On appeal from the Superior Court of New Jersey, Chancery Division, Monmouth County, C-61-98.
Before Judges Ciancia, Alley and Bilder.
The opinion of the court was delivered by: Alley, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 19, 2000
Fleet Bank appeals the July 23, 1999, order of the Chancery Division which denied its application requesting approval of payment to it as trustee of certain attorneys' fees and commissions out of trust assets. The Bank and its predecessor banks have served since 1968 as the trustee under a Trust Agreement created by Geoffrey Mears. Several years ago, Geoffrey Mears employed a housekeeper, Eileen Addonizio, who in early 1998 came under suspicion of attempting to exercise undue influence over him and trying to become the object of his donative wishes.
George Mears, the son of Geoffrey Mears, brought this action against Addonizio and joined the Bank as a defendant to prevent Addonizio from carrying out her alleged plan. The parties eventually settled the litigation and the Bank applied for approval of its commissions and attorneys' fees. George Mears joined the Bank as a formal party, but it was not then the object of allegations of wrongdoing.
This appeal arises from the Chancery Division's denial of the Bank's application seeking the court's approval of payment to it of $19,067.43, which the Bank had already paid to itself from assets of the Trust. This total included requested trustee commissions of $2,904.74. The Bank requested the balance of $16,762.69 for attorneys' fees it incurred, much of it for the litigation. The Bank's application was opposed by Geoffrey Mears, who died in October 1999, after the court rendered its decision on the application.
In its oral decision on July 23, 1999, the court stated,
Fleet Bank took the position early in the case through its counsel, which was the correct one ... under the circumstances, that its obligation was to preserve the assets of the trust and await the determination of the disputes that have arisen between plaintiff, Mears, the younger[,] and defendant Mears, the elder, and Eileen Addonizio, the defendant who was ... allegedly unduly influencing the elder Mr. Mears.
It found the Bank took "no position with respect to the control dispute, which was whether the older Mr. Mears was being unduly influenced," and the Bank "was just sitting back waiting for the conclusion as to that."
The court noted that although "[o]ne would have thought that that would have been the end of Fleet Bank's serious involvement in this case ...," the Bank, "during the life of this case thereafter, incurred approximately nineteen or $20,000 worth of counsel fees, which it now seeks to have paid from the trust ...." The court described as follows the two-part objection interposed to this fee request: (1) "the trust instrument does not permit for the payment of such fees, according to its very terms," and (2) "even if it did," it was "inappropriate for ... [the] Bank to incur such extensive legal fees in a case where it essentially should have been sitting on the sidelines waiting for the smoke to clear."
With respect to the first objection, the judge noted that, under the terms of the trust instrument, the Bank was "entitled" to employ attorneys "for the administration of the trust estate." He found, however, that "in light of the peculiar circumstances of this case," the Bank had employed attorneys to engage in "litigation beyond the administration of the trust estate," in that the Bank was named as a party in plaintiff's litigation simply "because it is the trustee" and "holding the funds that were the res" that plaintiff, defendant and Addonizio were "fighting over." He concluded that the Bank was not administering the trust estate but rather "merely monitoring this litigation."
With respect to the second objection, the court concluded, "even if it could be determined that the trust should bear the fees of Fleet Bank pursuant to the provision of the trust instrument," it was "unreasonable" for the Bank "to incur possibly close to $20,000 in fees" for "a dispute that really does not involve them," and is "... not the trust's problem." "While it might have been fair and reasonable for the Bank ... [to] have appeared initially, to determine exactly where the case was going, and to state its position," the court indicated that it could not endorse a course of conduct in which the Bank "would have continued to expend so much time and ...