INTHE MATTER OF THE ESTATE OF JOAN MCFADDEN, Deceased
Annotate this CaseNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2484-15T1
IN THE MATTER OF THE ESTATE
OF JOAN MCFADDEN, Deceased.
____________________________
Argued February 6, 2018 – Decided February 22, 2018
Before Judges Fasciale, Sumners and Moynihan.
On appeal from Superior Court of New Jersey,
Chancery Division, Burlington County, Docket
No. 2003-0952.
I. Dominic Simeone argued the cause for
appellant John McFadden (Simeone & Raynor,
LLC, attorneys; I. Dominic Simeone, Bryan T.
Eggert, and Kenneth E. Raynor, on the briefs).
Herbert J. Stayton, Jr., argued the cause for
respondents Joseph R. McFadden and Vincent J.
McFadden (Ridgway & Stayton, LLC, attorneys;
Herbert J. Stayton, Jr., on the brief).
PER CURIAM
John McFadden (defendant) appeals from a January 11, 2016
order directing him to repay and reconvey assets to Joan McFadden's
(decedent's) estate and awarding counsel fees to Joseph R. McFadden
and Vincent J. McFadden (collectively plaintiffs). We affirm.
In July 1998, decedent executed two powers of attorney (POAs)
and a Living Will-Durable Health Care Power appointing defendant
(her nephew) as her agent and attorney in fact, and Mary Sexton
(decedent's niece and defendant's sister) as her alternative agent
and attorney in fact. The two POAs stated that they would become
effective upon the following conditions: (1) incapacity declared
by a court of competent jurisdiction; (2) appointment of a
conservator or guardian based upon incapacity; (3) certification
of two licensed physicians that decedent was incapable of caring
for herself and physically or mentally incapable of managing her
financial affairs; or (4) upon executed certification of the
decedent that the agent was fully authorized to act under the
POAs. Plaintiffs assert there was no evidence at trial to prove
the POAs' prerequisites were ever satisfied.
More than a week later, decedent executed a will. The will
made five specific bequests to three charitable organizations and
to two friends. The will left the residue in equal parts to
thirteen nieces and nephews. The will named defendant and Mary
Sexton as co-executors of the estate.
Decedent was plagued with a myriad of medical issues including
Parkinson's disease, multiple accidents resulting in broken hips,
and degenerative mental issues. Defendant assisted decedent with
day-to-day tasks and even moved to her residence to provide her
care.
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Decedent eventually moved to an assisted living facility,
where she remained until her death. Defendant asserts that
decedent expressed her wish for him to have her home, with a life
estate reserved for herself, and for him to use her money to pay
for his expenses so that he could remain in the area and take care
of her. Plaintiffs assert no witness at trial could testify to
this desire besides defendant.
In April 2001, defendant met with decedent's lawyer and
indicated that decedent wanted to gift him $50,000. Decedent's
lawyer informed defendant that decedent could sign a care agreement
whereby defendant would be paid $1500 per month as decedent's
geriatric care manager. In May 2001, decedent's checking account
shows withdrawals of $1200 per month. Defendant testified he did
not know who received those checks.
In May 2002, decedent's lawyer prepared a deed transferring
decedent's home to defendant for one dollar of consideration; it
was signed by defendant as decedent's attorney in fact. In October
2002, decedent passed away.
In May 2003, Mary Sexton executed a Renunciation of Co-
Executor; and defendant made an Application for Probate and was
appointed the executor of decedent's estate. Defendant did not
notify the beneficiaries listed in decedent's will that the will
existed and had been probated.
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In 2006 and 2008, defendant executed a mortgage and a home
equity line of credit. When defendant transferred the deed to
himself, there were no outstanding mortgages or liens against the
home. At trial, defendant testified there was approximately
$285,000 outstanding on the home equity line of credit.
In late 2011, plaintiffs became aware of decedent's will.
