IN THE MATTER ESTATE OF MADELINE L. STOCKDALEAnnotate this Case
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
DOCKET NO. A-0535-04T50535-04T5
IN THE MATTER OF THE
ESTATE OF MADELINE L.
Argued November 9, 2006 - Decided
Before Judges Lefelt, Parrillo and
On appeal from the Superior Court of New
Jersey, Chancery Division, Monmouth
County, Docket Nos. Mon-P-234-03 and
Frederick J. Dennehy argued the cause
for appellant/cross-respondent, Ronald
J. Sollitto (Wilentz, Goldman & Spitzer,
attorneys; Mr. Dennehy and Richard F.
Lert, of counsel; Mr. Dennehy, Mr. Lert,
Linda Lashbrook, M. Matthew Mannion and
Jason Kislin, on the brief).
Michael A. Casale, appellant/cross-
respondent, argued the cause pro se.
William J. Gearty and Linda B. Kenney,
of the New York Bar, admitted pro hac vice,
argued the cause for respondent/cross-
appellant, Spring Lake First Aid Squad
(Mr. Gearty and Ms. Kenney, on the brief).
Paul F. Cullum, III, argued the cause for
intervenor/cross-appellant Peter A.
Lawrence (Gibbons, Del Deo, Dolan,
Griffinger & Vecchione, and James W.
Reiman, of the New York Bar, admitted
pro hac vice, attorneys; Mr. Cullum,
of counsel; Mr. Cullum and Cathleen T.
Butler, on the brief).
Andrew M. Zapcic, Sr., argued the cause for
Lawrence (Maybruch & Zapcic, attorneys;
joined in the brief of intervenor/cross-
appellant Peter Lawrence.
James Cleary, Court Appointed Administrator,
Pendente Lite, of The Estate of Madeline L.
Stockdale, submitted no brief.
These appeals and cross-appeals arise from Madeline Stockdale's contract to sell her Spring Lake house to a neighbor, Ronald Sollitto, a licensed podiatrist, and from her 2000 will, in which she changed the residuary beneficiary of her 1998 will from the Spring Lake First Aid Squad to the same neighbor. The dispute presents essentially four issues: (1) whether sufficient credible evidence supports the trial court's decision declining to probate the 2000 will as the product of undue influence, and admitting to probate the pre-existing 1998 will; (2) whether sufficient credible evidence supports the trial court's decision denying specific enforcement of Ms. Stockdale's 1999 house-sale contract; (3) whether the trial court abused its discretion by denying the First Aid Squad's punitive damage claim, and awarding the Squad counsel fees to be paid by Sollitto and Michael Casale, the lawyer-drafter and executor of the 2000 will; and (4) whether the trial court abused its discretion by not awarding counsel fees to Ms. Stockdale's nephews, Peter and George Lawrence, who intervened and appeared to assert that the 2000 will was a product of undue influence, and that the residuary clause of the pre-existing 1998 will was also invalid.
We affirm the trial court's decision declining to both probate the 2000 will and specifically enforce the house-sale contract. Pursuant to In Re Niles, 176 N.J. 282 (2003), we reverse the trial court's decision awarding the Squad counsel fees, but we remand for consideration of the Squad's punitive damage claim and for re-consideration of the nephews' request for counsel fees.
We begin by setting forth the pertinent facts and relevant procedural history. Ms. Stockdale was an elderly woman who had worked in real estate sales in Spring Lake for several decades. At all times relevant to this dispute, she was living alone in her Spring Lake home. Her husband died many years before, and she had no living family other than two previously disowned nephews. Since at least the mid-1980's, she had been suffering from numerous health problems including headaches and double vision; inflammation of the arteries to the brain; thyroid disease; and bone marrow disease. A CAT scan in May 1997 revealed that Stockdale had suffered a "tiny stroke."
Several witnesses testified that Stockdale periodically talked about selling her house, but only to someone who would restore it to its former grandeur and not subdivide it. She also expressed a desire to leave money to the First Aid Squad for either a new building or a new ambulance. In addition, Stockdale made clear to her attorneys and others, on numerous occasions, that she was "emphatic" in wanting her residuary estate to go to charity because she did not want to pay any estate taxes.
Sollitto bought a summer home in Spring Lake in 1991 and began living there year-round in 1997. He and his wife Patricia lived about one block from Stockdale and liked her home very much. In 1997, Sollitto introduced himself to Stockdale, and Patricia began bringing food to her every few days. The Sollittos helped Stockdale around the house, all the while telling her how much they liked her home.
In September 1997, Stockdale listed the property for sale at $1.4 million. Though the real estate agent showed Stockdale's home to several persons, and showed Stockdale several homes available for her purchase, Stockdale made no offers and did not sell her home at this time either.
Stockdale signed her 1998 will on March 11, making William Soons, an Englewood lawyer who handled her legal affairs after her husband's death, co-executor, along with Peter Kuzmick, a Sea Girt resident. Stockdale directed her executors to sell her home if she were living there at her death, and to add the net proceeds to her residuary estate. She made a number of bequests, mostly to religious entities or individuals. In paragraph eighteen, the residuary clause, Stockdale left her residual estate to the Squad, "to be used for construction of a new building and purchase of a new ambulance."
