Preview
FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166
NYSCEF DOC. NO. 154 RECEIVED NYSCEF: 11/28/2022
EXHIBIT A
{H4661546, l }
FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166
NYSCEF DOC. NO. 154 RECEIVED
INDEX NO'NYSCEF: 11/28/2022
EF2021-1'08165
RECEIVED NYSCEF I 06/t7 /2022
NYSCEF DOC. NO- 105
At a term of Supreme Court held for'the County
Of Herkimer ln the County of Herkimer, in the
Village of Herkimer, New York on the 29th day of
March 2022.
STATE OT'NEW YORK
SUPREME COURT HERKIMER COT]NTY
PRESENT: HON. JOHN H. CRANDALL' AJSC
Christopher Smith and Michael Smith as
Trustees of the Jay and Patricia Smith
frrevocable Trust
Plaintiffs,
DECISION AND ORDER
Index No. EF202l'108166
vs. RJI No. zt-21-147
Anna J.Smith, as Trustee of the Theodore P. Smith
lncome only Irrevocable Trust, and Theodore P. Smith
Defendants.
X'actu^al Background
plaintiffs Ch,ristopher Smith and Michael Smith are the Trustees of the Jay and Patricia Smith
Inevocable Trust ftereinafter Trust or Plaintiffl.
The Defendants are Anna J. Smith, as Trustee of the Theodore P. Smith Income Only
Irrevocablc Trust and Theodore P. Smith, (hereinafter Defendants). Together the parties own and
possess real property in Herkimer County, New York astenants'in commonr. The Plaintiffs hold
of Middleville and Newport and doscribed
rThe property is situated I the Town as 84 Herkirner Middleville'
Street
t,tew yoik and recorded in the Hcrkimer County 18,2002, in Book 903 of Deeds at pages
Clcrk's O{ficc on January
,l2,i1,7;,and 84. The portions of the property in the Town of Middleville are known
as Tax identification numbers
100.5g-l-33, 100.58-l-32, 100.58,1-26,100.5g-l-24, 100.58-l-17.The portion ofthe property situate in the Town of
Newport is known as tax identification number 100'4'2-3.
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FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166
NYSCEF DOC. NO. 154 RECEIVED
rNDEX NO. NYSCEF: 11/28/2022
EF202L-108166
RECETVED NvscEF I 06/17 /2022
NYSCEF DOC. NO. 105
an undivided two-thirds ownership interest in the property and Defendants hold an undivided
one-third ownership interest. Defendants operate a business known as Ace of Diamonds Mine &
Campground ,LLCon the property. Ace of Diamonds is an LLC operated by Anna J' Smith as
Trustee of the Theodore P. Smith, Income Only lrrevocable Trust. Ace of Diamonds operates
commercial and tourist mining enterprises as well as a campground on the property. The entirety
of the property was conveyed to the partiesas tenants in common. Donald Smith, father of Jay
Smith and Theodore P. Smith, had operated a business on the property under the same name' The
Ace of Diamonds LLC. business footprint is expansive and extends beyond one+hird of the
premises.
involves the extraction of "Herkimer Diamonds" which are a unique quartz
The mining
crystal, composed of silicon dioxide. Because of their unique characteristics, "Herkimer
Diamonds" are valuable. The crystals are found throughout the property. The most valuable
crystals are believed to be found in a "pocket layer, " which runs in a roughly north-south line'
of the ,,pocket layer', remains unexposed as it lies underneath overburden which consists of
Much
tillat varying deptts. The ability to access the "pocket layer"
bedrock, dolostone and/or glaoial
depends upon the thickness, nature and density of the overburden covering it. In some areas the
pockets are accessible through removal of rock, exposing the pockets from the side' The
point (where the tourist mining occurs) is largely unexposed as it sits under
southemrnost
twenty feet of bedrock. Substantial mechanized mining has occuned in sections of
approximately
the pocket layer is thinner at approximately nine feet,
the mine where the overburden covering
of the "pocket layer, " the thickness of
making the crystals easier to mine. However, over much
without coring. (Paragraph 14 from report of Adam
the overburden cannot be determined
not all areas of the "pocket layer" are equally accessible. Thick
schoonmaker, Ph.D). Thus,
overburden oan be very costly to remove' (Paragraph 20 from report of Adam Schoonmaker
ph.D). Further, the quantity and quality of quartz crystals remaining in the unexposed "pocket
In short, not all sections of the "pocket layer" are equally
layer,, cannot be accurately determined.
(Paragraph 19 from report of Adam Schoonmaker' Ph'D)
accessible from a mining perspective.
