Opinion
DOCKET NO. A-4037-10T4
01-29-2013
IN THE MATTER OF THE ESTATE OF MADELEINE L. STOCKDALE, DECEASED.
William J. Gearty, PA, attorneys for appellant Spring Lake First Aid Squad (Linda Kenney-Baden, of counsel; Mr. Gearty, on the briefs). Furlong and Krasny, attorneys for respondent Ronald J. Sollitto (John S. Furlong, on the brief). Michael A. Casale, respondent pro se, joins in the brief of respondent Ronald J. Sollitto.
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Axelrad and Ostrer.
On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Monmouth County, Docket No. P-211-00 and P-234-03.
William J. Gearty, PA, attorneys for appellant Spring Lake First Aid Squad (Linda Kenney-Baden, of counsel; Mr. Gearty, on the briefs).
Furlong and Krasny, attorneys for respondent Ronald J. Sollitto (John S. Furlong, on the brief).
Michael A. Casale, respondent pro se, joins in the brief of respondent Ronald J. Sollitto. PER CURIAM
Upon remand from the Supreme Court, In re Stockdale, 196 N.J. 275 (2008), the trial court, after reviewing the original trial record of this will contest, and after conducting a non-evidentiary hearing, entered a no cause judgment on the compensatory and punitive damages claims of the Spring Lake First Aid Squad (the Squad) against Ronald J. Sollitto and attorney Michael Casale. The Squad appeals from the court's judgment and its order denying reconsideration. We affirm in part and modify the judgment in part.
I.
The Court reviewed the lengthy history of the underlying Probate litigation. Id. at 282. Suffice it to say here the Squad successfully challenged as a product of undue influence and sharp dealings a will that Casale prepared and Madeleine Stockdale executed in January 2000, which made Sollitto the residuary beneficiary of her substantial estate. The Squad also established that an inter vivos transaction, in which Stockdale sold her multi-million dollar home in Spring Lake to Sollitto on exceptionally favorable terms, was likewise a product of undue influence.
The trial court rescinded the sale of the property, granted the Squad's caveat to the 2000 will, and directed that Stockdale's 1998 will, which named the Squad residuary beneficiary, be admitted to probate. Id. at 297. The 1998 will also directed her executors, upon her death, to sell her house in Spring Lake, if she still owned it, and add the net proceeds to her residuary estate. The trial court also awarded the Squad, as punitive damages sought in its third-party complaint against Sollitto and Casale, $1,174,264.87 in legal fees it incurred in its successful challenge to the 2000 will and inter vivos transfer. Id. at 297-98.
Prior to the verdict, the Squad also settled with Stockdale's estranged nephews, George and Peter Lawrence, who would have inherited through intestate succession if the court found the 1998 will invalid based on certain markings Stockdale apparently made on the 1998 will. In re Stockdale, No. A-0535-04 (App. Div. Dec. 26, 2006) (slip op. at 38). The court had invited the brothers to intervene in the case. Stockdale, supra, 196 N.J. at 296-97. The brothers agreed to give up their right to contest the 1998 will in exchange for ten percent of the net residuary estate and a promise that the Squad would not challenge their request for counsel fees. Stockdale, supra, slip op. at 38. The trial court thereafter denied the brothers' request for counsel fees. Stockdale, supra, 196 N.J. at 298.
We affirmed the trial court's orders rejecting the 2000 will and inter vivos transfer, and admitting to probate the 1998 will. Stockdale, supra, slip op. at 23-30. However, we determined the court erred in awarding the Squad, as punitive damages sought in the Squad's third-party complaint against Sollitto and Casale, the legal fees it incurred in its successful challenge to the 2000 will and inter vivos transfer. Instead, we held the Squad's fees should be paid out of the estate under Rule 4:42-9(a)(3). Id. at 33-35. We also held the court erred in denying the Lawrence brothers' fees, which likewise should have been charged to the estate. Id. at 41.
