Court could void transfer for breach of fiduciary duty SCHULTZ v GLASSER

Court could void transfer for breach of fiduciary duty SCHULTZ v GLASSER

 MARY ANN SCHULTZ, by her attorney-in-fact, DONNA SCHULTZ, ESTATE OF ROBERT SCHULTZ, SR., by its administrator, DONNA SCHULTZ, and DONNA SCHULTZ individually,

Plaintiffs/Respondents- Cross-Appellants,

v.

KATHLEEN GLASSER, EXECUTOR OF THE ESTATE OF ROBERT R. SCHULTZ, JR. and KATHLEEN GLASSER, individually,

Defendants-
Third-Party Plaintiffs/ Appellants-Cross-Respondents,

v.

THE SCHULTZ FAMILY LIVING TRUST,

Third-Party Defendant. _________________________________

 SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

DOCKET NO. A-5239-18T3

Argued January 6, 2021 – Decided January 27, 2021

Before Judges Yannotti, Mawla, and Natali.

On appeal from the Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. C- 000075-18.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

PER CURIAM

Defendants Kathleen Glasser (Kathleen)1 individually and as executor of

the Estate of Robert Schultz, Jr. (Bobby) appeal, and plaintiffs Mary Ann Schultz (Mary Ann) by her attorney-in-fact, the Estate of Robert Schultz, Sr. (Robert) by its administrator, and Donna Schultz (Donna), cross-appeal from a June 21, 2019 judgment entered following a trial. We affirm.

1 We utilize the parties' first names to reflect how they are referred to in the appellate record and because some of them share a common surname. We intend no disrespect.

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Robert and Mary Ann were married and had two children: Bobby and Donna. In 1996, Robert and Mary Ann, as the grantors and initial trustees, created the Schultz Family Living Trust.

The Trust listed the "immediate family group" as the "grantors' children," Bobby and Donna. The Trust also listed the beneficiaries as Robert, during his lifetime; Mary Ann, during her lifetime; Bobby, "upon the death of the surviving grantor"; and Donna, "upon the death of the surviving grantor." Therefore, Bobby and Donna became the beneficiaries of the Trust only if Robert and Mary Ann were deceased. Robert died in 2014, leaving Mary Ann as the surviving grantor.

The Trust owned properties in South Carolina, Maryland, and Manalapan. The Trust contained a schedule for "Specific Gifts for Distribution," indicating Bobby would receive "the real property located in New Jersey." The Trust also contained an "Alternate Beneficiary Distribution" provision stating: "If the deceased final beneficiary has no surviving children, then his or her share shall be distributed immediately to the surviving named final beneficiary."

In 1998, the Trust purchased the Manalapan property for $300,002. Bobby lived on the property from 1998 until his death in January 2018. He paid the property taxes on the home. Bobby was unmarried and had no children.

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On December 20, 2017, weeks before his death, Bobby signed a quitclaim deed for the Manalapan property, which stated he was the "trustee of the Schultz Family Living Trust." The deed purported to transfer ownership of the Manalapan property from the Trust to Bobby and Donna's cousin Kathleen as joint tenants with the right of survivorship. Bobby also listed Kathleen as the sole beneficiary of his will.

With regard to the South Carolina property, Kathleen testified she prepared a quitclaim deed for the property at the behest of Mary Ann in March 2017. She testified Mary Ann wished to transfer the property out of the Trust and to Bobby because he "was going there a lot and he was looking to move there." Mary Ann signed the quitclaim deed on March 10, 2017, transferring the South Carolina property out of the Trust and to Bobby personally.

On May 3, 2018, plaintiffs filed a complaint claiming Bobby breached his fiduciary duty to the beneficiaries of the Trust and sought judgment against Kathleen, declaring the transfer of the Manalapan property to her null and void. Plaintiffs argued the Manalapan property belonged to the Trust, not to Bobby's estate, and Bobby had no legal or equitable rights to the property.

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Defendants asserted a claim for equitable relief, seeking the imposition of a resulting or constructive trust because Bobby paid $163,000 of the $300,002, or 54.33 percent, of the purchase price of the Manalapan property.

Judge Katie A. Gummer tried the matter over the course of five days, during which Donna and Kathleen testified. The judge found neither witness credible. She stated "part of Donna's testimony was based on pure and utter speculation . . . as to what was discussed between her brother and their parents. Speculation about transactions of which she had no part." The judge found:

Kathleen was even less credible than Donna. Her pleadings alone demonstrated her lack of credibility.

She testified that Bobby would never harm his mother, yet in her answer she admitted that he had executed a deed to convey title of the New Jersey property to himself and to Kathleen, a transfer that could only serve to hurt his mother.

She denied in her answer . . . the allegation that Bobby had taken possession of two vehicles owned by Robert. But in her testimony acknowledged that he had taken those vehicles.

Her testimony about what payments Bobby made with respect to the . . . Manalapan property[] was really [ninety-nine] percent speculation.

....

One thing in particular that demonstrated to the [c]ourt her utter lack of credibility was testimony

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regarding Bobby's relationship with his mother, . . . especially during the time period when his mother was living with Bobby.

Kathleen testified . . . with no qualification, that Bobby would never . . . take money from her, would never use her ATM card.

But it's clear reviewing the records provided to the [c]ourt that in fact Bobby was using his mother's ATM card.

The judge stated: "This case is notable in that the three people who would have . . . the most knowledge as to what happened, didn't testify. Obviously[,] Robert and Bobby could not testify because they're deceased. Mary Ann did not testify and in fact no one deposed her." As a result, the judge found "[n]o one actually involved in [the Manalapan property] transaction [was] called to testify. So the [c]ourt largely was left with analyzing the case based on the documents presented and through those documents the behavior of the parties who actually were involved in the transactions at issue."

