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In re Settlement of Accounts of Unanue

May 19, 1998

IN THE MATTER OF THE SETTLEMENT OF THE ACCOUNTS OF JOSEPH UNANUE AND FRANK UNANUE, TRUSTEES UNDER THE TRUST AGREEMENT DATED NOVEMBER 16, 1970, AS AMENDED, BY AND AMONG PRUDENCIO UNANUE, AS GRANTOR, AND PRUDENCIO UNANUE, JOSEPH UNANUE AND ANTHONY UNANUE, AS TRUSTEES OF SIXTEEN TRUSTS THEREUNDER.


Before Judges Pressler, Wallace and Carchman.

The opinion of the court was delivered by: Per Curiam

[9]    Argued May 5, 1998

On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, whose is reported in part at 255 N.J. Super. 362 (Law Division 1991). *fn1

By these appeals, which we consolidate for purposes of this opinion, defendant Charles Unanue challenges orders of the Chancery Division, Probate Part, approving the final accounting of the trustees of a trust established by Prudencio Unanue on November 16, 1970; rejecting defendant's claim to any interest in the assets of the trust or the assets of the estate of Prudencio Unanue, who died in 1976; validating an agreement made in 1972 between defendant and Goya Foods, Inc. and its affiliates and a 1974 amendment of that agreement by which defendant waived his interest in those assets; determining that defendant's breach of the 1974 agreement entitled plaintiffs to compensatory damages including attorney fees; and assessing damages against defendant in the amount of $6,890,820.07 together with a portion of the fee of the special master appointed to address the damages issue.

We affirm all the orders appealed from substantially for the reasons stated by Judge Kole and judge Lesemann for reaching their respective determinations. We add only the following observations.

Because of the detailed factual recitations and findings contained in Judge Kole's exhaustive reported opinion, we need make only brief reference to the salient facts. The decedent and trust settlor, Prudencio Unanue, born in Spain, moved to Puerto Rico in 1904 to engage in various business ventures. He married his wife Carolina in Puerto Rico in 1921. Following his marriage, he came to the United States, where he had earlier studied, to earn his livelihood. Carolina and their first-born son, defendant Charles, joined him in Brooklyn, New York, shortly thereafter. Two more sons were born to the Unanues while they lived in Brooklyn, Joseph and Anthony. In 1929 the family moved to Ridgefield Park in New Jersey where the fourth son, Frank, was born. Five years later, the family moved to Bogota, New Jersey, and some years thereafter bought the house Prudencio had originally rented. The family lived in that house until 1962 when Prudencio and Carolina bought a new house in Tenafly, New Jersey. By that time all the sons, who had grown up and attended school in Bergen County and had completed their military service, had married and established their own homes. Prudencio was naturalized as an American citizen in 1946 and Carolina in 1956. It was not until 1949 or 1950 that either Prudencio or Carolina left New Jersey to visit Puerto Rico, and in the late 1950's, they had established the practice of spending the winter months in Puerto Rico.

By 1936, Prudencio, who had engaged in various business ventures in New York, established a sole proprietorship which ultimately became Goya Foods, Inc., and its various affiliates. The company was headquartered in New York City until 1974, when the business was moved to Secaucus, New Jersey. All the sons were engaged in the Goya operations, and by 1969, when he was dismissed from his positions following family business disputes, defendant was the chief operating and chief executive officer of all the companies.