Plaintiffs alleged defendant improperly used estate funds for his
own expenses. In March 2012, plaintiffs filed a verified complaint
alleging breach of fiduciary duty; conversion of estate assets;
negligent performance of fiduciary duties; theft of estate assets;
undue influence; lack of mental capacity; fraudulent transfer,
alienation, and hypothecation of estate assets; tortious
interference with the expectation of inheritance; and unjust
enrichment.
Following trial in July 2015, the judge found that decedent
"clearly lacked testamentary capacity to change her will during
the years 2001 and 2002 and clearly lacked the comprehension
required to make an informed decision to allow [defendant] to
reimburse himself for all the expenses that he clearly helped
himself to." Furthermore, the judge found defendant
totally lacks believability, totally lacks
credibility, but what is also obvious to me
is that he has not even one ounce of remorse
in his soul . . . for all the transgressions
he has committed in his obvious quest to loot
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his aunt's estate and to leave the cupboard
bare for those nephews and nieces and other
beneficiaries entitled to recover under the
last will and testament of the decedent.
The trial judge found that although defendant may have been
a caring and loving nephew for most of decedent's life, "it is
just as clear that he totally abandoned his obligations to her as
a fiduciary under the power of attorney and as executor of her
estate." He added, "[i]t is clear to me, and I find the record
amply demonstrates, that [defendant] did his very best to
intentionally hide the terms of his aunt's will from the siblings
and other cousins," and found that the statute of limitations
(SOL) would be equitably tolled. Further, he recounted numerous
medical records that described decedent's diminished capacity to
comprehend and communicate from 1999 to her death in 2002. He
concluded that decedent "had zero testamentary capacity, zero
capacity to make informed intelligent decisions" when defendant
claims she made such decisions. The judge found that defendant
exercised undue influence over decedent, evidenced by an
unexecuted asset protection plan prepared by her lawyers that
would have protected her home and other assets.
The judge entered a final order finding: (1) the estate shall
not recoup $10,000 defendant gifted to decedent's friend, a
specific beneficiary in decedent's will; (2) defendant shall
5 A-2484-15T1
reconvey decedent's home to the estate, subject to the mortgage
lien of record; (3) the parties shall inspect and inventory the
personal property in the home; (4) defendant shall provide
plaintiffs with documentation proving the mortgage was current as
well as provide proof of payment of property taxes, homeowners
insurance, and utilities; (5) defendant shall repay $422,576 to
the estate, representing the outstanding mortgage balance,
payments to defendant's American Express account, and other
unaccounted for funds from decedent's account plus interest; (6)
plaintiffs shall be entitled to counsel fees and costs totaling
$126,875; and (7) the remaining $7000 in the estate shall remain
frozen.
On appeal, defendant argues the probate court erred by denying
his motion for summary judgment; denying his subsequent cross-
motion for a Lopez1 hearing; failing to stay the matter to permit
defendant to intervene in the Law Division matter involving
decedent's banks; shifting the burden of proof to defendant without
first having disposed of the Lopez hearing issue; deeming laches
and SOL inapplicable, and finding plaintiffs carried their burden
with regard to equitable tolling; assessing damages, and making
1
Lopez v. Swyer,
62 N.J. 267, 275-76 (1973).
6 A-2484-15T1
findings of fact based upon documents and other information not
in evidence; and the trial judge was biased.
Defendant argues the pre-trial judge erred by denying his
motion for summary judgment because defendant was decedent's
attorney in fact, and the SOL and laches barred the action. When
reviewing an order denying summary judgment, we apply "the same
standard governing the trial court." Oyola v. Liu,
431 N.J. Super.
493, 497 (App. Div. 2013). We owe no deference to the motion
judge's conclusions on issues of law. Manalapan Realty, LP v.