Regarding the Manalapan property, defendants adduced in evidence the December 2017 deed signed by Bobby in which he referred to himself as trustee of the Trust. The judge noted "according to defendants [the deed] forms the legal basis to remove the Manalapan property from the Trust and . . . gift it to Bobby and Kathleen." The judge stated:

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The defendants' case with respect to the Manalapan property is premised on their argument that Bobby was the settl[o]r because . . . he had effectively purchased the property. And that as the settl[o]r, he had the right to amend the Trust which according to defendants he did so by executing this purported quit[]claim deed. . . .

The [c]ourt cannot conclude that Bobby was a settl[o]r of the Trust. The reason for the payments that defendants assert form the basis of their argument that he was a settl[o]r, were based on pure speculation as to the purpose of those purported payments . . . .

....

The reasons for the exchange of funds between Bobby and his parents are unknown to this [c]ourt.

The judge concluded Bobby never identified himself as the settlor and had no authority to execute the deed as either a settlor or trustee because the Trust designated Robert and Mary Ann as the sole trustees during their life and Mary Ann was living when the property transaction took place. The judge concluded Bobby violated his fiduciary duty to the beneficiaries of the Trust, voided the deed transferring the Manalapan property, and found defendants had neither a legal nor equitable interest in the Manalapan property.

At trial, plaintiffs contended Bobby and Kathleen conspired to exert undue influence on Mary Ann to transfer the Manalapan property out of the Trust. As a result, they sought attorney's fees. Judge Gummer denied these claims because

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Kathleen had no fiduciary duty to the Trust's beneficiaries and because there was not "enough evidence . . . to conclude that Kathleen knew that the . . . quit[]claim deed was premised on a lie."

I.
Our review of a trial court's findings in a non-jury case is limited.

Seidman v. Clifton Savs. Bank, S.L.A., 205 N.J. 150, 169 (2011). "[W]e do not disturb the factual findings and legal conclusions of the trial [court] 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[.]" Ibid. (last alteration in original) (quoting In re Tr. Created By Agreement Dated Dec. 20, 1961, 194 N.J. 276, 284 (2008)).

"Deference is especially appropriate when the evidence is largely testimonial and involves questions of credibility. Because a trial court hears the case, sees and observes the witnesses, and hears them testify, it has a better perspective than a reviewing court in evaluating the veracity of witnesses." Ibid. (quoting Cesare v. Cesare, 154 N.J. 394, 411-12 (1998)). Deference is also appropriate because "[i]n fashioning relief, [a] Chancery [court] has broad discretionary power to adapt equitable remedies to the particular circumstances

   

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of a given case." Marioni v. Roxy Garments Delivery Co., Inc., 417 N.J. Super. 269, 275 (App. Div. 2010).

On appeal, defendants argue: (1) the judge misapplied New Jersey law by denying Bobby's estate any relief with regard to the Manalapan property; (2) the deed should be amended to provide Bobby's estate with a 54.33 percent share of the property; (3) Bobby was a settlor of the Trust and had the power to revoke Robert's contributions to the Trust; (4) the judge erred by refusing to impose a constructive trust declaring Bobby's estate a 54.33 percent owner of the property; and (5) the judge erred by refusing to require Robert's estate to reimburse Bobby's estate for $163,000 he allegedly paid for the purchase of the property and $79,403 he allegedly paid for capital improvements.

Plaintiffs' cross appeal contends the judge erred by not allowing them to amend the complaint to assert a claim of undue influence regarding the South Carolina property. Plaintiffs claim the judge erred by failing to award Robert's estate litigation costs and attorney's fees as tort damages for the undue influence.

We affirm for the reasons expressed in Judge Gummer's thorough and well-reasoned oral opinion. We add the following comments.

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A. Defendants' Appeal

"It is well-settled that a court's primary function is to enforce the testator's expressed intent with respect to a testamentary trust." In re Est. of Bonardi, 376 N.J. Super. 508, 515 (App. Div. 2005). The court's "duty is to 'uphold testamentary dispositions of property, made through the medium of trusts, instead of searching for reasons for avoiding them, or dealing with them with any degree of disfavor.'" Ibid. (quoting Fid. Union Tr. Co. v. Margetts, 7 N.J. 556, 565 (1951)).

"[T]he goal always is the ascertainment of the testator's intent and it is not to be thwarted by unduly stressing 'the literal meaning' of his [or her] words." In re Tr. of Nelson, 454 N.J. Super. 151, 158 (App. Div. 2018) (first alteration in original) (quoting Fid. Union Tr. Co. v. Robert, 36 N.J. 561, 565 (1962)). Examining the probable intent of a trust is a two-step process, first involving the interpretation of the existing trust, and then, when warranted by evidence, reformation. Nelson, 454 N.J. Super. at 159-60 ("[R]eformation involves remaking or modifying an instrument, to correct mistakes, to fulfill an unexpressed intention, or to address circumstances that were unforeseen."). "The preponderance-of-the-evidence standard of proof applies to interpretation;

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however, the more rigorous clear-and-convincing standard of proof applies to reformation." Id. at 160.

