N.Y. Court Rejects Ouster of Duke Estate’s Executor

The highest court in New York state unanimously ruled Thursday that a lower court judge improperly removed Doris Duke’s former butler and a major New York bank as executors of the tobacco heiress’ $1.2-billion estate.

In an opinion marked by scathing language, the Court of Appeals said Manhattan Surrogate’s Court Judge Eve Preminger “abused her discretion” by disqualifying the butler, Bernard Lafferty, and the U.S. Trust Co. of New York--the bank he brought in as co-executor--without a hearing into allegations that Lafferty was unfit because of uncontrolled spending and drinking.

Criticizing as “woefully inadequate” an investigation by a former Manhattan district attorney that played a key role in the dismissal of Lafferty and the bank, the Albany-based appeals panel ordered the Surrogate’s Court to conduct “a tightly controlled” hearing to determine whether any sanctions, in fact, are warranted.

The seven judges noted that two years had been wasted in getting Duke’s Gilded Age fortune to charity while “enormous sums” went to fees for lawyers seeking to defend and overturn the last will made by the 80-year-old heiress, who died at her estate above Beverly Hills on Oct. 28, 1993.

The Times reported last week that more than $25 million in legal fees had rung up while not a penny has yet gone into the foundation that Duke intended to be one of the nation’s largest charities.

“What has been lost in the process is the interest of the beneficiaries--mostly charities--whose bequests have thereby been diminished,” the appeals court said.

The judges said Preminger used a “fundamentally flawed procedure” in removing Lafferty and the bank based on a secretive investigation that gave them no chance to examine witnesses.

“It’s a great day for us,” the 50-year-old Lafferty said following the ruling. “It’s been a very long and hard time for me.”

Though this is not the final word on the challenges to Duke’s will, he said he hoped to be able to “go about getting the money to the charities . . . Miss Duke asked me to.”

“We are very pleased with the appellate court’s unanimous decision.” U.S. Trust said in a statement. “We have always maintained that we have handled our fiduciary responsibilities for the Duke estate with professionalism and integrity.”

The opinion written by Judge Vito J. Titone attacked a report by Richard Kuh, a former prosecutor appointed by Preminger almost exactly a year ago after attorneys challenging Duke’s last will unleashed a series of highly publicized allegations--including charges that Duke was murdered with overdoses of morphine.

“The report contained no sworn statements, and its sources remain largely undisclosed,” the appeals court said. “As a consequence, it had little worth.”

Preminger relied on the report, however, in removing Lafferty for “waste of estate assets” and other transgressions, and the bank for failure to control his spending.

The appeals court said that “the interests of procedural fairness would have been better served” if the judge had appointed a referee to hold hearings into the alleged misconduct--a process that also would have been less expensive.

“As it was, Mr. Kuh was granted $662,000 for a report that yielded little usable information,” New York’s highest court said.

In an interview Thursday, Kuh complained that the panel “did not show familiarity with the 69 exhibits that I submitted with my report that included U.S. Trust documents, hospital and physician’s records, Lafferty’s writings, records of Doris Duke’s business office [and] other items.”

“The concept that [Preminger] did not have a record is absurd.”

But the ruling, in effect, threw out his work and set the stage--unless there is a settlement--for what is sure to be a hotly contested hearing on Duke’s final months and the management of her estate, the largest ever submitted for probate in New York.