2
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FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166
NYSCEF DOC. NO. 154 rNDEX NO.
RECEIVED NYSCEF: 11/28/2022
EF202L-108156
RECEIVED NYSCEF ; 06/L7 /2022
NYSCEF DOC. NO. 106
Plaintiffs contend they have substantially contributed to the Aoe of Diamonds business in
the form of services and materials, with the understanding it was the family business.
I
In 2013 the parties commenced a verbal lease agreement whereby the Defendants would
make annual lease payments to the PlaintiffTrust of $21,000.00.
Plaintiffs allege that since that time the volume of the mining activity on the premises has
substantially increased. As such, the Plaintiffs attempted to re-negotiate the terms of the lease,
sush that the lease payments would be commensurate with their two'thirds ownership interest.
The parties failed to reach an agreement. Defendants continued to mine the property without
compensating the Plaintiffs, which they allege has been a windfall to the Defendants, to the
detrirnent of Plaintiff.
Procedural HistorY
On April 27,Zyzl,the Plaintiffs filed a verified complaint seeking, inter alia, an Order
directing partition and sale of the property, alleging that an Order of partition alone, would be
impossible and impractical as the accessibility, location, quality, and quantity of the crystals is not
certain.
On May 6,Z02l,this Court issued an Order to Show Cause with a temporary restraining
plaintiffs sought a preliminary injunction. Defendants cross'moved to vacate or
order whereby
'
modify the temporary restraining order pending the Court's determination on the Plaintiffs'
motion for a preliminary injunction as per the procedures set forth in New York Real Property
Actions and Procedure Law Section 993. (The Heirs Act)'
3
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FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166
NYSCEF DOC. NO. 154 RECEIVED
rNDEX NO.NYSCEF: 11/28/2022
EF2o21-L08166
RECETVED NYSCEF z 06/t7 /2022
NYSCEF DOC. NO. 105
On June 17, the Court, after hearing argumonts on June l0,202l,modified the temporary
reshaining order of May 6,2021, such that:
1. The Defendants were prohibited from conducting or permitting any form of
"commercial mining" during the pendency of the action;
2. ,,Tourist mining" shall be permitted during the pendency of this aotion on the southern
portion of the property where tourist mining had been permitted in the past;
3. Defendants were permitted to sell minerals mined prior to the temporary restraining
order in the gift shop on the property and
4. Defendants were permitted to operate the camping business on the property during the
pendency of the action.
Conclusions of Law
New York State Real Property Aotions and Proceedings Law Section 901(l) states:
,,Aperson hotding and in possession of real property as iotnt tenant
or tensnt in common, in which he has an estate of inheritance, or for
life, orfor yeors, may maintaln an actionfor the partition ofthe property,
andfor a sale if it appears that a partition cannot be made without great
, preiudice to the ownerl"
in the property
There is no dispute that the plaintiffs own an undivided two-thirds interest
with Defendants holding title to the remainder. Plaintiffs have established
as tenants in common
prima facie standing to seek partition and are authorized to dispose of the property'
partition and sale among joint tenants or tenants in common as a matter of right absent a
gOJ The right to partition is not
showing that prejudice would result from paftition. RPAPL
in oommon has the right to maintain an action for partition
absolute, howev€r, and while a tenant
is always subject to the equities between the parties' (See
pursuant to BpApLg0l, , the remedy
Graffeo v, Paciello.. 46 A.D. 3d 613, 614, (2"d Dept' 2007)'
4
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FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166
NYSCEF DOC. NO. 154 RECEIVED
rNDEX NO. NYSCEF: 11/28/2022
EF202L-1081-56
RECEIVED NYSCEF' 06/I7 /2022
r{YscEF DOC. NO. 105
Partition and sale are required upon proof "that the property is so oircumstanced that a
partition thereof cannot be made without great prejudice to the owners." &PAPL Section 901;
I
Ora$so v. Paciello,46 A'D. 3d 613, 614,(znd Dept.2007).
Viable claims for partition and sale must rest upon allegations of a joint common
ownership in real property with attendant rights to possession and that the equities favor the
claimant and, where a sale rather than an actual partition is demanded, proof that a physical
partition of the premises cannot be made without great prejudice to the parties is also required.
Galilskaya v. Pfesman , 92 AD 3d 637,2nd Dept. 2012); James v. James, 52 AD 3d 474, (2nd Dept.
2008).