On the same date she executed her will, Stockdale entered another listing agreement with a different real estate agency to sell her home for $1.65 million. She told the agency's owner that if Sollitto bought the property, no commission would be due, probably because she already knew of his interest in her house.
Before she executed her 1998 will, and after, Stockdale appeared to be wavering on whether to make or retain the Squad as her residuary beneficiary, presumably because she had heard the Squad would receive support from another source. In fact, on May 7, 1998, Soons wrote to Stockdale to confirm their conversation that she wanted to give the Squad a $100,000 bequest, but remove it as residuary legatee; and remind her that she had to make a final decision regarding her residuary beneficiary. Despite this apparent wavering, no formal change was made to Stockdale's will until 2000.
In March of 1999, Sollitto offered $1 million for Stockdale's home, which she rejected. They eventually agreed on $1.3 million and Stockdale signed a contract on March 7, after, according to Sollitto, he reviewed each line of the contract with her, including the attorney review clause. Although Sollitto claimed to have promised Stockdale he would not subdivide the property, would restore it to its former grandeur, and would allow her to remain at the property until she was ready to leave, none of these promises found their way into the written contract.
Thomas Foley, an attorney who had represented Sollitto in 1997 or 1998, drafted the contract at Sollitto's instructions. The contract called for a $1,000 initial deposit with the balance to be paid at closing of title, which was to take place ninety days from the date Sollitto sold his house. Initially, the contract called for a second deposit of five percent, or approximately $56,000, to be paid after the signing of the contract. However, this was crossed out by Sollitto after, according to Sollitto, Stockdale told him they could "settle up" at closing. Sollitto testified that Stockdale never deposited his $1,000 check.
The attorney review period passed without Foley hearing from any attorney on Stockdale's behalf. After no deed, title, or survey was forthcoming, Sollitto asked Stockdale whether she wanted to use an attorney. Stockdale replied that she would use Soons and Sollitto faxed a copy of the contract to the attorney.
Soons's partner informed Foley that he did not think the contract was in Stockdale's best interests because it was contingent on the sale of Sollitto's home and nothing in the contract permitted Stockdale to remain in her house. In addition, the partner expressed concern that the amount of the mortgage was not clarified, and, according to him, the contract was merely an option to purchase because Sollitto was under no obligation to buy the house. Soons's partner described the contract as "not the normal type of contract that we would see on a real estate deal."
Presumably in response to these concerns, Foley prepared an addendum to the contract per Sollitto's instructions. The addendum, dated April 9, 1999, provided that the contract was not contingent on Sollitto obtaining a mortgage and that Sollitto had until March 8, 2000, to sell his house. Sollitto went over the addendum with Stockdale who stated that the issues in the addendum were "not my concerns" and signed. Foley forwarded a copy of the addendum to Soons's partner on April 24, 1999.
The Soons firm received the addendum on April 26, and upon reviewing it, still had concerns about the contract. On April 30, 1999, however, Stockdale called the firm and stated that she was not going ahead with the sale. As a result, the firm closed the file, believing the entire matter to be closed.
Despite the Soons firm's belief, the sale proceedings continued. In the summer of 1999, allegedly because of the anticipated cost of Sollitto's renovation of Stockdale's home, Stockdale agreed to take back a purchase money mortgage for the sale of her house. Sollitto claimed Stockdale remarked, "[i]t's the least I can do." There was no talk of amount, interest rate, or term at this time. In fact, Sollitto claimed he never again spoke to Stockdale about the mortgage.
Sollitto ordered title work and insurance for Stockdale's house from an agent, with whom he was friends. The results of the title search, the policy, and survey were all sent to Sollitto in October 1999, but Sollitto never forwarded a copy of the title commitment or survey to either Foley or the Soons firm.
Sollitto put his house on the market but only until July 1999, about three months after the contract was signed. Sollitto never completed a mortgage application, even though he claimed he had a verbal commitment.
Based on various comments Stockdale had with neighbors and other acquaintances in the summer of 1999, she seemed somewhat confused about whether she had actually sold her home or made a "terrible mistake" in selling to Sollitto because she was afraid he was going to subdivide the property. Around the same time, however, Stockdale continued making inquiries about purchasing other property in the neighborhood.
By the Spring of 1999, Stockdale's health continued to deteriorate. She was suffering from decreased hearing, shortness of breath, and difficulty in swallowing. She had lost twenty pounds over the prior five years, and weighed ninety-six pounds. She also suffered from regurgitation upon lying down after eating, slurring her words, and by late October 1999, she appeared confused and kept repeating stories.
On December 9, 1999, Stockdale fell in her home and fractured her hip, requiring surgery on December 11. Upon her admission to the hospital, she was dehydrated and malnourished with extremely low electrolytes, which can cause confusion, and low hemoglobin, or red blood cells, which carry oxygen to the brain. During this time, Sollitto visited Stockdale at the hospital each day. He brought her mail and mailed the checks she wrote for bills. He consulted weekly with her physicians.
The hospital transferred her to a rehabilitation facility on December 14, 1999, where it was noted that her short-term memory was impaired, and that her long-term memory "appears impaired." Her electrolytes remained abnormal from December 20 to January 3, and she remained slightly confused during her stay at the rehabilitation facility.
On December 16, Sollitto talked to Stockdale about the real estate deal, and she indicated that she wanted to see an attorney, preferably not a local attorney. Sollitto testified that he then called Soons at his office, but did not receive a response. Soons's partner testified that he had no record of receiving this call.
