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STATE OF NEW YORK
SUPREME COURT COUNTY OF HERKIMER
CHRISTOPHER SMITH AND MICHAEL SMITH AS
TRUSTEES OF THE JAY AND PATRICIA SMITH SUMMONS
IRREVOCABLE TRUST,
Index No.
Plaintiffs,
Vv.
THEODORE P. SMITH INCOME ONLY IRREVOCABLE
TRUST,
Defendant.
TO THE ABOVE-NAMED DEFENDANTS:
YOU ARE HEREBY SUMMONED to answer the attached Verified Complaint in this
action and to serve a copy of your Answer within twenty (20) days after the service of
this Summons, exclusive of the day of service (or within thirty [30] days after the service
is complete if this Summons is not personally delivered to you within the State of New
York); and in case of your failure to appear or answer, judgment will be taken against
you by default for the relief demanded in the Complaint.
The basis of venue as designated in the Complaint is the location of the property which
Plaintiffs seek partition and sale.
Dated: April 27, 2021 BOND, SCHOENECK & KING, PLLC
Pra Seiko
By:
Brody D. Smith, Esq.
Attomeys for Plaintiffs
Office and P.O. Address
One Lincoln Center
Syracuse, New York 13202-1355
Telephone: (315) 218-8225
TO: James Lagios, Esq.
Rivkin Radler LLP
66 South Pearl Street, 11th Floor
Albany, New York 12207
James.Lagios@rivkin.com
12448738.1STATE OF NEW YORK
SUPREME COURT COUNTY OF HERKIMER
CHRISTOPHER SMITH AND MICHAEL SMITH AS
TRUSTEES OF THE JAY AND PATRICIA SMITH VERIFIED COMPLAINT
IRREVOCABLE TRUST,
Index No.
Plaintiffs,
v.
THEODORE P. SMITH INCOME ONLY !RREVOCABLE
TRUST,
Defendant.
Plaintiffs Christopher Smith and Michael Smith, as Trustees of the Jay and
Patricia Smith Irrevocable Trust, by their attorneys Bond, Schoeneck & King, PLLC,
complaining of the Defendant, allege as follows:
1. Christopher Smith and Michael Smith are the Trustees of the Jay and
Patricia Smith Irrevocable Trust (the “Trust’).
2. Christopher Smith resides at 832 Route 29, Fairfield, New York.
3. Michael Smith resides at 274 Rose Valley Road, Newport, New York.
4. The Trust and Defendant, the Theodore P. Smith Income Only Irrevocable
Trust (“Defendant”), own in fee, and possess as tenants in common, certain real
property, situate partly in the Village of Middleville and partly in the Town of Newport,
County of Herkimer, and State of New York, known and described as 84 Herkimer
Street, Middleville, New York, and recorded in the Herkimer County Clerk's Office on
January 18, 2002 in Book 903 of Deeds at pages 72, 75, 78, 81, and 84 (collectively,
12421792.5the “Property”). Copies of the above-referenced pages of Book 903 of Deeds is
attached hereto as Exhibit A.
5. The Trust obtained title to the Property by Warranty Deed on March 28,
2019. A copy of the Warranty Deed is attached hereto as Exhibit B.
6. The Property is also known and described as Parcels F, G, H, I, and J in
the aforementioned Warranty Deed. See Exhibit B.
7. Upon information and belief, Theodore P. Smith transferred his one-third
undivided interest in the Property to Defendant, and Defendant now holds and
possesses the same interest as was granted to Theodore P. Smith in the above-
referenced pages of Book 903 of Deeds. See Exhibit A.
8. The portions of the Property situate in the Village of Middleville are known
also as Tax ID Nos. 100.58-1-33, 100.58-1-32, 100.58-1-26, 100.58-1-24, and 100.58-
1-17.
9. The Trust owns in fee and possesses a two-thirds undivided interest in the
Property, and Defendant owns in fee and possesses a one-third undivided interest in
the Property.
10. Upon information and belief, there are no liens on the Property and no
persons other than the Trust and Defendant have any interest in the Property as owners
or otherwise.
11. Plaintiffs Christopher Smith and Michael Smith are authorized by the
Certification of Trust to convey real and personal property owned by the Trust. A copy of
the Certification of Trust is attached hereto as Exhibit C.
12421792.512. Upon information and belief, Defendant operates a business known as
Ace of Diamonds Mine & Campground, LLC (the “Ace of Diamonds”), on the Property.
13. | Upon information and belief, the Ace of Diamonds is a single member LLC
with the sole member being Anna J. Smith as trustee for the Theodore P. Smith Income
Only Irrevocable Trust.