$t.. LLC..V,Iulloulnlexq$LIJ$ 57 AD 3d 511 (2"d Dept' 2008), the
In Snyder Fulton
Second Department reversed an Order of partition of real properly where the partition would
and dangerous" and result in a significantly reduced value of
have been "prohibitively expensive
unless such physical partition
the property. The Court held that physical partition is authorized
would cause great prejudice to the owners, which then requires sale at public auction. ld at 514'
here, the quartzcrystals are likely to be in the "pocket layer, " which
exists
Likewise,
different styles of overburden. Not only would partition likely create unequal division of
under
,,pocket loyer, may be differing quantity and quality of crystals, but the extent
the " of which there
and expense ofaccess to the "pocket layer" is largely unknown and thus, cannot be equitably
accounted for by the Court.
the Ace of Diamonds, LLC., physical plant, extends beyond one-third of the
Further,
5
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FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166
NYSCEF DOC. NO. 154 RECEIVED
INDEX EF2o21-108166
NO.NYSCEF: 11/28/2022
RECETVED NYSCEF : 06/r7 /2022
NYSCEF DOC. NO. 1.06
premises, making partition further complex as physical structures may then necessarily need be
considered.
Thus, partition would greatly prejudice the parties. The property as divided will likely
It is not possible or praotical for this Court to partition the property
have significantly less value.
WHEREFORE, it is hereby
be sold at public auction, under the supervision of a Coutl
Ordered, that the said premises
given to the purchaser; that from sale proceeds the Referee'
appointed Referee, with conveyance
property shall be satisfied; and
Broker and fees associated with the sale and/or maintenance of the
it is further
to
Ordered, that the parties account for their respective expenditures and receipts relative
the property and upon the completion thereof, there shall be paid out of the proceeds of the sale
such sums as shall be asoertained to be due and owing; and it is further
ordcred, that the residue of all sums ascertained tluough the sale of the properly and
ascertained by the accounting and/or from the receivership, shall divide as per the parties'
to Plaintiffs and one-third to Defendants; and it is
respective ownership interests,two-thirds
further
that the attomey for the Plaintiffs shall submit, on notice to the Defendants' a
ordered,
with this Decision and order and providing' in
proposed order of Partition and sale, consistent
with RPAPL Section 91 5 and such
blank for the appointment of a referee of sale in accordance '
including those requiredby 2ZNYCRR Part 36'
other necessary matters,
6
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FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166
NYSCEF DOC. NO. 154 RECEIVED
rNDEX NO. NYSCEF: 11/28/2022
EF202L-108166
NYSCEF DOC. NO. 106
RECEMD NYSCEF I 06/L7 /2022
The foregoing constitutes the opinion, Decision and Order of the Court.
Dated: June@2022
Herkimer, New York
ENTER,
H. Crandall
reme Court Justice
7
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Preview
FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 154 RECEIVED NYSCEF: 11/28/2022 EXHIBIT A {H4661546, l } FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 154 RECEIVED INDEX NO'NYSCEF: 11/28/2022 EF2021-1'08165 RECEIVED NYSCEF I 06/t7 /2022 NYSCEF DOC. NO- 105 At a term of Supreme Court held for'the County Of Herkimer ln the County of Herkimer, in the Village of Herkimer, New York on the 29th day of March 2022. STATE OT'NEW YORK SUPREME COURT HERKIMER COT]NTY PRESENT: HON. JOHN H. CRANDALL' AJSC Christopher Smith and Michael Smith as Trustees of the Jay and Patricia Smith frrevocable Trust Plaintiffs, DECISION AND ORDER Index No. EF202l'108166 vs. RJI No. zt-21-147 Anna J.Smith, as Trustee of the Theodore P. Smith lncome only Irrevocable Trust, and Theodore P. Smith Defendants. X'actu^al Background plaintiffs Ch,ristopher Smith and Michael Smith are the Trustees of the Jay and Patricia Smith Inevocable Trust ftereinafter Trust or Plaintiffl. The Defendants are Anna J. Smith, as Trustee of the Theodore P. Smith Income Only Irrevocablc Trust and Theodore P. Smith, (hereinafter Defendants). Together the parties own and possess real property in Herkimer County, New York astenants'in commonr. The Plaintiffs hold of Middleville and Newport and doscribed rThe property is situated I the Town as 84 Herkirner Middleville' Street t,tew yoik and recorded in the Hcrkimer County 18,2002, in Book 903 of Deeds at pages Clcrk's O{ficc on January ,l2,i1,7;,and 84. The portions of the property in the Town of Middleville are known as Tax identification numbers 100.5g-l-33, 100.58-l-32, 100.58,1-26,100.5g-l-24, 100.58-l-17.The portion ofthe property situate in the Town of Newport is known as tax identification number 100'4'2-3. 