Opinion
DOCKET NO. A-1889-11T1
02-15-2013
IN THE MATTER OF THE ESTATE OF E. WARREN FISHER, deceased, a/k/a EDWIN WARREN FISHER.
Louis A. Bernard, of the Ohio, Virginia, Maryland, and District of Columbia bars, admitted pro hac vice, argued the cause for appellant American Diabetes Association (Herold Law, P.A. and Mr. Bernard, attorneys; Craig S. Provorny, on the briefs). Stephen C. Gilbert argued the cause for respondents Family Beneficiaries (Stephen C. Gilbert, PC, attorneys; Mr. Gilbert, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Fisher, Waugh, and St. John.
On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Bergen County, Docket No. P-312-10.
Louis A. Bernard, of the Ohio, Virginia, Maryland, and District of Columbia bars, admitted pro hac vice, argued the cause for appellant American Diabetes Association (Herold Law, P.A. and Mr. Bernard, attorneys; Craig S. Provorny, on the briefs).
Stephen C. Gilbert argued the cause for respondents Family Beneficiaries (Stephen C. Gilbert, PC, attorneys; Mr. Gilbert, on the brief). PER CURIAM
In this case involving the last will and testament (Will) of E. Warren Fisher, the American Diabetes Association (Association) appeals orders of the Probate Part that denied its motion for summary judgment, reformed the Will, allocated certain expenses related to the litigation, and denied the Association's motion for counsel fees. We affirm.
I.
We discern the following facts and procedural history from the record on appeal.
Fisher executed the Will in October 2005. At the time, his wife was living. The couple had no children. The Will was drafted by Robert A. Hetherington, an attorney who concentrated in estate planning. Hetherington wrote the Will to take advantage of three tax exemptions: (1) the federal marital deduction, 26 U.S.C.A. § 2056, which permits unlimited tax-free transfers of assets to a spouse; (2) the federal charitable gift exemption, 26 U.S.C.A. § 170; and (3) the New Jersey tax exemption for transfers of $675,000, set forth in N.J.S.A. 54:38-1.
The Will was largely an updated version of an earlier will drafted by Hetherington.
The Will called for Fisher's assets to be held in trust, initially for the benefit of his wife. The trustee was to divide Fisher's assets into two parts, even if Fisher's wife predeceased him. In that event, the assets of each part were to be distributed to their respective named beneficiaries.
Part A was to be funded with
the smallest pecuniary amount which, if allowed as an estate tax marital deduction, would result in no federal or state estate tax being payable by reason of my death,The Will further provided that "[i]n satisfying Part A . . . the value of said assets shall be that of the date of distribution." Upon the death of Fisher's wife, or upon Fisher's death if his wife predeceased him, the assets remaining in Part A were to be distributed in the following manner: (1) $5000 to the Church of the Atonement in Tenafly; (2) $5000 to Englewood Hospital; (3) one-half of the remaining balance to Brown University; and (4) the other half to eight other charities, in equal shares. The Association is one of those eight charities.
after taking into account all other amounts which qualify for the marital deduction in my estate.
The remaining assets were to go into Part B. With respect to those assets, the Will provided that:
[u]pon the death of my said wife, or upon my death if she shall predecease me (the later of such events to occur being hereinafter referred to as the "time of the later death"), my Trustee shall pay over and distribute the then balance of Part B, in equal shares, to the following nieces and nephews of mine who are living at the time of the later death or the whole to the survivors or survivor.Fisher named twelve of his twenty-one nieces and nephews as the beneficiaries of Part B.
When Fisher died on January 16, 2008, his gross estate was valued at $3,345,305.41. Under the terms of the Will and the applicable taxation provisions, the amount payable to the Part-A fund was established as $2,455,793, which was the value of the distributable assets minus the $675,000 that was not taxable under New Jersey law.
Unfortunately, between the date of death and August 2010, when the trustee was ready to disburse the assets, there was a significant decline in the stock market. As a result, the value of the distributable assets had dropped to $2,335,715.87 when the trustee was ready to make the distribution. Consequently, there were insufficient assets to fully fund Part A and no remaining assets to fund Part B, if the literal terms of the Will were followed.