14. Defendant, through the Ace of Diamonds, operates commercial and tourist
mining enterprises on the Property, as well as a campground.
15. | The mining activity on the Property relates to the extraction of “Herkimer
Diamonds,” which are a unique type of double-terminated quartz crystal found in
Herkimer County composed of silicon dioxide and hard enough to scratch glass. The
brilliant appearance, hardness, natural facets and hexagonal structuring of Herkimer
Diamonds cause them to bear a striking resemblance to real diamonds.
16. Because of the unique characteristics of Herkimer Diamonds, extraction of
the minerals from the Property is a highly valuable enterprise capable of yielding
hundreds of thousands of dollars in revenue each year.
17. Over the years, and in connection with the business operations of the Ace
of Diamonds, the Trust has provided numerous improvements to the Property based on
its understanding that the Ace of Diamonds was the family business.
18. | These improvements included, inter alia, septic tank and leach field
replacement, a new 200 amp service feed for campground expansion, engineering
management and plan development for campground regulatory compliance, LED site
lighting improvements, sluice cleaning, overburden removal, fusing and installation of
12421792.5conduit raceway for waterline improvements, transportation and set-up of trailers for
“Ace” advertisement, and vinyl sign development and installation.
19. In addition to these services, the Trust also supplied materials for
improvements, including, by way of example, LED lights and custom brackets for
lighting improvements, 1,100 feet of 8” HDPE conduit with a value of $20 per foot, flush
mount pull boxes, spray foam insulation, and miscellaneous equipment and vehicles
which were conveyed at cost to the Ace of Diamonds.
20. Without accounting for the value of time and services supplied to the Ace
of Diamonds, the value of the materials supplied by Plaintiffs over the years well
exceeds $25,000.
21. — Plaintiffs supplied these services and materials based on their belief that
the Ace of Diamonds was the family business, given that the current Ace of Diamonds
operation was a continuation of the tourist mining business Plaintiffs’ grandfather,
Donald Smith (“Don”), had operated under the same name since the 1970s.
22. Indeed, this understanding that mining on the property would remain the
family business is why, upon information and belief, Don transferred the Property to his
sons as tenants in common.
23. Defendant and the Trust were parties to a verbal lease agreement,
entered into in or around 2013 after Don’s death, whereby Defendant made annual rent
payments to the Trust of $21,000 in exchange for permission to operate the Ace of
Diamonds on the Property.
24. In the years since this verbal agreement was entered into, the scope and
intensity of the Ace of Diamonds’ business operations have increased dramatically.
12421792.525. Realizing that the lease payments made by Defendant were drastically
below fair market value considering the value of minerals extracted from the Property
each year, the Trust attempted to negotiate a more reasonable arrangement with
Defendant under which the Trust’s compensation would be commensurate with its two-
thirds ownership interest in the Property.
26. In or around October of 2020, the Trust attempted unsuccessfully for
several months to establish fair terms for a tenants in common agreement with
Defendant.
27. At this time, a tenants in common agreement was deemed preferable to
partition of the property because of the large area of the Property currently being used
in connection with the Ace of Diamonds business. Due to the nature of mining, a
physical separation of the Property would likely have resulted in a massive disruption of
the business and would not have guaranteed that the parties would receive mineral
pockets proportionate to their respective shares.
28. During these negotiations, Defendant refused to provide the Trust an
accounting of its profits or of the amount of minerals that have been extracted from the
Property in connection with the operations of the Ace of Diamonds.
29. Despite the Trust’s good faith efforts to negotiate satisfactory terms with
Defendant, the parties were unable to reach an agreement on terms for the continued
operation of the Ace of Diamonds during the 2021 calendar year.
30. Defendant no longer has permission from the Trust to operate the Ace of
Diamonds on the Property.
12421792.531. Upon information and belief, Defendant continues to operate the Ace of
Diamonds on the Property without payment of rents to the Trust and mining operations
for the 2021 calendar year have already begun.
32. Defendant's failure to fairly compensate the Trust for the minerals
removed from the Property has resulted in a windfall for Defendant to the detriment of
the Trust.
33. | Upon information and belief, Defendant will continue to increase the
intensity of commercial mineral extraction on the Property in order to extract as many
minerals as possible.
34. Such reckless commercial mining on the property threatens to drastically
deplete the Property's most valuable pockets of minerals and cause irreparable harm to
the Property.
35. Upon information and belief, if Defendant is permitted to continue its
commercial mining operations on the Property during the pendency of this action, it will
also cause irreparable harm to the viability of the tourist mining and campground
operations of the Ace of Diamonds business.