The Supreme Court granted certification solely on the issue of the Squad's third-party complaint for punitive damages from Sollitto and Casale. In re Stockdale, 192 N.J. 518 (2007). The Court defined the issue as "the parameters within which an award of punitive damages, as recognized in [In re] Niles, [176 N.J. 282 (2003),] may be imposed in connection with a Probate Part proceeding." Stockdale, supra, 196 N.J. at 301. The Court ultimately agreed that counsel fees were not recoverable as a form of punitive damages under the circumstances, and distinguished this case from Niles. Id. at 312-13. The Court also held that punitive damages could not be awarded absent an award of compensatory damages. Id. at 308.
The Court held Sollitto and Casale could not be responsible for the Squad's attorney's fees under Niles. "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." Id. at 313. However, the Court noted the following facts supported a basis for punitive damages under Niles, namely: Sollitto and Casale were strangers to Stockdale, they engaged in undue influence to procure the 2000 Will, the 1999 Contract, and the 2000 Deed, a tort-based remedy was sought in the complaint, and "because the loss [to the Squad] could never be addressed through the ordinary Probate Part remedies." Ibid.
Recognizing that compensatory damages were a prerequisite to punitive damages, the Court identified potential grounds for compensatory damages, but made no findings that such relief was actually warranted. The Court stated, "We do not intend to suggest that an award of punitive damages, or even a compensatory award, must in fact be made in this matter; we note only that the record suggests a basis for each consistent with the proceedings in the Probate Part." Id. at 314. The Court remanded the case, "leav[ing] it to the sound discretion of the Probate Part judge to consider the record" and determine whether a punitive damage award was appropriate. Id. at 315.
In September 2008, two months after the Supreme Court's decision, Judge Thomas W. Cavanagh, Jr., entered an order directing the surrogate to admit to probate the 1998 will. The order noted that Sollitto objected to the sale of the property. In September 2009, Judge Cavanagh authorized the administrators of the estate to proceed with demolition of the house, subdivision of the property, and steps preliminary to the sale.
In the meantime, Judge Ronald L. Reisner conducted proceedings to comply with the Court's remand. After non-testimonial hearings, Judge Reisner decided, in a June 2010 written opinion, there was no basis for an award of compensatory damages, and therefore no basis for punitive damages. The court entered a conforming order July 7, 2010. The court also ordered executors of the estate to pay the Squad and its attorneys $1,782,296.44 for their reasonable fees and expenses.
The court rejected several grounds for compensatory damages urged by the Squad. Among them, the Squad claimed, and continues to seek before us, damages to compensate the Squad for (1) delay costs, in the form of lost interest on proceeds of the sale of Stockdale property, from April 2001, when it claims the transaction would have occurred, until March 2011, when the second of two sub-divided parcels was actually sold; (2) municipal taxes, property maintenance charges, insurance premiums, and water and sewer charges paid on the property when Sollitto held title and thereafter, while the Squad awaited actual sale; and (3) the funds expended to settle with the Lawrence brothers, and to reimburse them for their attorney's fees.
The Squad does not pursue its unsuccessful claim for damages equal to interest on the estate taxes paid under the 2000 will, as the taxes were refunded with interest after an amended return was filed under the 1998 will. The Squad also has abandoned its claim for an alleged $4,685 overpayment on a reimbursement to Sollitto, and a reimbursement to Sollitto for storage expenses he incurred.
Regarding the claim of delay damages, Judge Reisner noted in his initial opinion the Squad did not provide sufficient evidence regarding the "hypothetical sale" of the Stockdale property to establish its fair market value for the purposes of calculating interest. Additionally, any delay in selling the home was not a "'damage' proximately caused by the acts of 'undue influence' or 'sharp dealing'" in order to constitute a basis for compensatory damages.
The Squad moved for reconsideration in August 2010. The Squad asserted that the parties in the original trial stipulated to the admission into evidence of an appraisal that declared the property's value to be $1.73 million "[a]s is, [a]s improved" and $3.35 million "[s]ubdivided [w]ith [d]emolition of the [e]xisting [i]mprovements" as of April 18, 2000, the day Stockdale died. The record reflected that Stockdale, infirm and reclusive, had allowed the house to fall into significant disrepair. The Squad argued it was reasonable to conclude the property could have sold for the subdivided value of $3.35 million by April 18, 2001. It sought interest, at the rates allowed for pre-judgment interest on tort claims under Rule 4:42-11(b).
