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Sunday, September 8, 2013

In re Estate of Ferretti

Superior Court of New Jersey, Appellate Division
August 8, 2013
Submitted February 25, 2013.
On appeal from Superior Court of New Jersey, Chancery Division, Probate Part, Monmouth County, Docket No. P-327-11.
Elaine Vescovi, appellant pro se.
Giordano, Halleran & Ciesla, attorneys for respondent Mary Jean Bohn, Executrix of the Estate of Olga Ferretti (Robert J. Feinberg, of counsel and on the brief; Matthew N. Fiorovanti, on the brief).
Before Judges Graves and Guadagno.
Plaintiff Elaine Vescovi, niece of decedent Olga Ferretti, appeals from a January 27, 2012 order denying her motion to invalidate the Last Will and Testament of decedent. A judgment entered the same day dismissed her complaint with prejudice and declared the Last Will and Testament valid and enforceable. For the reasons that follow, we affirm.
Decedent was born October 17, 1922, and died testate on February 3, 2010. She never married, had no children, and was survived by three sisters: Rose Martz, Lucy Cox, and Esther Yurth. Decedent was predeceased by two additional sisters, Anne Roche and Mary Vescovi, mother of plaintiff. In addition to plaintiff, decedent had fifteen nieces and nephews.
On May 9, 2003, decedent executed a Last Will and Testament (the 2003 Will). The 2003 Will bequeathed the following: $50, 000 to Catholic Charities; $50, 000 to Catholic Relief Services; $5000 to St. Mark's Roman Catholic Church; $5000 to St. Ann's Roman Catholic Church; and $5000 each to plaintiff, Joanne Gnanasiri, Bernard Vescovi, Diane Vescovi, and Peter Vescovi (the five children of Mary Vescovi). The "rest, residue, and remainder" of decedent's estate was left to her then surviving sisters, Rose Martz, Lucy Cox, Esther Yurth, and Anne Roche, in equal shares; and her home located in Sea Girt was left to her sisters "to utilize and enjoy . . . with other members of [her] family." Decedent named Mary Jean Bohn, daughter of Lucy Cox, as executrix.
On October 21, 2005, decedent executed another Last Will and Testament (the 2005 Will), thereby revoking the 2003 Will. The 2005 Will stated:
All of my property of whatever nature and kind, wherever so situated shall be distributed to the Olga Ferretti Revocable Trust, dated October 21, 2005, naming Olga Ferretti, Rose Ferretti Martz and Bank of America as initial co-trustees thereunder. I direct my executor, hereinafter named, to consult with the co-trustees of my Revocable Trust to determine whether any expense or tax shall be paid from my trust or my probate estate.
. . I nominate, constitute and appoint Mary Jean Bohn, Executrix of this my Last Will and Testament and if she should predecease me or for any reason whatsoever not be appointed as such, resigns or becomes unable to act, then I nominate, constitute and appoint Lucy Bohn[1] Execut[rix] in her place and stead. . . .
I grant unto my said Executor or Executrix the following powers respecting my estate in addition to any powers granted by the State of New Jersey: full power and authority to sell, mortgage, lease, assign, exchange and otherwise to convey and encumber any and all of my real and personal property, at such prices and upon such terms as to him or her shall seem reasonable and proper, and my Executor or Executrix may at his or her discretion, retain any securities, real property, or other investments and continue to hold, manage and operate any property, business or enterprise that I may own in whole or in part at the time of my death, with or without order of court, the profits and losses therefrom, if any, to insure to and be chargeable against my estate and not my Executor or Executrix.
The Olga Ferretti Revocable Trust (the 2005 Trust), executed the same day, provided that upon the death of decedent, the co-trustees would divide the remaining trust estate into four equal shares to decedent's then surviving sisters, Rose Martz, Lucy Cox, Esther Yurth, and Anne Roche. The 2005 Trust provided that if any sister predeceased decedent, her share would be distributed per stirpes to that sister's living descendants.
Additionally, decedent established the Olga Ferretti Charitable Unitrust on June 12, 2006 (the Unitrust), naming Bank of America as the trustee. The Unitrst provided:
In each taxable year of the trust during the unitrust period, the Trustee shall pay to Olga Ferretti, if then living, and if not in equal shares to Esther Yurth, Ann Roche, Rose Ferretti Martz, Lucy F. Cox (hereinafter "the Recipient") a unitrust amount equal to seven (7) percent of the net fair market value of the assets of the trust valued as of the first day of each taxable year of the trust . . . . The unitrst period shall be the earlier to occur of the death of the last survivor of the Grantor of Recipient or 10 years. . . .
. . Upon the expiration of the term, the Trustee shall distribute all of the then income and principal of the trust, other than any amount due to the Grantor as follows:
Catholic Charities 50%
Catholic Relief Services 40%
Consolata Missions (Somerset, NJ) 4 1/2%
