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Pivnick v. Beck

December 20, 1999


Before Judges King, Carchman and Lefelt.

The opinion of the court was delivered by: Per Curiam


Submitted November 10, 1999

On appeal from the Superior Court of New Jersey, Law Division, Essex County.

Plaintiff Leonard Pivnick sued defendant David Beck, and his law firm, Sills Cummis Zuckerman Radin Tischman Epstein & Gross, for legal malpractice. Plaintiff alleged that Beck negligently drafted his father's revocable trust agreement in a manner that was directly contrary to his father's intent. Because plaintiff failed in an earlier probate proceeding to prove by clear and convincing evidence that the trust agreement was contrary to Pivnick's father's intent, the motion judge concluded that collateral estoppel barred the current malpractice action and dismissed plaintiff's complaint. Plaintiff appealed, claiming that malpractice actions must only meet a preponderance burden of proof. Thus, plaintiff argues that the motion judge erred because collateral estoppel does not apply when the prior litigation involved a higher burden of proof. We affirm.


Harry Pivnick ("Harry") was an independent businessman survived by two children, Leonard Pivnick ("Leonard" or "plaintiff"), his son, and Audrey Berman ("Audrey"), his daughter. Harry also had five grandchildren, three from Leonard and two from Audrey. When Harry died on July 8, 1992, he left a will, executed on August 2, 1989, and the Harry Pivnick Revocable Trust ("Trust Agreement"), executed on April 1, 1992. Both of these instruments were prepared by David Beck, Esq., of the Sills Cummis Zuckerman Radin Tischman Epstein & Gross firm ("Beck" or "defendants").

Among other bequests, Harry's will left $400,000 to Audrey and $10,000 to each of the five grandchildren. The Trust Agreement conveyed all the stock from Harry's business, the Acme Holding Co., Inc. ("Acme"), to the trust, with a life interest in Harry and the remainder on Harry's death to Leonard. The Acme stock, Harry's primary asset, was worth approximately $5.5 million at his death.

Leonard was both successor trustee of the trust and co-executor of Harry's estate. After Harry's death, Audrey requested that Leonard and Angela Roper, as co-executors of Harry's estate, pay her $400,000 bequest. Leonard did not pay Audrey's bequest, claiming the estate lacked the funds to do so without liquidating a portion of the trust, and as trustee, Leonard would not provide the estate with the necessary funds. Audrey then sued Harry's estate to compel payment of her bequest. This matter was determined on cross motions for summary judgment, and, at this point, defendants Beck and Sills Cummis were not yet part of the litigation.

Leonard's motion for summary judgment was supported by his certification asserting that the Trust Agreement, as prepared by Beck, did not reflect his father's intent and, therefore, the trust should be reformed. Leonard claimed that his father's intent in creating the trust was to insulate Acme stock from any claim by Audrey, insure the smooth transfer of the stock to Leonard and, further, that the stock was not intended to fund Audrey's bequest. Leonard attached to his certification a letter, dated June 22, 1993, from Beck that Leonard claimed confirmed his father's intent. This letter from Beck to Leonard provided, in pertinent part:

In further reference to your letter of June 2, 1993, and to our conversation of last week, it appears that you may be under a misconception as to the purpose and scope of the Revocable Trust Agreement of April 1, 1992.

The Trust Agreement accomplished the avoidance of probate only with respect to the assets transferred to it, i.e., 10 shares of Acme . . . Their value as of the date of Harry's death is nevertheless includible in his gross estate for federal tax purposes . . . The primary reason for the implementation of the Trust Agreement was to accomplish a speedy transfer to you of the Acme stock upon Harry's death without the risk of interference by your sister. However, the Trust Agreement is abundantly clear as to the application of the assets transferred, contributions for death taxes, and disposition of trust assets[.]

From the . . . applicable provisions of the Trust Agreement, it should be clear that the Trustees of the Trust are under an obligation to pay to the Executors of Harry's estate such amounts as the Executors certify as being required to pay Harry's debts and funeral expenses, expenses of administering his estate, pecuniary bequests contained in his will, and death taxes arising from the inclusion of the Acme stock in the estate.

On September 18, 1997, Judge Clarkson S. Fisher, Jr., sitting in probate, granted Audrey summary judgment, denying reformation of the Trust Agreement and directing payment of her $400,000 bequest. Judge Fisher determined that there was clear and convincing evidence that Harry intended to use the trust to transfer immediate ownership of the Acme stock to Leonard, while still charging the trust assets with the expenses of the estate and the specific bequests under Harry's will. In reaching his decision, the probate judge referenced Article II, paragraph 1 of the Trust Agreement which provides:

Upon the Grantor's death, the Trustees shall pay over to the Executors and Administrators of the Grantor's estate such amounts from time to time as the Executors or Administrators shall certify to the Trustees as being required to pay the debts and funeral expenses of the Grantor, the expenses of administering the Grantor's estate and any pecuniary bequests contained in the Grantor's will provided, however, that such payments shall be made exclusively out of funds or property or the proceeds thereof which are included in the Grantor's gross estate for federal estate tax purposes.

Thus, the Trust Agreement specifically made the trust chargeable for bequests in Harry's will if Harry's estate lacked funds to pay the pecuniary bequests left in the will. The probate judge further found that the trust was consistent with Harry's will because his will provided that "[Harry's] executors or trustees, in their sole and absolute discretion, shall have authority and power to implement whatever method they deem practicable and efficacious to discharge the within bequest . . . ."

The probate judge also noted that the "only proof offered [regarding Harry's alleged intent contrary to that of the will and Trust Agreement], other than Leonard's unsupported denials, is the Beck letter" and "[t]hat letter does provide clear and convincing proof . . . that Harry Pivnick intended exactly what the instruments state."

The probate judge entered final judgment for Audrey on November 13, 1997, and Leonard appealed. We affirmed the probate judge's decision on November 19, 1998. The Supreme Court denied certification on May 12, 1999, at 160 N.J. 476.

Leonard then filed the legal malpractice claim against Beck and his firm from which this appeal emanates. The crux of Leonard's complaint was that Beck's negligence in preparing the Trust Agreement yielded an outcome directly contrary to Harry's intent, which was ...

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