While Judge Reisner reviewed the reconsideration motion, Judge Cavanagh on September 24, 2010 authorized acceptance of a $2.755 million offer to purchase one of the two subdivided lots. The closing occurred November 10, 2010. On January 14, 2011, Judge Cavanagh authorized acceptance of a $2.6 million offer for the remaining parcel. That closing occurred March 2, 2011.
In April 2011, Judge Reisner denied the reconsideration motion in a written opinion. The court continued to reject the claim for delay damages, concluding there still was no evidence to establish when the property would have been sold absent Sollitto's and Casale's tortious behavior, what its value would have been at that time, and that the Squad would have suffered a loss.
Compensatory damages could only occur if there was proof of a loss (emphasis added), that is that the actions of the tortfeasors caused a sale to occur for less than the fair market value of the property. See Caldwell v. Haynes, 136 N.J. 422, 433 (1994). No such proof was provided at trial and, if anything, it is probably more likely that at the time of the trial, the real property's value increased over the value of the property at the time of Mrs. Stockdale's demise. Thus, there is no basis to award
"compensatory" damages upon the value of the property as of the date of Mrs. Stockdale's death.
In its June 2010 decision, the court also rejected the Squad's claims for payments to maintain the property, insure it, and to defray taxes. The court concluded that money paid on the property while Sollitto held title "constitute[d] payments voluntarily made by the estate administrator, rather than monetary injury proximately caused by the tortious acts of Sollitto and Casale." The court deemed these costs the proper responsibility of Stockdale and her estate, once the inter vivos transfer was rescinded and the 2000 will rejected. The court also concluded the cost of the settlement with the Lawrence brothers and their attorney's fees arose from a third-party's claim against the estate, and were not proximately caused by Sollitto and Casale's tortious acts. Because punitive damages may only be awarded if compensatory damages have been awarded, N.J.S.A. 2A:15-5.12, the Squad's claim for punitive damages failed.
Along with its motion to reconsider the court's no cause judgment, the Squad had moved for reimbursement from Sollitto and Casale of $24,228.94 in deposition costs; the Squad sought the funds as taxed costs under N.J.S.A. 22A:2-8. The court denied the motion. In the trial court's view, "because the appellate courts considered Niles and ruled it to be inapplicable to this case, such deposition costs may not be awarded against the tortfeasors." The court also held the request could not be considered on a reconsideration motion, as the Squad had not previously requested reimbursement. Also, the Squad's claim did not fall within Finch, Pruyn & Co., Inc. v. Martinelli, 108 N.J. Super. 156 (Ch. Div. 1969), which the court reasoned approved the award of deposition costs "for those depositions that were actually used at trial for some purpose in connection with the fraudulent conveyance[] claim. No such delineation has ever been provided in this application."
The Squad appeals from the trial court's orders and presents the following points for our review:
POINT I
THE TRIAL COURT IN ITS JUNE 15, 2010 OPINION JUSTIFYING ITS JULY 7, 2010 FINAL JUDGMENT OF NO CAUSE OF THE SQUAD'S CLAIMS FOR DAMAGE EXPRESSED ITS DECISION BASED UPON A PALPABLY INCORRECT BASIS AND DID NOT CONSIDER OR FAILED TO APPRECIATE THE SIGNIFICANCE OF PROBATIVE COMPETENT EVIDENCE.
1. There was undisputed evidence of the value of 10 Monroe at the time of Madeleine's death.
2. The trial court by misstating the Squad's theory of damages has made its decision based on a palpably incorrect basis.
3. The unlawful withholding of 10 Monroe and its sales proceeds from the Squad was indeed caused by the wrongful conduct of Sollitto and Casale.
4. The Appellate Courts did not prohibit the award of the Squad's counsel fees to be paid by either Sollitto or Casale.
5. The Appellate Courts properly decided that there was no equitable remedy of accounting and surcharge available to the Squad.