St. Mark's Roman Catholic Church (Sea Girt, NJ) 4 1/2%
St. Ann's Roman Catholic Church (Raritan, NJ) 1%
Decedent's estate planning attorney certified that he met with decedent in August 2005, along with Rose Martz and Lucy Cox, and decedent indicated that "she wished to maintain the same overall disposition contained within the terms of the 2003 Will, but that through discussions with Bank of America, she had learned that there may be a more tax effective way of accomplishing same." Counsel certified that in a private conversation decedent "confirmed her intention to benefit only her four sisters" and indicated she preferred to make an outright gift to her nieces and nephews rather than execute a trust on their behalf. He also certified that she "impressed [him] as intelligent and a deliberate, independent thinker."
Following decedent's death, the 2005 Will was admitted to probate and letters testamentary were issued to Mary Jean Bohn on March 5, 2010. In accordance with Rule 4:80-6, plaintiff received written notification that the 2005 Will was probated. Pursuant to plaintiff's request, a copy of the 2005 Will was sent to her on June 16, 2010.
Plaintiff's sister, Joann Gnanasiri (decedent's niece), filed a verified complaint on September 1, 2010, against defendants Mary Jean Bohn, Rose Martz, Bank of America, and Lucy Cox, seeking a declaration that the 2005 Will and 2005 Trust were null and void. Gnanasiri alleged that decedent's sisters used their confidential relationship to "unduly influence" the decedent to execute the 2005 Will, and that the distribution of decedent's estate did "not comport with the relationship enjoyed between [Gnanasiri] and the decedent."
On March 14, 2011, the court entered an order to show cause (OTSC) requiring defendants to show cause why a judgment should not be entered declaring the 2005 Will and the 2005 Trust null and void. The OTSC was returnable on May 6, 2011. It required counsel for Gnanasiri to serve plaintiff, as a party in interest, with a copy of the complaint and OTSC before March 19, 2011. The order further stated:
1. Any party in interest who wishes to be heard with respect to any of the relief requested in the verified complaint served with this order to show cause shall file with the Surrogate of Monmouth County and serve upon the attorney for [Gnanasiri] a written answer, an answering affidavit, a motion returnable on the date this matter is scheduled to be heard, or other response . . . by April 20, 2011. . . .
2. Any party in interest who fails to timely file and serve a response . . . shall be deemed in default, the matter may proceed to judgment without any further notice to or participation by such defaulting party in interest, and the judgment shall be binding upon such defaulting party in interest.
Plaintiff conceded that the complaint and OTSC were sent to her post office box in La Jolla, California and were received "on or about March 23, 2011." Thereafter, Gnanasiri and Bohn entered into a settlement agreement, dated July 2, 2011. The parties agreed that Bohn, as executrix, would pay $6000 to Gnanasiri and she would dismiss her complaint. The court entered a final judgment on August 2, 2011, which dismissed the matter with prejudice and admitted the 2005 Will to probate.
On September 30, 2011, plaintiff filed a verified complaint against defendants Mary Jean Bohn, as executrix of the estate, Rose Martz, individually and as co-trustee of the revocable trust, Bank of America, as co-trustee of the revocable trust, and Lucy Cox, individually. The complaint sought to invalidate the 2003 Will, the 2005 Will, and the 2005 Trust on the basis of undue influence and diminished capacity.
In a supporting certification, plaintiff stated that notification of Gnanasiri's complaint had been delivered to her mailbox in La Jolla but at that time she had moved to Berkley, California. Plaintiff certified that her daughter, Aleta Reese, received the documents on March 23, 2011, and left for Spain the next day. However, because plaintiff was suffering from "serious eyesight problems, " she could not read the legal documents herself. Plaintiff further stated that because her daughter was unavailable, and she lacked "funds for professional legal counsel, [she] had to wait until [her] daughter could provide assistance." Plaintiff also certified:
Before receiving the additional [OTSC] documentation from the Estate's counsel at the end of May 2011, my understanding of my sister Joann's documentation was that I was already part of Joann's lawsuit challenging the Will. My daughter was under the same impression.
My own interpretation was due, in part, to the fact that I was unable to read the papers for myself and had to rely upon others to read the document for me.
Additionally, plaintiff stated that after she realized she "needed to hire a lawyer and challenge the 2005 Will and 2005 Trust [herself], " she was unable to find an attorney until the end of July, due to conflicts of interest.
