IN THE MATTER OF THE ESTATE OF DOMENICK DENORA

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3101-11T4

IN THE MATTER OF THE ESTATE

OF DOMENICK DENORA, deceased.

_______________________________________

December 24, 2012

Argued November 14, 2012 Decided

Before Judges Yannotti and Harris.

On appeal from Superior Court of New Jersey, Chancery Division, General Equity Part, Middlesex County, Docket No. 214275.

John A. Craner argued the cause for appellant Patricia DeNora (Craner, Satkin, Scheer & Schwartz, PC, attorneys; Mr. Craner, on the brief).

James F. Keegan argued the cause for respondent Alfred D. Krivak (Bendit Weinstock, P.A., attorneys; Mr. Keegan and Sherri Davis Fowler, on the brief).

PER CURIAM

Patricia DeNora appeals from a judgment entered by the Chancery Division, General Equity Part, on January 20, 2012, which approved accountings for the Estate of Domenick F. DeNora (Estate) and the Domenick F. DeNora Family Trust (Family Trust), and struck and dismissed certain exceptions that appellant had taken to the accountings. For the reasons that follow, we affirm.

I.

In August 2006, Domenick F. DeNora's will was admitted to probate in Middlesex County. Appellant was decedent's wife. In the will, decedent bequeathed a fifty-one percent interest in a business known as King George Auto Sales, Inc. (King George) to appellant, and a forty-nine percent interest in the business to decedent's brother Robert DeNora (Robert). The will designated appellant as the primary residuary beneficiary of the estate, and appointed Alfred D. Krivak (Krivak) as executor and trustee of certain trusts created under the will.

Krivak also was designated the trustee of the Family Trust, which decedent had created on October 9, 2002, when he executed the will. The Family Trust has three components a family trust and two separate trusts. Appellant and her children are beneficiaries of the family trust, and the children are beneficiaries of the separate trusts.

In January 2007, appellant filed a lawsuit against Robert and asserted, among other things, a claim pursuant to N.J.S.A. 14:12A-7 as an oppressed minority shareholder of King George. Appellant also asserted claims regarding ownership of D&R Realty, a partnership that owned the land on which King George operated. Decedent and Robert were partners in D&R. Appellant and Robert thereafter agreed to submit the dispute to binding arbitration, and the arbitrator issued his decision and award on September 17, 2008.

Among other things, the arbitrator entered judgment for Robert on plaintiff's oppressed shareholder claim. He ordered appellant to sell her fifty-one percent interest in King George to Robert for $731,000, and directed Robert to pay that amount to the Estate within fifteen days of the date of the order.

The arbitrator noted that counsel for the Estate had agreed to be bound by his decision regarding ownership of King George. The arbitrator ordered the Estate to issue one-hundred percent of the shares of King George to Robert upon the Estate's receipt of Robert's payment for appellant's interest in the corporation.

Appellant filed an appeal to this court from the arbitrator's award. While the appeal was pending, Robert filed a verified complaint and order to show cause in the trial court seeking an order confirming the award. Proceedings in that matter were stayed pending resolution of the appeal. On January 2, 2009, we dismissed the appeal and remanded the matter to the trial court. Appellant thereafter filed a motion in the trial court to vacate the arbitration award.

The trial court issued a written opinion dated September 9, 2009, in which it concluded that the award should be confirmed. The court stated, among other things, that the arbitrator's findings regarding ownership of King George were fully supported by the record and New Jersey law. The court wrote that survival of King George as a successful, profitable enterprise was "at stake, and a buy-out of [appellant's] shares is the only practical, realistic and equitable remedy for all parties." The court entered a judgment dated September 9, 2009, confirming the award.

Appellant appealed from the trial court's judgment. While the appeal was pending, appellant filed a motion in the trial court seeking an order directing Krivak to disburse to her the $731,000 the Estate had received from Robert for appellant's interest in King George. The court entered an order dated March 4, 2010, which denied the motion but directed Krivak to retain the monies, with interest thereon, in the Estate's accounts. The order also stated that "no further distributions or disbursements are to be made from those funds."

We thereafter affirmed the trial court's judgment confirming the arbitration award. DeNora v. DeNora, No. A-0691-09 (App. Div. June 30, 2010). Appellant filed a petition for certification with the Supreme Court, seeking review of our judgment. The Court denied the petition. DeNora v. DeNora, 205 N.J. 15 (2010).

In December 2010, Krivak filed a motion in the trial court seeking to modify its March 4, 2010 order and to permit him to distribute $500,000 to appellant and retain the remaining $231,000 for the Estate's ongoing litigation costs. Appellant opposed the motion and filed a cross-motion to compel Krivak to pay her $731,000. The court entered an order on January 18, 2011, which permitted Krivak to disburse $500,000 to appellant and to use the remaining monies "to address additional and ongoing expenses of the Estate, including continuing legal expenses."

