th Department case re CPLR 8003(a): O'Dwyer v. Robson, 103 A.D.2d 1036, 478 N.Y.S.2d 407, (4th Dept 1984) the statute [CPLR 3008(a)] which sets the statutory rate also authorizes the court to fix a different compensation and does not require that it be established before the referred matter is heard. 1 st Department case re CPLR 8003(a): Garay v Soling 169 A.D.2d 616; 564 N.Y.S.2d 755; 1991 N.Y. App. Div. LEXIS 589 (1 st Dept 1991), at 618, Court held: Finally, though both parties urge that the award to the Referee, in the amount of $ 20,000, was excessive and, in any event, beyond the statutory rate, we are of the view that the court properly confirmed the fee application. In this regard, we first note that while CPLR 8003 (a) provides for a statutory rate of $ 50 compensation per day, it also allows for the court or the parties to set a Referee's fees beyond the statutory rate. ( Matter of O'Dwyer v Robson, 103 AD2d 1036 [4th Dept 1984].) The provision authorizing the court to so fix a different, i.e., higher compensation does not require the compensation to be established before the referred matter is heard. 7 Subdivision (b) of CPLR 8003 reads as follows: Upon sale of real property. A referee appointed to sell real property pursuant to a judgment is entitled to the same fees and disbursements as those allowed to a sheriff. Where a referee is required to take security upon a sale, or to distribute, apply, or ascertain and report upon the distribution or application of any of the proceeds of the sale, he or she is also entitled to one-half of the commissions upon the amount secured, distributed or applied as are allowed by law to an executor or administrator for receiving and paying out money. Commissions in excess of fifty dollars shall not be allowed upon a sum bid by a party, and applied upon that party's judgment, without being paid to the referee. A referee's compensation, including commissions, upon a sale pursuant to a judgment in any action cannot exceed five hundred dollars, unless the property sold for fifty thousand dollars or more, in which event the referee may receive such additional compensation as to the court may seem proper

20 o If the property does not sell, the referee must obtain judicial approval in order to retain money in excess of the fees and disbursements allowed to a sheriff. If there is no sale, the referee to sell is entitled to the same fees and disbursements as those allowed to a sheriff, per CPLR o Referee s fees, upon a sale, may not exceed $500, unless the property sold for $50,000 or more (CPLR 8003 (b)]. o If the sale is cancelled, without sufficient notice: It may be customary in some jurisdictions for plaintiff to proffer an additional fee to a referee for a sale which was cancelled without sufficient notice. It is problematic for the referee to retain this money without court approval. The referee must obtain court approval in order to retain the $500 fee for a sale which never takes place. o Additional compensation if sale is especially complicated: Cases generally provide that additional compensation is to be awarded rarely; the referee must show unusual difficulties complexities or was required to perform unusual, i.e., substantially exceeding the typical, services. High sale price is not a factor in difficulty of case. o Attending the closing The referee s fee to sell includes the closing. RPAPL Even though the fee to sell includes the closing, some referees request from the petitioner additional compensation to attend the closing or if the closing was complex or lengthy. Request for additional compensation must be made to the court. For interesting discussion of fees for referee to sell and the recommended guidelines of Bronx Justice Paul A. Victor, see JP Morgan Chase v Pizzini, 12 Misc.3d 520, 813 N.Y.S.2d 649, 2006 N.Y. Slip Op (Supreme Court Bronx County, 2006) Referee or person acting on referee s behalf may not purchase property RPAPL 232; violation is a misdemeanor and purchase would be void. Surplus Money. Referee must pay surplus moneys into court within 5 days after the money has been received

21 Mortgage Foreclosure Referee is independent contractor; and, therefore, is not entitled to representation or indemnification by the New York Attorney General. o O'Brien v. Spitzer, 7 N.Y.3d 239, 851 N.E.2d 1195, 818 N.Y.S.2d 844 (Ct App 2006). Referee is not entitled to be represented by the Attorney General pursuant to Public Officer Law 17(2)(a). A private lawyer appointed to serve as a referee in a mortgage foreclosure action is not a state employee, but rather is an independent contractor. Accordingly, that person is entitled to neither a defense by nor indemnification from the State should he be sued in his capacity as referee. Referee to sell must comply with bankruptcy stay. o See In re Crawford, 388 B.R. 506, 2008 WL (Bkrtcy.S.D.N.Y.) where US Bankruptcy Court, S.D. held NYS foreclosure referee willfully violated automatic stay by conducting sale after notice of Chapter 13 filing. Court found referee liable for damages; but no liability for punitive damages due to lack of malice or bad faith

22 Judiciary Law Rules of Professional Conduct Rule 1.5. Fees and Division of Fees (a) A lawyer shall not make an agreement for, charge, or collect an excessive or illegal fee or expense. A fee is excessive when, after a review of the facts, a reasonable lawyer would be left with a definite and firm conviction that the fee is excessive. The factors to be considered in determining whether a fee is excessive may include the following: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent or made known to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent. (b) A lawyer shall communicate to a client the scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible. This information shall be communicated to the client before or within a reasonable time after commencement of the representation and shall be in writing where required by statute or court rule. This provision shall not apply when the lawyer will charge a regularly represented client on the same basis or rate and perform services that are of the same general kind as previously rendered to and paid for by the client. Any changes in the scope of the representation or the basis or rate of the fee or expenses shall also be communicated to the client. (c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. Promptly after a lawyer has been employed in a contingent fee matter, the lawyer shall provide the client with a writing stating the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or, if not prohibited by statute or court rule, after the contingent fee is calculated. The writing must clearly notify the client of any expenses for which the client will be liable regardless of whether the client is the prevailing party. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a writing stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination. (d) A lawyer shall not enter into an arrangement for, charge or collect: (1) a contingent fee for representing a defendant in a criminal matter; (2) a fee prohibited by law or rule of court; (3) a fee based on fraudulent billing; (4) a nonrefundable retainer fee; provided that a lawyer may enter into a retainer agreement with a client containing a reasonable minimum fee clause if it defines in plain language and sets forth the circumstances under which such fee may be incurred and how it will be calculated; or