Here, there was no difficulty surmising testator's intent because the Trust was clearly worded, and Bobby was never designated as a trustee. The unambiguous language of the Trust expressly stated Bobby would receive the Manalapan property only if he survived Robert and Mary Ann. Further, the Trust contemplated a scenario where Bobby predeceased a surviving grantor. Indeed, the Trust included an "Alternate Beneficiary Distribution" provision, which stated: "In the event that . . . [Bobby or Donna] predeceases the surviving Grantor" and the deceased final beneficiary has no surviving children, "then his or her share shall be distributed immediately to the surviving named final beneficiary." Therefore, as here, where Bobby predeceased Mary Ann and had no surviving children, his share would have to be distributed to Donna, not Bobby's estate.

Furthermore, N.J.S.A. 3B:31-3 defines a settlor as

a person, including a testator, who creates, or contributes property to, a trust. If more than one person creates or contributes property to a trust, each person is a settlor of the portion of the trust property attributable to that person's contribution except to the extent another person has the power to revoke or withdraw

that portion.

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Additionally, a constructive trust should "be impressed in any case where to fail to do so will result in an unjust enrichment." D'Ippolito v. Castoro, 51 N.J. 584, 588 (1968). "Generally all that is required to impose a constructive trust is a finding that there was some wrongful act, usually, though not limited to, fraud, mistake, [or] undue influence . . . which has resulted in a transfer of property." Id. at 589.

We have no reason to second guess Judge Gummer's detailed fact and credibility findings that defendants failed to meet their burden of proof to establish Bobby was a settlor. As the judge noted, the proofs presented allegedly showing Bobby purchased the Manalapan property were not persuasive. Nor is there any evidence to convince us the judge erred by not imposing a constructive trust or reimbursing Bobby's estate for the funds he allegedly spent for the benefit of the Trust. The preponderance of the evidence showed the quitclaim deed improperly removed the property from the Trust and to let the transaction stand would unjustly enrich defendants. Also, defendants did not meet their burden to prove an entitlement to reimbursement of the funds allegedly spent.

B. Plaintiffs' Cross-Appeal
The power to permit a party to amend its pleadings is left to the sound

discretion of the trial judge. R. 4:9-1. The "exercise of discretion requires a

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two-step process: whether the non-moving party will be prejudiced, and whether granting the amendment would nonetheless be futile." Notte v. Merchs. Mut. Ins. Co., 185 N.J. 490, 501 (2006). "[T]he factual situation in each case must guide the court's discretion, particularly where the motion is to add new claims or new parties late in the litigation." Bonczek v. Carter-Wallace, Inc., 304 N.J. Super. 593, 602 (App. Div. 1997). We review such determinations for an abuse of discretion. Fisher v. Yates, 270 N.J. Super. 458, 467 (App. Div. 1994).

"[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 . . . ." In re Est. of Folcher, 224 N.J. 496, 512 (2016) (alteration in original) (quoting In re Est. of Stockdale, 196 N.J. 275, 302-03 (2008)). "[W]hen there is a confidential relationship coupled with suspicious circumstances, undue influence is presumed and the burden of proof shifts to the will proponent to overcome the presumption." Folcher, 224 N.J. at 512 (quoting Stockdale, 196 N.J. at 303).

Judge Gummer found plaintiffs pled neither a confidential relationship nor a lack of capacity on Mary Ann's part to support an undue influence claim. She stated:

      

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Even applying the liberal standard that the [c]ourt must, searching the complaint in depth and with liberality, the [c]ourt does not see the fundament of a cause of action based on undue influence.

. . . [T]hat in and of itself is enough to keep it out of the case. It is grossly unfair to a defendant to raise at the last minute an undue influence claim not present in the complaint. It prevented . . . defendants from being able to bear any burden that shifted to them based on the existence of a confidential relationship.

We are unconvinced the judge abused her discretion.

Finally, we review a trial judge's determination whether to assess attorney's fees for an abuse of discretion. Mears v. Addonizio, 336 N.J. Super. 474, 479-80 (App. Div. 2001). Plaintiffs cite In re Estate of Lash, 169 N.J. 20, 27 (2001) and argue the judge should have awarded attorney's fees as tort damages for defendants' breach of fiduciary duty. Lash is inapposite because there, our Supreme Court held attorney's fees are compensable in tort where the breach of fiduciary duty arises from an attorney-client relationship, which did not exist here. Id. at 34; see also Innes v. Marzano-Lesnevich, 224 N.J. 584, 596 (2016).

Affirmed.

 

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Guardian here could seek to void transfer JANETTE FAULK, as guardian of the person of HARRY FAULK, a/k/a HAROLD C. FAULK, an adjudged incapacitated person, Plaintiff-Respondent, v. ANNE MARTUCCI,

 Guardian here could seek to void transfer

JANETTE FAULK, as guardian of the person of HARRY FAULK, a/k/a HAROLD C. FAULK, an adjudged incapacitated person,

Plaintiff-Respondent, v.

ANNE MARTUCCI,

Defendant-Appellant. _____________________________

Submitted January 11, 2021- Decided January 26, 2021

Before Judges Fasciale and Mayer.

On appeal from the Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. C- 000160-18.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

DOCKET NO. A-2234-19T1

Defendant Anne Martucci (Anne) appeals from a December 24, 2019 order awarding a constructive trust in favor of plaintiff Janette Faulk (Janette) as guardian of Harry Faulk (Harry), an adjudged incapacitated person. We affirm.

Harry began his career in construction demolition and later transitioned to heavy-equipment and machinery scrap sales. He operated Quick Way Contracting Company (Quick Way) on property located on Tax Block 284, Lots 9.01, 10.02, 9.03, and 11.04 in Kearny. Lots 9.01 and 10.02 are referred to as the "front lots," while Lots 9.03 and 11.04 are referred to as the "back lots" of the property colloquially known as the Meadows.