On February 17, 2010, Krivak filed a verified complaint in the trial court seeking approval of his formal accountings for the Estate and the Family Trust. Previously, appellant had filed a complaint in which she sought Krivak's removal as Executor and Trustee and to compel him to provide accountings for the Estate and Family Trust. The matters were consolidated.

On April 21, 2010, appellant filed exceptions to Krivak's accountings. Krivak filed a motion to strike certain exceptions and to dismiss certain claims raised by appellant. On October 1, 2010, the court issued a written opinion on the motion, and entered an order dated October 19, 2010, striking certain exceptions and dismissing certain claims.

Appellant filed a motion for reconsideration, and the court entered an order dated November 19, 2010, denying the motion, except for the reinstatement of two of appellant's exceptions, which are not pertinent to this appeal. The court conducted a trial on the remaining exceptions and issued another opinion dated December 16, 2011, striking the exceptions, dismissing the claims, and approving the accountings. Final judgment was entered on January 20, 2012. This appeal followed.

II.

Appellant argues that the trial court erred by striking exception 3(n), in which she asserted that Krivak had wrongly retained the $731,000 that Robert paid the Estate for her interest in King George. Appellant sought to "surcharge" Krivak for the $731,000 plus interest, less the $500,000 paid to her in January 2011. Appellant contends that Krivak wrongfully used some of the monies to pay the Estate's expenses, including his commissions and counsel fees. We disagree.

In its opinion, the trial court addressed exception 3(n). The court stated that appellant had

alleged that the interests her husband held in [King George and D&R Realty] prior to his death should have passed directly to her and were not assets of the Estate. The prior arbitration addressed and resolved this exact issue with finality, with the court noting that if [appellant's] position were adopted there would never be a need for estate administration. [Appellant] is precluded from relitigating this issue.

Appellant contends that the arbitrator ordered Robert to pay the Estate $731,000 "in the mistaken belief" that the Estate was the legal owner of the King George shares. According to appellant, Robert's attorney told the arbitrator that he did not know who held the stock certificates or even if stock certificates had ever been issued. Appellant says that the arbitrator "simply decided" the "easiest way" to resolve the issue was to order Robert to pay the money to the Estate, and let the Executor distribute the money to appellant.

Appellant further argues that the arbitrator's determination to require Robert to pay the Estate $731,000 was not binding on the trial court in the probate matter. Appellant says that the court should have resolved the question as to the ownership of the stock and entitlement to the money. Appellant insists that she was legal owner of the shares devised to her in the will, and that she was entitled to the $731,000 notwithstanding the arbitrator's decision to the contrary, since that was not an issue for decision by the arbitrator.

Appellant additionally argues that Krivak should have issued the shares in King George to her in July 2007, when the inheritance tax waivers were issued to the Estate. Appellant contends that, since there were no other debts or costs of administration at that time, Krivak was obligated to distribute the shares to King George, and his failure to do so constituted a breach of his fiduciary duty.

We are satisfied, however, that the trial court correctly determined that that appellant was barred from relitigating issues decided in the arbitration proceeding. The doctrine of collateral estoppel precludes "relitigation in a subsequent action of a factual issue fully fairly litigated in the prior one." Harbor Land Development Corp., Inc. v. Mirne, Nowels, Tumen, Magee & Kirschner, 168 N.J. Super. 538, 541 (App. Div. 1979). "The law contemplates that when a controversy between the parties is once fairly litigated and determined it is no longer open to relitigation." Matter of Arlinghaus' Estate, 158 N.J. Super. 139, 147 (App. Div. 1978) (citing Lubliner v. Paterson Bd. of Alcoholic Bev. Con., 33 N.J. 428, 435 (1960)).

At the time the arbitrator issued his decision and award, Krivak had not issued the shares in King George, and the arbitrator's decision makes clear that there was an issue as to whether Robert would pay appellant or Krivak the $731,000 required to buy out appellant's interest in the corporation. The arbitrator's award states that the Estate had agreed to be bound by the arbitrator's decision on this issue, even though the Estate was not a party to the lawsuit or arbitration.

The arbitrator ordered Robert to pay the Estate $731,000, and ordered the Estate to issue to Robert shares representing full ownership of King George. Thus, despite appellant's contention that the issue of ownership of the shares and entitlement to the $731,000 were not properly before the arbitrator, it is clear from the record that the issue was, in fact, an issue in the arbitration proceeding and it was decided by the arbitrator.

Furthermore, there is no indication that appellant ever challenged the arbitrator's ruling on that point in the trial court or on appeal from the trial court's judgment confirming the award. We are therefore satisfied that the trial court correctly determined that appellant was barred from relitigating the arbitrator's determination that the buy-out monies were to be paid to the Estate, rather than appellant.

We are additionally satisfied that, under the circumstances, Krivak did not breach his fiduciary duty owed to appellant and the trial court correctly rejected appellant's claim to surcharge him for the portion of the buy-out proceeds that were applied to the Estate's expenses. Krivak acted reasonably by delaying the issuance of the shares in King George after the Estate received the tax waivers because of the pending litigation instituted by appellant regarding the corporation. The arbitrator directed Robert to pay the buy-out proceeds to the Estate. Because the buy-out proceeds were paid to and became part of the Estate's funds, they were properly applied to the Estate's expenses, as permitted by the court's January 18, 2011 order.

