Opinion
DOCKET NO. A-3742-12T4
06-23-2014
IN THE MATTER OF THE ESTATE OF MILTON KLAUSNER, DECEASED
Samuel Lachs, attorney for appellant Ronald Klausner. La Corte, Bundy, Varady & Kinsella, attorneys for respondent Gerald Klausner (Richard M. Brockway, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Sabatino and Sumners.
On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Union County, Docket No. 0-0380.
Samuel Lachs, attorney for appellant Ronald Klausner.
La Corte, Bundy, Varady & Kinsella, attorneys for respondent Gerald Klausner (Richard M. Brockway, on the brief). PER CURIAM
This appeal arises from the motion judge's dismissal of plaintiff's complaint seeking an estate accounting and his alleged share of an estate, and, in turn, the judge's determination that plaintiff's discovery motions were moot. We affirm.
I.
We derive the relevant facts from the record. On August 21, 2001, Milton Klausner signed a holographic will naming his nephew, defendant Gerald Klausner, as his executor, and leaving fifty percent of his estate to Gerald, and his wife Gail, respectively, twenty five percent to his niece, Linda Bledstein, and fifteen percent to his nephew, plaintiff Ronald Klausner, with the remaining ten percent of his estate to be distributed in accordance to a future codicil. Except for Gail, all the beneficiaries are siblings.
On August 5, 2004, at the age of 86, Milton passed away following a battle with cancer. Milton and Ronald had been residing in the same apartment complex in Springfield Township. In the years prior to his death, Ronald cared for Milton and oversaw his hospital and rehabilitation care. Meanwhile, Gerald lived in California, and had far less contact with his uncle.
On January 10, 2005, the will was admitted to probate and Gerald was appointed executor. After assuming control of Milton's financial affairs, Gerald obtained account statements from Milton's Investors Saving Bank account. Gerald discovered that on July 20, 2004, while his uncle was hospitalized and two weeks prior to his death, a $60,000 check dated June 1, 2004, drawn on Milton's account payable to Ronald, was cashed and deposited into Ronald's personal bank account.
Gerald also learned that after Milton died, a $1,580.47 check dated August 10, 2004, made payable to Milton and purporting to contain his endorsement, was debited from Milton's bank account. As this later check depleted the entire balance of the account, Gerald believed that Ronald had used the transaction to close the account, in an effort to prevent Gerald from discovering the account and the earlier $60,000 check. He also believed Ronald had forged Milton's signature on both checks. Moreover, Gerald had concerns over what he characterized as "other questionable and forged checks to the benefit of Ronald" totaling approximately $12,000.
After state inheritance taxes and estate administration expenses were paid, Milton's net estate totaled $431,029. Ronald's fifteen percent share equaled $64,650. Ronald was also entitled to an additional one-sixth share of the estate, in the amount of $7,183, as an intestate succession share, because Milton did not prepare a codicil for the remaining ten percent of his estate. Thus, Gerald determined that Ronald's share of the estate totaled $71,833.
However, Ronald did not receive any money from Gerald. Instead, Gerald told Ronald that he had "discovered [Ronald's] misappropriation of funds from their uncle's bank account during and after the last days of [Milton's] life." Consequently, Gerald advised Ronald that the misappropriation would be an "offset" or "advance" on Ronald's share of the estate.
Gerald contends that his brother accepted this offset arrangement without protest. He points out that Ronald executed a release and refunding bond on May 21, 2005 that "released and forever discharged" Gerald as the executor of the Estate of Milton Klausner "from all claims and demands whatever on account of or in respect to the estate" as a result of Ronald receiving $75,000, his full computed share of the estate. The release and refunding bond was duly filed with the Union County Surrogate's Court on January 12, 2006.
On December 30, 2010, almost five years after the filing of the release and refunding bond, Ronald filed a verified complaint in the Chancery Division, Probate Part against Gerald, seeking to compel an accounting and receive his allegedly unpaid $75,000 share of Milton's estate. Ronald asserted in the complaint that Gerald had deprived him of his estate share, and converted estate funds for his own use. Gerald denied these allegations, including an affirmative defense of laches. He also responded with a counterclaim demanding compensatory damages and attorney fees due to Ronald's alleged misappropriation of funds and alleged misuse of his confidential relationship to exert undue influence on Milton for Ronald's benefit. Gerald furthered asserted that in the more than five years from the time that Ronald executed the release in May 2005 up until the filing of the complaint in December 2010, it is undisputed that Ronald was an overnight guest at Gerald's California home on several occasions. According to Gerald, during those occasions, Ronald never claimed he was due any money from the estate, nor did he challenge the way his share of the estate was resolved.
According to his motion certification, Gerald, who still resides in California, has significant health issues. As the certification attests, those health issues prevent Gerald from traveling long distances, and his air travel is medically prohibited.