In the 1980s, Harry was a member of Harrison Station, a partnership compromised of Harry and two others. On January 11, 1982, Harrison Station purchased the front lots for $50,000 from Erie Lackawanna Railway Company. Thereafter, Harry purchased the lots from Harrison Station. Ralph Fucetola, Esq. (Fucetola), Harry's friend and personal attorney, represented him in the transaction.

Anne worked as Harry's secretary and bookkeeper. Harry was previously married but never divorced. Anne and Harry's professional relationship

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eventually became a personal one. The two had a martial-type relationship for forty years.

On December 1, 1983, Fucetola created Edgar-Charles Realty Corporation (Edgar-Charles) for Harry with Anne as incorporator and co-trustee, along with Harry's sister, June Ochsner (June). On April 12, 1984, Harry transferred title to the front lots to Edgar-Charles for nominal consideration. Fucetola represented both Harry and Edgar-Charles in the transaction. When the back lots became available for purchase in 1984, Fucetola again represented both parties in the transaction.

From 1983 onward, Harry operated Quick Way on the premises. Edgar- Charles did not use or maintain the property, it conducted no business other than holding legal title to the Meadows, and it did not have a bank account.

On June 6, 1987, June's attorney resigned her subscription in Edgar- Charles and received nothing from her subscription. On June 23, 2005, defendant, for Edgar-Charles, transferred the back lots to Anne Martucci, Inc. by quitclaim deed for nominal consideration. The deed made no mention of how the grantor acquired its interest. Defendant conceded that Harry did not acknowledge the transfer of title of the front lots in writing.

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In 2014, Harry suffered a stroke which rendered him physically and mentally incapacitated. Thereafter, on April 13, 2015, on behalf of Edgar- Charles, defendant deeded the front lots to herself for nominal consideration. That same day, Anne Martucci, Inc., deeded the back lots to herself for nominal consideration, therefore assuming complete and personal ownership of the Meadows.

In August 2018, Harry's daughter Janette sought and was granted appointment as guardian of Harry. After learning of the contested interest in the property, and acting as guardian of the person, plaintiff filed her complaint on October 10, 2018, seeking to void defendant's legal title to the Meadows. On November 28, 2018, defendant filed a motion to dismiss for lack of standing, which plaintiff opposed. On January 4, 2019, the trial judge entered an order denying the motion. Thereafter, on January 15, 2019, defendant filed her answer.

Judge Jeffrey R. Jablonski presided over a bench trial from August 26, 2019 to August 28, 2019. Thereafter, on December 24, 2019, the judge entered the order under review and rendered a comprehensive written opinion. The judge found that Harry retained an equitable interest in the property and that Anne wrongfully transferred the property to herself. After imposing the

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constructive trust for Harry, he ordered Anne to transfer the property and provide an accounting, which the judge gave Janette the right to recover.

On February 5, 2020, defendant filed this appeal. According to the notice of appeal and the case information statement (CIS), defendant appeals exclusively from the December 24, 2019 order.

On appeal, defendant raises the following arguments for this court's consideration:

POINT I

THE PLAINTIFF, AS STATUTORY GUARDIAN OF THE PERSON OF HARRY . . . , LACKED STANDING TO INSTITUTE THIS ACTION SEEKING RECOVERY OF PROPERTY ALLEGED TO HA VE BEEN HELD IN CONSTRUCTIVE TRUST BY DEFENDANT RESULTING FROM TRANSFERS OVER THIRTY-FIVE YEARS AGO. RATHER, THAT POWER RESIDED EXCLUSIVELY IN THE APPOINTED GUARDIAN OF [HARRY'S] PROPERTY[.]

POINT II

THE TRIAL JUDGE ERRED IN CONCLUDING THAT PLAINTIFF HAD SUSTAINED HER BURDEN OF PROVING, BY CLEAR AND CONVINCING EVIDENCE, THE ELEMENTS

 

REQUIRED FOR IMPOSITION CONSTRUCTIVE TRUST. AS A RESULT, DEFENDANT'S MOTION TO DISMISS SHOULD HAVE BEEN GRANTED[.]

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POINT III

THE TRAL [JUDGE'S] OPINION IS SO FATALLY FLAWED, INCLUDING UNSUPPORTED ASSERTION[S] OF FACT AND ERRONEOUS CONCLUSIONS OF LAW, THAT IT MUST BE SET ASIDE[.]

POINT IV

THE CASE SHOULD HAVE BEEN, AND MUST NOW BE, DISMISSED ON THE BASIS OF LACHES[.]

POINT V

THE TRIAL [JUDGE] COMMITTED PREJUDICIAL ERROR BY PERMITTING THE CROSS- EXAMINA TION OF DEFENDANT'S SOLE AND CRUCIAL WITNESS, AN A TTORNEY , ON PROFESSIONAL ETHICS VIOLA TIONS COMMITTED BY HIM OVER A PERIOD OF YEARS, NONE OF WHICH TOUCH ON THE SUBJECT MATTER OF HIS TESTIMONY AND THEREBY DID NOT SERVE TO IMPEACH HIM. IT WAS ALSO ERROR TO PERMIT IMPEACHMENT OF THAT WITNESS BY HIS FAILURE TO OBTAIN A WRITTEN WAIVER OF A POTENTIAL CONFLICT OF INTEREST, WHEN THE RULES OF PROFESSIONAL CONDUCT APPLICABLE AT THE TIME DID NOT REQUIRE A WRITTEN WAIVER[.]

Defendant also raises the following arguments in reply, which we have renumbered:

  

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POINT [VI]

PLAINTIFF LACKED STANDING TO INSTITUTE AND PROSECUTE THIS ACTION.

A. The Issue is Properly Before this Court.

B. On the Merits, the [T]rial [Judge's] Ruling [W]as [I]n [E]rror.

POINT [VII]

PLAINTIFF FAILED TO PROVE AN ACTIONABLE WRONGFUL ACT.

POINT [IX]

THE TRIAL [JUDGE'S] OPINION CONTAINS SO MANY ERRORS THAT IT CANNOT BE RELIED UPON TO SUPPORT THE JUDGMENT.

POINT [X]

LACHES SHOULD HAVE BARRED THE RELIEF GRANTED TO PLAINTIFF.

POINT [XI]

DEFENDANT WAS GREVIOUSLY PREJUDICED BY THE IMPROPER CROSS-EXAMINATION OF . . . FUCETOLA.

We reject defendant's arguments and affirm.

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I.
We first reject defendant's argument that plaintiff lacked standing to

institute this action. Although we conclude the issue is not before this court, even if it was, plaintiff has statutory standing as Harry's guardian of the person to seek recovery of property held in constructive trust by defendant.

Rule 2:5-1(e)(3)(i) requires defendant to "designate the judgment, decision, action or rule, or part thereof appealed from" in the notice of appeal. "[W]e review 'only the judgment or orders designated in the notice of appeal.'" Kornbleuth v. Westover, 241 N.J. 289, 298-99 (2020) (quoting 1266 Apartment Corp. v. New Horizon Deli, Inc., 368 N.J. Super. 456, 459 (App. Div. 2004)). It is those orders and judgments alone "which are subject to the appeal process and review[.]" 1266 Apartment Corp., 368 N.J. Super. at 459 (citing Sikes v. Twp. of Rockaway, 269 N.J. Super. 463, 465-66 (App. Div.), aff'd, o.b., 138 N.J. 41 (1994)); see Park Crest Cleaners, LLC v. A Plus Cleaners and Alterations Corporation, 458 N.J. Super. 465, 472 (App. Div. 2019) (noting that "a party's failure to seek review of cognizable trial court orders or determinations . . . by identifying them in the notice of appeal . . . is largely fatal").

Here, the only order accompanying defendant's notice of appeal is the December 24, 2019 order. Defendant did not include the January 4, 2019 order

       

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denying defendant's motion to dismiss based on standing grounds in the notice of appeal or appendix. While defendant did mention the issue in the CIS as one of the issues being appealed, brief inclusion in the CIS alone is insufficient as a matter of procedure. Cf. Synnex Corp. v. ADT Sec. Servs. Inc., 394 N.J. Super. 577, 588 (App. Div. 2007) (court permitted consideration of an order granting partial summary judgment that was identified as an order being appealed in the CIS where the issue of the validity of the exculpatory clause was also listed as the primary issue on appeal). The issue of standing is therefore not before this court on appeal. We nevertheless add the following remarks about plaintiff's standing as Harry's guardian of the person.

"Standing is not a jurisdictional issue in New Jersey," Capital One, N.A. v. Peck, 455 N.J. Super. 254, 259 (App. Div.), certif. denied, 235 N.J. 469 (2018), but merely "an element of justiciability[.]" Deutsche Bank Nat'l Tr. Co. v. Russo, 429 N.J. Super. 91, 102 (App. Div. 2012) (quoting New Jersey Citizens Action v. Riviera Motel Corp., 296 N.J. Super. 402, 411 (App. Div. 1997)). To have standing to raise an issue, "a party must have 'a sufficient stake and real adverseness with respect to the subject matter of the litigation.'" Triffin v. Somerset Valley Bank, 343 N.J. Super. 73, 81 (App. Div. 2001) (quoting In re Adoption of Baby T., 160 N.J. 332, 340 (1999)). "Standing has been broadly

         

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construed in New Jersey as '[the] courts have considered the threshold for standing to be fairly low.'" Ibid. (quoting Reaves v. Egg Harbor Twp., 277 N.J. Super. 360, 366 (App. Div. 1994)). Although "a litigant may not [ordinarily] claim standing to assert the rights of a third party," Jersey Shore Med. Ctr. v. Estate of Baum, 84 N.J. 137, 144 (1980), "standing to assert the rights of third parties is appropriate if the litigant can show sufficient personal stake and adverseness so that the [c]ourt is not asked to render an advisory opinion." Ibid.

Standing may be statutorily conferred. See, e.g., Triffin v. Bridge View Bank, 330 N.J. Super. 473, 477 (App. Div. 2000). Relevant to this appeal, Rule 4:26-2(a) provides that "a mentally incapacitated person shall be represented in an action by the guardian of either the person or the property . . . or if a conflict of interest exists . . . by a guardian ad litem." Under N.J.S.A. 3B:12-57(f)(10), which governs guardians:

     

[A] guardian of the person of a ward shall exercise authority over matters relating to the rights and best interest of the ward's personal needs, only to the extent adjudicated by a court of competent jurisdiction. In taking or forbearing from any action affecting the personal needs of a ward, a guardian shall give due regard to the preferences of the ward, if known to the guardian or otherwise ascertainable upon reasonable inquiry. To the extent that it is consistent with the terms of any order by a court of competent jurisdiction, the guardian shall:

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....

If necessary, institute an action that could be maintained by the ward including but not limited to, actions alleging fraud, abuse, undue influence and exploitation.

N.J.S.A. 3B:12-57(f)(10) clearly identifies undue influence, fraud and related claims that that may be brought by the guardian of the person, therefore conferring standing on plaintiff under these circumstances. Plaintiff believed Harry was the true owner of the Meadows and its income stream notwithstanding how it was legally titled by his attorney. Plaintiff argues that defendant's titling in her own name and the siphoning of the income stream for Harry's support and maintenance was contrary to her role as trustee of Edgar-Charles. This theory is related to undue influence, fraud, and exploitation, with a remedy tied to Harry's financial support.

Whether the property guardian also could have brought the action or may have been more appropriate to bring the action does not alter the fact that the statute clearly confers standing on plaintiff. Defendant does not cite to any case barring the personal guardian's standing, and more importantly she does not cite a case that would have required dismissal of the complaint as opposed to a mere

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substitution of the guardian.1 The property guardian appeared in response to defendant's January 4, 2019 motion to dismiss and could have been substituted as the plaintiff in this action. Defendant has not identified anything that would have changed if the property guardian had simply substituted in or if defendant had joined her.

II.
We will not set aside the trial judge's findings of fact "'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[.]'" Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of No. Bergen, 78 N.J. Super 154, 155 (App. Div. 1963)). We must "give deference to the trial [judge] that heard the witnesses, sifted the competing evidence, and made reasoned conclusions." Griepenburg v. Twp. of Ocean, 220 N.J. 239, 254 (2015) (citing Rova Farms,

1 In a letter to the court, defendant submits that Repko v. Our Lady of Lourdes Medical Ctr, Inc., 464 N.J. Super. 570 (App. Div. 2020), which was published after the parties completed their briefing, undermines plaintiff's argument that defects in standing can be cured through substitution. We reject the application of Repko here, as there is no defect in standing and conclude that the decision does not warrant this court's dismissal of plaintiff's complaint or otherwise alter the outcome.

      

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65 N.J. at 483-84). "Deference is especially appropriate when the evidence is largely testimonial and involves questions of credibility." Cumberland Farms, Inc. v. N.J. Dept. of Environmental Protection, 447 N.J. Super. 423, 437 (App. Div. 2016) (quoting Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011)), certif. denied, 229 N.J. 149 (2017). We "give deference to the findings of [the] trial judge because they have the 'opportunity to hear and see the witnesses and to have the "feel" of the case, which a reviewing court cannot enjoy.'" In re Civil Commitment of A.Y., 458 N.J. Super. 147, 166 (App. Div. 2019) (quoting In re Civil Commitment of R.F., 217 N.J. 152, 174 (2014)).

"A constructive trust is a remedial device through which the 'conscience of equity' is expressed [and] it will be imposed when a person has acquired possession of or title to property under circumstances which, in good conscience, will not allow the property's retention." Thompson v. City of Atlantic City, 386 N.J. Super. 359, 375-76 (App. Div. 2006) (quoting Flanigan v. Munson, 175 N.J. 597, 608 (2003); Stewart v. Harris Structural Steel Co., Inc., 198 N.J. Super. 255, 266 (App. Div. 1984)), aff'd as modified, 190 N.J. 359 (2007). "The circumstances in which a constructive trust may be imposed are as extensive as required to reach an equitable result." Thompson, 386 N.J. Super. at 376.

          

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"[A] constructive trust is a powerful tool to be used only when the equities of a given case clearly warrant it." Flanigan, 175 N.J. at 611. Thus, the party asserting that a constructive trust should be imposed bears the burden of establishing its right to the remedy through clear and convincing evidence. Dessel v. Dessel, 122 N.J. Super. 119, 121 (App. Div. 1972), aff'd o.b., 62 N.J. 141 (1973). Under this standard, the party seeking the remedy "should produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established." Liberty Mut. Ins. Co. v. Land, 186 N.J. 163, 169 (2006) (quoting In re Purrazzella, 134 N.J. 228, 240 (1993)).

"[T]he imposition of a constructive trust requires a two-part finding that the res has been received or retained through a 'wrongful act' which 'unjustly enriches' the recipient." Thompson, 386 N.J. Super. at 376-77 (citing Flanigan, 175 N.J. at 608). A wrongful act is "usually, though not limited to, fraud, mistake, undue influence, or breach of a confidential relationship," D'Ippolito v. Castoro, 51 N.J. 584, 589 (1968) (citing Neiman v. Hurff, 11 N.J. 55, 93 (1952)), and can include "innocent misstatements, or even simple mistakes[.]" Flanigan, 175 N.J. at 609 (quoting Dan B. Dobbs, Remedies, § 4.3 (1973)).

Despite defendant's contentions to the contrary, the judge correctly opined that "the party asserting that a constructive trust should be imposed bears the

          

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burden of establishing its right to the remedy with clear and convincing evidence." Applying this standard, the judge found that plaintiff established both elements for imposition of a constructive trust.

First, the judge found the transfer was a wrongful act based on the following specific facts:

Fucetola less-th[a]n-credibly contradicted himself when questioned about his involvement with the formation of Edgar[-]Charles. Originally, he noted that [Harry] approached him to create this entity. However, he reversed himself at trial when he testified that it was the defendant's idea to establish this business organization.

Fucetola formed the entity uniquely, establishing the entity with two co-trustees, rather than the traditional corporate management structure. According to his trial testimony, the purpose of such a formation was to provide a right of survivorship between [June] and the defendant. However, no trust documents were presented to substantiate this purpose, and such a procedure is not recognized nor supported by statute or regulation.

Fucetola was unable to credibly explain the reason for the transfer from [Harry] to Edgar[-]Charles, and was similarly unable to explain why, if the transfer was bona fide, the defendant would then have had to transfer the properties to herself.

....

The defendant testified that, consistent with her position, that she provided most of the funding for the

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purchase of the lots. However, she fails to reconcile this assertion with the fact that the property was not placed in her own name, but rather in a corporate entity.

The source of the funding changed during her testimony. At first, she testified that the funds came from a successful jewelry business, but later, those funds resulted from an inheritance from her sister. No substantiating documentation was provided to support these assertions.

The defendant also noted that she realized funds from the other real estate holdings. However, a review of those deeds reveals that the purchase price reflected only the assumption of existing mortgages rather than any net profits from the sales.

[Defendant] does not provide any plausible explanation about the creation of the business entity being created exclusively and personally from [Harry's] own family.

Despite her position as a trustee, and her self-admitted sophistication in real estate matters, she was unable to explain the import of such a designation, and the fact that despite her position that she owned the properties individually, she, in fact, did and could not because of the ownership under Edgar[-]Charles.

She noted that she received funds from an inheritance from her sister or that she raised these funds from a jewelry business. No specifics were provided to lend credibility with substantiating evidence. Despite her presence and her self-acknowledged business acumen, she did not understand the definition, import, responsibility, and obligation of a trustee's ownership.

The defendant's representation that the defendant was the owner of the premises and had exclusive control

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over it is belied by the lack of customary evidence to demonstrate that ownership. Specifically, no business checking accounts were presented at trial. Other than her representations, no proof of either the payment or receipt of $10,000.00 per month in rent was credibly established. No business tax returns were presented and accompanied by an unconvincing explanation that the records existed elsewhere and that she was prohibited from access[ing] them.

Rather than reporting her present title as a co-trustee of Edgar[-]Charles, the defendant misrepresented herself as the president of that entity in formal applications and in supporting certifications.

Property taxes were not paid with business checks. Rather, they were paid from a joint account owned by the defendant with [Harry].

Actions taken after [Harry's] stroke cast doubt on the perceived and purported exclusive ownership of the property by the defendant.

Specifically, if the property were vested exclusively with the defendant, and after the "resignation of subscription", there would be no reason, if [Harry] had indeed divested himself of any interest in the properties vis-a-vis Edgar[-]Charles' holdings, to transfer the parcels to herself.

Rent checks for others' use of the premise for parking activities were made directly to [Harry] rather than to the record owner of the premises- Edgar[-]Charles.

The judge further noted that:

Trial testimony supported by documentary evidence revealed that [Harry] participated or orchestrated some

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unique property acquisitions and dispositions. Examples include the transfer of property ownership for consideration reflected to be the assumption of a mortgage and properties were transferred to individuals and entities who essentially were employed to hold those assets for other or future purposes. Considering the less-than-consistent testimony provided by . . . Fucetola, the fact that . . . Fucetola had a continuing and on-going representational relationship with [Harry] in a variety of endeavors, and the lack of the defendant's ability to provide specific and credible evidence of her ownership activities of Edgar[-]Charles, it is reasonable to infer that this endeavor was another unique property management technique of [Harry]. Despite the arguments that [Harry] engaged in substantial financial largesse to those within his family and outside of it, the record, and the reasonable circumstantial inferences from those facts does not support the defendant's assertion that it was his intent to divest himself of any equitable ownership of any property. The opposite, however, is both reasonable, supported, and true. Even though [Harry] might have removed himself from the legal title to this property, the plaintiff has established both by direct and circumstantial proof, clearly and convincingly, that he remained in equitable control.

Next, the judge found that defendant was unjustly enriched. noted that

[e]ach time that a transfer took place, it was related to a watershed moment between the defendant and [Harry]. The first transfer took place following a fight in 2005 in which the defendant divested [Harry] of the equitable rights that he had in a portion of the Meadow's property. Similarly, in 2015, after [Harry] suffered his stroke and after a judicial determination of incapacity, she moved the entirety of the property to her own name.

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In effect, this action impermissibly removed a sizable asset from the reach of [Harry's] financial guardian and unreasonably and prejudicially deprived him of a significant source of funds that would be used for his care.

These findings are supported by substantial credible evidence in the record, and largely based on the judge's findings that the defendant and Fucetola were incredible witnesses, to which this court affords substantial deference. We therefore see no reason to second-guess the trial judge's findings.

Likewise, we see no reason to second-guess the trial judge's factual findings. Specifically, defendant contends that the trial judge failed to distinguish between the lots for purposes of asserting true possession, erroneously found that Fucetola represented Harry in a conflicted interest transaction, failed to appreciate that Harry's sister contributed to the front lots, and the judge should have believed that defendant was a jewelry mogul who inherited money to pay for the properties.

The chronological distinction between the acquisition of the front and rear lots carries no weight, as the question at issue is whether Edgar-Charles and its co-trustees were supposed to do something other than hold legal title to the land. The trial judge did not fail to appreciate Fucetola's exclusive representation of Edgar-Charles. Rather, the question before him was what was Edgar-Charles

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and why was title being placed in it. The judge found that the evidence established that Harry retained Fucetola to incorporate Edgar-Charles, and it was incorporated with co-trustees close to Harry. Harry's sister received nothing when she resigned, while Harry continued to operate his businesses for decades, paying himself no rent. Moreover, the judge did not fail to appreciate June's contribution to the front lots. According to defendant's trial testimony, defendant and a business partner paid for the lots. Finally, the judge did not err by not giving weight to defendant's testimony about where her inheritance came from. The judge noted that the story repeatedly changed and the inheritance that somehow paid for the properties in the early 1970s reappeared twice more for the purchase of the front and rear lots. After considering Fucetola's affidavit, the judge properly rejected defendant's explanation of the formation of Edgar- Charles and found her incredible, as she had not produced any evidence of rent payments which would prove a landlord-tenant relationship. These findings are supported by substantial credible evidence in the record

III.
"[T]o maintain a laches defense against a plaintiff's delayed claim, a

defendant must assert the defense in a diligent fashion." Mancini v. Twp. of Teaneck, 179 N.J. 425, 433 (2004). "In other words, diligence is a two-way

 

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street." Ibid. "A mere one-time mention of laches in a defendant's answer[, like here,] is insufficient to preserve it through the span of litigation." Ibid.; see Williams v. Bell Tel. Labs. Inc., 132 N.J. 109, 118 (1993) (observing that litigant in that case "had waived the statute-of-limitations defense by its failure to assert that defense at any stage of the proceedings after pleading the statute in its [a]nswer").

Laches "operates to bar a plaintiff from prosecuting all or part of an action based on acts occurring months or years earlier[.]" Mancini, 179 N.J. at 435. "[W]hether laches should be applied depends upon the facts of the particular case and is a matter within the sound discretion of the trial [judge]." Id. at 436 (quoting Garrett v. General Motors Corp., 844 F.2d 559, 562 (8th Cir. 1988)). This court "considers three factors as being especially relevant. They are: (1) whether an alleged act is unreasonably distant in time, (2) whether a plaintiff knew or should have known of a valid claim based on that act, and (3) whether the plaintiff's delay in filing a claim has caused undue prejudice to a defendant." Ibid. (citing National Railroad Passenger Corp. v. Morgan, 536 U.S. 101, 121- 22 (2002); Shepherd v. Hunterdon Developmental Center, 174 N.J 1, 23 (2002)).

Defendant had opportunities before and after trial to advance a laches defense and failed to do so. Specifically, the trial judge's January 4, 2019 order

   

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called for pre-trial submissions. Defendant only asserted the defense in her answer and argued that it was only "when the judge issued his opinion" that she realized the prejudice caused by the delay. This contention is belied by the record. The record reflects that defendant claimed to be receiving $10,000 per month in base rent from Harry up until his stroke in October 2014. Plaintiff filed this action four years later and defendant had no proof of receiving $120,000 per year from Harry.

Defendant claims that plaintiff caused the delay by bringing the action thirty-five years after the fact. However, placement of legal title thirty-five years ago did not even give rise to the claim. The actions of the co-trustees were not inconsistent with those of Harry until 2014 when he had a stroke and thereafter claimed to be the true owner of the back lots. Plaintiff brought this action four years later in 2018 after she was appointed as Harry's guardian, therefore giving her standing to litigate the issue. With this in mind, and applying the factors set forth in Mancini, the alleged act was not unreasonably distant in time and plaintiff found out four years earlier of the ownership issue in the only way she could have. Additionally, defendant cannot show prejudice where she claims that Harry was her $10,000 per-month tenant up until his stroke, yet failed to proffer tax returns, checks, or bank statements to evidence

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decades of payments, even those as recent as 2014. Therefore, even if defendant properly asserted the defense, it would have been meritless. And despite defendant's assertion, there was no reason for the judge to sua sponte apply it.

IV.
Lastly, we reject defendant's argument that the judge erred by allowing

plaintiff's counsel to cross-examine defendant's sole attorney witness on disciplinary transgressions.

"'[Trial judges] have a broad discretion in determining the scope of cross- examination.'" Manata v. Pereira, 436 N.J. Super. 330, 343 (App. Div. 2014) (quoting State v. Silva, 131 N.J. 438, 444 (1993)). "[This] court will not interfere with the exercise of such discretion unless clear error and prejudice is shown.'" State v. Adames, 409 N.J. Super. 40, 61 (App. Div. 2009) (quoting Glenpointe Assocs. v. Twp. of Teaneck, 241 N.J. Super 37, 54 (App. Div.), certif. denied, 122 N.J. 391 (1990)).

N.J.R.E. 607 states in relevant part that "for the purposes of attacking or supporting the credibility of a witness, any party including the party calling the witness may examine the witness and introduce extrinsic evidence relevant to the issue of credibility[.]" This rule "permits the introduction of extrinsic

    

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evidence affecting a witness's credibility regardless of whether that evidence is relevant to any other issue in the case." State v. Parker, 216 N.J. 408, 418 (2014). The court has held that that when misconduct is an issue in the case, the fact that the attorney was subject to disciplinary proceedings unrelated to the case are admissible to impeach the attorney's credibility. See Fuschetti v. Bierman, 128 N.J. Super. 290, 298 (Law Div. 1974) (noting that for the purpose of attacking credibility it may be shown on cross-examination that a witness is a disbarred attorney).

On cross-examination, the trial judge allowed plaintiff's counsel to confront the attorney with several disciplinary actions by the Office of Attorney Ethics for inadequate record keeping. Plaintiff's counsel offered this line of inquiry to call the attorney's credibility into question, which the trial judge admitted over objection as "relevant under the circumstances." The cause for the witness's ethical violations is relevant here, where there was an alleged conflicted interest transaction. Moreover, inadequate record keeping does bear upon credibility and veracity, especially given Fucetola's involvement with the incorporation of Edgar-Charles and the subsequent title transfers.

Notably, the trial judge's written opinion did not make specific mention of the ethical matters or how they impacted his credibility assessment.

  

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Defendant concedes this, but nonetheless contends that the "[trial judge] was quite clear in finding [the attorney witness] less than credible and stressing the importance of credibility generally in reaching his ultimate conclusion," resulting in an ultimate prejudice to defendant. There was no jury and no impact on the bench trial. As such, we see no prejudice. The cross-examination of Fucetola was therefore appropriate here.

Affirmed.

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