6. The trial court's reconstruction of the status quo ante was done on a unilateral basis. The trial court erred because its reconstruction did not return Madeleine Stockdale to status quo ante.
POINT II
THE TRIAL COURT ERRED WHEN IT REFUSED TO AWARD DAMAGES TO COMPENSATE THE SQUAD FOR ITS LOSS DUE TO SOLLITTO/CASALE WITHHOLDING THE 10 MONROE SALES PROCEEDS FROM IT.
POINT III
THE TRIAL COURT ERRED WHEN IT DENIED DAMAGES FOR THE AMOUNT OF (1) COUNSEL FEES PAID TO THE ATTORNEYS REPRESENTING THE LAWRENCE BROTHERS (2) SETTLEMENT MONIES PAID TO THE LAWRENCE BROTHERS AT THE TIME OF TRIAL.
1. Counsel fees paid to the attorneys representing the Lawrence Brothers.
2. Settlement monies paid to the Lawrence Brothers at the time of trial.
POINT IV
THE TRIAL COURT ERRED WHEN IT DENIED COMPENSATORY DAMAGES ON THE GROUND THAT THE SQUAD SUSTAINED NO LOSS.
POINT V
THE TRIAL COURT ERRED WHEN IT REFUSED TO AWARD PUNITIVE DAMAGES.
POINT VI
IN FIXING THE AMOUNT OF THE PUNITIVE DAMAGES AWARD, THE COURT SHOULD CONSIDER THE AMOUNT OF THE SQUAD'S LITIGATION COSTS AND COUNSEL FEES EXPENDED IN RETRIEVING ITS PROPERTY.
POINT VII
THE DEFENDANTS ARE EQUALLY COMPLICIT IN ACTUAL MALICE AND INVOLVEMENT AND ACCORDINGLY, BOTH ARE LIABLE FOR THE ENTIRETY OF THE PUNISHMENT.
POINT VIII
THE TRIAL COURT ERRED WHEN IT REFUSED TO ALLOW AND TAX COSTS, INCLUDING THE EXPENSE OF DEPOSITIONS AGAINST THE UNSUCCESSFUL PARTIES.
II.
We address first the Squad's claim that it suffered compensable damages resulting from (a) the delay in its use of the property sale proceeds, and (b) the property's carrying costs — taxes, insurance, utilities, and maintenance — incurred during that delay. The Squad claimed $1,800,970 in interest on $3.35 million, its projected hypothetical sale proceeds, between April 18, 2001 and December 31, 2010. But, the Squad asserts that if we were to remand, it would prove a total interest loss through March 2, 2011 in the lesser amount of $1,749,516.85. The Squad also sought $300,286.78 in taxes, utility charges, insurance, and maintenance costs through March 2, 2011.
The $1,800,970 figure was calculated applying the Rule 4:42-11 rate to the $3.35 million principal amount.
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For the purposes of our review, we assume without deciding that Sollitto's and Casale's tortious behavior proximately caused the delay in the Squad acquiring title and then selling the property, and the Squad is entitled to recover any damages caused by that delay. The Squad submits that Sollitto's and Casale's behavior necessitated the prolonged litigation to challenge the 2000 will and the inter vivos transfer, which delayed admitting to probate the 1998 will. We note the Supreme Court did not expressly contemplate this form of damages in its opinion. Nonetheless, even if theoretically subject to recovery, the Squad's claim fails because the Squad did not demonstrate it suffered a loss as a result of the delay.
We are guided by well-settled principles. As the Squad notes, destruction or impairment of a protected interest in land is compensable in damages, which may consist of interest on the value of the property while it is withheld. Restatement (Second) of Torts § 927 (1979) ("Restatement"). However, damages are reduced by the value recovered. "The amount of damages for the conversion of a chattel is diminished by its recovery or acceptance by a person entitled to its possession." Restatement, supra, § 922. The principle applies with equal force to the property transaction here.