1of7 FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 154 RECEIVED rNDEX NO. NYSCEF: 11/28/2022 EF202L-108166 RECETVED NvscEF I 06/17 /2022 NYSCEF DOC. NO. 105 an undivided two-thirds ownership interest in the property and Defendants hold an undivided one-third ownership interest. Defendants operate a business known as Ace of Diamonds Mine & Campground ,LLCon the property. Ace of Diamonds is an LLC operated by Anna J' Smith as Trustee of the Theodore P. Smith, Income Only lrrevocable Trust. Ace of Diamonds operates commercial and tourist mining enterprises as well as a campground on the property. The entirety of the property was conveyed to the partiesas tenants in common. Donald Smith, father of Jay Smith and Theodore P. Smith, had operated a business on the property under the same name' The Ace of Diamonds LLC. business footprint is expansive and extends beyond one+hird of the premises. involves the extraction of "Herkimer Diamonds" which are a unique quartz The mining crystal, composed of silicon dioxide. Because of their unique characteristics, "Herkimer Diamonds" are valuable. The crystals are found throughout the property. The most valuable crystals are believed to be found in a "pocket layer, " which runs in a roughly north-south line' of the ,,pocket layer', remains unexposed as it lies underneath overburden which consists of Much tillat varying deptts. The ability to access the "pocket layer" bedrock, dolostone and/or glaoial depends upon the thickness, nature and density of the overburden covering it. In some areas the pockets are accessible through removal of rock, exposing the pockets from the side' The point (where the tourist mining occurs) is largely unexposed as it sits under southemrnost twenty feet of bedrock. Substantial mechanized mining has occuned in sections of approximately the pocket layer is thinner at approximately nine feet, the mine where the overburden covering of the "pocket layer, " the thickness of making the crystals easier to mine. However, over much without coring. (Paragraph 14 from report of Adam the overburden cannot be determined not all areas of the "pocket layer" are equally accessible. Thick schoonmaker, Ph.D). Thus, overburden oan be very costly to remove' (Paragraph 20 from report of Adam Schoonmaker ph.D). Further, the quantity and quality of quartz crystals remaining in the unexposed "pocket In short, not all sections of the "pocket layer" are equally layer,, cannot be accurately determined. (Paragraph 19 from report of Adam Schoonmaker' Ph'D) accessible from a mining perspective. 2 2of7 FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 154 rNDEX NO. RECEIVED NYSCEF: 11/28/2022 EF202L-108156 RECEIVED NYSCEF ; 06/L7 /2022 NYSCEF DOC. NO. 106 Plaintiffs contend they have substantially contributed to the Aoe of Diamonds business in the form of services and materials, with the understanding it was the family business. I In 2013 the parties commenced a verbal lease agreement whereby the Defendants would make annual lease payments to the PlaintiffTrust of $21,000.00. Plaintiffs allege that since that time the volume of the mining activity on the premises has substantially increased. As such, the Plaintiffs attempted to re-negotiate the terms of the lease, sush that the lease payments would be commensurate with their two'thirds ownership interest. The parties failed to reach an agreement. Defendants continued to mine the property without compensating the Plaintiffs, which they allege has been a windfall to the Defendants, to the detrirnent of Plaintiff. Procedural HistorY On April 27,Zyzl,the Plaintiffs filed a verified complaint seeking, inter alia, an Order directing partition and sale of the property, alleging that an Order of partition alone, would be impossible and impractical as the accessibility, location, quality, and quantity of the crystals is not certain. On May 6,Z02l,this Court issued an Order to Show Cause with a temporary restraining plaintiffs sought a preliminary injunction. Defendants cross'moved to vacate or order whereby ' modify the temporary restraining order pending the Court's determination on the Plaintiffs' motion for a preliminary injunction as per the procedures set forth in New York Real Property Actions and Procedure Law Section 993. (The Heirs Act)' 3 3of7 FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 154 RECEIVED rNDEX NO.NYSCEF: 11/28/2022 EF2o21-L08166 RECETVED NYSCEF z 06/t7 /2022 NYSCEF DOC. NO. 105 On June 17, the Court, after hearing argumonts on June l0,202l,modified the temporary reshaining order of May 6,2021, such that: 1. The Defendants were prohibited from conducting or permitting any form of "commercial mining" during the pendency of the action; 2. ,,Tourist mining" shall be permitted during the pendency of this aotion on the southern portion of the property where tourist mining had been permitted in the past; 3. Defendants were permitted to sell minerals mined prior to the temporary restraining order in the gift shop on the property and 4. Defendants were permitted to operate the camping business on the property during the pendency of the