After a Hackensack attorney declined Sollitto's request to represent Stockdale, Sollitto, on December 18, called Casale at his office in West Caldwell and told him he had a contract to buy a house and wanted him to represent Stockdale in the transaction.
Casale first met Sollitto in the mid-1980s. Sollitto became a "continuing client" over a fifteen-year period, with Casale representing him on various matters including a number of real estate transactions, one of which was Sollitto's purchase of his Spring Lake house in 1991. Casale was also a member of the wedding party when Sollitto married in October 1992. In addition, he represented Sollitto's wife in a bankruptcy matter.
Casale met Stockdale for the first time on December 21, 1999. According to Casale, Stockdale had no problem with his having represented Sollitto on many occasions, and his representation of Sollitto in an ongoing arbitration. Stockdale told Casale that she wanted to sell her house to Sollitto because he would not demolish it. According to Casale, Stockdale's biggest concern was capital gains taxes, and there was no discussion of estate taxes. Stockdale also asked Casale to prepare a power of attorney.
Stockdale told Casale that she had a prior will but had made changes to it. Casale told her that she either had to make a codicil or a new will to effectuate those changes. Stockdale told Sollitto where the will and related documents were in a folder in her house, and Sollitto retrieved them. Sollitto testified that he did not know what was in the folder and did not look inside. Casale picked up the folder from Sollitto. Upon examination of the 1998 will, the lawyer observed that Stockdale had made pencil notations on her copy. According to Casale, Stockdale had drawn a line through the residuary clause, paragraph eighteen.
Casale testified that he had a telephone conversation with Sollitto after each meeting with Stockdale. The total phone call minutes between Casale and Sollitto from December 19 to January 17 was 291, or 4.8 hours.
Casale met again with Stockdale on December 27, who, according to Casale, agreed to receive approximately $50,000 at the closing with the remaining payment to be through the note and purchase money mortgage. Stockdale agreed that the mortgage would have a maximum five-year term so as to minimize capital gains taxes in conjunction with the sale of her home. Stockdale initially wanted a nominal interest rate, such as two or three percent, but Casale suggested a higher rate. They eventually settled at five percent. The market rate at the time was eight percent.
At the same meeting, Casale went through the 1998 will with Stockdale, paragraph by paragraph. Wherever Stockdale had a notation, Casale claims to have asked her whether she wanted to make the change. In some instances, according to Casale, the changes Stockdale sought were consistent with the penciled notations; in others they were not.
Casale testified that Stockdale remained undecided on the residuary beneficiary. Stockdale told Casale that she did not want her residuary estate to go to the Squad because the Squad had already received money from another source. Casale told her that she had to replace the Squad with another residuary legatee, and to think about what charities or organizations she might wish to consider. Casale took two pages of handwritten notes while Stockdale was sitting up in bed.
Casale described Stockdale as a "strong-willed feisty woman who knew what she wanted." Casale did not view her as being in failing health. Instead, according to Casale, Stockdale was "calling the shots."
A vascular surgeon who had seen Stockdale in late December believed that she was under a "tremendous amount of sedation" for someone her age. Between December 29 and January 3, Stockdale received her nutrition primarily through an IV.
On the afternoon of December 29, there was a thirty-minute call between Casale and Sollitto. Sollitto visited Stockdale that evening. There was conflicting evidence as to whether Casale had his next meeting with Stockdale on December 29 or December 30. Casale's time sheets indicated that he visited her on the evening of December 29, but he claims that this was a mistake and he could only have met with her for the third time on December 30. He further pointed to phone records revealing that he had made a call from his West Caldwell office on 4:12 p.m. on December 29.
In any event, it was at this meeting that Stockdale advised Casale that she had decided to make Sollitto her beneficiary. In addition, at Casale's suggestion, Stockdale agreed to forgive the mortgage debt because Sollitto, as residuary legatee, would get the money anyway after she died. Sollitto denied discussing the forgiveness of the debt with Stockdale. According to Casale, Stockdale told him that she wanted Sollitto to get the residue because she felt close to Sollitto and his family.
Also according to Casale, Stockdale wanted only one executor for her will. Because of Soons's age, Stockdale did not want him as executor, but gave him a $50,000 bequest. No mention was made regarding the other co-executor of the 1998 will, Kuzmick. According to Casale, Stockdale never gave a reason for naming him as sole executor, although in all of her previous wills Stockdale had chosen two executors.
Because Stockdale was to have throat surgery on January 4 to remove her diverticulum, Casale decided to have Stockdale execute the will and closing documents on January 3. Consequently, without waiting for Foley to return from a Florida vacation, Casale prepared the closing statement. At trial, he agreed this was usually prepared by the buyer's attorney. Sollitto testified that he reviewed the closing statement with Foley by phone, and did not recall whether Casale told him he was also preparing a will for Stockdale.
Sollitto called Foley on January 2 or 3 and advised him that Stockdale wanted to close on the property right away and that she had a new lawyer. Foley replied, "I hope you had nothing to do with the selection of that attorney." Sollitto said that he had not. Sollitto indicated he would fax the documents to Foley, but Foley testified to never seeing any of the closing documents. Foley never sent Sollitto a bill, nor was he paid for any of the work he did on the contract. Casale never had a conversation with Foley, whom he described as "nonexistent . . . from day one." Casale described having a buyer who lacked an attorney with whom to communicate as "a little unusual."