Twp. Comm. of Manalapan,
140 N.J. 366, 378 (1995). A court should
grant summary judgment when the record reveals "no genuine issue
as to any material fact" and "the moving party is entitled to a
judgment or order as a matter of law." R. 4:46-2(c). Applying
these standards, we conclude that the pre-trial judge did not err
in denying defendant's motion for summary judgment.
Defendant relies on
N.J.S.A. 2A:14-1, which provides:
Every action at law for trespass to real
property, for any tortious injury to real or
personal property, for taking, detaining, or
converting personal property, for replevin of
goods or chattels, for any tortious injury to
the rights of another not stated in sections
2A:14-2 and 2A:14-3 of this Title, or for
recovery upon a contractual claim or
liability, express or implied, not under seal,
or upon an account other than one which
concerns the trade or merchandise between
merchant and merchant, their factors, agents
and servants, shall be commenced within 6
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years next after the cause of any such action
shall have accrued.
Defendant argues that because decedent passed away in October 2002
and plaintiffs filed their complaint in 2012 – over the six-year
SOL – plaintiffs were time-barred or, alternatively, laches
applied, entitling him to summary judgment. "Laches is an
equitable doctrine, operating as an affirmative defense that
precludes relief when there is an 'unexplainable and inexcusable
delay' in exercising a right, which results in prejudice to another
party." Fox v. Millman,
210 N.J. 401, 417-18 (2012) (quoting Cty.
of Morris v. Fauver,
153 N.J. 80, 105 (1998)).
Defendant argues plaintiffs had sufficient opportunity to
inquire as to the status of the decedent's property and about the
POA over the ten years since decedent's death. He also asserts
that there was substantial unfairness to him in this case because
of the amount of time that had passed. However, plaintiffs argue
that the SOL only began to run in December 2011, when plaintiffs
discovered the will.
There existed genuine issues as to when the action accrued
and when plaintiffs knew or should have known they had a claim,
especially when viewing the facts in the light most favorable to
plaintiffs. The pre-trial judge found that defendant made efforts
to conceal the will from the beneficiaries and recognized that
8 A-2484-15T1
plaintiffs only found the will in 2011. She wrote a comprehensive
statement of reasons and concluded there were "many factual issues
that preclude summary judgment." We agree.
Next, defendant argues that the pre-trial judge improperly
denied his cross-motion for a Lopez hearing to determine if he was
entitled to relief from the SOL. We conclude this argument is
without sufficient merit to warrant discussion in a written
opinion. R. 2:11-3(e)(1)(E). We add the following brief comments.
The pre-trial judge carefully considered whether to grant the
Lopez hearing to determine when plaintiffs knew or should have
known they had a cause of action. The judge determined she could
consider the evidence on the SOL issue and perform the Lopez
analysis without bifurcating the trial. The trial judge later
heard testimony from witnesses to determine whether the SOL
applied, conducted a full Lopez analysis, and recognized the burden
of proof was on plaintiffs; and he determined that plaintiffs were
entitled to equitable tolling. The decision not to bifurcate this
issue was not an abuse of discretion, or prejudicial to defendant.
Next, defendant argues that the pre-trial judge's decision
not to stay the matter and allow defendant to intervene in a Law
Division action where plaintiffs filed a complaint against
decedent's bank and retirement funds institution was an abuse of
discretion and clearly erroneous. Plaintiffs filed a motion to
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amend their verified complaint to add Morgan Stanley and Pentagon
Federal Credit Union as additional defendants, but the motion was
denied. Plaintiffs then filed a separate complaint against Morgan
Stanley and Pentagon Federal Credit Union in the Law Division.
Defendant filed a motion to stay the trial and consolidate the
actions, however, the pre-trial judge denied the motion. We
conclude this decision was neither an abuse of discretion nor
erroneous.
Rule 4:38-1 states, "[w]hen actions involving a common
question of law or fact arising out of the same transaction or
series of transactions are pending in the Superior Court, the
court on a party's or its own motion may order the actions
consolidated." (Emphasis added). Even if the other action involved
a common question of law or fact, a judge uses his or her discretion
to stay the matter and allow a party to intervene.