In August 2010, PNC Bank, N.A. (PNC), Fisher's executor and trustee, filed a verified complaint in the Probate Part seeking approval of its plan to distribute all the remaining assets to the Part-A beneficiaries, thereby leaving Part B unfunded. Notice was given to all interested parties, including the Attorney General because there were charities involved. In October 2010, the Attorney General submitted a letter to the Probate Part to the effect that she had no objections to PNC's proposed distribution.
The Attorney General did not participate in the ensuing litigation.
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In November 2010, nine of the Part-B beneficiaries submitted a brief in opposition to PNC's proposed distribution. They argued that all of the assets should be used to fund Part B, arguing that, because Fisher's wife predeceased him, there was no need for a marital-deduction trust and that Fisher would have wanted his other named relatives to receive shares under the Will. PNC opposed their proposed plan of distribution. One of the Part-A beneficiaries submitted a letter brief supporting PNC's proposal.
The Probate judge appointed a special master to review the matter and make a recommendation. In June 2011, the special master filed a report recommending that the judge apply the doctrine of probable intent to reform the Will and require the funding of both parts of the trust on a proportional basis.
In August 2011, the Association filed a motion for summary judgment, asking the judge to approve PNC's proposal, which it correctly argued was in accordance with the literal language of the Will. The Part-B beneficiaries filed a cross-motion for summary judgment, seeking implementation of the special master's recommendation, apparently having abandoned their original proposal that all of the assets go into Part B. The Probate judge heard oral argument in September and denied both motions, concluding that a trial was required.
On September 26, the judge held a one-day trial, at which the only witness was Donald Willmott, one of the nephews named in Part B. He testified in general terms to the relationship between Fisher and his nieces and nephews and more specifically to his own relationship with Fisher. He also testified that he and the other nieces and nephews would see their uncle regularly for family dinners until the late 1960s or early 1970s, after which he saw him once or twice a year. He further testified that his uncle was very generous to his nieces and nephews, and treated them as if they were his own children. That testimony, however, was addressed primarily to the period when the nieces and nephews were children. The Part-B beneficiaries also introduced a section of Hetherington's deposition into evidence. The Association offered no evidence at trial.
In an oral decision delivered the same day, the judge concluded that reformation of the Will was appropriate because Fisher's probable intent was that both the Part-A and Part-B beneficiaries receive something under his Will in the event his wife predeceased him, and that he had not foreseen the possibility that a significant drop in the value of the assets prior to distribution would disinherit his nieces and nephews. The judge entered an order on October 24, 2011, providing that the Will be reformed to divide the remaining assets in the same percentages the two parts of the trust would have received had they been established as of the date of death. The order also allocated the litigation expenses incurred by the estate and the special master and approved a settlement agreement between the Part-B beneficiaries and all of the Part-A beneficiaries other than the Association, which had been reached prior to trial.
In October, the Association filed a motion seeking attorney's fees for the period during which the Part-B beneficiaries sought to have all of the estate's assets used to fund Part B. The motion sought payment from the Part-B beneficiaries rather than the estate. The Part-B beneficiaries opposed the motion. In November, the judge denied the Association's motion and granted the Part-B beneficiaries' cross-motion to modify the allocation of expenses. His decision was explained in a written opinion dated November 4. This appeal followed.
II.
On appeal, the Association argues that the trial judge erred in denying its motion for summary judgment and, in the alternative, applying the doctrine of probable intent to reform the Will following the trial. In addition, the Association argues that the judge erred in allocating the costs of the litigation and denying its motion for counsel fees.
It is well-established that, whether the decision is the result of a motion for summary judgment or a bench trial, our review of a judge's conclusions of law is plenary. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) ("A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.").
With respect to a motion for summary judgment, we consider the issues raised de novo, applying the same standard as the trial court under Rule 4:46-2(c). Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 539-40 (1995); Chance v. McCann, 405 N.J. Super. 547, 563 (App. Div. 2009) (citing Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007)). We must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill, supra, 142 N.J. at 540; see also R. 4:46-2(c).