On October 11, 2011, the court entered an OTSC that required defendants to appear and show cause why a judgment should not be entered invalidating the 2005 Will, the 2005 Trust, and the 2003 Will. The OTSC was returnable on January 27, 2012. On January 11, 2012, Mary Jean Bohn filed a cross-motion seeking to dismiss plaintiff's complaint for failure to file "within the timeframe required under Rule 4:85-1."
On the return date of the OTSC, counsel for plaintiff argued that exceptional circumstances warranted relaxation of the rule:
[Plaintiff] has had a series of debilitating mental and physical illnesses. It's prevented her from [intervening in the prior litigation]. And, by the time that she reached my office, after several months of contacting attorneys, the case was dismissed the next day.
[Plaintiff] was also financially destitute, [she] lived 500 miles away from where the papers were served. She was basically blind. She had to rely on her daughter, who picked up the papers and the next day left for Spain for six weeks. She relied on her daughter to read those papers to her. And as soon as she got back, they did start trying to find counsel. And by the time they got to me, the case was dismissed.
So, we are here because there are exceptional circumstances. . . . She was impeded throughout her process of trying to intervene in this matter. And so, I believe that the court should allow her to proceed.
In response, the attorney for the estate argued plaintiff "was noticed on several occasions, not only about the initial litigation, but about the settlement. . . . [She] knew about it, she didn't like the fact that her aunt didn't decide to benefit her, and she filed out of time." The trial court agreed, reasoning as follows:
[I]n this case, [plaintiff] has filed her complaint . . . more than 18 months after the 2005 Will was admitted into probate on March 5, 2010.
And then there was the will [contest] — there was another action that was pending. She did not file any answer to that complaint, also, although she . . . did receive notice.
So, [plaintiff] certainly has not complied with Rule 4:85-1 in the will contest, but she argues . . . that Rule 4:50-1(f) applies. And under that rule, the movant must show exceptional circumstances that the enforcement of the order would be unjust or oppressive.
[T]he court finds in this case . . . there is no reason not to comply . . . with Rule 4:85-1 and also with Rule 4:50-1(f).
So, I find that there are no . . . circumstances which would allow this action to continue. I will dismiss the complaint and the order to show cause.
The court entered a judgment dismissing plaintiff's complaint on January 27, 2012. The judgment also stated that the 2005 Will, the 2005 Trust, and the 2006 Unitrust were "valid and enforceable."
Plaintiff argues on appeal that the trial court erred in dismissing her complaint. We do not agree.
Rule 4:85-1 provides:
If a will has been probated by the Surrogate's Court or letters testamentary or of administration, guardianship or trusteeship have been issued, any person aggrieved by that action may, upon the filing of a complaint setting forth the basis for the relief sought, obtain an order requiring the personal representative, guardian or trustee to show cause why the probate should not be set aside or modified or the grant of letters of appointment vacated, provided, however, the complaint is filed within four months after probate or of the grant of letters of appointment, as the case may be, or if the aggrieved person resided outside this State at the time of the grant of probate or grant of letters, within six months thereafter. If relief, however, is sought based upon R. 4:50-1 (d), (e) or (f) or R. 4:50-3 (fraud upon the court) the complaint shall be filed within a reasonable time under the circumstances.
Rule 4:50-1 "permits relief from a judgment in the 'interests of justice.'" In re Thomas, 431 N.J.Super. 22, 34 (App. Div. 2013) (quoting Siwiec v. Fin. Res., Inc., 375 N.J.Super. 212, 219 (App. Div. 2005)). "It is well established that a R. 4:50 motion may not be used as a substitute for a timely appeal." Wausau Ins. Co. v. Prudential Prop. and Cas. Ins. Co . of N.J., 312 N.J.Super. 516, 519 (App. Div. 1998). Under Rule 4:50-1, an "applicant bears the burden to show extraordinary circumstances." Marte v. Oliveras , 378 N.J.Super. 261, 267 (App. Div.), certif. denied, 185 N.J. 295(2005). A "trial court's determination under [Rule 4:50-1] warrants substantial deference, and should not be reversed unless it results in a clear abuse of discretion." U.S. Bank Nat. Ass'n v. Guillaume , 209 N.J. 449, 467 (2012).
In this case, plaintiff had notice of her sister's complaint and her right to participate in that matter, but she waited approximately eighteen months before taking legal action. Thus, the trial court correctly concluded plaintiff failed to challenge the 2005 Will within a reasonable time. Moreover, as we have noted, plaintiff's inability to retain counsel is "not such an extraordinary circumstance as to require relief from [a] judgment under Rule 4:50-1." In re Schifftner, 385 N.J.Super. 37, 45 (App. Div.), certif. denied, 188 N.J. 356 (2006).