36. The Property is so situate that physical partition thereof among the parties,
according to their respective rights and interests, cannot be had without great prejudice
to the owners thereof.
37. It is neither practical nor possible to partition the Property given, among
other things, the extent of Defendant’s business operations on the Property despite only
possessing a one-third interest in the Property.
12421792.538. In addition, the exact location and amount of minerals remaining on the
Property cannot be determined with any reasonable certainty. Partition could therefore
result in vastly dissimilar valuations and further injury to the Trust.
39. Accordingly, the Court must partition and sell the Property.
40. All of the parties to this action, upon information and belief, are of full age
and sound mind.
41. | The Trust and the Defendant own, hold and are seized of as tenants in
common in addition to the Property described in Paragraph 4 of this Complaint, certain
real property situate in the County of Herkimer, State of New York, known and
described as Parcels B and K in the Warranty Deed. See Exhibit B.
WHEREFORE, Plaintiffs respectfully demand judgment as follows:
a. That the Trust is seized and possessed as tenant in common in fee of an
undivided two-thirds part of the Property;
b. That the Defendant is seized and possessed as tenant in common in fee of
an undivided one-third part of the Property;
c. That the premises are so situate that a sale thereof is necessary, and that
said premises be sold at a private sale, under the supervision and direction of
a court-appointed referee, with conveyance given to the purchasers;
d. That out of the moneys arising from said sale, the Trust shall be paid the
costs, disbursements and fees of this action and of said sale, including
attorneys’ fees;
e. That out of the moneys arising from said sale, the Referee shall be paid
his/her own fees and expenses, shall satisfy the fees and expenses of the
12421792.512421792.5
broker, and shall satisfy all fees and costs associated with the sale of the
Property and/or its maintenance and upkeep pending sale;
That there is an accounting between the Trust and Defendant of their
respective expenditures for the payment of the taxes, insurance,
improvements, repairs, renovations and related costs, expenses and
disbursements of time, material and supplies related to the Property, and
upon the completion of said accounting, there shall be paid out of the
proceeds of the sale such sum or sums as shall be ascertained to be due the
respective parties hereto;
That there is an accounting between the Trust and Defendant of the value of
minerals removed from the Property;
That a receiver be appointed, with the usual powers and directions, of all the
rents and profits now due and unpaid, or to become due pending this action,
and issuing out of the Property;
That Defendant may be compelled to pay to the said receiver for the benefit
of the Trust any money, and the value of any property, which Defendant has
acquired to itself, or transferred to others, or lost or wasted;
That upon the completion of the accounting by Defendant, it be decreed to
pay over to the Trust such sum or sums as shall be ascertained to be due to
it;
That that the residue of the money arising from said sale be divided and paid,
two-thirds thereof to the Trust and one-third thereof to Defendant;|. That it be adjudged by said sale and conveyance pursuant thereto, that the
Plaintiffs and Defendant and all persons claiming through or under them
subject to the filing of the notice of the pendency of this action, be barred of
all right, title and interest in said premises in possession, reversion,
remainder, or otherwise; and
m. For such other and further relief as the Court deems just, fair, proper and
equitable.
Dated: April 26, 2021 BOND, SCHOENECK & KING, PLLC
By: Les Zs
Brody D. Smith, Esq.
Attomeys for Plaintiffs
Office and P.O. Address
One Lincoln Center
Syracuse, New York 13202-1355
Telephone: (315) 218-8225
12421792.5VERIFICATION
STATE OF NEW YORK )
)ss.:
COUNTY OF HERKIMER )
Christopher Smith, being duly sworn, deposes and says that deponent is
the Trustee of the Jay and Patricia Smith Irrevocable Trust, Plaintiff in this action, that
deponent has read the foregoing Verified Complaint and knows the contents thereof,
that the same is true to the knowledge of deponent, except as to such matters which are
stated to be alleged on information and belief, and as to those matters deponent
believes it to be true.
Sworn to before me this
Be day of _dpuk , 2021.
i .
hey lis echo
Notary Public
yr 1S
No. O1GI
Qualified in Herkimar County,
Commission Expires May 12, 2223...
10
12421792.5VERIFICATION
STATE OF NEW YORK )
)ss.:
COUNTY OF HERKIMER )
Michael Smith, being duly sworn, deposes and says that deponent is the
Trustee of the Jay and Patricia Smith irrevocable Trust, Plaintiff in this action, that
deponent has read the foregoing Verified Complaint and knows the contents thereof,
that the same is true to the knowledge of deponent, except as to such matters which are
stated to be alleged on information and belief, and as to those matters deponent
believes it to be true.
Sworn to before me this
Ay day of te , 2021.
11
12421792.5