When reviewing a decision resulting from a bench trial, "[t]he general rule is that [factual] findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998) (citing Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974)). We do not disturb the factual findings of the trial judge unless we are "convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Id. at 412 (quoting Rova Farms, supra, 65 N.J. at 484) (internal quotation mark omitted); see also Beck v. Beck, 86 N.J. 480, 496 (1981).
A.
The Association first argues that the judge erred in denying its motion for summary judgment because there was no ambiguity in the Will and Fisher's intent was clearly stated in the text of the Will itself.
Pursuant to N.J.S.A. 3B:3-33.1(a), "[t]he intention of a testator as expressed in his will controls the legal effect of his dispositions, . . . unless the probable intention of the testator, as indicated by the will and relevant circumstances, is contrary." Consequently, the courts initially seek the intention of a testator or settlor of a trust "from the language of the instrument itself." In re Trust Co. of Morris Cnty., 83 N.J. Super. 411, 416 (App. Div. 1964).
Although the Association is correct that there is no ambiguity in the Will in the sense of language that can reasonably be interpreted in two ways, we have held that a will can be considered "ambiguous" "where an unforeseen contingency occurred which might have resulted in unexpected intestacies." In re Estate of Gabrellian, 372 N.J. Super. 432, 443 (App. Div. 2004), certif. denied, 182 N.J. 430 (2005). Such an unforeseen contingency implicates the doctrine of probable intent. Ibid.
"The doctrine of probable intent has developed over the years through a series of cases in which courts construed the language of a will in a fashion contrary to its literal, technical, or settled meaning." In re Estate of Branigan, 129 N.J. 324, 331-32 (1992); see also Bottomley v. Bottomley, 134 N.J. Eq. 279, 291 (Ch. Div. 1944) ("The power of this court to effectuate the manifest intent of a testator by inserting omitted words, by altering the collocation of sentences, or even by reading his will directly contrary to its primary signification is well established."). We confine the inquiry to the four corners of the document and the language therein, and then consider the circumstances surrounding its execution and other extrinsic evidence of intention. In re Estate of Payne, 186 N.J. 324, 335 (2006) ("Extrinsic evidence may 'furnish[] information regarding the circumstances surrounding the testator [and] should be admitted to aid in ascertaining [the testator's] probable intent under the will.'") (quoting Wilson v. Flowers, 58 N.J. 250, 260 (1971)) (alterations in the original).
Our Supreme Court has held that
in ascertaining the subjective intent of the testator, courts will give primary emphasis to his dominant plan and purpose as they appear from the entirety of his will when read and considered in the light of the surrounding facts and circumstances. . . . So far as the situation fairly permits, courts will ascribe to the testator "those impulses which are common to human nature, and will construe the will so as to effectuate those impulses."Courts are enjoined to "strain" toward effectuating the testator's probable intent "to accomplish what he would have done had he envisioned the present inquiry." Id. at 565-66 (internal quotation marks omitted).
[Fid. Union Trust Co. v. Robert, 36 N.J. 561, 564-65 (1962) (citations omitted) (quoting Greene v. Schmurak, 39 N.J. Super. 392, 400 (App. Div.), certif. denied, 21 N.J. 469 (1956)).]
As the Court observed in Payne, "'when we say we are determining the testator's intent, we mean his probable intent.' We continue to adhere to the view of the doctrine of probable intent expressed in Fidelity Union." Payne, supra, 186 N.J. at 335 (citation omitted) (quoting Fid. Union, supra, 36 N.J. at 564). While determining the intention of the testator, the court should consider "the general scope of the will, the general purpose of the testator, the particular language used, the relationship of the parties, and the surrounding circumstances." Brown v. Fid. Union Trust Co., 134 N.J. Eq. 217, 218 (Ch. 1943) (quoting Walker v. First Trust & Sav. Bank, 12 F.2d 896 (8th Cir. 1926)), aff'd o.b., 135 N.J. Eq. 461 (E. & A. 1944).
In denying the cross-motions for summary judgment, the judge determined that there was an ambiguity in the Will, which he characterized as follows: "[I]t is unclear Fisher would want to follow the literal language of his will . . . if it meant completely disinheriting his nieces and nephews." That determination is consistent with Gabrellian, supra, 372 N.J. Super. at 443, and required the judge to consider Fisher's probable intent.