Before the January 3 meeting with Stockdale, Casale prepared a conflict of interest waiver letter for Stockdale. The letter referred to his past representation of Sollitto, but stated nothing of their personal relationship. The letter was addressed to Stockdale at her home "via hand delivery," even though Casale knew Stockdale was hospitalized at the time. The letter did not advise Stockdale that she should sign a copy of the letter and return it to Casale, and this letter was not found in Stockdale's effects at the time of her death.
On January 3 at 5:22 p.m., Casale met Stockdale at the rehabilitation facility. Two nurses who observed Stockdale on that evening described her as drawn and undernourished, but alert and oriented. The facility's executive director and a social worker served as witnesses to the document signing. The director told Casale that they could only witness that it was Stockdale' signature, and Casale agreed. Casale claimed that he asked Stockdale whether she wanted the document to be her last will and testament with the witnesses in hearing range, and that she affirmatively replied. Casale's claim was not corroborated by the witnesses.
In any event, besides the 2000 will, Stockdale also signed a document giving Sollitto her power of attorney, a property deed, an affidavit of title, a bill of sale, a living will, a title closing statement, and a mortgage note. Casale testified that he went over all the documents with Stockdale before she signed. Casale kept the will and left copies of the will and power of attorney at the nurse's station. Sollitto arrived at Stockdale's room at 7:09 p.m.
Of the $1,290,000 purchase price for the sale of her house, Stockdale took back a $1,250,000 mortgage, and was to receive $54,665 from Sollitto. Under the mortgage, Sollitto was to pay interest at the five percent rate in fixed monthly mortgage payments beginning March 15, 2000. The note provided for monthly payments of $4,000, though if the mortgage were amortized equally the monthly payments would have been $23,589. The mortgage was to be paid off by February 3, 2005, though the note says February 15, 2005.
Besides the change in the residuary legatee and executor, Stockdale's will also left her jewelry to the Sollittos' daughters. According to the will, Stockdale gave Sollitto her residuary estate "in appreciation for all of his kindness in caring for me." In addition, Stockdale forgave "any and all debts that are due and owing to me as of the date of my death."
On January 4, Stockdale underwent the throat surgery. She signed consent forms for all the medical procedures she underwent, including the surgery. She was readmitted to the rehabilitation center the following day for two weeks of rehabilitation. She signed her admission form using her maiden name, which she had not used for years, and she stated that she did not have a living will, even though she had signed one two days earlier.
Casale and Sollitto had a half-hour telephone conversation on January 4; however, Casale claimed that he did not tell Sollitto he was a beneficiary under the new will. Casale was unsure as to when he mentioned this to Sollitto. Casale testified that he may have told Sollitto that there was a new will and that Sollitto was mentioned in the will, but he could not recall Sollitto's reaction.
Sollitto testified that neither Stockdale nor Casale discussed the will with him, but Casale did tell him about the power of attorney. According to Sollitto, about ten days after Stockdale's death, Casale told Sollitto that he had been named residuary beneficiary.
Casale did not receive the signed mortgage and down-payment check from Sollitto until about January 10; Casale deposited the check on January 12.
On January 13, 2000, Casale brought Stockdale all the signed documents and the proceeds check, totaling $41,675. He also gave her an additional $3,251 check on January 18 to account for the realty transfer fee overpayment resulting from his failure to calculate the fee to reflect a sale by a senior citizen. Casale filed the mortgage and deed for recording on January 13, 2000. They were recorded on February 4, 2000.
After Stockdale was admitted into the hospital in December 1999, the Sollittos rented an apartment in Spring Lake in Stockdale's name and hired live-in help for her assistance. Stockdale signed a lease for the Spring Lake apartment on January 18, 2000, and she was discharged from the rehabilitation center on January 19. After initially staying at a hotel, because the apartment was not ready, she moved into the apartment on February 2, 2000.
At some point, Stockdale's bank statements began going to Sollitto, and the address on her safe deposit box was changed to Sollitto's. Sollitto paid a few utility bills with funds from Stockdale's checking account covering both the pre- and post-closing period, apparently totaling around $1,500. Sollitto described his paying for the post-closing period from Stockdale's account as "an honest mistake."
Stockdale was readmitted to the hospital on February 7 and discharged on February 17. She was not seen by a visiting nurse until March 3, at which time she was bedridden. Sollitto did not make the March 15th mortgage payment. Witnesses described her at this time as weaker, disoriented, and more confused. She began saying that she wanted "to go home." Stockdale died on April 18, 2000, of cardiac arrest and cardiovascular disease. The Sollittos were in Florida on vacation, having left on April 7, not believing that Stockdale's death was imminent. Sollitto made the funeral arrangements from Florida, and paid the expenses including the casket, with a check written on Stockdale's account. Sollitto did not make the April 15 mortgage payment because, he said, the funeral expenses he paid exceeded the $4,000 amount due and owing.
The property was appraised "as is" at the time of Stockdale' death at $1,730,000, with a market value subdivided as $3,350,000. Under the 1998 will, Stockdale's total liability for death taxes would have been $7,650. Under the 2000 will, the estate would owe $368,138 in New Jersey estate taxes, and $583,151 in federal estate taxes, for a total tax of $951,289.