We accordingly conclude that the trial court did not err by striking exception 3(n).

III.

Next, appellant contends that the trial court erred by approving the commissions sought by Krivak without requiring him to submit an affidavit of services. Again, we disagree.

Krivak's accountings indicated that he had paid himself commissions as authorized by N.J.S.A. 3B:18-14, which allows a fiduciary to be paid a commission in certain percentages of the corpus that the fiduciary receives. The statute further provides that:

Such commissions may be reduced by the court having jurisdiction over the estate only upon application by a beneficiary adversely affected upon an affirmative showing that the services rendered were materially deficient or that the actual pains, trouble and risk of the fiduciary in settling the estate were substantially less than generally required for estates of comparable size.

[Ibid.]

It is undisputed that Krivak's commissions were calculated in accordance with the statute. Indeed, appellant's expert, Martin D. Hauptman, agreed that the commissions were authorized by N.J.S.A. 3B:18-14, and he expressed no opinion that the commissions should be reduced or that Krivak's actions in settling the estate were less than the actions "generally required for estates of comparable size." Ibid.

We are satisfied that the trial court did not err by striking appellant's exception to the commissions. The commissions were calculated in accordance with the statute, and appellant did not establish a basis for reduction of the commissions. Therefore, an affidavit of services was not required.

We note that Rule 4:88-1 generally requires a fiduciary to submit an affidavit of services in cases in which the fiduciary's commissions are within the discretion of the court. In this matter, the court had the discretion under N.J.S.A. 3B:18-14 to reduce Krivak's commissions but appellant failed to carry her burden under the statute to show that such discretion should be exercised. Under the circumstances, Krivak was not required to submit an affidavit of services for his commissions.

IV.

Appellant also argues that the court erred by approving the accounting fees that Krivak sought for services provided to the Estate and the Family Trust.

N.J.S.A. 3B:18-9 provides that, in addition to compensation that may otherwise be allowed, the court

may allow reasonable compensation to the fiduciary for services required by law to be rendered by the fiduciary in connection with or arising out of any property as defined in [N.J.S.A.] 3B:18-8, including, but not by way of limitation, services rendered in connection with apportionment of any taxes specified in [N.J.S.A.] 3B:18-8 between a decedent's estate and the recipient of the property, and in collecting or attempting to collect, the apportionment of the taxes applicable to the property.

Krivak is a certified public accountant. He prepared the tax returns for the Estate and Family Trust. Krivak also prepared a valuation report for decedent's businesses, which was submitted along with the Estate's tax return. The court correctly found that N.J.S.A. 3B:18-9 permitted the Estate to compensate Krivak for the aforementioned professional services, because they were rendered "in connection with or arising out of" the property of the Estate and Family Trust.

Appellant contends, however, that the court's determination was not consistent with N.J.S.A. 3B:14-23(x), which permits a fiduciary to

employ and compensate accountants from the fiduciary fund for services rendered to the estate or trust or to a fiduciary in the performance of the fiduciary's duties, including the duty of a corporate or other fiduciary with respect to the preparation of accountings, without reduction in commissions due to the fiduciary, so long as the accountings are not the usual, customary, or routine services provided by the fiduciary in light of the nature and skill of the fiduciary.

Appellant's argument is without merit. The statute permits a fiduciary to retain and compensate accountants for services rendered to an estate or trust, but the statute does not preclude a fiduciary from receiving compensation when the fiduciary performs those services. The limitation in N.J.S.A. 3B:14-23(x) regarding the preparation of accountings does not apply here because Krivak provided those services without charge, and the compensation at issue relates to the preparation of tax returns, for which compensation is expressly allowed by N.J.S.A. 3B:18-9.

V.

Appellant additionally contends that the court erred by approving the equal division of legal fees between the Estate and the Family Trust. The court found that the legal expenses Krivak incurred were "reasonable and necessary." Appellant does not challenge that finding, but maintains that the court erred by concluding that the legal fees should be divided equally between the Estate and Family Trust.

Appellant contends that the trial court failed to provide an analysis of the legal services provided to the Estate and to the Family Trust. She contends that the vast amount of the legal services pertain to the exceptions that she filed, and that the "greatest activity" related to Krivak's alleged failure to distribute $731,000 to her for her interest in King George.

We are convinced that appellant's arguments are without sufficient merit to warrant extensive comment. R. 2:11-3(e)(1)(E). We are satisfied that there is sufficient credible evidence in the record to support the allocation of fees between the Estate and the Family Trust.

As the trial court noted, the attorneys' fees were required for litigation that involved both the Estate and Family Trust. Among other things, appellant challenged actions that Krivak had taken in his administration of both the Estate and the Family Trust. The allocation of fees was not an abuse of discretion warranting our intervention.

Affirmed.