In particular, "[i]f . . . the subject matter is worth as much as when taken or more, no more than nominal damages can be recovered, except that for things susceptible to use [the owner] is entitled to damages for the value of their use for the period of detention or to interest." Id. at § 922, comment b (emphasis added). See Foley Mach. Co. v. Amland Contractors, Inc., 209 N.J. Super. 70, 78 (App. Div. 1986) (stating damages for conversion of machine was equal to "value of machinery on [the date of conversion] . . . less the value of the machine as returned to Foley, together with interest from the conversion to the entry of judgment"); Bayer v. Airlift Int'l, Inc., 111 N.J. Super. 461, 474 (Ch. Div. 1970) (denying damages to plaintiff claiming wrongful refusals to transfer shares of stock, where plaintiff ultimately sold the shares for more than he would have gained if the transfers had occurred but for the refusals).
In this case, the Squad ultimately sold the subdivided property for $5,355,000 in two phases in November 2010 and March 2011. Those sales achieved a gain of $2,005,000 over the $3,350,000 appraised subdivided value as of April 2000. Thus, the Squad must prove its losses, arising from the delay in acquiring and selling the property, exceeded the property's appreciation during the delay. Otherwise, the Squad would obtain an undeserved double recovery.
We recognize the Squad's claim of $1,749,516.85 in interest and $300,286.78 in carrying costs, totals $2,049,803.63 and exceeds the $2,005,000 appreciation in value, albeit by less than $45,000. However, in numerous respects, the Squad's proofs of $2,049,803.63 in damages fall short.
First, there is no proof that, absent Sollitto's and Casale's tortious behavior, the Squad would have been able to obtain a subdivision, clear the land, and sell the property by April 2001, a mere year after Stockdale's death. We note that after Judge Cavanagh's September 2008 order directing the will be admitted to probate, it took the estate almost twenty-six months to close on a partial sale in November 2010, and almost four more months to close on the balance of the sale in March 2011. Even once the court authorized the estate to clear the land, seek a subdivision and find a buyer, closings took roughly fourteen and seventeen months.
In support of its hypothesized April 2001 sale date, the Squad simply asserts it "feels that if unimpeded by the Sollitto/Casale team, it would probably have taken a year for the executors to complete the transaction." That is a weak reed on which to base the running of interest. Just an eight-month delay in the Squad's hypothetical closing date would have reduced its interest claim by over $176,000.
The Squad also presumes without proof that the April 2000 value of the property would have remained unchanged in April 2001. As Judge Reisner aptly noted, property values fluctuate. Although the Squad claimed it was being conservative in positing an unchanged value, the fact of value required proof, not presumptions.
The Squad also mistakenly predicates its interest calculations on the gross appraised value of $3.35 million for cleared land "with demolition." The Squad did not account for seller-borne costs of demolition, the legal costs to secure the subdivision, fees for any real estate professionals assisting in the sale, and any other costs that would reduce the net proceeds below the appraised value. While such costs would also likely have reduced the net proceeds of the actual sales in 2010 and 2011, the Squad seeks almost a decade of interest on proceeds it would not have received. As a result, the Squad has inflated its damages claim and failed to establish that its losses exceed the $2.005 million appreciation in the value of the property.
The purpose of compensatory damages is to make the plaintiff whole. Correa v. Maggiore, 196 N.J. Super. 273, 285 (App. Div. 1984) ("Although specific rules regarding damages in fraud cases are formulated for sundry purposes, they must be subordinated to the basic objective of making the injured party whole."). Where damages sought exceed what is necessary to make plaintiff whole, they must be rejected. Id. at 286. As the Squad failed to demonstrate that it suffered a loss as a result of the delay in its acquisition and sale of the property, its claim for compensatory damages was correctly denied.
We turn to the Squad's claim it is entitled to damages equal to the settlement paid to the Lawrence brothers, and the brothers' attorney's fees borne by the estate. Judge Reisner soundly concluded these costs were not proximately caused by Sollitto's and Casale's tortious behavior.