In response to a Monmouth County Prosecutor's Office subpoena, Casale's secretary erased whatever notations existed on the 1998 will because she believed it was not part of the original document. She stated that she was in a rush and wanted to send out a clean copy and not one with markings. She did not know whether erasing the markings was what Casale wanted.
On April 28, 2000, Soons offered the 1998 will for probate. On May 8, 2000, the Squad filed a caveat with the Monmouth County Surrogate objecting to the probate of any other will purporting to be Stockdale's. On June 22, 2000, Casale, as executor of the 2000 will, filed a complaint to admit that will to probate and directed an order to the Squad to show cause why that will should not be admitted to probate. In response, the Squad filed an answer and counterclaim and third-party complaint against Casale and Sollitto alleging fraud, duress, undue influence, and breach of trust in the execution of the 2000 will and deed transferring Stockdale's house to Sollitto.
Trial of these matters came before the trial court over various dates in 2003 and 2004. During the trial, Stockdale's nephews, upon invitation of the court, entered an appearance and intervened, claiming that the 2000 will, the contract and the deed were invalid, and the residuary clause of the 1998 will was null and void. The court held that the nephews were bound by the proceedings that had already occurred and could not take any new depositions or pursue any new discovery.
The court eventually issued judgments declaring the 2000 will invalid and unenforceable, admitting the 1998 will to probate, declaring the deed and contract invalid, repaying Sollitto the $54,665 he paid at closing, denying specific performance of the contract, ordering Sollitto and Casale to pay the Squad $1,193,725.87 in counsel fees, denying the Squad punitive damages, and denying the nephews counsel fees. Appeals and cross-appeals by the parties brought these judgments before us for review.
Undue Influence and the 2000 Will
Undue influence constitutes mental, moral, or physical exertion that destroys the free agency of the testatrix by preventing the testatrix from following the dictates of her own mind. Haynes v. First Nat'l State Bank, 87 N.J. 163, 176 (1981). Thus, the unduly influenced testatrix accepts the domination and influence of another rather than following her own wishes. Ibid.
The burden of proving undue influence is on the will contestant unless the will benefits one who stood in a confidential relationship to the testatrix and there are additional circumstances of a suspicious character which require explanation. In re Rittenhouse's Will, 19 N.J. 376, 378-79 (1955). A confidential relationship exists where the testatrix by reason of weakness or dependence, reposes trust in a beneficiary, or where the parties occupied a relationship in which reliance was naturally inspired or in fact exists. Haynes, supra, 87 N.J. at 176. The presence of suspicious circumstances need be no more than slight. Rittenhouse's Will, supra, 19 N.J. at 379.
When a confidential relationship and suspicious circumstances are present, there is a presumption of undue influence and the burden of proof shifts to the will proponent to overcome the presumption by a preponderance of the evidence. In re Will of Catelli, 361 N.J. Super. 478, 486-87 (App. Div. 2003). However, where the presumption is created "by a professional conflict of interest on the part of an attorney, coupled with confidential relationships between a testatrix and the beneficiary as well as the attorney," the presumption must be rebutted by clear and convincing evidence. Haynes, supra, 87 N.J. at 183.
Sollitto and Casale had confidential relationships with Stockdale. Sollitto had been doting on Stockdale for some two years by visiting and bringing her meals. Sollitto went with Stockdale to look at a house that Stockdale was interested in purchasing. Sollitto obtained Stockdale's signature on both the contract and addendum after reviewing both documents with her. Furthermore, Sollitto arranged for Stockdale's legal representation as well as her living accommodations and caregiver once she went into the hospital.
The record also supports a confidential relationship between Stockdale and Casale who was providing legal representation. An attorney-client relationship is inherently a confidential relationship, see In re LiVolsi, 85 N.J. 576, 588 (1981); In re Davis, 14 N.J. 166, 169 (1953), and a lawyer may be in a confidential relationship whether or not he or she is representing the best interests of the client.
There were also a plethora of facts that warranted the trial court's finding of suspicious circumstances. For example, the forgiveness of Sollitto's debt to Stockdale appears contrary to her personality and prior actions. See Haynes, supra, 87 N.J. at 177. The most significant of the suspicious circumstances, however, remains the fact that Sollitto solicited his own attorney, and friend, Casale, to represent Stockdale, leaving Sollitto purportedly unrepresented.
The conclusion is almost inescapable that Casale represented both Stockdale and Sollitto during the critical period involving the sale closing and execution of the 2000 will. This is so especially because the result of Casale's representation was a contract of sale that was extremely favorable to Sollitto and a will that named Sollitto as residuary beneficiary and Casale as executor.
"It has often been recognized that a conflict on the part of an attorney in a testimonial situation is fraught with a high potential for undue influence, generating a strong presumption that there was such improper influence and warranting a greater quantum of proof to dispel the presumption." Id. at 178. In imposing this higher burden of proof, New Jersey courts have continually emphasized the need for a "lawyer of independence and undivided loyalty, owing professional allegiance to no one but the testator." Id. at 179.
Therefore, the trial court correctly shifted the burden of proving the validity of the 2000 will to Sollitto and Casale. Although Sollitto and Casale take issue with the trial court's factual findings of undue influence and offer a contrasting theory, the question on appeal is not whether their theory had more validity or even whether we would have decided that way had we presided over this trial. Instead, the question is whether the trial court's theory was supported by substantial credible evidence in light of its view of the credibility of the witnesses. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974). "A verdict founded upon logical and legitimate inferences from facts established by evidence is normally conclusive." Murphy v. Terzako, 14 N.J. Super. 254, 259 (App. Div. 1951).
In this case, the trial court found "that the proponents of the January 3, 2000 [will] have not met their burden of proof . . . . Indeed, the proofs offered by the caveator were so 'clear and convincing' that even if the burden of proof did not shift to the proponents . . . the caveators would prevail by a preponderance of the believable evidence as its evidence was 'clear and convincing.'" There is adequate evidence supporting these findings and more than sufficient evidence establishing that the 2000 will was the product of undue influence.
For example, we are bound by the judge's determination that both Sollitto and Casale lacked credibility. As an appellate court, we must respect the trial court's "credibility findings that are often influenced by matters such as observations of the character and demeanor of witnesses and common human experience that are not transmitted by the record." State v. Locurto, 157 N.J. 463, 474 (1999).
Credibility findings were particularly important in this case, where the only testimony regarding Stockdale's statements and actions vis-a-vis Casale and Sollitto came exclusively from Casale and Sollitto. A trier of fact is free to reject the testimony of a witness, even though not directly contradicted, when it contains inherent improbabilities or contradictions which, alone or in connection with other evidence, raise suspicion as to its truth. D'Amato by McPherson v. D'Amato, 305 N.J. Super. 109, 115 (App. Div. 1997).
The court found that Sollitto's testimony regarding not meeting or consulting with Casale at the rehabilitation center on the evening of January 3, 2000 was "incredible." Furthermore, the court found Sollitto's claim that he never knew the contents of the 2000 will until after Stockdale's death to be "patently false," and the claim that he never looked into the folder he retrieved from Stockdale's house to be "absurd." The court also found that Casale's claim that his secretary erased the notations on the 1998 will on her own without any direction from him to be "beyond belief." In addition, the court found that Casale failed to inform Stockdale that he had represented Sollitto on numerous occasions.
There was other evidence besides the incredible portions of the Casale and Sollitto testimony that supported the trial court's findings and conclusions. For example, one of the witnesses to the will witnessed only the signature and never heard Stockdale declare the document to be her last will and testament. The other witness could not recall the conversation between Casale and Stockdale. In addition, there was no testimony about Stockdale revoking the 1998 will. Stockdale often spoke to others about wanting to benefit the Squad and yet the will failed to provide them with any bequest whatsoever. Stockdale also indicated to others that she did not want to suffer any significant estate tax and yet her estate incurred hundreds of thousands in estate taxes. Sollitto clearly lied when he told Foley that he had nothing to do with Casale's selection, and Sollitto failed to make the initial two mortgage payments. The amount of time Sollitto and Casale conversed on the phone during the relevant time period also supports the Judge's findings. Finally, there was significant evidence tending to establish that at the times closest to the execution of the will and the deed, Stockdale's mental faculties were impaired, so that she could not comprehend legal documents.
We do acknowledge that there were factual errors made by the trial judge. For example, one of the experts did find that lines had been drawn across the residuary clause of the 1998 will, though the judge stated that none of the experts found any penciled erasures on the residuary clause. In addition, the judge was mistaken when he indicated that "Casale claimed he discussed this surgery with Dr. Sharp on January 3, 2000." Casale actually claimed that he had a conversation on December 30, 1999 with Dr. Sharp, who performed Stockdale's surgery on January 4. Casale never claimed he spoke to Dr. Sharp on January 3, though Sharp did deny meeting Sollitto or any lawyer for Stockdale. The errors made by the judge are minor and insufficient to compel a conclusion that the court's overall findings were not supported by substantial credible evidence. In fact, we have no doubt that they were.
Specific Performance of the Real Estate Contract
The trial court found that Sollitto was not entitled to specific performance of either the 1999 contract or the "alleged oral agreement confirmed in the closing statement of January 3, 2000" because of the undue influence he exhibited toward Stockdale. In addition, Sollitto was guilty of "sharp dealing" as a result of paying $54,665 for a house that was worth well over $1 million.
Sollitto contends that the trial court erred in setting aside the deed and mortgage and in not granting him specific performance, or, in the alternative, by not awarding him damages. He claims that there was no legal or equitable basis to invalidate the deed and contract because the terms of the contract were definite and any "unclean hands" on his part related to the will, not the contract.
The granting of specific performance is discretionary, and based on equitable considerations. Marioni v. 94 Broadway, Inc., 374 N.J. Super. 588, 599-600 (App. Div.), certif. denied, 183 N.J. 591 (2005). Specific performance will not be decreed where the contract was unfairly procured by undue influence. 71 Am. Jur.2d Specific Performance 63 (2001).
"[W]hen specific performance is sought, the court is required to do more than merely determine whether the contract is valid and enforceable; the court of equity must also 'appraise the respective conduct and situation of the parties[.]'" Marioni, supra, 374 N.J. Super. at 600 (quoting Friendship Manor, Inc. v. Greiman, 244 N.J. Super. 104, 113 (App. Div. 1990), certif. denied, 126 N.J. 321 (1991)). The conduct of the party seeking specific performance must have been fair, just and equitable, not sharp or aiming at an unfair advantage. Ibid.
We find no support in fact or law for Sollitto's suggestion that his inequitable conduct with respect to the will can be isolated from the contract. By January 2000, the two were intertwined. Moreover, Sollitto's actions in having Casale represent Stockdale with respect to the closing, and his attempt to isolate Stockdale from Soons in early 1999, sufficiently establish independent inequitable conduct with respect to the contract. Finally, Sollitto's alternative claim for damages was not raised below. Therefore, we need not address it. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).
The Squad's Counsel Fee Award
Because of the undue influence and sharp dealing, the trial court directed that, under Niles, Sollitto and Casale shall pay the Squad's counsel fees. Under Rule 4:42-9, however, "[n]o fee for legal services shall be allowed" except in certain circumstances enumerated in the rule or when such fees are specifically authorized by statute, contract, or case law. A counsel fee award is a matter that rests in the trial court's discretion, and will not be reversed absent a manifest abuse of that discretion. In re Will of Landsman, 319 N.J. Super. 252, 271 (App. Div.), certif. denied, 161 N.J. 335 (1999).
New Jersey has a strong policy against shifting counsel fees. Niles, supra, 176 N.J. at 293. We follow the "American Rule," which prohibits recovery of counsel fees by the prevailing party against the losing party. Id. at 294. The Supreme Court has created only a few exceptions to the American Rule, beyond those mentioned in Rule 4:42-9. These exceptions include attorney malpractice cases, Saffer v. Willoughby, 143 N.J. 256, 272 (1996); attorneys who intentionally violate their fiduciary duties, Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 443 (2001); administrator malfeasance on a surety bond, In re Estate of Lash, 169 N.J. 20, 28-29 (2001); and "when an executor or trustee commits the pernicious tort of undue influence, an exception to the American Rule is created that permits the estate to be made whole by an assessment of all reasonable counsel fees against the fiduciary that were incurred by the estate." Niles, supra, 176 N.J. at 298-99.
In this case, however, Sollitto was not acting as a fiduciary or executor. Even if Sollitto was the "driving force" in eliminating Soons and making Casale the estate executor, neither Casale nor Sollitto depleted the estate, as the fiduciaries had done in Niles. The squad does not claim that any compensation Casale received acting as executor was unwarranted or excessive, and the record indicates that Sollitto paid out of the estate less than $1500 for utility bills on Stockdale's house. There is no other evidence in the record that the estate was financially harmed by either Casale's or Sollitto's actions. Furthermore, the attorney fees in this matter were not incurred by the estate as was the case in Niles. Id. at 291. See also In re Estate of Vayda, 184 N.J. 115, 120 (2005).
Moreover, although counsel fees may be collected from a negligent attorney in a legal malpractice action, Vayda, supra, 184 N.J. at 121, the negligence must arise out of an attorney-client relationship. Id. at 122; Lash, supra, 169 N.J. at 34. Here, there was no attorney-client relationship between the Squad and Casale.
Accordingly, the trial court mistakenly applied its discretion in ordering Casale and Sollitto to pay the Squad's counsel fees. Any award of counsel fees in this case would have been limited by Rule 4:42-9(a)(3), which restricts awards to those paid out of the estate. See Vayda, supra, 184 N.J. 124. Thus, we reverse the counsel fee award.
The trial court declined to award the Squad punitive damages. Sollitto contends there was no basis for a punitive damages award. Casale contends that the trial court did not err because there was no willful or wanton conduct on his part in as much as he neither exercised undue influence nor converted any funds. The trial court denied the Squad's request for punitive damages because it believed, under Niles, that the counsel fee award was the equivalent of punitive damages. The trial court was mistaken.
Punitive damages are limited to exceptional cases, as punishment and as a deterrent. Pavlova v. Mint Mgmt. Corp., 375 N.J. Super. 397, 404 (App. Div.), certif. denied, 184 N.J. 211 (2005). "To warrant imposition of punitive damages, the defendant's conduct must have been wantonly reckless or malicious. There must have been an intentional wrongdoing in the sense of an evil-minded act." Nappe v. Anschelewitz, Barr, Ansell & Bonello, 97 N.J. 37, 49 (1984); N.J.S.A. 2A:15-5.12(a). A plaintiff "must demonstrate a deliberate act or omission with knowledge of a high degree of probability of harm and reckless indifference to consequences." Pavlova, supra, 375 N.J. Super. at 405 (quoting Berg v. Reaction Motors Div., 37 N.J. 396 (1962)). Fraudulent misrepresentations are a sufficient basis for punitive damages. Albright v. Burns, 206 N.J. Super. 625, 636 (App. Div. 1986). Punitive damages are therefore awarded for egregious conduct to punish and deter the miscreant while counsel fees under Niles are awarded for compensatory purposes to make a damaged estate whole. Niles, supra, 176 N.J. at 282. A counsel fee award under Niles in an undue influence case is not a substitute for punitive damages.
Since the trial court was mistaken in linking these two forms of damages, the court did not properly determine whether punitive damages should be awarded. Consequently, we remand for reconsideration of punitive damages in view of the fact that counsel fees may not be awarded under Niles.