23 (5) any fee in a domestic relations matter if: (i) the payment or amount of the fee is contingent upon the securing of a divorce or of obtaining child custody or visitation or is in any way determined by reference to the amount of maintenance, support, equitable distribution, or property settlement; (ii) a written retainer agreement has not been signed by the lawyer and client setting forth in plain language the nature of the relationship and the details of the fee arrangement; or (iii) the written retainer agreement includes a security interest, confession of judgment or other lien without prior notice being provided to the client in a signed retainer agreement and approval from a tribunal after notice to the adversary. A lawyer shall not foreclose on a mortgage placed on the marital residence while the spouse who consents to the mortgage remains the titleholder and the residence remains the spouse's primary residence. (e) In domestic relations matters, a lawyer shall provide a prospective client with a statement of client's rights and responsibilities at the initial conference and prior to the signing of a written retainer agreement. (f) Where applicable, a lawyer shall resolve fee disputes by arbitration at the election of the client pursuant to a fee arbitration program established by the Chief Administrator of the Courts and approved by the Administrative Board of the Courts. (g) A lawyer shall not divide a fee for legal services with another lawyer who is not associated in the same law firm unless: (1) the division is in proportion to the services performed by each lawyer or, by a writing given to the client, each lawyer assumes joint responsibility for the representation; (2) the client agrees to employment of the other lawyer after a full disclosure that a division of fees will be made, including the share each lawyer will receive, and the client's agreement is confirmed in writing; and (3) the total fee is not excessive. (h) Rule 1.5(g) does not prohibit payment to a lawyer formerly associated in a law firm pursuant to a separation or retirement agreement. Rules of Prof. Con., Rule 1.5 McK. Consol. Laws, Book 29 App., NY ST RPC Rule 1.5 Rules of Professional Conduct Rule Preserving Identity of Funds and Property of Others; Fiduciary Responsibility; Commingling and Misappropriation of Client Funds or Property; Maintenance of Bank Accounts; Record Keeping; Examination of Records (a) Prohibition Against Commingling and Misappropriation of Client Funds or Property. A lawyer in possession of any funds or other property belonging to another person, where such possession is incident to his or her practice of law, is a fiduciary, and must not misappropriate such funds or property or commingle such funds or property with his or her own. (b) Separate Accounts. (1) A lawyer who is in possession of funds belonging to another person incident to the lawyer's practice of law shall maintain such funds in a banking institution within New York State that agrees to provide dishonored check reports in accordance with the provisions of 22 N.Y.C.R.R. Part Banking institution means a state or national bank, trust company, savings bank, savings and loan

24 association or credit union. Such funds shall be maintained, in the lawyer's own name, or in the name of a firm of lawyers of which the lawyer is a member, or in the name of the lawyer or firm of lawyers by whom the lawyer is employed, in a special account or accounts, separate from any business or personal accounts of the lawyer or lawyer's firm, and separate from any accounts that the lawyer may maintain as executor, guardian, trustee or receiver, or in any other fiduciary capacity; into such special account or accounts all funds held in escrow or otherwise entrusted to the lawyer or firm shall be deposited; provided, however, that such funds may be maintained in a banking institution located outside New York State if such banking institution complies with 22 N.Y.C.R.R. Part 1300 and the lawyer has obtained the prior written approval of the person to whom such funds belong specifying the name and address of the office or branch of the banking institution where such funds are to be maintained. (2) A lawyer or the lawyer's firm shall identify the special bank account or accounts required by Rule 1.15(b)(1) as an Attorney Special Account, Attorney Trust Account, or Attorney Escrow Account, and shall obtain checks and deposit slips that bear such title. Such title may be accompanied by such other descriptive language as the lawyer may deem appropriate, provided that such additional language distinguishes such special account or accounts from other bank accounts that are maintained by the lawyer or the lawyer's firm. (3) Funds reasonably sufficient to maintain the account or to pay account charges may be deposited therein. (4) Funds belonging in part to a client or third person and in part currently or potentially to the lawyer or law firm shall be kept in such special account or accounts, but the portion belonging to the lawyer or law firm may be withdrawn when due unless the right of the lawyer or law firm to receive it is disputed by the client or third person, in which event the disputed portion shall not be withdrawn until the dispute is finally resolved. (c) Notification of Receipt of Property; Safekeeping; Rendering Accounts; Payment or Delivery of Property. A lawyer shall: (1) promptly notify a client or third person of the receipt of funds, securities, or other properties in which the client or third person has an interest; (2) identify and label securities and properties of a client or third person promptly upon receipt and place them in a safe deposit box or other place of safekeeping as soon as practicable; (3) maintain complete records of all funds, securities, and other properties of a client or third person coming into the possession of the lawyer and render appropriate accounts to the client or third person regarding them; and (4) promptly pay or deliver to the client or third person as requested by the client or third person the funds, securities, or other properties in the possession of the lawyer that the client or third person is entitled to receive. (d) Required Bookkeeping Records. (1) A lawyer shall maintain for seven years after the events that they record: (i) the records of all deposits in and withdrawals from the accounts specified in Rule 1.15(b) and of any other bank account that concerns or affects the lawyer's practice of law; these records shall specifically identify the date, source and description of each item deposited, as well as the date, payee and purpose of each withdrawal or disbursement; (ii) a record for special accounts, showing the source of all funds deposited in such accounts, the names of all persons for whom the funds are or were held, the amount of such funds, the description and amounts, and the names of all persons to whom such funds were disbursed;

25 (iii) copies of all retainer and compensation agreements with clients; (iv) copies of all statements to clients or other persons showing the disbursement of funds to them or on their behalf; (v) copies of all bills rendered to clients; (vi) copies of all records showing payments to lawyers, investigators or other persons, not in the lawyer's regular employ, for services rendered or performed; (vii) copies of all retainer and closing statements filed with the Office of Court Administration; and (viii) all checkbooks and check stubs, bank statements, prenumbered canceled checks and duplicate deposit slips. (2) Lawyers shall make accurate entries of all financial transactions in their records of receipts and disbursements, in their special accounts, in their ledger books or similar records, and in any other books of account kept by them in the regular course of their practice, which entries shall be made at or near the time of the act, condition or event recorded. (3) For purposes of Rule 1.15(d), a lawyer may satisfy the requirements of maintaining copies by maintaining any of the following items: original records, photocopies, microfilm, optical imaging, and any other medium that preserves an image of the document that cannot be altered without detection. (e) Authorized Signatories. All special account withdrawals shall be made only to a named payee and not to cash. Such withdrawals shall be made by check or, with the prior written approval of the party entitled to the proceeds, by bank transfer. Only a lawyer admitted to practice law in New York State shall be an authorized signatory of a special account. (f) Missing Clients. Whenever any sum of money is payable to a client and the lawyer is unable to locate the client, the lawyer shall apply to the court in which the action was brought if in the unified court system, or, if no action was commenced in the unified court system, to the Supreme Court in the county in which the lawyer maintains an office for the practice of law, for an order directing payment to the lawyer of any fees and disbursements that are owed by the client and the balance, if any, to the Lawyers' Fund for Client Protection for safeguarding and disbursement to persons who are entitled thereto. (g) Designation of Successor Signatories. (1) Upon the death of a lawyer who was the sole signatory on an attorney trust, escrow or special account, an application may be made to the Supreme Court for an order designating a successor signatory for such trust, escrow or special account, who shall be a member of the bar in good standing and admitted to the practice of law in New York State. (2) An application to designate a successor signatory shall be made to the Supreme Court in the judicial district in which the deceased lawyer maintained an office for the practice of law. The application may be made by the legal representative of the deceased lawyer's estate; a lawyer who was affiliated with the deceased lawyer in the practice of law; any person who has a beneficial interest in such trust, escrow or special account; an officer of a city or county bar association; or counsel for an attorney disciplinary committee. No lawyer may charge a legal fee for assisting with an application to designate a successor signatory pursuant to this Rule. (3) The Supreme Court may designate a successor signatory and may direct the safeguarding of funds from such trust, escrow or special account, and the disbursement of such funds to persons who are