During the course of the litigation, discovery issues arose due to Gerald's non-compliance with certain discovery requests. Consequently, Ronald moved to strike Gerald's Answer and dismiss his counterclaim. The discovery sought related to the estate's accounting. In turn, Gerald filed a cross-motion to quash Ronald's notice to produce and a cross-motion to dismiss Ronald's complaint. He later filed a motion to quash a subpoena that Ronald had served on him.
In an oral ruling on February 28, 2013, the trial judge granted Gerald's motion to dismiss the complaint, principally on the basis of laches. The judge determined that Ronald had waited over five years to file suit after providing his release and refunding bond that acknowledged his receipt of his estate share. The judge found this lengthy delay prejudiced Gerald, who had discarded the estate's documents on the belief that all of its affairs were concluded, and could not adequately defend the action due to his failing health. The judge also held that the outstanding discovery motions were moot because the complaint was being dismissed. In addition, the judge rejected the claims by both parties for attorney fees and costs. This appeal by Ronald followed.
The judge read into the record a letter opinion, which was later provided to the parties in written form when he issued an order memorializing his decision.
The reciprocal denial of attorney fees and costs was not appealed by either party.
II.
The main issue presented is whether the trial judge appropriately applied the doctrine of laches in dismissing Ronald's complaint, and, in turn, denying Ronald's pending discovery motions. Having considered Ronald's arguments, we affirm substantially for the sound reasons set forth in Judge James Hely's letter opinion. We amplify his analysis with the following comments.
Laches is a concept that arises from "'the neglect for an unreasonable and unexplained length of time . . . to do what in law should have been done.'" Lavin v. Hackensack Bd. of Educ., 90 N.J. 145, 151 (1982) (quoting Atlantic City v. Civil Serv. Comm'n, 3 N.J. Super. 57, 60 (App. Div. 1949)). It can be applied by a court of equity where a statute of limitation does not apply. Fox v. Millman, 210 N.J. 401, 420 (2012). The doctrine bars relief when the delaying party had ample opportunity to bring a claim, and the party invoking the doctrine was acting in good faith in believing that the delaying party had given up on its claim. Knorr v. Smeal, 178 N.J. 169, 181 (2003); Lavin, supra, 90 N.J. at 152. "Inequity, more often than not, will turn on whether a party has been misled to his harm by the delay." Lavin, supra, 90 N.J. at 153 (citations omitted).
When determining whether the doctrine of laches should be invoked, the court considers: (1) the length of the delay, (2) the reasons for the delay, and (3) how the circumstances of the parties have changed over the course of the delay. Knorr, supra, 178 N.J. at 181. The period of time during which laches can be raised as an equitable defense is flexible, not fixed. Lavin, supra, 90 N.J. at 151. "The core equitable concern in applying laches is whether [the opposing] party has been [unfairly] harmed by the delay." Knorr, supra, 178 N.J. at 180-81; Lavin, supra, 90 N.J. at 152-53. Whether laches applies depends on 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. General Motors Corp., 844 F. 2d 559, 562 (9th Cir.), cert. denied, 488 U.S. 908, 109 S. Ct. 259, 102 L. Ed. 2d 248 (1988)).
A decision involving an equitable remedy is largely left to the judgment of the trial court, which has to balance the equities, and fashion a remedy. Such an equitable decision generally will only be reversed for an abuse of discretion. Sears Mortgage Corp. v. Rose, 134 N.J. 326, 354 (1993); see also Fox, supra, 210 N.J. at 418. Here, we discern there has been no such abuse of discretion.
Ronald contends that pursuant to Fox, supra, the trial judge committed reversible error by applying laches to dismiss his complaint, which was filed within six years of providing Gerald his release and refunding bond. In this regard, Ronald invokes the six-year statute of limitations for contractual disputes set forth in N.J.S.A. 2A:14-1. The motion judge rejected this argument, and so do we.
Pursuant to N.J.S.A. 2A:14-1, every action at law for "recovery upon a contractual claim or liability" must be commenced within six years after the cause of action accrued.
The trial judge properly relied upon Phair v. Melosh, 125 N.J. Eq. 497 (Ch. 1939), which held that an action to enforce the performance of an executor's "duties, [is] not barred by the statute of limitations, [and] the right of a beneficiary against [him] may [instead] be barred by laches." Ronald has provided no authority to the contrary. In fact, his brief on appeal does not even cite Phair. His suit to seek his alleged share of the estate was filed in the Chancery Division, a court of equity. His claims relating to his uncle's estate simply are not governed by the six-year statute of limitations for contract claims.
Thus, since this is not a case in which a statute of limitations governs the timeliness of suit, the equitable doctrine of laches may be invoked. See Fox, supra, 210 N.J. at 418 (noting that laches "is most frequently considered in circumstances where there is no statute of limitations"). Here, the principles of laches were properly applied by Judge Hely, who observed in his written opinion:
When looking at the factors, the key factors, in considering a laches application, the [c]ourt can come to no other conclusion, than to find the doctrine should be applied. First, filing the [c]omplaint more than [five] years after signing the release is a significant delay. Second, the only reason for the delay mentioned by Ronald in his papers was "personal reasons" and no further explanation is given. Finally, there were no changing conditions for Ronald during the delay that have been presented to [t]he [c]ourt. The changing conditions that were presented to the court by Gerald were that he distributed the assets after receiving the [r]eleases from the major beneficiaries and destroyed the estate documents based on his understanding that everyone received their inheritance and the estate was closed.The judge also added the following observation in the oral version of his ruling:
I want to add the other fact [which supports] . . . that it was a changed circumstance for Gerald is the fact that he's been diagnosed with a very serious illness and that's another changed circumstance that is prejudicial to him, [and] has not [caused] prejudice to Ronald.For these many sound reasons, we conclude there was no abuse of discretion in the motion judge's application of laches to equitably dismiss Ronald's claim for his purported share of Milton's estate.
In the alternative, Ronald contends that even if the doctrine of laches applies, dismissal is premature because further fact finding, in the form of a Lopez hearing, is necessary to address his alleged delay in filing suit. We conclude this argument is meritless.
Lopez v. Swyer, 62 N.J. 267 (1973). We note that Lopez is a case that involves a plaintiff's request to delay the accrual date of a statute of limitations. Id. at 271. Here, as we have already noted, the timeliness of the claims raised by Ronald is not governed by a statute of limitations but instead is governed by equitable principles of laches. In any event, we see no necessity for the motion judge to have conducted an evidentiary hearing on the timeliness issues, whether or not such a proceeding would be called a "Lopez" hearing.
A Lopez hearing is a proceeding to address the discovery of a cause of action, "to remedy inequity resulting 'when an injured person, unaware that he has a cause of action, [is] denied his day in court solely because of his ignorance, if he is otherwise blameless." Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 335-336 (quoting Lopez, 62 N.J. at 267, 273-74).
Here, there is no genuine dispute that Gerald told Ronald when Ronald signed the release and refunding bond that he would not receive his share of the estate due to his "misappropriation" prior to and after Milton's death. According to Ronald's certification, his delay in filing suit was due to unspecified "personal reasons." Ronald does not assert he was unaware that Gerald was not paying him his estate share. He does not argue that he was unaware of his right to seek legal action against Gerald, or the estate, if he disagreed with Gerald's actions. Thus, a hearing or any more extensive fact finding, is unnecessary to address further the timeliness of Ronald's complaint.
As we have mentioned, the outstanding discovery that Ronald had sought solely related to the estate's financial matters, not to the timeliness of Ronald's suit. Moreover, Ronald never divulged to the motion judge the "personal reasons" that allegedly caused him to delay in filing suit. Such a vague assertion is woefully inadequate to trigger a need for a fullblown hearing. Consequently, we reject Ronald's contention that he should receive a Lopez hearing, or some other form of a plenary hearing, and delay the application of laches to dismiss his claim for a share of Milton's estate.
We next address Ronald's contention that he is entitled to an accounting of the estate to substantiate his belief that Gerald deprived him of his share of the estate and converted estate funds for Gerald's own use. The motion judge ruled that, pursuant to N.J.S.A. 3B:17-1, Ronald cannot compel Gerald to provide such an accounting, because Ronald executed a release and refunding bond that Gerald filed with the court. We agree.
N.J.S.A. 3B:17-1 provides, in pertinent part, that "[a] fiduciary need not render or settle an account if the fiduciary files with the court a release or discharge from the beneficiary, ward, or cestui que trust who has reached majority and is not incapacitated."
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In accordance with N.J.S.A. 3B:17-1, an accounting of an estate is not required where a release and refunding bond is executed and filed with the court. As we have recognized:
The general rule is that when all of the interested parties agree to an informal accounting and sign release and refunding bonds . . . , none of them can later compel the fiduciary to account formally. . . . This rule is limited in its application to those instances where fraud, misrepresentation, mismanagement, or undue influence of the fiduciary or a substantial misunderstanding by the legatee are not shown.There is no contention that Ronald was misled, coerced, or deceived into executing the release and refunding bond. Accordingly, Ronald is not entitled to an accounting of the estate.
[Bartel v. Clarenbach, 114 N.J. Super. 79, 86 (App. Div. 1971) (citations omitted).]
Lastly, given the dismissal of the complaint, which we have sustained, the discovery motions were appropriately deemed moot.
Affirmed.