The Nephews' Counsel Fees
Shortly before trial began, the trial judge advised one of Stockdale's nephews, by letter, about the trial and the name of the estate administrator. During the trial, the trial judge became concerned that the "entire trial effort may be meaningless if it is later determined that the pencil writing on the 'client's copy' of the  will is deemed a 'revocation' under N.J.S.A. 3B:3-13." The court undoubtedly believed that if Stockdale revoked the residuary clause of the 1998 will, and the court rejected probate of the 2000 will, the residuary estate would be distributed pursuant to the intestacy laws, N.J.S.A. 3B:5-1 to -14, and the nephews would become Stockdale's heirs. Consequently, at the court's direction, the estate administrator, on November 4, 2003, wrote one of Stockdale's nephews attaching the correspondence between the judge and the lawyers on the revocation issue. The letter stated: "I strongly suggest that you contact an attorney immediately since the tenor of the correspondence may directly affect you." About one week before Christmas and after the trial had begun, one of the nephews had intervened and the other had made an appearance. This was more than three years after the Squad filed its caveat. At this point, no one other than the nephews had an interest in challenging the 1998 will.
On January 27, 2004, the nephews and the Squad settled their dispute. The nephews gave up their right to challenge the 1998 will in exchange for ten percent of the net residuary estate and a promise that the Squad would not object to the nephews' request for counsel fees.
The nephews subsequently sought approximately $187,000 in counsel fees from the estate pursuant to Rule 4:42-9(a)(3). The trial court denied the application because the nephews had settled their claims, suffered no cognizable loss, and did not suffer any injury as a result of Casale's and Sollitto's actions. The court further believed that there was no reason to enhance "their settlement by their own counsel fees to be paid from the estate which would have surely defeated their claims for revocation."
In rejecting the nephews' motion for reconsideration, the court reiterated that they could not have succeeded on their claim because it was "legally flawed." Although the court recognized that the standard was "reasonable cause" to assert a claim, it believed that the nephews "could not have succeeded in [their] challenge of Mrs. Stockdale's 1998 will because long-established precedent in this state holds that a testator cannot revoke an unexecuted copy of a will."
Rule 4:42-9(a)(3) permits counsel fees in probate actions. If the challenge is successful and probate refused, the court may direct counsel fees to be paid out of the estate of the decedent; if probate is granted, the court may direct that counsel fees be paid out of the estate if "it shall appear that the contestant had reasonable cause for contesting the validity of the will or codicil." Ibid.
To constitute "reasonable cause," there must be "a factual background reasonably justifying the inquiry as to the testamentary sufficiency of the instrument by the legal process." In re Caruso, 18 N.J. 26, 35 (1955). "Except in a weak or meretricious case, courts will normally allow counsel fees to both proponent and contestant in a will dispute." In Re Reisdorf, 80 N.J. 319, 326 (1979).
Preliminarily, although settlements often dispose of counsel fee claims, there is at least one decision awarding counsel fees to a party from the estate after settlement of a probate action. See In re Estate of Reisen, 313 N.J. Super. 623, 628 (Ch. Div. 1998). Our research has disclosed no decision to the contrary.
A "'revocatory act on the will' includes burning, tearing, canceling, obliterating or destroying the will or any part of it." N.J.S.A. 3B:3-13(b). The nephews do not claim the entire 1998 will is invalid, only the residuary clause.
We have found revocation based upon destruction of a fully executed duplicate of the will. In re D'Agostino, 9 N.J. Super. 230, 232 (App. Div. 1950). See also, Will of Nassano, 199 N.J. Super. 414, 416-18 (App. Div. 1985)(finding revocation by language on a fully executed duplicate will indicating that the document was null and void). "[D]estruction of an unexecuted or conformed copy," however, will not meet the statutory revocation requirements. D'Agostino, supra, 9 N.J. Super. at 233.
This case does not involve a fully executed duplicate copy, but a Xerox copy of a fully executed will. The Xerox copy of the will had a blue colored backer and was marked "Client Copy." We have found no New Jersey case addressing the question of the revocation of a will or parts thereof, by obliterating words in a Xerox copy of a will contained in such a backer. It is possible that, pursuant to D'Agostino, we would reject the nephews' argument. However, there is at least a colorable argument that in today's world a client holding such a copy would consider that copy her will. In any event, the standard is not "likelihood of success," but "reasonable cause." The trial court appeared to mistakenly focus on the nephews' likelihood of success in invalidating the 1998 residuary clause rather than on whether the nephews had "reasonable cause" to contest that portion of the will.
Such a mistaken focus requires a remand for the trial court to reconsider whether counsel fees would be appropriate under Rule 4:42-9(a)(3). Upon remand, should the trial judge allow counsel fees, the court may consider the factors mentioned in In re Bloomer, 37 N.J. Super. 85, 94 (App. Div. 1955), to establish a proper amount for such allowance. The Bloomer factors were not intended to be used to determine whether to award a counsel fee. Ibid.
Accordingly, for the reasons explained above, we affirm the judgment admitting the 1998 will to probate and rejecting probate of the 2000 will. We affirm judgment denying Sollitto specific performance of the real estate contract and decline consideration of his alternative argument seeking damages. We reverse the Squad's counsel fee award imposed against Sollitto and Casale and remand for reconsideration of punitive damages against Sollitto and Casale and for reconsideration of a counsel fee award from the estate for the nephews.
Affirmed in part, reversed in part, and remanded. We do not retain jurisdiction.
As of 1999, the record variously reflects her age as 87, 91, and 93.
December 26, 2006