In 1970 Prudencio completed his final estate plan by executing both an inter vivos trust and a will. He conveyed to the trust, whose beneficiaries were all his grandchildren, including the children of defendant, his principal asset, namely, his shares in Goya. His residuary estate "poured over" into the trust. In the meantime, the family disputes between defendant and his brothers and father, which had already been the subject of protracted litigation, were finally settled by the execution of a settlement agreement in 1972 and an amended agreement in 1974 between defendant and the Goya companies for the stated benefit not only of the businesses but also for the benefit of defendant's parents and brothers and their respective heirs and assigns. By these agreements, Charles, for a substantial consideration, sold his interest in the Goya companies back to the companies, agreed to the dismissal of all litigation, waived all his rights to the companies and his father's estate, and, by the 1974 amendment, covenanted

... for the benefit of the Companies, the Additional Companies, Charles' Brothers, Prudencio Unanue and their estates, heirs, beneficiaries, successors, legal representatives and assigns, that he irrevocably disclaims and renounces any and all interests he may have or may hereafter have in the assets or estate of Prudencio Unanue, whether under any will, trust, by intestacy, by virtue of relationship, by other operation of law, or otherwise, and that Charles will not at any time or in any way contest, challenge, interfere with, hinder, or seek to invalidate, set aside or impair, in whole or in part, in any court, tribunal, agency or any other governmental organ or forum (of any jurisdiction) or otherwise, any will, gift, trust, other testamentary or inter vivos Disposition by operation of law or any other Disposition of property of any kind of or by Prudencio Unanue, or institute, bering, prosecute or make any claim, suit, proceeding (including, without limitation, any proceeding to construe any testamentary or inter vivos instrument), cause of action or objection (including, without limitation, objection to the jurisdiction of any court) relating to any such will, gift, trust or other Disposition or devolution. Charles understands and acknowledges that he is not a beneficiary or recipient of any property or interest under any present instrument relating to the Disposition of the assets or estate of Prudencio Unanue and agrees to execute all documents and take any and all actions in any jurisdiction necessary or required effectively to waive or renounce any rights or claim he may have or may hereafter have with respect to any of the matters referred to in this Section 6.03 under any of the foregoing.

The 1974 agreement further provided that in the event of a suit or proceeding by a party to the agreement or by Prudencio, the losing party was obligated to pay as liquidated damages twice the costs and expenses of the litigation, including reasonable attorneys' fees.

Prudencio died in Puerto Rico in 1976. His will was probated in Bergen County. The trust continued, as theretofore, to be administered in Bergen County. Interim accountings were rendered in Bergen County. All went smoothly until 1987, when defendant claimed entitlement to an inheritance from his father and an interest in the Goya shares that had been placed in trust. This litigation ensued by the trustees who sought a declaration that defendant had no interest either in the trust or the estate.

The linchpin of defendant's claim is that Prudencio was a domiciliary of Puerto Rico both in 1970, when he executed the trust document, and in 1976, when he died. Defendant asserts that under Puerto Rican law, which therefore governed Prudencio's estate, he could not have been disinherited and hence that his waivers contained in the 1972 and 1974 agreements were void. He also argues that Puerto Rican law of conjugal partnership applied to the Disposition of Prudencio's shares of Goya and hence that at least half of those shares remained vested in Carolina, through whose estate he, defendant, would take.

The domiciliary issue was tried over the course of 170 trial days by Judge Kole, whose detailed findings and Conclusions are set forth in his opinion reported as Matter of Unanue, 255 N.J. Super. 362 (Law. Div. 1991). The voluminous record amply supports his findings on which he based his Conclusion that Prudencio's domicile prior to 1970, in 1970, and in 1976 remained in New Jersey. There is no basis at all in this record for us to interfere with either his findings or Conclusions. See, e.g., Rova Farms Resort v. Investors Ins. Co., 65 N.J. 474, 483-484 (1974). We therefore affirm Judge Kole's decision.

The inevitable consequence of the domiciliary decision, as Judge Lesemann concluded in granting plaintiffs' summary judgment motion, is that New Jersey law applies to all questions arising out of the administration of Prudencio's trust and estate. It is well-settled that New Jersey law does not prohibit the disinheriting of an adult child. See, e.g., In re Estate of Campbell, 71 N.J. Super. 307, 310 (Cty. Ct. 1961). *fn2 There is, therefore, no legal basis upon which defendant can successfully argue that he is entitled to a share of ...


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