To succeed on a damages claim, a plaintiff must demonstrate its loss was the "'natural and necessary' consequence of the defendant's wrongdoing. Remote, uncertain and contingent consequences do not afford a basis for recovery." Flowers v. Viking Yacht Co., 366 N.J. Super. 49, 58 (Law Div. 2003) (citation omitted). Importantly, the harm must be foreseeable at the time of the defendant's wrongdoing. Ibid.
The Squad argues that but for Sollitto's and Casale's tortious behavior, there would have been no litigation, and no occasion for the court to identify the markings on the 1998 will and to invite the brothers to intervene. The Squad concludes Sollitto and Casale caused the brothers to incur fees and the Squad to reach a settlement.
We disagree. Simply put, the settlement costs and fees were not proximately caused by Sollitto and Casale. They were the result of the court's actions, the reasonable actions of the brothers' counsel, and the Squad's own independent decision to settle rather than engage in a contest over the validity of the 1998 will. Moreover, the issue pertaining to the 1998 will was unrelated to the drafting and execution of the 2000 will that was the product of Sollitto's and Casale's tortious behavior.
Turning finally to the Squad's argument that the trial court erred in rejecting the Squad's claim for deposition costs pursuant to N.J.S.A. 22A:2-8 and Rule 4:42-8, we are persuaded the trial court erred in rejecting the Squad's request.
First, the Squad's motion for costs was not untimely. The Squad was not seeking reconsideration of a demand for costs. Rather, in conjunction with its motion for reconsideration of the court's June 2010 decision, the Squad asked for the first time for the award of costs, including deposition costs. Where a judgment has been subject to appellate review, Rule 4:42-8(d) permits a motion for costs to be made within six months after the judgment "has been finally disposed of," which occurred in this case no earlier than the court's June 2010 order.
Second, the trial court apparently misconstrued our decision, and the Supreme Court's, to bar charging of costs, as well as attorney's fees, against non-executors such as Sollitto and Casale. We and the Supreme Court addressed attorney's fees, not costs. Our Rules of Court treat attorney's fees and costs differently. Rule 4:42-8(a) generally entitles prevailing parties to recover costs "as of course," except as provided by law, rules or court order. By contrast, Rule 4:42-9(a) generally bars inclusion of attorney's fees within taxed costs, except as provided. Although we and the Court held the Squad could not recover attorney's fees from Sollitto and Casale, the Court recognized the Squad could recover compensatory damages from them under the egregious circumstances of this case. Stockdale, supra, 196 N.J. 311-14. Consistent with that finding, the Squad should also be eligible to recover costs from Sollitto and Casale.
We recognize the award of costs is discretionary. Hirsch v. Tushill Ltd., 110 N.J. 644, 646 (1988); Buccinna v. Micheletti, 311 N.J. Super. 557, 561 (App. Div. 1998). In particular, the taxation of expenses of depositions, authorized by N.J.S.A. 22A:2-8, should not be routinely granted. Finch, Pruyn & Co. v. Martinelli, 108 N.J. Super. 156, 159-60 (Ch. Div. 1969). See also Hirsch, supra, 110 N.J. at 649 (citing Finch, Pruyn & Co., supra, with approval for proposition that "deposition expenses not generally recoverable as taxed costs"). On the other hand, "where fraud or other reprehensible conduct on the part of the losing party is involved or there are other extraordinary circumstances in the cause of action or conduct of the litigation, deposition costs may be properly allowable by court order." Pressler & Verniero, Current N.J. Court Rules, comment 3.1 on R. 4:42-8 (2013).
Thus, the court misconstrued that it was precluded from exercising its discretion to tax Sollitto and Casale for the Squad's deposition costs. It seems likely, in light of the court's other findings, that if the court had the benefit of the views expressed here, the court would have required Sollitto and Casale to reimburse the Squad for its deposition costs, given the egregious nature of their tortious behavior. Given the clarity of the record and Judge Reisner's overall explicit findings, and to avoid a second remand, we shall exercise original jurisdiction, Rule 2:10-5, and tax Sollitto and Casale, jointly and severally, the expense of the Squad's depositions in the amount of $24,228.94.
To the extent we have not addressed the Squad's other specific arguments, they lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(2).
Affirmed in part, and modified in part.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION