Court finds undue influence in change of account beni. IN THE MATTER OF EVELYN
WORLEY, an incapacitated
person.
_____________________________
DWIGHT WORLEY and DANIEL
WORLEY,
Plaintiffs-Appellants/
Cross-Respondents,
v.
RICHARD WORLEY,
Defendant-Respondent/
Cross-Appellant.
_____________________________
|
Argued February 6, 2017 – Decided
Before Judges Nugent and Currier.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
On appeal from the Superior Court of New Jersey, Chancery
Division, Gloucester County, Docket No. P-13-00468.
PER CURIAM
In
this matter, we review the judicial determinations rendered, subsequent to a
trial, regarding the care and guardianship of Evelyn Worley (Evelyn)[1]
and the subsequent disposition of her assets. Two of Evelyn's three surviving sons, Dwight
and Daniel,[2]
commenced this action against their brother Richard, following the execution of
a Power of Attorney (POA) and attempted modification to the named beneficiary
on an investment account. After a review
of the record in light of the applicable legal principles, we affirm the
rulings as to the validity of the POA executed in favor of Richard, but reverse
the court's determination that changed the beneficiary on a financial account
to include all of Evelyn's surviving sons.
I.
We
derive our summary of the facts from the evidence presented at trial over several
days in April and May 2015. In 2009,
Evelyn was diagnosed with mild dementia and potential onset of Alzheimer's
disease. At the time, she was living in
her own home and managing her daily affairs. Daniel and Richard assisted her with some
tasks around the house and took her to medical appointments. Richard had begun
handling Evelyn's checking account in 2007 in order to pay her bills. He did not have access to her savings account.
Dwight handled Evelyn's finances, was named
executor in Evelyn's 2008 Will, and was her living representative in her health
care directive prepared that same year. Dwight had her sign a POA in 2005. In the Wills executed by Evelyn in 1993 and
2008, she distributed her assets equally among her sons. The parties stipulated that Evelyn was
competent when she signed all of these documents.
A.
While
working as a financial advisor in 1997, Dwight had assisted Evelyn in opening a
Transfer on Death (TOD) account with his company, Waddell & Reed. He explained to his mother that the money in
the account was hers as long as she was alive. Dwight was designated as the sole beneficiary
on the account, and he told his mother that after her death, the money would
pass to him. The account was initially
funded with a $100,000 investment.[3]
The existence of this account was
unknown to all of the other brothers until this litigation. Dwight testified that, as a seller of
financial products, he had a confidential relationship with his clients and
could not discuss a client's account with anyone else, including its existence.
In
September 2011, Dwight sent a letter to his mother enclosing a POA for a
different investment account. Evelyn
executed the form which designated Dwight as her POA.
B.
In
Fall 2011, Evelyn's sons began investigating local assisted living facilities,
anticipating that Evelyn might require more care than could be given to her at
home. A facility was chosen and Evelyn
began living there in November 2011. Although
amenable to the move at first, Evelyn was complaining by the end of the third week
and told each of her sons that she wanted to go home.
On
December 10, 2011, Richard brought Evelyn to meet with an attorney, Christopher
Manganello, to discuss the preparation of a new POA. Manganello prepared the document which Evelyn
signed on December 14. The attorney made
a video recording of his meeting with Evelyn that day. He explained that he did so "to make sure
there was some type of record to show that this woman was oriented as best as
she could be at a time and place and really meant to do what we were trying to
do that day." He also suspected
that the new POA would become an issue between the brothers. He stated: "So, I wanted some type of
documentation for two reasons; to help protect my client and her wishes, but
also to protect me as well."
Manganello
testified that Evelyn was clear that she wanted Dwight removed from
"having decision making power as [her] power of attorney and also to be
able to ensure that she could leave [the assisted care facility]." Evelyn told him that Dwight did not communicate
with her and that she felt more comfortable with Richard. Manganello described Evelyn as "feisty,"
"engaging," and "funny." "She seemed very with it . . . . She did not seem in any way disengaged or . .
. any different than anybody else that comes to my office. She was of sound mind and . . . capacity."
Richard
removed Evelyn from the assisted care facility in late December 2011. She remained in her home with a health care
aide initially, and then full-time live-in help was required. In November 2013, Evelyn moved to a nursing
home.[4]
C.
After
the execution of the POA in December 2011, Richard learned about the Waddell
and Reed account and contacted the firm on several occasions. He advised the firm that he wished to have the
existing POA designating Dwight replaced with the newly executed one. There was no discussion of the beneficiary on
the account.
Richard
contacted Waddell again in March 2012 requesting a history of the account. The account representative needed to confirm
with Evelyn her acquiescence with the request. During the conversation, Evelyn was unable to
remember her social security number and she asked Richard for the information. Later that month, Richard called Waddell and
stated that his mother "was made aware of some problems on her account as
far as the way that it's set up and everything. She wanted to make some changes today." The account representative again spoke with
Evelyn who was unable to provide her social security number and date of birth
without prompting from her son. Evelyn
gave permission for the representative to speak with Richard, who requested
that Dwight be removed as the designated beneficiary and that Evelyn's estate
be substituted as the beneficiary on the account. Richard also asked for an address change on
the account. After being instructed to
send a written request for change of beneficiary, Richard asked that the
original application form be provided to him as well.
A
senior regulatory counsel and vice president of Waddell, Amy Rush, testified at
the trial. Rush explained the training
provided to the company's customer service representatives on senior abuse issues.
She said both March conversations raised
a "red flag" due to Evelyn's inability to remember her social
security number and birth date, and the substance of the questions being asked
by Richard. Rush testified further that
she received a court order from Dwight during this timeframe that voided
Richard's POA. The order required Richard
to serve this notice on Waddell, which he had not done. She described this as "a huge red
flag" and she instructed the customer service department not to distribute
any money from the account, send out statements, or change the account's
address. Rush stated that the
beneficiary on the account was not changed as instructed by a court order that
was subsequently presented to Waddell, and because Evelyn had never directed
the change herself.
D.
In
January 2012, Manganello prepared a Will and healthcare directive for Evelyn's
signature. The only change made to the Will
was to substitute Richard as the executor; he was also named as the healthcare
representative on the living will. Manganello testified that he was certain that
Evelyn wanted these documents prepared.
II.
In March 2012, Dwight and Daniel (plaintiffs)
presented an order to show cause and verified complaint seeking (1) to nullify
the December 2011 POA as a product of the undue influence on Evelyn by Richard
(defendant); and (2) a disclosure of any financial changes made to Evelyn's
accounts by Richard during his capacity as designated POA. The order to show cause was granted.
On April 3, 2012, the chancery judge
entered a joint consent order in which
the parties agreed to its provisions until the final resolution of the matter. The order provided that: (1) the POA in favor
of Richard executed by Evelyn on December 14, 2011 was void; (2) the will prepared
by Manganello and executed by Evelyn was void; (3) Evelyn's financial assets would
be managed by Dwight;[5]
(4) Richard would manage Evelyn's checking account for her ordinary and usual monthly
expenses; (5) Evelyn was to undergo a competency examination; and (6) Gerald
Sinclair, Esq., was appointed by the court as counsel for Evelyn. The order required service by Richard's
counsel on all of Evelyn's health care providers, assisted living facilities,
and applicable financial institutions.
Plaintiffs
amended the complaint in March 2013, seeking their appointment as co-guardians
of their incapacitated mother and her estate.
In his answer and cross-claims, Richard requested that he be appointed
guardian for Evelyn. He also alleged
that the creation of the Waddell investment account was a breach of the
fiduciary duty owed by Dwight.
III.
At
trial, both parties presented witnesses to testify regarding Evelyn's mental
capacity and cognitive functioning. Cynthia Furman, a registered nurse with
Gloucester County Senior Services, stated she was contacted by Evelyn's family in
November 2010 to assess Evelyn and provide care options for her.
Nurse Furman noted that although Evelyn
was able to take care of her personal needs and hygiene, she required assistance
from others to complete housework and shopping, prepare meals, take medication,
and manage her finances. She found
Evelyn to be only minimally impaired in her decision-making, although she
exhibited difficulty making decisions in unfamiliar circumstances. In Furman's opinion, Evelyn's short term and
procedural memory were impaired.
Mary Ann Poekert was the home health
companion assigned to Evelyn from 2010 to 2012.
While working with Evelyn in 2011, prior to her admittance to the
assisted living facility, Poekert stated that "[Evelyn] was having a lot
of trouble remembering . . . . Then
she was telling me that . . . there's people in here having parties at
night. And she told me there was a man
that would come into her bedroom and try and get her." She noticed an improvement in Evelyn after
she returned from the assisted living facility.
Poekert also recalled that Evelyn told her that "she wanted Rick to
take care of everything, to be her power of attorney, to take care of her, to
do whatever needed to be done." Poekert
denied knowing anything about Evelyn's investment accounts, but stated that Evelyn
knew Dwight had control of an account and said "she didn't want one son
having control of everything." In
response to questioning, Poekert added that Evelyn wanted her sons to all be treated
the same. "[S]he said when she
passed away, she wanted everything to be, you know, divided up evenly."
Plaintiffs presented Barry Rovner,
M.D., a psychiatrist specializing in Alzheimer's disease, as an expert. Dr. Rovner reviewed Evelyn's medical records
and listened to Manganello's video tape. He concluded that Evelyn was disoriented to
time, and she did not understand why she was at the attorney's office in
December 2011. Based on the information presented
to him, Dr. Rovner opined that Evelyn lacked the capacity to understand what a
POA was and lacked the ability to execute her Will knowingly.
Plaintiffs
also proffered the testimony of Danielle DiGregorio, Psy.D., who had performed neuropsychological
evaluations of Evelyn in 2012 and 2013
at the request of Sinclair. A month
before the trial, plaintiffs advised they were naming Dr. DiGregorio as an
expert witness. No new report was
provided. At the de bene esse
deposition of Dr. DiGregorio taken several days before the commencement of
trial, plaintiffs attempted to elicit her opinion of Evelyn's mental capacity
at the time of the signing of the POA and the Will. The execution of those documents had taken place
nine months before the doctor met Evelyn, therefore, that opinion was not
contained in any of her reports.
Defense
counsel objected at the deposition and renewed the
objection at
trial. The chancery judge sustained the
objection and ordered the redaction of the expert's testimony regarding the
previously undisclosed opinion.
Dr.
DiGregorio performed a number of tests and concluded that Evelyn was in the
mild to moderate stages of dementia. At her second evaluation, in May 2013, the
doctor noted further deterioration in many areas of functioning.
Mr.
Sinclair, as court-appointed counsel, met with Evelyn on five occasions, the
first in April 2012. During those visits,
Evelyn admitted she had memory lapses but was able to discuss her children and grandchildren
cogently. Sinclair described her as
having mild dementia. The attorney asked
Evelyn about the December 2011 POA on several occasions, and she consistently told
him that she "wanted Rick." She
also consistently mentioned that she wanted her three sons to share equally
after her death.
Sinclair
issued three reports, each recommending that Richard be appointed the guardian
of his mother, of both her person and her property. He believed that Richard had shown the
greatest level of involvement with Evelyn and it was her own request. The attorney felt that Richard demonstrated
the "aptitude and attitude" to be the guardian.
Richard
presented Pogos Voskanian, M.D., a neuropsychiatrist, as his expert. Dr. Voskanian described Evelyn as having a mild degree of cognitive
impairment in late 2011 and early 2012 but opined that she had testamentary
capacity at that time. Upon reviewing
Manganello's video recording of the execution of the POA, he found Evelyn's
"speech was clear," "she provid[ed] good reasons for her
choices," and she indicated a desire to be informed regarding her own
care. "[E]lderly people do not know
exact dates. . . . It does not mean lack of testamentary capacity. Actually people can be demented and still
have testamentary capacity. . . . Knowing the date is not [a]
requirement."
IV.
On June 29, 2015, the trial judge issued a
lengthy comprehensive oral decision.[6]
After setting forth her findings of
fact, she rendered several legal conclusions. The judge first found that there was a
presumption of undue influence by Richard, warranting the shifting of the
burden of proof to him. She described the
special relationship between Evelyn and Richard and the suspicious
circumstances of the execution of the POA at Manganello's office. Noting that the defendant must rebut the presumption
of undue influence by clear and convincing evidence, the judge found that
Richard had abided by his mother's wishes. Her request was for him to remove her from the
assisted care facility in December 2011. Based on the testimony and medical records, the
judge found that Evelyn had the ability to form an opinion, express it, and she
wanted to be heard about remaining in her own home. The judge stated: "If anything, Rick was
doing exactly what [Evelyn] wanted him to do, getting her back to her home and
out of the [assisted care facility]."
In
her decision, the judge relied on the testimony presented regarding Dr.
Morton's notes[7]
of his visits with Evelyn in late 2011. On
December 12, 2011, Dr. Morton wrote in an office note:
It is clear to me that [Evelyn] would prefer that her son
Rick be her power of attorney to help her with legal decisions . . . . I think that Evelyn will do well in her own
home if she has someone there to assist her with meals and medicine . . . . Her
dementia is mild, and she could enjoy her home for some time yet if she had
someone there to assist her full time.
The doctor also
noted that Evelyn was sharper and brighter after the change in her medication. The judge concluded:
[Evelyn] had sufficient cognitive function to articulate
her desire to live at home and her desire for Rick to be her POA.
. . . .
I am satisfied that the evidence established clearly and
convincingly that Mrs. Worley wanted Rick to be her POA in November 2011 and that
she had the capacity to communicate that decision and to sign a legal document
implementing that decision.
In
addressing Evelyn's capacity to sign the Will in 2012, the judge concluded to
the contrary. She stated: "There's no
evidence that Mrs. Worley told anyone that she wanted Rick to be the executor
of her Will . . . . So I'm satisfied that the proofs do not establish clearly
and convincingly that the Will was the voluntary and knowing act of Mrs.
Worley." She, therefore, found the
POA valid and enforceable, but ruled the 2012 Will was invalid. The judge declined to award any damages,
finding that the early departure fees for Evelyn's withdrawal from the assisted
care facility in 2011 was "money well spent" as Evelyn was happy to
spend an additional two years in her home.
In
addressing the TOD account, the judge determined that it did not satisfy the
requirements to be considered an inter vivos gift. She concluded that the very nature of the
account, a transfer on death, is that the money in the account is owned by the
holder of the account; the TOD "is a conditional gift that if there is
anything in the account at the time of death, it would go to that named
beneficiary." The judge determined
the account was not an irrevocable relinquishment in ownership nor an outright
gift. Relying on Sinclair's testimony
that Evelyn wished all of her sons to be treated equally, the judge ruled that
the TOD account beneficiary should be changed to designate all three sons in
equal shares.
In
a second order on June 30, 2015, the court found Evelyn was an incapacitated
person and unable to manage her own affairs. Richard was appointed the guardian
of the person and property of Evelyn.
Plaintiffs
filed a subsequent motion seeking a stay of the transfer of financial authority
from Dwight to Richard until the resolution of the appeal, and an award of
counsel fees for the guardianship application, as well as for the costs and
fees incurred defending the POA granted to Dwight in 2005. Richard cross-moved for counsel fees for his
guardianship application.
After
hearing the parties' oral argument on August 12, 2015, the judge determined
that it was not feasible to split the guardianship between Richard and Dwight
because of the likelihood of friction and further litigation. In considering the requests for counsel fees
under Rule 4:86-4(e), the judge noted her discretion to award fees if
deemed appropriate. She stated that by the
time the matter reached trial, it was not about the guardianship as Evelyn's
mental condition had deteriorated. It was
"a fight between brothers." Therefore,
the judge found it appropriate to deny attorney's fees for the majority of the
action. Plaintiffs were awarded $2500
for bringing the complaint and defendant was awarded $2500 for his efforts in
prosecuting the guardianship. The parties
were each responsible for their remaining attorney's fees and costs.[8]
V.
On appeal, plaintiffs assert that
the trial judge erred in (1) altering the beneficiary designation on the TOD
account; (2) affirming the designation of Richard as Evelyn's POA and
subsequent guardian after finding a presumption of undue influence; (3) barring
certain testimony of Dr. DiGregorio; and (4) failing to award legal fees and
costs to plaintiffs incurred by them in the pursuit of guardianship on Evelyn's
behalf and in defending the 2005 POA.
Defendant's
cross appeal contends the judge failed to award sufficient fees to him incurred
in the defense of the 2011 POA.
In considering
these arguments, we are mindful of our limited scope of review. We will not "engage in an independent
assessment of the evidence as if [we] were the court of first instance." N.J. Div. of Youth & Family Servs. v.
Z.P.R., 351 N.J. Super. 427, 433 (App. Div. 2002) (alteration in
original) (quoting State v. Locurto, 157 N.J. 463, 471 (1999)).
"The factual findings of a trial
court are reviewed with substantial deference on appeal, and are not overturned
if they are supported by adequate, substantial and credible
evidence." Manahawkin
Convalescent v. O'Neill, 217 N.J. 99, 115 (2014) (citations
omitted). Such deference is especially
due when a trial judge's findings "are substantially influenced by [the
judge's] opportunity to hear and see the witnesses and to have the 'feel' of
the case, which a reviewing court cannot enjoy." Zanman v. Felton, 219 N.J. 199,
216 (2014) (alteration in original) (citation omitted).
However, we review the trial judge's
determinations on legal issues de novo.
A trial judge's "interpretation of the law and the legal
consequences that flow from established facts are not entitled to any special
deference." Manalapan Realty,
L.P. v. Twp. Comm., 140 N.J. 366, 378 (1995) (citations omitted).
A.
Mindful of these standards, we turn
to a review of the POA executed by Evelyn in favor of Richard in 2011.[9]
Plaintiffs contend that the disparate
rulings that the POA was not the product of undue influence, but the Will
signed several weeks later was a result of undue influence are not supported by
the credible evidence in the record. We
disagree.
[U]ndue influence is a mental, moral, or physical exertion
of a kind and quality that destroys the free will of the testator by preventing
that person from following the dictates of his or her own mind as it relates to
the disposition of assets, generally by means of a will or inter vivos transfer
in lieu thereof.
. . . .
Ordinarily,
the burden of proving undue influence falls on the will contestant. Nevertheless,
we have long held that if the will benefits one who stood in a confidential
relationship to the testator and if there are additional 'suspicious'
circumstances, the burden shifts to the party who stood in that relationship to
the testator.
[In re Estate of Stockdale, 196 N.J. 275,
302-03 (2008) (citing Haynes v. First Nat'l State Bank, 87 N.J.
163, 176 (1981))].
We have described a confidential
relationship as one
where the "the relations
between the parties are of such a character of trust and confidence as to
render it reasonably certain that the one party occupied a dominant position
over the other and that consequently they did not deal on terms and conditions
of equality." Estate of Ostlund
v. Ostlund, 391 N.J. Super. 390, 402 (App. Div. 2007) (quoting Blake
v. Brennan, 1 N.J. Super. 446, 454 (Ch. Div. 1948)). "[A]mong the most natural of confidential
relationships is that of parent and child." Pascale v. Pascale, 113 N.J. 20,
34 (1988).
The judge found Richard had a
special relationship with his mother.
All witnesses agreed that Richard spent the most time with Evelyn and
took care of her daily needs. Evelyn
herself told many of the witnesses that she wanted Richard to be her POA
because he listened to her and spent time with her. In assessing the requirement that there be
"additional circumstances of a suspicious character," In re Will
of Rittenhouse, 19 N.J. 376, 378-79 (1955), the judge noted the
involvement of attorney Manganello. She
stated: "Mr. Manganello did not speak to Mrs. Worley outside of the
presence of Rick. [He did] not clarify
whether he represented [Evelyn] or Rick. [He did] not obtain at least a primary care physician's
opinion regarding her capacity."
The judge found that the presumption
of undue influence existed regarding the POA, and we are satisfied that she
correctly shifted the burden to defendant to rebut the presumption.
All agreed that Evelyn did not want
to stay at the assisted living facility. Within several weeks of her admission, she was
voicing her desire to return to her home to everyone with whom she spoke. She told Sinclair and others that only Richard
was listening to her. As the judge
noted:
Rick was acting on his mother's request in taking steps to
obtain a POA and remove her from the [assisted care facility]. Mrs. Worley was sufficiently capacitated to
have a say in whether she would live in facility or stay in her home with paid,
in-home care service providers that she was well able to afford.
Evelyn knew what she wanted and knew
that Richard was the one to effectuate her desire – by obtaining a POA and
removing her from the care facility. We
are satisfied that the judge's conclusion that Evelyn was not unduly influenced
by Richard in obtaining the POA for her removal from the care facility is
supported by the credible evidence in the record.
In considering the 2012 Will, the
evidence leads to a contrary result. Evelyn
never voiced any desire to anyone to change the executor on her Will. She had executed at least two Wills prior to
the 2012 version; each had Dwight as the executor. There was no evidence presented that she
desired to change the executor of her Will in 2012 to Richard. We are satisfied that the judge's conclusion
that Richard did not meet his burden of rebutting the presumption of undue influence
is supported by the record.
We disagree with plaintiffs' argument that
these rulings cannot stand as they are contrary to one another. With regard to the POA and the 2012 Will, the judge
considered the presumption of undue influence and found plaintiffs had met their
burden. When the burden of rebuttal
shifted to defendant, the court found it was met in the case of the POA, but
there was insufficient evidence presented to rebut the presumption surrounding
the Will. As a result, when each document
was considered separately, differing legal conclusions were properly reached. Those conclusions are supported by the credible
evidence.
B.
Fifteen years before this litigation
arose, Evelyn opened a TOD account with the financial services firm where
Dwight was an employee, thereby avoiding payment of fees and commissions. The parties stipulated that she was competent when
she opened the account and that it was her signature on the application. Dwight was designated as the beneficiary of
the account upon her death; that designation never changed. Evelyn executed Wills in 1993 and 2008 at
which time the parties stipulated that Evelyn was competent; the TOD account
was not referenced in either Will. Although
Evelyn spoke on the phone several times with Waddell representatives in 2012,
she never requested a change in the TOD beneficiary designation.
After determining the TOD account
was not an inter vivos gift, and relying on Sinclair's testimony, the judge concluded
that Evelyn wished to treat her surviving sons equally and that she had a
"change of mind with respect to the TOD account."
The contradictory evidence
presented, however, does not support the premise that Evelyn always treated her
sons equally. There was testimony that she gave Roger more than $100,000 during
his lifetime. Daniel testified that in
1997, the same timeframe as the establishment of the Waddell account with
Dwight, his mother offered him a gift of $100,000 that he declined. In addition, there was testimony that there
were bank accounts opened for one or two of the grandchildren, but not all
nine. The assets in each Will executed
by Evelyn were to be divided equally among the three surviving sons; Roger's
estate and heirs were not included.
The testimony of Sinclair considered
by the judge was offered subsequent to the commencement of this litigation. Evelyn was aware of the contentious
proceedings taking place among her sons and expressed her sadness at its
occurrence. It is not unusual under the
circumstances that she would express the general premise that she wished her
sons to be treated equally. Although the
judge relied on the testimony provided by Sinclair, the attorney conceded that
he never asked Evelyn specifically about the TOD account or her desired
beneficiary designation of it.
Although well aware of the deference
due the judge's decision, we find it a leap to conclude that after so many
years of the beneficiary designation remaining unchanged, Evelyn's generalized
statement that she wanted all her sons to be treated equally after her death
was a statement of her probable intent to change the beneficiary of the TOD
account. See Stephenson v.
Spiegle, 429 N.J. Super. 378, 386 (App. Div. 2013) (emphasis added) (noting
the doctrine of probable intention may be used to reform mistaken testamentary
dispositions).
Evelyn stated after the inception of
this litigation that she loved her three sons equally. She was never specifically asked about the TOD
account, but provided generalized statements that her three sons should be
treated equally. We are not satisfied
that the substantial credible evidence supported changing the beneficiary
designation on this non-probate asset. This litigation centered on whether Evelyn was
unduly influenced by Richard to effect a POA in his favor and a new Will naming
him as executor. There were no similar
contentions regarding the TOD account; there were no allegations that it was
wrongly established or that Evelyn was unduly influenced in her choosing just
one of her sons as the beneficiary of the account. To the contrary, the parties stipulated that
she was fully competent at the time of the initiation of the account. As a result, we reverse the decision of the
court regarding the TOD account; the beneficiary of the account remains Dwight.
C.
We turn to plaintiffs' argument that
Richard, having been found to have unduly influenced his mother, should not be
Evelyn's guardian. In giving deference
to the judge's finding based on her ability to perceive witnesses and assess
credibility, as we must, we find this argument to be without merit. The judge found Sinclair's report recommending
that the guardianship not be split to be persuasive. She noted the inability of Dwight and Richard
to cooperate throughout the litigation, and although the judge recognized
Dwight's skills as a money manager, she determined a shared guardianship would
not be feasible based on the "likelihood of friction and . . . further
litigation." We are satisfied that
the judge's finding that Richard's interests are synonymous with those of
Evelyn is supported by the evidence and his appointment as her guardian is
correct.
D.
We briefly address plaintiffs'
argument that the chancery judge erroneously barred them from questioning Dr.
DiGregorio on an opinion that had not been included in her report. After the court ordered a competency exam, Evelyn
was evaluated by Dr. DiGregorio, a geriatric neuropsychologist, who also performed
a series of objective tests in August 2012. In her report, she concluded that Evelyn was
cognitively incapacitated at that time.[10]
Plaintiffs identified the doctor as a fact
witness who would provide testimony regarding her evaluations.
In preparation for trial, plaintiffs
scheduled a de bene esse deposition of Dr. DiGregorio. Several days before the deposition, plaintiffs advised defendant that
they intended to use the doctor as an expert witness. No new report nor amended report was provided.[11]
At the deposition, plaintiffs' counsel
sought to inquire of Dr. DiGregorio her opinion on the mental capacity of
Evelyn in December 2011 and January 2012 – eight months prior to the doctor's
first evaluation.
We apply a deferential approach to
the trial judge's decision to admit expert testimony and review it against an
abuse of discretion standard. Although
an expert witness is generally confined to the opinions contained in his or her
report provided in discovery, Conrad v. Robbi, 341 N.J. Super.
424, 440-41 (App. Div.), certif. denied, 170 N.J. 210 (2001),
"the logical predicates for and conclusions from statements made in [an
expert] report are not foreclosed." McCalla v. Harnischfeger Corp., 215 N.J.
Super. 160, 171 (App. Div.), certif. denied, 108 N.J. 219
(1987).
The judge found the sought-after new
opinion was not a logical predicate from the information and opinions set forth
in the doctor's expert report. It was
not expected that the doctor would provide an opinion about the state of
Evelyn's mental capacity nine months prior to their first meeting and
evaluation. There was no notice in the
served reports of Dr. DiGregorio that she had read medical reports from the
applicable timeframe. The new opinion was a complete surprise to defendant, leaving
him without the opportunity of effective cross-examination and resulting in
certain prejudice. See Westphal
v. Guarino, 163 N.J. Super. 139, 146 (App. Div.), aff'd o.b.,
78 N.J. 308 (1978) (noting that the opposing party must be protected
from the effect of surprise and prejudice). We are satisfied that the trial judge did not
abuse her discretion in her decision to exclude the newly offered opinion.
E.
Plaintiffs seek legal fees from (1)
defendant for the breach of his fiduciary duty for exerting undue influence
when exercising his POA; and (2) the Estate for legal fees and costs incurred
in defending the validity of the 2005 POA. Defendant's cross-appeal seeks legal fees for
defending the POA determined by the court to be valid and enforceable.
New
Jersey courts "have traditionally adhered to the American Rule as the
principle that governs the allocation of attorneys' fees." Occhifinto v. Olivo Constr. Co., 221 N.J.
443, 449 (2015) (quoting Walker v. Giuffre, 209 N.J. 124, 127
(2012)). The American Rule
"prohibits recovery of counsel fees by the prevailing party against the
losing party." In re Estate of
Vayda, 184 N.J. 115, 120 (2005) (quoting In re Niles, 176 N.J.
282, 294 (2003)). Notwithstanding New
Jersey's "strong public policy against the shifting of costs,"
counsel fees may be awarded in certain circumstances. Litton Indus. v. IMO Indus., 200 N.J.
372, 404-05 (2009) (quoting Vayda, supra, 184 N.J. at
120); see also R. 4:42-9(a)(1)-(8).
One
such circumstance exists when an executor or trustee commits the tort of undue influence.
"[A]n exception to the American rule is created that permits the estate to
be made whole by an assessment of all reasonable counsel fees against the
fiduciary that were incurred by the estate." Niles, supra, 176 N.J. at
298-99. Plaintiffs request the estate be
reimbursed the monies expended by Richard to attorney Manganello for the
drafting of the POA and new Will. The
chancery judge declined to do so. We see no error in her ruling. As noted, although the judge found Richard had
unduly influenced his mother in obtaining the POA, nevertheless, she found the
document to be valid and enforceable as he was acting to achieve his mother's
wishes. Richard did not strip the estate
of any assets, and his actions did not rise to the pernicious level envisioned
in In re Estate of Folcher, 224 N.J. 496, 511 (2016), and Niles.
As
to the argument that plaintiffs are entitled to counsel fees for the defense of
the 2005 POA, we find it likewise to be without merit. The 2005 POA was not the subject of the
litigation. Evelyn did not wish to
remain in the assisted care facility; Dwight would not listen to her wishes. Therefore, Evelyn desired a change in the POA
to Richard who was willing to accede to her desire to move back to her
home. The court found Evelyn had the
capacity to communicate her decision for Richard to be her POA and to sign the
legal document. The 2011 POA was the
crux of the case, not the former document.
The
judge awarded $2500 in fees to both parties under Rule 4:86-4(e),
authorizing compensation of counsel fees for the party seeking guardianship. Both Dwight and Richard sought the
guardianship of their mother. In
assessing fees to both sides, the judge remarked that "this was not really
about the guardianship . . . . Rather, this was straight-out a fight between
brothers. . . . [Evelyn] should certainly
not have to fund the sole source of stress in her life." We see no reason to disturb the judge's
ruling.
In
addressing the cross-appeal, we reiterate the premise of the American rule
governing this fee consideration. We
reject defendant's argument that a contractual entitlement to fees existed under
the 2011 POA. Although the document
contained a clause that the agent in the POA had the authority to sue and
settle suits, it did not reference counsel fees. There is no pertinent exception to the
American rule for the award of further fees to defendant.
The
June 30, 2015 orders are affirmed with the exception of the court's ruling
pertaining to the TOD account. In accordance with the above discussion, we
reverse the portion of the order that re-designated the beneficiary of the
account and restore Dwight Worley as the account beneficiary.
Affirmed in part, reversed in part.
|
[1]
The parties are referred to by their first names for the clarity and ease of
the reader as they share a last name.
[2]
A fourth son, Roger, predeceased Evelyn.
[3]
At the time of the hearing in 2014 the account was valued at $250,000 and
represented approximately 42% of Evelyn's estate.
[4]
At the time of the appellate oral argument in February 2017, Evelyn reportedly was
still living in the nursing home.
[5]
The order further clarified that no funds would be withdrawn from the accounts
other than to care for Evelyn and that there would be no change to title or
beneficiary designation on any account owned by Evelyn.
[6]
An order reflecting the oral decision was issued on June 30, 2015.
[7]
Reports and office records of Dr. Morton of the Elmer Family Practice are
discussed with several witnesses and admitted into evidence. Dr. Morton did not testify, and his reports
and medical records were not provided to us.
[8]
Plaintiffs' request for a stay of judgment pending appeal was denied.
[9]
Richard does not appeal the court's invalidation of the 2012 Will.
[10]
Dr. DiGregorio performed a second evaluation and rendered an additional report
in May 2013.
[11]
See Rule 4:17-7.