Undue influence found

HALPECKA, Deceased, DOCKET NO. A-0752-10T3


Cross-Appellants, DOCKET NO. A-0752-10T3


ROSEMARY WALSH, individually and
as Attorney-in-Fact for Renee
Halpecka and as Executrix of the
Estate of Renee Halpecka and JOHN

July 31, 2013

Argued December 5, 2012 - Decided

Before Judges Grall, Koblitz and Accurso.

On appeal from Superior Court of New
Jersey, Chancery Division, Probate Part,
Burlington County, Docket No. P-2005-0758.

« Citation
Original Wordprocessor Version
(NOTE: The status of this decision is Unpublished.)




When Renee Halpecka died in March 2005, she was eighty-four years old and had been suffering for years from macular degeneration, cataracts, chronic obstructive pulmonary disease, Parkinson's disease, Alzheimer's disease, and rheumatoid arthritis. Halpecka's husband was her caretaker until October 2001, when he died as a consequence of a car accident. At that time, Rosemary Walsh, a neighbor, became her caretaker and obtained authority to serve as Halpecka's attorney-in-fact and medical attorney-in-fact. Walsh assisted Halpecka with matters ranging from grocery shopping and arranging for a house-cleaning service to managing Halpecka's financial affairs and attending her appointments with doctors and meetings with an attorney and bank staff. In fact, regular statements from several of Halpecka's accounts were sent directly to Walsh's home.
Halpecka died on March 18, 2005, leaving the remainder of her estate after payment of funeral expenses and taxes, in equal shares, to three "friends" — Rosemary Walsh, executrix, Andrea Price, alternate executrix, and Brenda Hedrick. Her assets included funds received after Walsh had become her attorney-in-fact — a settlement she obtained as a consequence of her husband's fatal accident and a brokerage account she received as her sister's sole heir.
In February 2006, Hedrick and Price commenced this litigation against Walsh and her husband, John.1Judge Hogan determined that Walsh had a confidential relationship with Halpecka and exercised undue influence to convert probate assets into non-probate assets, which she accomplished through a series of inter vivos gifts and transactions that left nearly all of Halpecka's assets, other than her real estate, payable to Walsh on Halpecka's death. With respect to John, the judge found that he was complicit in and unjustly enriched by Walsh's course of conduct. Consequently, a judgment in excess of $500,000 plus counsel fees was entered against defendants and in favor of the estate. Plaintiffs' claim for punitive damages, however, was denied.
Defendants appeal contending that the judge erred in:
1) granting their attorney leave to withdraw; 2) resolving the question of a confidential relationship on summary judgment;
3) concluding that defendants failed to overcome the presumption of undue influence; 4) assigning responsibility for undue influence to John; and 5) awarding counsel fees. Plaintiffs cross-appeal the denial of their claim for punitive damages. Substantially for the reasons stated by Judge Hogan, we affirm.2
Contrary to defendants' claim, the evidential materials submitted on the motion for summary judgment were so one-sided as to permit a determination that plaintiffs were entitled to judgment as a matter of law on the question of a confidential relationship. See Brill v. Guardian Life Ins. Co., 142 N.J. 520, 540 (1995). In addition, the judgment entered following trial "is based on findings of fact that are adequately supported by the record." R. 2:11-3(e)(1)(A). We add the brief comments that follow to address arguments the parties present on appeal concerning the award of counsel fees and the denial of punitive damages. Otherwise, the arguments lack sufficient merit to warrant discussion beyond that provided by Judge Hogan. R. 2:11-3(e)(1)(E).
Defendants argue that the exception to the American Rule recognized in In re Niles176 N.J. 282 (2003), has no application here because there was "no clear and convincing proof in the form of direct testimony of acts constituting undue influence" and only an "artificial presumption establishing same," and that "a finding of undue influence does not necessarily equate to a finding of fraud."
Fraud includes truthful representations that the maker knows or believes are "materially misleading" without "additional or qualifying" information. Restatement (Second) of Torts § 529 (1997); see also id. at § 551 (liability for nondisclosure). In addressing undue influence, the judge determined that Halpecka lacked understanding of the legal consequences and Walsh took advantage of the situation to unduly enrich herself to Halpecka's detriment. The judge elaborated when addressing counsel fees, explaining that Halpecka did not understand the nullifying effects the transactions orchestrated by Walsh had on her estate plan, which, as noted above, was a division of her assets equally among her three friends.
In the judge's view, Walsh defeated Halpecka's estate plan through use of her power of attorney and undue influence as effectively as if she had used undue influence to have Halpecka change her will. We are satisfied that the record includes clear and convincing evidence of undue influence amounting to fraud, including the evidence that Walsh had statements on several accounts mailed to her residence rather than Halpecka's home.
Defendants also argue that the Supreme Court's decision in In re Estate of Stockdale196 N.J. 275 (2008), precludes an award of counsel fees pursuant to Niles in this case. They rely on the following statement: "Simply put, because the claim in this matter was brought by a putative beneficiary rather than by the substitute executor, no counsel fee could be awarded. . . . [T]hat form of relief, permitted in Niles, is not a broader pronouncement about the availability of attorneys' fees in estate contests." Id. at 313. This passage has no relevance in this case.
In Stockdale, there were two wills offered for probate. Id. at 296. One will, executed in the year 2000, was offered by the lawyer who had prepared it and who was one of the two "strangers to the natural bounty of the testatrix and who, solely through the mechanism of undue influence, both gained access to her and then used their confidential relationship to overbear her will to their personal benefit." Id. at 296, 306. A second will, prepared in 1998, was offered by the attorney who had prepared it at a time before the testatrix came under the influence of the strangers to her natural bounty. Id. at 296. The local first aid squad, a residual beneficiary of the 1998 will, filed a caveat against the 2000 will. Ibid. The attorney and executor of the 2000 will filed a complaint seeking dismissal of the caveat and admission of the 2000 will to probate. Ibid. The first aid squad then filed a third-party complaint seeking compensatory and punitive damages from the strangers as well as acceptance of the caveat and admission of the 1998 will to probate. Ibid. Thus, the Court's reference to the "putative beneficiary" in Stockdale is to the first aid squad.
Hedrick and Price are not in a position comparable to that of the first aid squad in Stockdale, and Walsh is not in a position comparable to that of the two strangers who exerted undue influence in Stockdale. Price was the alternate executor of the only will at issue, and Walsh was the executor. Finally, plaintiffs sought return of the assets transferred during Halpecka's life to the estate.
Indeed, this request for counsel fees falls squarely within the Court's holding in Niles:
We hold that when, as in this case, an executor or trustee reaps a substantial economic or financial benefit from undue influence, the fiduciary may be assessed counsel fees incurred by plaintiffs and third parties in litigation to restore the estate's assets to what they would have been had the undue influence not occurred.
[176 N.J. at 286.]