In opposing the Association's motion for summary judgment, the Part-B beneficiaries relied, in part, on Hetherington's deposition testimony that, at the time the Will was drafted and signed, a diminution in the value of the assets sufficient to exclude any distribution to the Part-B beneficiaries was unforeseen. The judge properly determined that Hetherington's assertion raised a genuine issue of material fact that could not be decided on cross-motions for summary judgment.
B.
The Association next argues that the Part-B beneficiaries failed to meet their burden to prove at trial that Fisher did not foresee the possibility that Part B would not be funded and that he would not have wanted them disinherited had he foreseen it.
Willmott's testimony was not overly helpful in determining Fisher's probable intent, inasmuch as Willmott did not testify concerning any discussions with Fisher about his testamentary intentions. Nevertheless, it did establish that Fisher had been close to some of his nieces and nephews during their childhood and that there had been some continuing contact thereafter. We note in that regard that the Part-B beneficiaries were some, but not all, of Fisher's nieces and nephews, and that they would only receive a share of Part B if they survived both Fisher and his wife. There was no provision for inheritance by their heirs. Those facts indicate that Fisher sought to benefit specific individuals with whom he had had a relationship, rather than an entire class of relatives.
The judge also considered the following excerpts from Hetherington's deposition testimony:
Q: Did [Fisher] express to you . . . how much he thought his nieces and nephews might end up getting?
A: I can't -- 1992? I'm sure we discussed it, but I would have been the one that would have told him. He was not, you know, right on top of the provisions of the estate tax code.
. . . .
Q: Did you ever discuss with him the possibility that because of the way the will and trust was drafted, that the [P]art B beneficiaries, his nieces and nephews, would be disinherited, that could have been an outcome?
A: I might have, but I would think -- yes, probably not, because it was almost an unheard of thing at the time.
Q: And when you had drafted the '92 will and trust and subsequently the 2005 will and trust, would it be fair to say then that it was always his intent to have that [P]art B funded?
A: Yeah, there is no question that he expected that that would be the case. No one foresaw the economic situation that prevented it from happening.
We find no merit in the Association's suggestion that the judge erred in his application of N.J.R.E. 701 in admitting the deposition excerpts into evidence. Our scope of review of a trial judge's evidential rulings requires that we grant substantial deference to the judge's exercise of that discretion. DeVito v. Sheeran, 165 N.J. 167, 198 (2000). Rulings on evidence will not provide a basis for reversal unless they reflect an abuse of discretion. Benevenga v. Digregorio, 325 N.J. Super. 27, 32 (App. Div. 1999), certif. denied, 163 N.J. 79 (2000). Reversal is not warranted unless the trial judge's ruling was "so wide of the mark that a manifest denial of justice resulted." State v. Carter, 91 N.J. 86, 106 (1982). We find no abuse of that discretion with respect to the judge's admission of Hetherington's deposition testimony.
Based upon the evidence adduced at trial and his review of the provisions of the Will, the judge determined, correctly in our view, that the "dominant plan" of the Will was "to reduce tax consequences, and to provide for certain enumerated charities and [Fisher's] family." Fisher clearly intended to favor the charities over the relatives in the amount of their respective shares. However, the judge's factual determination, that Fisher expected both parts of the trust to be funded and that he did not anticipate that a significant drop in his assets' value would frustrate that expectation, was supported by "adequate, substantial, credible evidence" in the record, Cesare, supra, 154 N.J. at 412, including Hetherington's testimony and the language of the Will.
We note, as did the trial judge, that the Will provided for division of the estate into two parts even if, as happened, Fisher survived his wife. That provision strongly supports the judge's rejection of the Association's argument that Fisher's overarching concern was solely the avoidance of taxation, which could best have been achieved by leaving all of the assets to the charities in the event Fisher's wife died first.
In addition, we note that the Will provides that "Part B shall consist of the balance of Fisher's residuary estate." That language and the failure to add "if any" after "balance" are consistent with the judge's determination that Fisher did not contemplate that the Part-B beneficiaries might receive nothing if his wife died first.