In her statement of reasons denying the stay, the pre-trial
judge explained "there is no substantial, immediate and
irreparable harm if trial is to go forward," as defendant was not
a named defendant in the Law Division action, and "the equities
do not favor defendant who filed these motions to consolidate and
stay the trial on the eve of trial." We see no error or abuse of
discretion in the judge denying the stay.
10 A-2484-15T1
Next, defendant asserts that the trial judge improperly
shifted the burden of proof to him mid-trial without conducting a
Lopez analysis first. We disagree. This court will reverse a
discretionary decision "when the stated 'findings were mistaken[,]
. . . the determination could not reasonably have been reached on
sufficient credible evidence present in the record[,]' or the
judge 'failed to consider all of the controlling legal
principles[.]'" Clark v. Clark,
429 N.J. Super. 61, 72 (App. Div.
2012) (alterations in original) (quoting Gonzalez-Posse v.
Ricciardulli,
410 N.J. Super. 340, 354 (App. Div. 2009)). The
trial judge, after plaintiffs presented their case, properly ruled
without prejudice midtrial that the SOL did not bar the action and
shifted the burden to defendant; yet made it clear that defendant
could address Lopez and other discovery issues with testimony and
other evidence for the judge to consider.
Next, defendant argues that the trial judge's decision
erroneously found that the defenses of laches and SOL did not
apply, and that plaintiffs met their burden for equitable tolling.
The standard of review of judgments or orders entered after bench
trials is well-settled. The findings of the judge are binding on
appeal if they are "supported by adequate, substantial and credible
evidence." Rova Farms Resort, Inc. v. Inv'rs Ins. Co. of Am.,
65 N.J. 474, 484 (1974).
11 A-2484-15T1
The judge found that defendant took steps to conceal the will
from the beneficiaries and that the beneficiaries should not have
known they had a cause of action before 2011. Plaintiffs filed
the action in 2012, and the judge properly found they were not
barred by the SOL under
N.J.S.A. 2A:14-1.
Laches is "an equitable defense that may be interposed in the
absence of the [SOL]." Lavin v. Bd. of Educ.,
90 N.J. 145, 151
(1982). The Court has explained that laches is "invoked to deny
a party enforcement of a known right when the party engages in an
inexcusable and unexplained delay in exercising that right to the
prejudice of the other party." Knorr v. Smeal,
178 N.J. 169, 180-
81 (2003). "Laches may only be enforced when the delaying party
had sufficient opportunity to assert the right in the proper forum
and the prejudiced party acted in good faith believing that the
right had been abandoned." Id. at 181. "Our courts have long
recognized that laches is not governed by fixed time limits, but
instead relies on analysis of time constraints that 'are
characteristically flexible.'" Fox,
210 N.J. at 418 (citation
omitted) (quoting Lavin,
90 N.J. at 151). Whether laches applies
"depends upon the facts of the particular case and is a matter
within the sound discretion of the trial court." Mancini v. Twp.
of Teaneck,
179 N.J. 425, 436 (2004) (quoting Garrett v. Gen.
Motors Corp.,
844 F.2d 559, 562 (8th Cir. 1988)).
12 A-2484-15T1
In determining whether to apply laches, the court should
consider the length of the delay, the reasons for the delay, and
any changing circumstances of the parties during the delay.
Fauver,
153 N.J. at 105. As to the delay, the court should look
to an analogous SOL, and laches applies where "a claim derived
from a statutory right had been lost through failure to make a
timely demand therefor." Fox,
210 N.J. at 420.
Plaintiffs' delay in filing their verified complaint was
excusable. The trial judge made factual findings that defendant
did not act in good faith. Plaintiffs did not know they were
beneficiaries in their aunt's will nor did they have reason to
know. Defendant asserts plaintiffs had reason to inquire because
defendant lived in decedent's house and plaintiffs attended
decedent's funeral. However, defendant did not follow the proper
procedure in notifying plaintiffs they were beneficiaries in the
will pursuant to Rule 4:80-6 (requiring the executor of the estate
to notify all beneficiaries within sixty days after the date of
the probate of a will that the will has been probated). Defendant
failed to notify any beneficiaries of the will's existence.