As the Court explained in Stockdale, the Niles exception to the American Rule is "directed solely to circumstances in which 'an executor or trustee commits the pernicious tort of undue influence . . . [such as to allow] the estate to be made whole by an assessment of all reasonable counsel fees against the fiduciary that were incurred by the estate.'" 196 N.J. at 307 (alteration in original) (quoting Nilessupra, 176 N.J. at 298-99). The award at issue here addresses the harm of a pernicious tort and achieves the goal Niles intended — making the estate whole. Thus, there is no reason to disturb it.
Plaintiffs' objection to the denial of punitive damages is also based on a misunderstanding of Niles andStockdale. The award of punitive damages is within the discretion of the fact-finder. Maul v. Kirkman270 N.J. Super. 596, 619-20 (App. Div. 1994). The judge denied punitive damages on the ground that the remedies awarded in the probate action, which included an award of counsel fees available in a tort action only in narrow circumstances, were adequate to address the wrong, making a punitive damage award inappropriate. For the reasons Judge Hogan stated, we agree that this determination is consistent withStockdale and Niles.
1 Defendants filed a counterclaim which was pending in the trial court when they filed their notice of appeal. We granted defendants' motion for a temporary remand to permit them to dismiss the counterclaim, and that has been done. Defendants also filed a third-party complaint charging Hedrick's husband with slander, which was severed by order of April 18, 2008.
2 The judge's decisions are:
1. Oral opinion of July 25, 2008, granting counsel's motion to withdraw.
2. Written opinion filed December 16, 2008, granting partial summary judgment on confidential relationship.
3. Oral opinion of March 18, 2009 and written opinion filed July 10, 2009, addressing undue influence and John's complicity.
4. Written opinion filed February 18, 2010, addressing counsel fees.
5. Written opinion filed May 10, 2010, addressing punitive damages.