26 entitled thereto, and may order that funds in such account be deposited with the Lawyers' Fund for Client Protection for safeguarding and disbursement to persons who are entitled thereto. (h) Dissolution of a Firm. Upon the dissolution of any firm of lawyers, the former partners or members shall make appropriate arrangements for the maintenance, by one of them or by a successor firm, of the records specified in Rule 1.15(d). (i) Availability of Bookkeeping Records: Records Subject to Production in Disciplinary Investigations and Proceedings. The financial records required by this Rule shall be located, or made available, at the principal New York State office of the lawyers subject hereto, and any such records shall be produced in response to a notice or subpoena duces tecum issued in connection with a complaint before or any investigation by the appropriate grievance or departmental disciplinary committee, or shall be produced at the direction of the appropriate Appellate Division before any person designated by it. All books and records produced pursuant to this Rule shall be kept confidential, except for the purpose of the particular proceeding, and their contents shall not be disclosed by anyone in violation of the attorneyclient privilege. (j) Disciplinary Action. A lawyer who does not maintain and keep the accounts and records as specified and required by this Rule, or who does not produce any such records pursuant to this Rule, shall be deemed in violation of these Rules and shall be subject to disciplinary proceedings

27 INSTRUCTIONS TO AMEND YOUR APPLICATION INSTRUCTIONS TO AMEND THE UCS 870 Application for Appointment Pursuant to Part 36 TO AMEND THE CATEGORIES OR COUNTIES OF ENROLLMENT: Send an to or Send a fax to (212) or Write to OCA at the address listed below. Include the following information: Your full name Your Fiduciary ID Number (FID#) The first five digits of your Social Security Number A link to (or copy of) your application will be sent to you by return (or fax or mail) along with a copy of your receipt. Please print both and make changes, additions or deletions in ink on the application and receipt. Sign and date each, attach any required documentation (e.g. resume), and mail to: Office of Court Administration P.O. Box 3171 Church Street Station New York, NY TO AMEND YOUR NAME, ADDRESS OR OTHER CONTACT INFORMATION Send an to part36@courts.state.ny.us with your changes, or Send a fax to (212) with your changes Include the following information:... Your full name... Your Fiduciary ID Number (FID#)... The first five digits of your Social Security Number You may also mail a copy of your receipt with the changes marked in ink to: Office of Court Administration P.O. Box 3171 Church Street Station New York, NY

28 75 N.Y.2d 511, 553 N.E.2d 1005, 554 N.Y.S.2d 457 Court of Appeals of New York. In the Matter of Alan KANE, Petitioner. Harold Freedman et al., Respondents; Irving Tenenbaum, Appellant. April 5, On appeal from order of the Supreme Court, Nassau County, Kelly, J., denying motion to vacate order terminating receivership and failing to rule on motion for leave to commence action against receiver for payment of excessive commissions, the Supreme Court, Appellate Division, 132 A.D.2d 610, 517 N.Y.S.2d 771, reversed and remitted. The Supreme Court, Nassau County, Robbins, J., then entered judgment in favor of dissolving company. Receiver appealed. The Supreme Court, Appellate Division, 151 A.D.2d 672, 543 N.Y.S.2d 934, affirmed as modified. On appeal, the Court of Appeals, Bellacosa, J., held that court-appointed receiver could not, as part of overall settlement between two litigating shareholders of close corporation, privately negotiate fee without court approval in amount exceeding scheduled maximum fixed by statute. Affirmed. OPINION *513 OF THE COURT ***458 BELLACOSA, Judge. The issue is whether a court-appointed receiver, as part of an over-all settlement between two litigating shareholders of a close corporation, can privately negotiate a fee without court approval in an amount exceeding the scheduled maximums fixed by section 1217 of the Business Corporation Law. Our answer is no. Alan Kane and Harold Freedman were each 50% shareholders of S.A.E. Motor Parts Co., Inc., a successful wholesale business with sales in excess of $1 million annually. Differences between the shareholders led to Kane's action in January 1984 to dissolve the corporation pursuant to Business Corporation Law Supreme Court promptly made an order which included the appointment of appellant Tenenbaum as receiver of the corporation's assets and property, with all the usual powers and duties, requiring him also to take and subscribe an oath to faithfully, honestly and impartially discharge the trust committed to him (record on appeal, at 48). By August 1984, the shareholders settled their differences on their own to the extent that Kane agreed to sell his shares to the corporation. They advised the receiver of their settlement. Kane, Freedman and Tenenbaum then entered into two agreements on August 22, The first was a stipulation, so ordered by Supreme Court, terminating the receivership. The second agreement-the one at issue before us now and never submitted to or approved by the court-waived a judicial settlement of an accounting by the receiver and allowed receiver Tenenbaum to pay himself the settled sum of $40,000 from the corporation's funds for his commissions and expenses. It also provided for additional payments to the attorney and accountant selected by the receiver to provide professional services to him during the seven-month receivership, a period of which was stayed by the Appellate Division. Freedman and the corporation in which he became sole shareholder subsequently moved in Supreme Court to rescind the fee agreement and sought leave to sue Tenenbaum to recover excessive commissions and damages. Supreme Court denied the relevant relief. In reversing, the Appellate Division *514 held that [d]espite a stipulation of the parties, the court was without the authority to allow the receiver compensation in excess of the maximum receivership commission provided for by Business Corporation Law (132 A.D.2d 610, 611, 517 N.Y.S.2d 771 [citations omitted].) That court added: The Legislature has seen fit to set ceilings on the amounts that receivers, as court-appointed officers, may be awarded for their services and it is not within the province of parties to stipulate, nor within the discretion of the court to accept stipulations to a greater amount. The matter was remitted to Supreme Court, which then determined that the negotiated fee of $40,000 exceeded the statutory maximum ($11,285) by $28,715. Judgment for that excess sum plus interest was entered against Tenenbaum in favor of Freedman and the corporation. The Appellate Division affirmed the full judgment amount but modified to provide that it was payable only to the corporation. 151 A.D.2d 672, 543 N.Y.S.2d 934. We granted

29 the receiver's motion for leave to appeal from the Appellate Division order insofar as it affirms the money judgment against him, and we review the prior nonfinal order holding that the Business Corporation Law 1217 maximums exclusively control. We now affirm. Business Corporation Law 1217 provides: (a) A receiver shall be entitled, in addition to his necessary expenses, to such commissions upon the sums received and disbursed as may be allowed by the court, as follows: (1) On the first twenty thousand dollars, not exceeding five percent; (2) On the next eighty thousand dollars, not exceeding two and one-half percent; and (3) On the remainder, not exceeding one percent. ***459 **1007 (b) If the commissions of the receiver so computed do not amount to one hundred dollars, the court in its discretion may allow such sum not exceeding one hundred dollars as shall be reasonable (emphasis added). Appellant-a representative of the court itself-asserts that Business Corporation Law 1217 does not apply and does not prohibit fixing his receivership commissions by private agreement. His argument pivots on the premise that Business Corporation Law 1217 provides for limited maximum receiver's commissions only as may be allowed by the court, but that private extrajudicial commission agreements, reached at arm's length, are free of any statutory limitation or judicial *515 oversight. The premise is untenable, because this would allow a circumvention of the statute, and is self-contradictory, because as a court-appointed receiver he is the court's direct agent and therefore legally incapable of being released and compensated without the court's involvement. A receivership is a creature of the court ( see generally, Business Corporation Law art. 12; CPLR art. 64), subject to the control of the court at all times (Business Corporation Law 1202[b] ), and functions in the place of and as the instrumentality of the court itself. As a special officer of the court ( see, Copeland v. Salomon, 56 N.Y.2d 222, 228, 451 N.Y.S.2d 682, 436 N.E.2d 1284) with fiduciary responsibilities ( see, Insurance Co. v. City of New York, 71 N.Y.2d 983, 985, 529 N.Y.S.2d 70, 524 N.E.2d 424) the receiver acts solely on the court's behalf ( see, Matter of Schwartzberg v. Whalen, 96 A.D.2d 974, 975, 466 N.Y.S.2d 846) and is otherwise a stranger to the parties and their dispute. The corporation is the court's ward and its property-the corpus of the receivership itself-cannot be diminished to the benefit of the receiver without the court's approval. Appellant acknowledges that he is the court's agent, not the parties', and we therefore conclude he cannot punctuate the completion of his receivership duties with a private compensation arrangement beyond the statute and the glimpse and grasp of the indispensable ultimate principal-the appointing court. Business Corporation Law 1216(a) provides the receiver shall apply to the court for a final settlement of his accounts and for an order for distribution and for prescribed fees. Appellant challenges the exclusivity of the governing fee schedule by urging that only proven fraud, duress or unconscionability can undo this privately negotiated deal. This argument fails. Parties resorting to the aid of the courts for the resolution of their privately intractable disputes and getting a receiver appointed to help them should not be limited by such high hurdles when challenging the receiver's actions. The parties instead should be entitled to hold the receiver in such circumstances to the strict standards that the governing statute imposes ( see, Meinhard v. Salmon, 249 N.Y. 458, 464, 164 N.E. 545). As this court noted more than a century ago: It is a matter of public notoriety that the act of 1883 [predecessor of Business Corporation Law 1217] was passed, in view of the scandals which had been set afloat, in respect to the administration of the affairs of insolvent corporations through receivers. * * * [I]t is, we think, reasonably clear that the object of the act was to supplement the existing legislation, in respect *516 to the winding up of the affairs of insolvent corporations, and to provide further restrictions and safe-guards against the misuse or depletion of corporate funds in the hands of the receivers. ( United States Trust Co. v. New York, W. Shore & Buffalo Ry. Co., 101 N.Y. 478, 486, 5 N.E. 316.) The passage of time and the solvency of the instant corporation have not diluted the potency or pertinency of this observation. To allow the receiver to receive a commission higher than that allowed by the statute is contrary to its plain meaning and destroys the historic spirit and transcendent policy permeating that legislation (Business Corporation Law

30 1217; see, e.g., La Vin v. La Vin, 281 App.Div. 888, 889, 119 N.Y.S.2d 573 [interpreting predecessor statute]; Salmon v. Schenectady Mason Supply Corp., 278 App.Div. 609, 610, 102 N.Y.S.2d 91; see also, ***460 **1008 Hirsch v. Peekskill Ranch, 100 A.D.2d 863, 474 N.Y.S.2d 117 [interpreting CPLR 8004]; Caso v. Edgecombe Realty Corp., 25 A.D.2d 637, 267 N.Y.S.2d 916 [same]; Rinaud v. Home Shares Corp., 115 N.Y.S.2d 425 [Sup.Ct., Bronx County, Matthew M. Levy, J.] ). Finally, our holding does not conflict with or diminish, as appellant argues, the policy favoring private settlements of disputes. For the reasons stated, that policy is not apt here and even if it were, it would be subordinated to the paramount policy reflected in the governing statute ( see, Meinhard v. Salmon, supra, 249 N.Y. at 464, 164 N.E. 545; see also, Birnbaum v. Birnbaum, 73 N.Y.2d 461, 466, 541 N.Y.S.2d 746, 539 N.E.2d 574; Hudson v. Yonkers Fruit Co., 258 N.Y. 168, 173, 179 N.E. 373). We have examined appellant's other arguments and conclude they are without merit. The order of the Appellate Division should be affirmed, with costs. SIMONS, KAYE, ALEXANDER, TITONE and HANCOCK, JJ., concur. WACHTLER, C.J., taking no part. Order affirmed, with costs. Bottom of Form

31 58 A.D.3d 677, 871 N.Y.S.2d 706, 2009 N.Y. Slip Op Supreme Court, Appellate Division, Second Department, New York. Theresa FLOTTERON, et al., plaintiffs-appellants, v. JEL REALTY, et al., defendants-appellants; Harrison J. Snell, nonparty-respondent. Jan. 20, Background: Plaintiff brought action, inter alia, to dissolve certain partnerships. The Supreme Court, Kings County, Dabiri, J., granted that branch of the motion of nonparty permanent receiver, which was to fix the compensation to be paid to him to the extent of awarding him a commission in the sum of $59,230. Parties appealed. Holding: The Supreme Court, Appellate Division, held that special circumstances existed warranting a recovery for receiver in the sum of $59,230. Affirmed. PETER B. SKELOS, J.P., FRED T. SANTUCCI, WILLIAM E. McCARTHY and THOMAS A. DICKERSON, JJ. *677 In an action, inter alia, to dissolve certain partnerships, the plaintiffs and the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Dabiri, J.), dated April 3, 2008, as granted that branch of the motion of the permanent receiver, nonparty Harrison J. Snell, which was to fix the compensation to be paid to him to the extent of awarding him a commission in the sum of $59,230. ORDERED that the order is affirmed insofar as appealed from, with costs. Upon application of a receiver, the court may direct the parties who sought that appointment to pay necessary expenses and compensation which exceeds the money in the receiver's hands upon termination of the receivership ( see generally CPLR 8004[b] ). Here, after the Supreme Court disbursed the remaining funds in the receiver's account to the property manager, it discharged the receiver. Under the circumstances presented, the Supreme Court providently exercised its discretion in determining that special circumstances existed warranting a recovery in excess of five percent of the amount collected by the receiver in rents ( see Sun Beam Enters. v. Liza Realty Corp., 210 A.D.2d 153, 621 N.Y.S.2d 9; *678 Litho Fund Equities v. Alley Spring Apts. Corp., 94 A.D.2d 13, 16, 462 N.Y.S.2d 907; see also CFTC v. Korbean Intl. Inv. Corp., 1998 WL , 1998 U.S. Dist. LEXIS [S.D.N.Y.1998]; **707 Resolution Trust Corp. v. Volpe, 912 F.Supp. 65, 67; American Sav. Bank v. Saleski Dev. Inc., 812 F.Supp. 28, 32; Federal Home Loan Mtge. Corp. v. S.E.A. Yonkers Assoc., 869 F.Supp. 187, 188). Thus, the court properly fixed the receiver's compensation in accordance with the respective services [he] rendered (CPLR 8004[b] ). The appellants' remaining contentions are without merit

32 25 A.D.3d 146, 803 N.Y.S.2d 71, 2005 N.Y. Slip Op Supreme Court, Appellate Division, First Department, New York. In re Application of Adam JAKUBOWICZ, Petitioner-Respondent, v. A.C. GREEN ELECTRICAL CONTRACTORS, INC., et al., Respondents, Chaim Rozenblatt, Respondent-Respondent. Dudley Gaffin, Receiver-Appellant. In re Application of Adam Jakubowicz, et al., Petitioners-Respondents, v th Avenue, LLC, a New York Limited Liability Company, et al., Respondents, Nov. 1, Background: Court-appointed receiver appealed from order of the Supreme Court, New York County, Nicholas Figueroa, J., which denied him a commission in excess of that statutorily mandated. Holding: The Supreme Court, Appellate Division, Tom, J.P., held that receiver was not entitled to receive commission in excess of that statutorily mandated, based on value of property administered, or for legal expenses incurred in establishing his right to a commission. Affirmed. Ellerin, J., filed dissenting opinion. PETER TOM, J.P., RICHARD T. ANDRIAS, GEORGE D. MARLOW, BETTY WEINBERG ELLERIN, JOHN W. SWEENY, JR., JJ. TOM, J.P. *147 A receiver, appointed by Supreme Court to effectuate the dissolution of nine corporations and dispose of their assets, appeals from an order denying him a commission in excess of that mandated by Business Corporation Law Because the statutory language is plain and leaves no room for judicial interpretation, this Court is constrained to affirm the ruling. In March 2002, pursuant to Business Corporation Law 1202(a)(1), Dudley Gaffin, Esq. was appointed receiver in the dissolution of a 20-year business partnership between Adam Jakubowicz and Chaim Rozenblatt, who together operated an electrical contracting business and owned, through separate corporations, eight buildings on the West Side of Manhattan. The receiver states that, by the spring of 2002, Adam and Chaim had already been in court for more than two years, their partnership enmeshed in a tangle of claims, cross-claims and mutual allegations of impropriety. Despite what is described as their fierce, mutual hatred and distrust, Gaffin was able to negotiate a settlement on the eve of the judicial sale of the properties,*148 thereby saving each of the two partners some $1 million (in the receiver's own estimation). The court thereupon approved the stipulated settlement and vacated the orders of dissolution. Gaffin moved to approve his accounting and fix his commission and expenses in the amount of $167,500, based upon the value of the real property and the amounts collected, including rent and other receivables. In January 2003, by stipulation of the parties, the eight properties were valued at $12 million, but they were purported to have been worth up to $20 million in the opinion of unnamed real estate experts. Assigning a fair market value of $15 million to the properties, Gaffin asked the court to award him 1% of this sum, or $150,000.FN1 In support of the motion, Gaffin**73 maintained that he was entitled to be compensated for the special service he rendered during the course of the proceedings (citing Weckstein v. Breitbart, 154 A.D.2d 305, 546 N.Y.S.2d 593 [1989]; Precision Dynamics Corp. v. 601 W. 26 Corp., 51 A.D.2d 907, 381 N.Y.S.2d 69 [1976] )

33 FN1. Where, as here, the estate to be distributed is significant, the commission afforded by Business Corporation Law 1217 amounts to a little more than 1% of the sums received and disbursed. In addition, Gaffin sought 5% of the approximately $350,000 in rents collected and other receipts, or $17,500, pursuant to CPLR 8004(a),FN2 which provides for a receiver's commission not exceeding five percent upon the sums received and disbursed by him. Gaffin contended that this Court permitted such a departure from Business Corporation Law 1217 to determine a receiver's commission in State of New York v. Chatsworth Realty Corp., 284 A.D.2d 260, 726 N.Y.S.2d 845 [2001], lv. denied 97 N.Y.2d 604, 735 N.Y.S.2d 493, 760 N.E.2d 1289 [2001]. FN2. CPLR 8004 Commissions of receivers provides, in relevant part: (a) Generally. A receiver, except where otherwise prescribed by statute, is entitled to such commissions, not exceeding five percent upon the sums received and disbursed by him, as the court by which he is appointed allows, but if in any case the commissions, so computed, do not amount to one hundred dollars, the court may allow the receiver such a sum, not exceeding one hundred dollars, as shall be commensurate with the services he rendered. The receiver's application was opposed by the partners, particularly Jakubowicz, who maintained that Gaffin had merely delayed the proceedings by his attempts to mediate a settlement and had engaged in professional misconduct. Jakubowicz argued that the receiver should not be permitted to *149 impose himself upon an objecting, unwitting client, self-define his own role over and beyond that set forth in the order of appointment, and then demand... compensation at a self-prescribed rate. In reply, Gaffin argued that the court had discretion to make an award based upon the special benefit to the parties as well as the quality of the services rendered, noting that had the sale taken place, I would have been entitled to my one (1%) percent commission on the amount raised. As a policy consideration, he argued, For the court to deprive me of a commission on the value of these properties and assets will mean that every Receiver will oppose every settlement proposed by the warring parties wherever and whenever the settlement will deprive him/her of a fee. For some 300 hours of service to the court, rendered over a period of 11 months, Gaffin was awarded a commission of only $5, based on a total of $378, received and disbursed by him. The court disregarded the opposing arguments advanced by Jakubowicz, which it characterized as unfounded and speculative, and acknowledged the receiver's efforts to expedite the proceedings in spite of the partners' obvious mutual hostility. Nevertheless, the court noted that Business Corporation Law 1217, unlike CPLR 8004, makes no provision for payment of compensation based on the value of a receiver's services. Because the receiver was appointed pursuant to Business Corporation Law article 12, his commission is governed by the provisions of Business Corporation Law 1217.FN3 Moreover, even under **74 CPLR 8004(a), a receiver's commission is not payable on the value of the property administered. Rather, as this Court stated in New York State Mtge. Loan Enforcement & Admin. Corp. v. Milbank Site One Houses, 151 A.D.2d 424, 425, 542 N.Y.S.2d 632 [1989]: FN3. Business Corporation Law 1217 provides, in pertinent part: (a) A Receiver shall be entitled, in addition to his necessary expenses, to such commissions upon the sums received and disbursed as may be allowed by the court, as follows: (1) On the first twenty thousand dollars, not exceeding five percent; (2) On the next eighty thousand dollars, not exceeding two and one-half percent; and (3) On the remainder, not exceeding one percent. (b) If the commissions of the receiver so computed do not amount to one hundred dollars, the court in its discretion may allow such sum not exceeding one hundred dollars as shall be reasonable. *150 a commission is due upon the total amount which passes through the receiver's hands... In a simple case, the amount received and the amount disbursed will be the same ( City of New York v. Big Six Towers, 59 Misc.2d 839 [300 N.Y.S.2d 346] ). Where it is not, a commission is payable as a percentage of what the court decided was the value of the assets which came into the hands of the receivers, and which were disbursed or transferred by them ( Betz v. New Jersey Refrig. Co., 231 App.Div. 553 [248 N.Y.S. 35] )

34 While the receiver is correct in stating that, had the properties been sold, he would have been entitled to 1% of the amount received, it is dispositive that the properties were not sold; control then reverted to the corporations that owned them. This Court has construed the schedule of payment contained in Business Corporation Law 1217 to represent the maximum payable as a commission, subject to reduction upon consideration of the attendant facts and circumstances, the nature of the services rendered, the time expended and the sums received and disbursed ( Matter of Ronan Paint Corp., 98 A.D.2d 413, 418, 469 N.Y.S.2d 931 [1984] ). As the Court of Appeals has noted, the statute is subject to strict construction, and the payment of commissions in excess of the statutory rate is contrary to its plain meaning ( Matter of Kane, 75 N.Y.2d 511, 516, 554 N.Y.S.2d 457, 553 N.E.2d 1005 [1990] ). Reimbursement for expenses, including the services of a managing agent, is recoverable. The statute, however, does not provide compensation for management services performed by the receiver himself ( Goldman v. Bernardini, 246 A.D.2d 510, 667 N.Y.S.2d 390 [1998], lv. dismissed 92 N.Y.2d 919, 680 N.Y.S.2d 459, 703 N.E.2d 271 [1998] ). Thus, had the receiver hired a mediator to perform the same services, he could have been reimbursed for the mediator's fee ( see Sun Beam Enters. v. Liza Realty Corp., 210 A.D.2d 153, 621 N.Y.S.2d 9 [1994] [counsel's fees]; Kraizberg v. Frank, 170 A.D.2d 306, , 565 N.Y.S.2d 817 [1991] [same] ). On appeal, the receiver argues that this Court should construe Business Corporation Law 1217 similarly to SCPA article 23, which, he notes, provides for the fixing of the commission of a receiver or other fiduciary calculated upon the total value of the property placed in their hands and not merely cash monies received. This statute is clearly distinguishable, however. Under SCPA 2307, the meaning of receiving and paying out all sums of money is stated in subsection 2: The value of any property, to be determined in such manner as directed by the court and the increment thereof, received, distributed or delivered, shall be considered as money in computing commissions. *151 The provision that property be received, distributed or delivered stands in marked contrast to the language of Business Corporation Law 1217, **75 which provides for a commission based upon the sums received and disbursed (emphasis added). The use of the conjunctive in the Business Corporation Law, as opposed to the disjunctive in the SCPA, must be regarded as dispositive ( see Adkins v. City of New York, 43 N.Y.2d 346, 351, 401 N.Y.S.2d 469, 372 N.E.2d 311 [1977] [ the statute being worded in the conjunctive, both conditions must be satisfied ] ). Moreover, subsection (2) was not included in the SCPA, as originally drafted, but was added by amendment (L. 1916, ch. 596; see Matter of Potter, 106 Misc. 113, 122, 175 N.Y.S. 598 [1919] ). Significantly, the Legislature did not see fit to similarly amend the Business Corporation Law to allow commissions to be calculated upon the value of real property coming into the hands of the fiduciary ( id.). Finally, Gaffin misinterprets our decision in Chatsworth Realty, 284 A.D.2d 260, 726 N.Y.S.2d 845, wherein we noted that although an earlier ruling had stated that the case arose under Business Corporation Law 1202(a)(3) ( Abrams v. Chatsworth Realty Corp., 143 A.D.2d 596, 533 N.Y.S.2d 279 [1988], appeal dismissed 73 N.Y.2d 995, 540 N.Y.S.2d 1006, 538 N.E.2d 358 [1989] ), five separate motions seeking interim commissions in accordance with CPLR 8004 had gone unopposed by the defendant. It is apparent that the decision does not represent a departure from the strict application of Business Corporation Law 1217, but rests instead on the doctrine of laches. We stated, Having inexcusably slept upon its rights, defendant may not now raise the issue of whether the award of commissions to the receiver under CPLR 8004 is appropriate (284 A.D.2d at 261, 726 N.Y.S.2d 845). Gaffin ceased to represent the estate upon submission of the instant motion to approve his accounting and fix his commission. As the receiver concedes, he is not entitled to reimbursement for legal fees incurred in connection with the submission of the final accounting. Similarly, reimbursement is unavailable for the time expended by counsel in defending against accusations of professional misconduct made by Adam Jakubowicz in opposition to the motion. Unlike the factual circumstances of Jessup v. Smith, 223 N.Y. 203, 119 N.E. 403 [1918] [trustee], upon which Gaffin relies, there was no attempt to wrest control from the appointed administrator and place it in the hands of another, requiring services by counsel deemed beneficial in preserving the trust. The receiver has provided no other authority to support*152 his effort to obtain compensation for legal expenses incurred in establishing his right to a commission, and this Court is aware of none. Supreme Court properly reduced the sum due for counsel's services rendered in connection with the intended dissolution. Duplicate hours were billed for January 2nd, 3rd, and 6th, However, the submitted time sheets indicate that counsel billed 4 hours for January 2nd, 2 hours for January 3rd and 3.5 hours for January 6th. Thus, the total should have been reduced by 9.5 hours, not 13.5 hours, as deducted by the court, and the award for legal fees should be modified to include an additional $1,000 (4 hours at $250 an hour)

35 Although we are required to give literal application to the provisions of Business Corporation Law 1217, we cannot detract from the value of the services rendered by the receiver, which were applauded by Supreme Court and acknowledged, albeit reluctantly, by the parties.fn4 The **76 statutory reimbursement scheme contemplates the actual dissolution of the corporation and the distribution of corporate assets by the referee; it does not address the situation where dissolution is avoided. In this case, the referee was able to extract a negotiated settlement and so preserve, more effectively than by means of a judicial sale, the value of the corporate assets for the share owners. This outcome is both favorable to the parties and to the court. As a matter of policy, settlement is favored as a means of facilitating the resolution of disputes and preserving judicial resources ( see Mitchell v. New York Hosp., 61 N.Y.2d 208, 214, 473 N.Y.S.2d 148, 461 N.E.2d 285 [1984]; Matter of Hofmann, 287 A.D.2d 119, 733 N.Y.S.2d 168 [2001] ). These salutary purposes will not be promoted by a compensation provision that dissuades a receiver from attempting to settle a dispute between share owners in order to preserve his entitlement to an adequate commission for the services he has rendered. FN4. The decision concludes, In closing, this court would be remiss in not acknowledging the receiver's invaluable assistance in successfully expediting these proceedings tactfully, notwithstanding the open hostility of the litigants towards each other; however, it is barred from basing his compensation on the worth of these services however useful they may have been. In sum, the remedy lies not with the courts but with the Legislature. We strongly urge that consideration be given to amending Business Corporation Law 1217 to afford a court discretion to fix a receiver's commission based upon the value of the services rendered in those cases where, as here, dissolution *153 and the consequent disposition of corporate property are not effectuated (particularly as the result of a negotiated settlement), subject to limitation by reference to a percentage of the total assets administered. Accordingly, the order of the Supreme Court, New York County (Nicholas Figueroa, J.), entered May 7, 2004, insofar as it fixed the receiver's commission at $5, and denied certain compensation for counsel fees relating to his motion for approval of his accounting, should be modified, on the law, to the extent of increasing the award for counsel fees by $1,000 and, except as so modified, affirmed, without costs. Order, Supreme Court, New York County (Nicholas Figueroa, J.), entered May 7, 2004, modified, on the law, to the extent of increasing the award for counsel fees and, except as so modified, affirmed, without costs. All concur except ELLERIN, J. who dissents in an Opinion. ELLERIN, J. (dissenting). While I agree that ordinarily the statute appears to limit the receiver's fees to the schedules in Business Corporation Law 1217, I believe that the unique circumstances of this case require additional relief. Indeed, the motion court itself acknowledged the receiver's invaluable assistance in successfully expediting these proceedings tactfully, notwithstanding the open hostility of the litigants to each other, but indicated that it was barred from basing his compensation on the worth of these services however useful they may have been. This encomium merely touches upon the extraordinary amount of time and inordinate skill required to resolve the myriad disputes between the bitterly warring and litigious defendant partners who apparently have been able to overcome their animosity only on the issue of limiting the receiver's fees. A brief recital of some of the services rendered by the receiver demonstrates their nature and value in preserving the assets of the corporations despite the best **77 efforts of the warring partners to deplete these assets by way of unnecessary litigation fueled by their animosities. The receiver's time sheets reflect that he and his staff expended more than 396 hours performing work in connection with these actions. He spoke to counsel for the respective parties and met with counsel and the parties in an effort to settle the disputes or, in the alternative, to obtain documents each claimed were needed by the other for the pending actions. During these conversations and meetings, he learned about the complexity of the dispute and other pending

36 actions and was informed of the parties' desire to settle the matter rather than selling the properties, which would be very costly to them. The receiver also learned that settling the matter would involve all nine entities, which these discussions with counsel *154 and the parties disclosed were worth more than $15 million. This value was later confirmed in the receiver's discussions with brokers and their clients to whom he showed the properties before the auction sale, and is the reason that he was required to post a $2 million bond in the first action in which he was collecting approximately $25,000 per month in rent. After he was appointed in Action No. 1, the receiver had difficulty finding a managing agent because of the low rent roll, which was due to the many vacancies in the buildings and petitioner Jakubowicz's and respondent Rozenblatt's refusal to pay for the use and occupancy of the spaces they occupied. The receiver permitted Jakubowicz to continue managing the properties that he had managed before the receiver's appointment, but because Jakubowicz was continually late in responding to the receiver's requests, the receiver discontinued his services and retained another managing agent. In addition to managing the properties and preparing them for sale, the receiver helped the parties, at their request, resolve a myriad of issues, including accusations of misconduct, that arose in connection with court orders directing the individual parties to account to each other. He also continued to supervise the operation of all the entities, including the electrical corporation, and entered into an agreement with Jakubowicz to complete a contract between A.C. Green and the Medical Examiner of the City of New York, under which Jakubowicz and Rozenblatt were personally obligated under a bond of $1 million. The receiver arranged to give the parties an opportunity to review the voluminous records that had come into his possession, some of which the parties had withheld from each other, to enable them to obtain the necessary data to settle the remaining litigation issues. He continued to try to settle the dispute, assisting the parties in obtaining records for discovery, meeting with the principals and their assistants to organize the documents, holding conversations with the mortgagees, notifying the creditors by publication in two newspapers, and helping to obtain documents from computer records. He negotiated a settlement of the dispute as to the procedure for a court-ordered accounting, which involved conversations with counsel and attendance at court hearings and conferences concerning the four properties that were the subject matter of Action No. 2 even before he was appointed in that action. The receiver had discussions with chief counsel of a title company to fashion a method of selling the properties so that *155 the buyer(s) would receive title insurance. He prepared and arranged for the publication of a notice of sale of the properties, met with more than 50 prospective brokers and investors and had telephone conversations**78 with many more concerning the prospective sale, and showed the properties to groups of prospective buyers on at least six occasions. When the auction scheduled for January 7, 2003 was stayed on January 6, he notified almost 50 people that day that the auction was canceled and he went to the court on the auction date to tell those who appeared that the auction was suspended. The receiver expended a vast amount of time in assisting the parties to resolve their disputes. By playing so significant a role in the parties' settlement, he averted the sale of the subject properties, thereby preserving the parties' assets. His compensation as calculated according to the statutory schedules simply is not commensurate with his extraordinary efforts. Indeed, the $5, commission thus computed is manifestly unfair; fair compensation would be an award for the reasonable value of the services he rendered ( see American Savings Bank v. Saleski Dev., Inc., 812 F.Supp. 28, 32 [U.S. Dist. Ct., S.D.N.Y.1993] ), and I would remand the matter for a determination thereof. It is undisputed that, as respondent Rozenblatt conceded on appeal, [i]n his capacity as a mediator, negotiator or special master, Mr. Gaffin did spend an extraordinary amount of time on his extraordinary activities. The motion court explicitly recognized that this extraordinary work benefitted the parties. Had the receiver hired a mediator to perform the dispute-resolution functions he performed, he likely would have been reimbursed those costs ( see e.g. Sun Beam Enters. v. Liza Realty Corp., 210 A.D.2d 153, 153, 621 N.Y.S.2d 9 [1994] [receiver authorized to retain counsel for all reasonable purposes in connection with receivership was entitled to attorneys' fees and costs where the facts, including extensive motion practice concerning violations and disrepair of the subject property, established that counsel's services were warranted ]; Kraizberg v. Frank, 170 A.D.2d 306, , 565 N.Y.S.2d