We find that the trial judge properly determined that the SOL
and laches did not bar this matter. As the judge stated, "[t]o
allow the [d]efendant in this matter to avail himself of these
13 A-2484-15T1
defenses flies in the face of everything that a court of equity
is [su]pposed to stand for."
Next, defendant argues that damages were improper and the
judge made findings based on information not in evidence.
Defendant argues the judge erroneously added the mortgage on
decedent's house to damages. However, this was not an error, as
the judge decided the house should be returned to the estate. The
house was not encumbered with any mortgages or liens when defendant
transferred the deed to himself acting as decedent's attorney in
fact. Accordingly, the amount of the mortgage outstanding should
rightfully be returned to the estate.
Defendant argues that some amounts that were withdrawn from
decedent's bank account should not have been assessed as damages
because there was no proof as to whom the checks were written.
However, the judge performed a thorough analysis. He accounted
for the known amounts decedent had as of April 2001, her known
income from Social Security and pensions, her living expenses
until her death, and her funeral expenses. The judge reviewed
specific line items and decided not to add some of the checks to
the damages. Furthermore, the judge rightfully assessed damages
on behalf of the estate, rather than pro rata damages to
plaintiffs. The judge stated, "my finding restores to the estate
assets the testator intended for distribution and it is on her
14 A-2484-15T1
behalf that I act, should act, where such actions are warranted."
The judge recognized that future accountings would most likely be
required.
Additionally, the judge did not improperly make findings of
fact based on information not in evidence. N.J.R.E. 703 states:
The facts or data in the particular case upon
which an expert bases an opinion or inference
may be those perceived by or made known to the
expert at or before the hearing. If of a type
reasonably relied upon by experts in the
particular field in forming opinions or
inferences upon the subject, the facts or data
need not be admissible in evidence.
Plaintiffs presented evidence by a doctor who properly relied upon
decedent's medical reports and records. Thus, the judge's findings
were adequately supported in the record.
Lastly, defendant's argument that the judge was biased is
without merit. Rule 1:12-1(g) states that a judge should be
disqualified on the court's own motion "when there is any other
reason which might preclude a fair and unbiased hearing and
judgment, or which might reasonably lead counsel or the parties
to believe so." Our Supreme Court has stated the applicable
standard in determining whether disqualification is necessary:
"Would a reasonable, fully informed person have doubts about the
judge's impartiality?" DeNike v. Cupo,
196 N.J. 502, 517 (2008).
15 A-2484-15T1
"[A] judge need not 'withdraw from a case upon a mere
suggestion that he is disqualified unless the alleged cause of
recusal is known by him to exist or is shown to be true in fact.'"
Chandok v. Chandok,
406 N.J. Super. 595, 603 (App. Div. 2009)
(quoting Panitch v. Panitch,
339 N.J. Super. 63, 66 (App. Div.
2001)). Moreover, "the mere appearance of bias may require
disqualification. However, before the court may be disqualified
on the ground of an appearance of bias, the belief that the
proceedings were unfair must be objectively reasonable." State
v. Marshall,
148 N.J. 89, 279 (1997) (citations omitted).
A reasonable, fully-informed person would not have doubts
about the judge's impartiality. Any of the judge's comments or
questions were part of the judge's fact-finding and analysis, as
is his role in a bench trial. The judge took care to acknowledge
that defendant cared for and must have loved his aunt. However,
this love and care did not justify defendant's actions.
Affirmed.
16 A-2484-15T1
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