action. Conclusions of Law New York State Real Property Aotions and Proceedings Law Section 901(l) states: ,,Aperson hotding and in possession of real property as iotnt tenant or tensnt in common, in which he has an estate of inheritance, or for life, orfor yeors, may maintaln an actionfor the partition ofthe property, andfor a sale if it appears that a partition cannot be made without great , preiudice to the ownerl" in the property There is no dispute that the plaintiffs own an undivided two-thirds interest with Defendants holding title to the remainder. Plaintiffs have established as tenants in common prima facie standing to seek partition and are authorized to dispose of the property' partition and sale among joint tenants or tenants in common as a matter of right absent a gOJ The right to partition is not showing that prejudice would result from paftition. RPAPL in oommon has the right to maintain an action for partition absolute, howev€r, and while a tenant is always subject to the equities between the parties' (See pursuant to BpApLg0l, , the remedy Graffeo v, Paciello.. 46 A.D. 3d 613, 614, (2"d Dept' 2007)' 4 4of7 FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 154 RECEIVED rNDEX NO. NYSCEF: 11/28/2022 EF202L-1081-56 RECEIVED NYSCEF' 06/I7 /2022 r{YscEF DOC. NO. 105 Partition and sale are required upon proof "that the property is so oircumstanced that a partition thereof cannot be made without great prejudice to the owners." &PAPL Section 901; I Ora$so v. Paciello,46 A'D. 3d 613, 614,(znd Dept.2007). Viable claims for partition and sale must rest upon allegations of a joint common ownership in real property with attendant rights to possession and that the equities favor the claimant and, where a sale rather than an actual partition is demanded, proof that a physical partition of the premises cannot be made without great prejudice to the parties is also required. Galilskaya v. Pfesman , 92 AD 3d 637,2nd Dept. 2012); James v. James, 52 AD 3d 474, (2nd Dept. 2008). $t.. LLC..V,Iulloulnlexq$LIJ$ 57 AD 3d 511 (2"d Dept' 2008), the In Snyder Fulton Second Department reversed an Order of partition of real properly where the partition would and dangerous" and result in a significantly reduced value of have been "prohibitively expensive unless such physical partition the property. The Court held that physical partition is authorized would cause great prejudice to the owners, which then requires sale at public auction. ld at 514' here, the quartzcrystals are likely to be in the "pocket layer, " which exists Likewise, different styles of overburden. Not only would partition likely create unequal division of under ,,pocket loyer, may be differing quantity and quality of crystals, but the extent the " of which there and expense ofaccess to the "pocket layer" is largely unknown and thus, cannot be equitably accounted for by the Court. the Ace of Diamonds, LLC., physical plant, extends beyond one-third of the Further, 5 5of7 FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 154 RECEIVED INDEX EF2o21-108166 NO.NYSCEF: 11/28/2022 RECETVED NYSCEF : 06/r7 /2022 NYSCEF DOC. NO. 1.06 premises, making partition further complex as physical structures may then necessarily need be considered. Thus, partition would greatly prejudice the parties. The property as divided will likely It is not possible or praotical for this Court to partition the property have significantly less value. WHEREFORE, it is hereby be sold at public auction, under the supervision of a Coutl Ordered, that the said premises given to the purchaser; that from sale proceeds the Referee' appointed Referee, with conveyance property shall be satisfied; and Broker and fees associated with the sale and/or maintenance of the it is further to Ordered, that the parties account for their respective expenditures and receipts relative the property and upon the completion thereof, there shall be paid out of the proceeds of the sale such sums as shall be asoertained to be due and owing; and it is further ordcred, that the residue of all sums ascertained tluough the sale of the properly and ascertained by the accounting and/or from the receivership, shall divide as per the parties' to Plaintiffs and one-third to Defendants; and it is respective ownership interests,two-thirds further that the attomey for the Plaintiffs shall submit, on notice to the Defendants' a ordered, with this Decision and order and providing' in proposed order of Partition and sale, consistent with RPAPL Section 91 5 and such blank for the appointment of a referee of sale in accordance ' including those requiredby 2ZNYCRR Part 36' other necessary matters, 6 6of1 FILED: HERKIMER COUNTY CLERK 11/28/2022 02:02 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 154 RECEIVED rNDEX NO. NYSCEF: 11/28/2022 EF202L-108166 NYSCEF DOC. NO. 106 RECEMD NYSCEF I 06/L7 /2022 The foregoing constitutes the opinion, Decision and Order of the Court. Dated: June@2022 Herkimer, New York ENTER, H. Crandall reme Court Justice 7 7of7