JEAN ZAWODNIAK a/k/a JOHN ZAWODNIAK v. CATHERINE HUTCHINSON

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0245-04T10245-04T1

JEAN ZAWODNIAK a/k/a

JOHN ZAWODNIAK,

Plaintiff-Respondent,

v.

CATHERINE HUTCHINSON,

Individually and as Executrix

of the Estate of Josephine

Zawodniak; and THERESA MARIE

NIEVES, Jointly, severally

and/or in the alternative,

Defendants-Appellants,

v.

SOUTH JERSEY GAS COMPANY

and CONECTIV POWER DELIVERY,

Third-Party Defendants-

Respondents.

______________________________________

 

Argued November 15, 2005 - Decided

Before Judges Skillman and Miniman.

On appeal from Superior Court of New Jersey, Chancery Division, Cape May County, Docket No. C-52-03.

David A. Gies argued the cause for appellants.

William J. Kaufmann argued the cause for respondent Jean Zawodniak (Cafiero & Balliette, attorneys; Mr. Kaufmann, on the brief).

Gerald J. Corcoran argued the cause for respondents South Jersey Gas and Conectiv Power Delivery (Youngblood Corcoran Lafferty Hyberg & Waldman, attorneys; Mr. Corcoran, on the brief).

PER CURIAM

Plaintiff Jean Zawodniak and Josephine Zawodniak were married in 1982. At the time, Josephine had two children from a prior marriage, defendants Catherine Hutchinson and Theresa Marie Nieves. From the date of their marriage until Josephine's death in 2002, Jean and Josephine lived in a house in Ewing Township that they rented from Josephine's brother. The couple did not have any children.

In early November 1998, Josephine contracted to purchase a house in Wildwood for $75,000. During the attorney review period, the attorney who represented Josephine and Jean sent a letter, dated November 9, 1998, to the seller's attorney, Paul Rubin, which requested, among other things, that Jean's name be added to the contract of sale. The seller consented, and a contract of sale that identified both Josephine and Jean as the buyers was executed on November 22, 1998. Josephine and Jean subsequently made a joint application for a mortgage.

However, before the closing, either Josephine or a representative of the mortgage company that was financing the purchase informed Rubin that title to the property would be taken in Josephine's name only. As a result, the application for title insurance was made solely in Josephine's name. In addition, the certificate of inspection issued by the Wildwood Bureau of Fire Prevention and the certificate of permitted continued occupancy issued by the Wildwood Office of Code Enforcement listed Josephine as the sole owner.

On March 1, 1999, the property was conveyed solely to Josephine. According to Rubin, both Jean and Josephine attended the closing, and he pointed out to them that even though the mortgage company was requiring them to both sign the mortgage and note, title to the property was being taken solely in Josephine's name. Rubin stated that to the best of his recollection, Jean "did not have an objection" to this arrangement.

More than three years later, Josephine executed a will, one provision of which stated:

I give, devise and bequeath my one-half share of a residential property known as 233 East Montgomery Street, Wildwood, New Jersey to my beloved daughter, CATHERINE A. HUTCHINSON, per stirpes.

The will also named Catherine as executrix.

On November 13, 2002, Josephine died.

Thereafter, Jean brought this action in the Chancery Division for reformation of the deed to reflect that Josephine and he owned the Wildwood property as tenants by the entirety and that he became sole owner upon her death. Defendants filed a counterclaim that alleged, among other things, that plaintiff had damaged the property by disconnecting gas and electric service, which had resulted in pipes bursting and water damage to the house. Defendants also filed a third-party complaint against South Jersey Gas Company and Conectiv Power Delivery, claiming that the utilities had unreasonably interfered with defendants' use of the property by disconnecting the utility service without proper authorization.

After completion of discovery, the third-party defendants filed a motion for summary judgment, which the trial court granted.

Jean's claim for reformation of the deed and defendants' counterclaims were heard in a one-day bench trial. In his testimony, Jean denied that Rubin told him at the closing that title to the property was being taken solely in Josephine's name:

Q. Did Mr. Rubin discuss with you who was on the deed for the property?

A. No.

Q. Did you and Josephine, that day in Mr. Rubin's office, discuss who was on the deed to the property?

A. No one said anything.

Q. When you left Mr. Rubin's office that day, March 1st, 1999, whom did you think owned the property?

A. We did, both.

However, Rubin testified that he pointed out to both Josephine and Jean that title was being acquired solely in Josephine's name:

Q. How is it possible that at the closing of title a loan for $60,000 was closed wherein Mr. Zawodniak became indebted to the First Union Mortgage Corporation in the princip[al] amount of $60,000 without his name being on that deed? How did that occur?

A. My recollection is that I pointed that out to them. I said that it was unusual.

Q. Who is "them"?

A. Mr. and Mrs. Zawodniak. That it was -- that the deed was in her name, but the bank was requiring that both sign the deed and the mortgage. And -- and typically with regards to the mortgages, I said when in doubt, give them what they want, but, you know, I didn't say that to them. I don't recall saying that to them, but I did -- I do recall that I did point that out to them.

. . . .

Q. And what was Mr. Zawodniak's response?

A. Again, my recollection is is -- is as best as I can remember is that he did not have an objection.

Q. Did you find it unusual that you were accepting a deed on behalf of your clients, when they were mortgaging -- when Mr. Zawodniak was mortgage the property on which he was not included on the deed?

A. Yes, that's why I pointed it out to them that his name was not on the dead.

Q. Did you pick up the phone, and call [the seller's attorney], and say, stop. There's a problem. The deed's wrong. It doesn't match the mortgage?

A. No, I did not. As I stated to you earlier, I was told that title would be just in Mrs. Zawodniak's name.

Rubin also testified that he had been told before the closing, possibly by Josephine, that title to the property would be acquired solely in Josephine's name:

Q. Did you place an order for title insurance for just Josephine?

A. Yes, we did.

Q. Why did you do that when in P-2 you asked that the purchasers be amended to Josephine and John?

A. My recollection is at some point subsequent to my November 9th letter I was advised that only -- only Mrs. Zawodniak would be on title.

Q. Who told you that?

A. I do not recall whether it was David Ferdetta or Mrs. Zawodniak directly.

Q. David Ferdetta was the gentleman from First Union Mortgage Corporation?

A. Correct.

Jean testified that he first learned that the deed was not in his name sometime in August 2002, when he found it in a box in the closet to his bedroom. According to Jean, he subsequently confronted Josephine with the fact that his name was not on the deed. In response, Josephine told him that "she would go change the deed at the courthouse if she feels better," but she died before she had the opportunity to execute an amended deed.

The trial court found that Rubin was advised before the closing that "title [to the property] would be in [Josephine's] name only." The court also found that Rubin advised both Josephine and Jean that title to the property was being acquired solely in Josephine's name:

I'm satisfied [Rubin] apprised both parties, Mr. and Mrs. Zawodniak, of the fact that Mr. Zawodniak's name was not on the deed and the implications of that in terms of ownership. And that neither Mr. or Mrs. Zawodniak interposed any objection or concern at the time.

The court also found that Josephine and Jean

were experienced adults. Not in specifics in the details of real estate transactions, certainly in the handling of money, and in responsibility for their own affairs, and in dealing with lawyers. So I don't think either one of them was naive.

Nevertheless, the court found that "[Josephine] intended that this property would be jointly held between her and her husband," and on that basis concluded that defendant Hutchinson "holds the property in a constructive trust for [Jean]." In reaching this conclusion, the court relied primarily on the will executed by Josephine in June 2002, more than three years after acquisition of the property, in which she bequeathed a one-half share in the property to her daughter, Catherine Hutchinson:

What I cannot get past and what I cannot come to any satisfactory alternative explanation for is the will. The will is the last . . . in the train [of documents].

. . . .

I'm satisfied that the language of the will says what it means and means what it says. And that is at the time she wrote it, and at the time she asked her lawyer to draft it, it was her view that she had a one-half interest, and that's what she was leaving to her daughter.

Now to be sure she didn't have a one-half interest. She never had a one-half interest. She either had an entire interest or she had an interest as a joint tenant. Or for this purpose indistinguishably, an interest by the entirety, which is not a half interest because if you out live the spouse, it's a whole interest, and if you don't out live the spouse, it's a zero interest. Either way it's not a half interest.

So the rest of the problem is that although the will says what I believe she thought, the will's wrong anyway because she never had a half interest. So . . . the literal provision of the will has no legal efficacy as it's written, but it is relevant and important to us here because it speaks to what her intention was.

And when you couple that, articulated statement shortly before her death with a document that she signed in applying for the will or for the mortgage, . . . I'm satisfied that the greater weight of evidence is that she intended that this property would be jointly held between her and her husband.

Because the court concluded that Jean now owns the Wildwood property, it dismissed defendants' counterclaim for the alleged damage to the property caused by Jean requesting disconnection of gas and electric service. The court also dismissed damage claims brought by Jean that are not at issue on this appeal.

Defendants filed a motion for reconsideration of the judgment, which the trial court denied.

On appeal, defendants challenge the trial court's declaration that Jean is the true owner of the Wildwood property and the order requiring Hutchinson to convey title to him, the dismissal of their counterclaim against Jean for the alleged damage to the property caused by the disconnection of utility services, and the summary judgment in favor of the third-party defendant utility companies.

A court may order reformation of a deed or other legal instrument only upon a showing of "either mutual mistake or unilateral mistake by one party and fraud or unconscionable conduct by the other." St. Pius X House of Retreats v. Diocese of Camden, 88 N.J. 571, 577 (1982). The trial court found that Josephine had not committed a fraud upon Jean when she acquired title to the Wildwood property in her name, and Jean does not challenge that finding. Thus, Jean's reformation claim is based solely on alleged mutual mistake. "Reformation predicated upon mutual mistake requires that both parties are in agreement at the time they attempt to reduce their understanding to writing, and that the writing fails to express that understanding correctly." Id. at 579. Such mutual mistake must be proven by "clear and convincing" evidence. Id. at 580-81.

The trial court did not indicate that its factual findings were based on clear and convincing evidence. The court did not refer to this standard in the course of its opinion, and the court's observation that "there's a little bit of evidence that goes in a lot of different directions and it is not 100 percent in either direction" suggests that it found the proofs as to Josephine's and Jean's intent at the time of closing to present a close question. In addition, the court's statement that "the greater weight of evidence is that [Josephine] intended that this property would be jointly held between her and her husband" (emphasis added), indicates that the court applied a preponderance of the evidence standard in evaluating the evidence rather than the "clear and convincing" standard that governs a claim for reformation of a deed. Consequently, it appears that the trial court applied the wrong burden of proof in deciding this determinative factual issue.

In any event, we conclude that the proofs in this case, considered in light of the trial court's subsidiary findings of fact, particularly regarding Rubin's credibility, could not support a finding by clear and convincing evidence that Josephine's and Jean's intent at the time of closing was to take title to the property as tenants by the entirety. Rubin testified that either Josephine or the representative of the mortgage company that was financing the purchase informed him before closing that title to the property was to be taken in Josephine's name only. The trial court found this testimony to be credible. If Josephine was the one who told Rubin that title to the property would be acquired in her name only, that was obviously her intent. If the representative of the mortgage company was the one who transmitted this information to Rubin, it is reasonable to infer that either Josephine or Jean told him they had decided to take title solely in Josephine's name. Therefore, the evidence indicates that Jean or, more likely, Josephine, was the one responsible for the deed being drafted to name only Josephine as the buyer. Moreover, Rubin testified that he expressly brought to both Josephine's and Jean's attention at the closing that title was being taken solely in Josephine's name, that he explained to them the consequences of taking title in this form and that Jean did not object. The trial court also found this testimony to be credible. In addition, the court found, after hearing Jean testify, that he was not unintelligent, naive or inexperienced in financial affairs.

There is no basis for concluding that the evidence that Josephine expressed an intent before closing to acquire the property in her name only, and that this form of ownership was brought to both Josephine and Jean's attention at closing, is outweighed by whatever inferences regarding Josephine's intent can be drawn from the will she executed more than three years later purporting to bequeath one-half the property to her daughter Catherine. There are a variety of possible explanations for this provision of the will. It may be that Josephine and the attorney who drafted the will believed that Jean and Josephine were tenants in common, which would have given Josephine the ability to bequeath her one-half interest in the property to her daughter. See Burbach v. Sussex County Mun. Utils. Auth., 318 N.J. Super. 228, 233-34 (App. Div. 1999). It may be that Josephine intended when she drafted the will to execute a deed establishing a tenancy in common with Jean. Or it may be that the attorney who drafted the will failed to include a bequest of a one-half interest to Jean. But whatever Josephine may have believed regarding the ownership of the Wildwood property when she drafted her will in June 2002, the will does not demonstrate by clear and convincing evidence that Josephine's and Jean's intent in March 1999 was to takes title to the property as tenants by the entirety. Therefore, we reverse the part of the judgment reforming the deed and ordering Catherine to convey the property to Jean.

The trial court's conclusion that Jean was the true owner of the property obviated the need for the court to make findings of fact and conclusions of law regarding defendants' counterclaim, which seeks damages based on Jean's actions in disconnecting the utility service. Because we have reversed this part of the judgment, the case must be remanded to the trial court to make findings relating to the counterclaim.

We affirm the summary judgment dismissing defendants' third-party complaint against South Jersey Gas and Conectiv Power Delivery substantially for the reasons expressed in the trial court's oral opinion of February 2, 2004.

 
Accordingly, paragraph one of the final judgment is reversed; paragraph three is reversed and defendants' counterclaim is remanded to the trial court for further proceedings in conformity with this opinion; and the February 2, 2004, order granting summary judgment to the third-party defendants is affirmed.

(continued)

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A-0245-04T1

December 9, 2005