37 817 [1991] [ the IAS court was well within its authority to ratify the hiring of attorneys by the receiver in circumstances which the IAS court determined were pregnant with unusual circumstances ] ). Indeed, had he been appointed under CPLR 8004, which permits an award that exceeds the statutory maximum under the doctrine of quantum meruit if the statutory maximum would be manifestly unfair, the receiver undoubtedly would have been compensated for the reasonable *156 value of the services he performed ( Federal Home Loan Mtge. Corp. v. S.E.A. Yonkers Assoc., 869 F.Supp. 187, 188 [U.S. Dist. Ct., S.D.N.Y.1994], citing American Savings Bank, 812 F.Supp. at 32). In the circumstances, it would be manifestly unfair to limit his compensation according to the fee schedules in Business Corporation Law As Governor T. Whitfield Davidson, a federal District Court Judge for the Northern District of Texas, said, A sound principle of justice is that there must never arise a wrong for which there is not a tribunal wherein there is a remedy. That is in fact the spirit of equity that has come down to us through the ages. This Court has deviated from a strict interpretation of Business Corporation Law 1217 where justice warranted it ( see State of New York v. Chatsworth Realty Corp., 284 A.D.2d 260, 726 N.Y.S.2d 845 [2001], lv. denied 97 N.Y.2d 604, 735 N.Y.S.2d 493, 760 N.E.2d 1289 [2001] ). Justice warrants that we do so again here

38 RECEIVERSHIP APPOINTMENTS and THE RULES OF THE CHIEF JUDGE Part NYCRR 36

39 Overview and Rationale Investigations and Reports: Birnbaum Commissions I and II Special Inspector General s Report Action by the Administrative Board, Court of Appeals, Chief Judge Appointments to be fair, impartial and beyond reproach Merit selection No favoritism, nepotism or politics

40 Implementation Categories of appointment Appointment is a judicial function and responsibility Disqualifications from eligibility Compensation limitations Publication of records

41 Primary Categories of Appointment Guardians Guardians ad litem and their counsel and assistants Privately paid attorneys for the child (formerly called law guardians) Court Evaluators Attorneys for Alleged Incapacitated Persons Court Examiners

42 Primary App t. Categories cont d: Supplemental Needs Trustees Receivers Referees Referees to perform an act Primarily Foreclosure Referees Surrogate s Court Public Administrators and Counsel to PA (limited applicability)

43 Secondary Appointment Categories Secondary Appointment defined: Persons or entities Performing Services Applicable ONLY to Receivers (and Guardians) Must be made by the Judge Must be on the list

44 This Training Course This training course is certified for enrollment on the Part 36 list in the category of RECEIVER Secondary appointment categories do not require prior training for enrollment

45 Secondary Appointees: Receivers Counsel to Receiver Accountants to Receiver Auctioneers for Receiver Appraisers for Receiver Property Managers for Receiver Real Estate Brokers for Receiver

46 Exemptions from Part 36 Certain Guardians, SNT Trustees or Guardians ad litem (friends or relatives) Not-for-profit corporations as guardians or court evaluator Certain public officials and appointments required by law Appointments without compensation Significance for Receivers

47 Appointments Must be made by the judge Secondary appointments included Must be selected from OCA list Judge may appoint non-list if: Written finding of good cause Filed with fiduciary clerk (UCS-872.5) Judge must send copy to Chief Administrator

48 Disqualifications from Appointment Two major types: By reason of relationships, employment, position, background or involvement in the case By reason of compensation from other Part 36 appointments

49 Disqualifications Judges, housing judges, town and village justices Relatives of judges AND relatives of the spouses of judge (and spouses of those relatives) Related within the 4th degree (1 st cousin) JHOs on panel in a court in a county

50 Disqualifications cont d Political party officials AND their close relatives: State or County political party office Chair, executive director or equivalent 2 year prohibition after leaving office, includes family Includes members, associates, counsel and employees of party official s law firms or entities while in office Former judges and their close relatives, for two years

51 Disqualifications cont d: Disbarred or suspended attorney during penalty period. Convicted Felons Unless certificate relief from disabilities Misdemeanants for 5 yrs from sentencing Unless waived by Chief Administrator

52 Receiver Disqualifications Receiver (or guardian) may not be own counsel Law firm associated with receiver may not be counsel to receiver Unless compelling reason exists

53 Limitations based upon compensation Two Rules ( the caps ) $15,000 Rule $75,000 Rule One exception: continuity of representation or service; must be the same person or entity Limitation rules operate at the time of appointment

54 Compensation defined: Written order signed by judge. Awards: includes fees, commissions, allowances, etc. Excludes: costs and disbursements. Date of the court order is the date of compensation.

55 May I accept this appointment? The $15,000 Rule Do I anticipate this appointment will result in compensation exceeding $15,000 in ANY calendar year? If no, then appointee may accept; the $15,000 does not apply. If yes, then appointee must look at all appointments in current calendar year.

56 May I accept this appointment? The $15,000 Rule cont d: Yes, current appointment compensation anticipated to exceed $15,000 Did I accept an appointment in the current calendar year in which compensation is anticipated to exceed $15,000? If no, then appointee may accept If yes, then appointee must decline

57 May I accept this appointment? The $75,000 Rule Add all Part 36 compensation awards in prior calendar year. (E.g. 2009) If total exceeds $75,000, then appointee may not accept compensated appointment in subsequent calendar year. (E.g. 2010) Not a per se cap; rather a consequence if exceed the cap in one year. Applies to new appointments only, may keep inventory

58 Contact Us: Guardian & Fiduciary Services 25 Beaver Street Suite 1110 New York, NY GFS:

59