The judge fashioned a commonsense remedy to effectuate Fisher's probable intent. Because the unexpected drop in value that would have disinherited the Part-B beneficiaries occurred during the time between the date of death and the date on which the trustee was ready to distribute the assets, the judge ordered that the estate's assets be divided in the same proportion as if they had been distributed as of the date of death. That reformation of the terms of the Will was designed to have the two classes of beneficiaries share the reduction in value caused by unforeseen market changes, while preserving Fisher's plan that the fund for the charities be larger than the fund for the nieces and nephews.
We conclude that the Part-B beneficiaries satisfied their burden of proof and that the trial judge appropriately exercised his authority to put himself "in the testator's position insofar as possible in the effort to accomplish what he would have done had he envisioned the present inquiry." In re Estate of Tateo, 338 N.J. Super. 121, 127 (App. Div.) (quoting Fid. Union, supra, 36 N.J. at 565-66) (internal quotation marks omitted), certif. denied, 168 N.J. 295 (2001).
We reject the Association's assertion that Tateo is inapposite because it involved a specific bequest whereas this case involved a residuary bequest, which we view as a distinction without a difference in the present context. In any event, both Part A and Part B were funded by the residuary estate. Like the judge in Tateo, the trial judge here "did not create a bequest from 'whole cloth,'" but "merely addressed a situation where the estate assets were insufficient to fund all bequests." Gabrellian, supra, 372 N.J. Super. at 442 (citing Tateo, supra, 338 N.J. Super. at 128-30).
C.
We now turn to the allocation of certain expenses of estate administration and counsel fees.
Rule 4:42-9(a)(3) provides:
[i]n a probate action, if probate is refused, the court may make an allowance to be paid out of the estate of the decedent. If probate is granted, and it shall appear that the contestant had reasonable cause for contesting the validity of the will or"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) (emphasis added). In order to award attorney's fees "against the estate there must . . . be a showing that the validity of the will was not only questionable but there was reasonable cause for actually contesting it, related to the practical effect of a successful contest, the size of the estate and the probable expenses of litigation, and the reasonably anticipated result." In re Will of Caruso, 18 N.J. 26, 33 (1955) (internal quotation marks omitted). In awarding attorney's fees in a probate action, the trial judge must "exercise . . . sound discretion to prevent misuse of the judicial process and the mulcting of the estate." Id. at 36.
codicil, the court may make an allowance to the proponent and the contestant, to be paid out of the estate.
In order to determine the reasonableness of the requested attorney's fees, a court must look at:
(1) the amount of the estate and the amount thereof in dispute or jeopardy as to which professional services were made necessary;"[F]ee determinations by trial courts will be disturbed only on the rarest of occasions, and then only because of a clear abuse of discretion." Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001) (quoting Rendine v. Pantzer, 141 N.J. 292, 317 (1995)) (internal quotation marks omitted).
(2) the nature and extent of the jeopardy or risk involved or incurred; (3) the nature, extent and difficulty of the services rendered; (4) the experience and legal knowledge required, and the skill, diligence, ability and judgment shown; (5) the time necessarily spent by the attorney
in the performance of his services; (6) the results obtained; (7) the benefits or advantages resulting to the estate, and their importance; (8) any special circumstances, including the standing of the attorney for integrity and skill; and (9) the overhead expense to which the attorney has been put. In any case, the counsel fee allowed should never exceed reasonable compensation for the services rendered the estate.
[In re Bloomer, 37 N.J. Super. 85, 94 (App. Div. 1955).]
We have reviewed the Association's arguments with respect to these issues and find them to be without sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). We add only the following.
The Association did not seek counsel fees from the estate, as permitted by Rule 4:42-9(a)(3), but sought instead to require the Part-B beneficiaries, who had succeeded in establishing their claim, to pay the fees. The relief requested by the Association is simply not authorized by the rule upon which it relies. In any event, our review of the judge's opinion convinces us that his decision with respect to counsel fees did not amount to "a clear abuse of discretion," and we affirm that decision for the reasons stated in Judge Peter E. Doyne's written opinion. We reach the same result with respect to Judge Doyne's decision allocating the expenses of the estate related to the litigation.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION