January 24, 2007
IN THE MATTER OF THE ESTATE OF MARVIN MAZER.
On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Camden County, Docket No. CP-089-01.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 27, 2006
Before Judges Lintner, S.L. Reisner and C.L. Miniman.
Residuary beneficiaries Alexandra Mazer and her brother Benjamin Mazer, two of five natural-born grandchildren of decedent Marvin Mazer, appeal from an October 17, 2005, order overruling their exceptions and approving the final accounting of the executrix, Sandra Mazer Moss, and approving the payment by the Estate of counsel fees in the amount of $199,572.17 to the firm of Cozen O'Connor for services they rendered in connection with the probate of the will, the defense of will-contest litigation, two interim accountings, and a final accounting. We reverse and remand for further proceedings.
The events giving rise to the exceptions to the final accounting provide important background to an understanding of the basis for the exceptions. Marvin Mazer had three children, Lawrence Mazer, Sandra Mazer Moss, and Norman Mazer. Alexandra and Benjamin are the natural-born children of Norman Mazer. Lawrence Mazer had one natural-born child, Zachary Mazer, and one stepchild, Erick Eidus. Sandra Mazer Moss had two natural-born children, Deborah Picker Vankin and David Picker.
Sandra Mazer Moss, the executrix under Marvin Mazer's 1999 will, submitted that will for probate after Marvin died on January 11, 2001. Her brother, Lawrence, filed a verified complaint on June 7, 2001, to contest the will and to secure the appointment of an administrator pendente lite. He did not name any individual defendants in the verified complaint. That day the court entered an order compelling Sandra to show cause why the will should not be stricken due to its invalidity.
In the first count of the verified complaint, Lawrence alleged that Marvin Mazer suffered from dementia at the time of his death, and that after Marvin's wife Sylvia died in 1999, Marvin became mentally unable to care for himself. He alleged that Marvin was not competent to make a will on October 7, 1999 (the 1999 will), and that Sandra exerted undue influence and duress over the decedent at the time the will was drafted. Lawrence further alleged that Sandra had arranged for a lawyer of her own choice to draft the will and that she manipulated Marvin into signing it. He contended that a confidential relationship existed between Marvin and Sandra, and that Marvin gave up all of his responsibility for his medical care and financial transactions to Sandra because she was a judge. Lawrence also alleged in the first count of the complaint that the attorney who drafted the will was a former judge who was a close personal friend of Sandra. Finally, he alleged that the will was inconsistent with representations made by the decedent prior to his death regarding the bequest of his property.
In the second count, Lawrence alleged that Sandra had violated the Pennsylvania Judicial Code of Conduct in the manner in which she conducted herself vis-à-vis her father and his affairs. He sought to have Sandra disqualified and subjected to sanctions or disciplinary measures for violations of that Judicial Code of Conduct.
In the third count, Lawrence alleged the making of an October 28, 1992, will (the 1992 will) and the creation at that time of two living trusts. The trusts bequeathed $5000 to the step-grandchild, Erick, and the remainder of the trust property was divided equally among the five natural-born grandchildren. Lawrence was the successor executor of the 1992 wills of both parents, and co-trustee of both trusts along with Sandra's daughter Deborah. At least one of the decedent's pieces of real property, a condominium in Atlantic City, was conveyed to the living trusts. Lawrence alleged that Sandra took advantage of her father's ill health and manipulated him into signing a will that did not actually reflect his wishes and that was contrary to the intent of the 1992 living trusts.
In paragraph twenty-two of the third count, Lawrence alleged that Sandra advised him "that she did this because she did not agree with Decedent's intent to leave his estate to the grandchildren and because she wanted to retire to [decedent's] Florida Condominium." He alleged that Sandra exerted undue influence and made misrepresentations to further her own financial gain not only with respect to the real estate in Florida, but also with respect to all of the tangible personal property, which was bequeathed solely to her under the 1999 will, yet had been distributed equally among the three children pursuant to the 1992 will.
In the fourth count of the verified complaint, Lawrence alleged that Marvin owned a condominium in Palm Beach, Florida, which he devised to Sandra in the 1999 will, rather than bequeathing it to the 1992 living trusts for the benefit of the five natural-born grandchildren, as had been Marvin's intent in 1992. Lawrence alleged in paragraph twenty-eight that, after execution of the 1999 will, Marvin deeded the Florida Condominium together with all of its furnishings and personalty to Sandra in December 1999. He also alleged that Sandra used her power and leverage over her father to have him transfer ownership of other tangible personal property to her before his death.
In the fifth count Lawrence identified all of the persons interested in the Estate and sought to have all of the assets of the Estate preserved in the hands of an impartial, disinterested and fit person. The ad damnum clause contains thirteen prayers for relief demanding that, among other things, any assets belonging to decedent or his wife that were wrongfully converted by Sandra be restored to the Estate and that the court find that the 1999 will was invalid and unenforceable due to the undue influence of Sandra, as well as the testator's incapacity. Lawrence also sought imposition by the court of sanctions or disciplinary measures with respect to Sandra's improper judicial conduct and for damages resulting therefrom.
Cozen O'Connor, on behalf of the Estate, filed an answer to the complaint. The firm defended all of the allegations of the verified complaint, including those of improper conduct on the part of Sandra.*fn1 On August 10, 2001, Sandra moved to dismiss the second count of the verified complaint alleging violations of the Pennsylvania Judicial Code of Conduct. That motion was granted on September 10, 2001, for lack of jurisdiction and for failure to state a claim. Sandra did not move to strike the portion of the fourth count of the verified complaint that attacked the inter vivos gifts of real estate and tangible personal property on the ground that Sandra was not a party to the action, nor did she move to dismiss the claims respecting the inter vivos gift of the condominium on the ground that Lawrence had no standing to dispute it.
On September 18, 2002, Lawrence filed a First Amended Complaint. He alleged the execution of the 1992 will and alleged that he was bringing the action individually, as well as in his capacity as the executor of the 1992 will. Except for these additions, the first count of the amended pleading was identical to the original complaint. Count Two, naturally, was deleted and the remaining counts of the verified complaint were renumbered, but the allegations were not otherwise modified. He did not name any additional parties to the suit.
The litigation between Lawrence and Sandra dragged on for two years. Concerned about the financial drain of the litigation on the Estate, Norman filed a motion returnable July 7, 2003, seeking an order compelling Sandra and Lawrence to be solely responsible for the legal fees, costs, and other expenses related to the litigation.*fn2 Norman certified that the 1992 will provided that the tangible personal property of the Estate would go to Lawrence, Sandra and Norman, whereas under the 1999 will all of the tangible personal property went to Sandra. He also certified that, under the 1992 will and living trusts, all of the real property and intangible personal property went to the living trusts, under which the step-grandchild, Erick, received $5000 and the remainder was split equally among the five natural-born grandchildren. By contrast, under the 1999 will, the Florida Condominium and the tangible personal property was bequeathed to Sandra, and only the intangible personal property was split equally among the five grandchildren.*fn3 Norman certified that he was making the motion because it was inequitable and patently unfair that Norman's minor children should be compelled to pay the counsel fees of the litigation, because the defense of Sandra was not benefiting the Estate, only Sandra.
Sandra filed a certification in opposition to Norman's motion. She certified that she did not bring the lawsuit, but was only defending it. She stated that as the personal representative of the Estate she was obligated to defend the testator's intent in the will contest and the gift contest. She agreed that the Estate was being depleted and that she had been unable to settle the litigation as a result of Norman's conduct, because he refused to participate in the settlement of the litigation. She discussed at length all of the occasions when Norman was unwilling to be drawn into the litigation. She also blamed the expense of the litigation on Lawrence and pointed out that she had successfully moved for an order striking count two, which charged her with violations of the Pennsylvania Judicial Code of Conduct. She expressed the opinion that, if Norman had only participated in the settlement negotiations, the case could have been resolved, and she accused Norman of not acting in the best interests of his children. Sandra also attached an earlier certification that she had filed in the case in which she pointed out that Lawrence, personally, only stood to gain one-third of the total tangible, personal property if the 1992 will was probated, roughly $7000.
On July 8, 2003, Norman filed a responsive certification. In that certification he refuted each of Sandra's allegations that he had thwarted settlement of the will contest. He explained that his position had been that his sister and brother should come to an agreement and then present it to him and he would take a position on the proposed settlement. He further explained that he felt that mediating the case would be a waste of the estate's assets and did not want to participate, again advising Sandra and Lawrence that if they came to an agreement he would consider it. However, by the Summer of 2003 no agreement had been reached.
Norman objected to having the cash portion of the Estate fund the litigation over the Florida Condominium. He stated that Sandra was defending her receipt of the Florida Condominium against allegations of undue influence and was using the cash portion of the Estate to fund that defense. He averred that his father would never have wanted his inheritance to go to attorneys in a dispute such as this.
Norman denied that any settlement in principle had been reached or presented to him in June 2002. He had considered a proposal and made counteroffers, but nothing was resolved because Sandra would not commit to anything. He pointed out that it was Sandra's actions in obtaining a large portion of his father's assets prior to his death and her conduct in arranging for a new will that led to the will-contest litigation. He also noted that Sandra had received the condominium in Florida that would have gone to the five grandchildren under the 1992 will. He certified that he was powerless to conserve his children's remaining inheritance, and, as a consequence, filed the motion seeking to have a determination of responsibility for counsel fees. The court never decided Norman's motion even though all required materials were presented to the court.
On December 23, 2003, Sandra filed a motion for partial summary judgment. In support of the motion, Sandra certified that the partial summary judgment motion concerned only her father's gift of the Florida Condominium, not her father's will or any of his various gifts of personalty to her. She certified that "[t]he main issue in this case is the issue regarding the Florida Condominium. The other issues are minor in comparison." One of the subheadings in the certification is "THE VALIDITY OF THE GIFT OF THE FLORIDA CONDOMINIUM IS THE MAIN ISSUE IN THIS CASE." Of course, that gift was made after the 1999 will was executed.
Sandra again pointed out that Lawrence stood to gain very little from the will contest. Because the condominium had been gifted, it was not Estate property.*fn4 She contended that the value of the personalty did not justify the expense of the litigation. She also expressed an intention to share the personalty passing under the 1999 will with her brothers. Because the Florida Condominium was gifted to her by her father, all of its contents also were gifted to her. She stated "[t]he value of the Florida Condominium eclipses the value of the personalty and, as such, is the key issue in this litigation."
Sandra set forth facts supporting her contention that the gift was made knowingly, freely, and with all mental capacity intact. She explained her father's reasons for gifting the condominium to her. She also explained why she selected the attorney from Cozen O'Connor to prepare a new will for her father and denied being involved in any discussions about the content of the will. The attorney who drafted the 1999 will also prepared the deed transferring the Florida Condominium from Marvin to Sandra. She blamed Lawrence for causing the Estate to be depleted by over $170,000 in legal fees and expenses, and stated that Lawrence never should have challenged the gift of the Florida Condominium to Sandra. She pointed out that Lawrence is pursuing his challenge to my father's gift of the Florida Condominium to me and he stands to gain nothing if he is successful.
If the Florida Condominium were drawn back into the Estate, it would become part of the Estate's residuary which passes to the five Natural Grandchildren. Three of the Natural Grandchildren are adults (my children and Plaintiff's son). None of them are pursuing this challenge. My children have told me that they do not support Plaintiff's actions. The two minor Natural Grandchildren are Norman's children. Norman is not a party to this suit. Indeed, Norman testified at his deposition that he did not want to take time and energy away from his children and his business to pursue this litigation. He stated that he felt it would not be worth it considering the amount of money and other things could be won and considering the fact that challenges such as this are difficult to win under the best circumstances.
The record does not contain any response to this motion, nor does it contain an order disposing of it. It was carried by the judge and never listed for disposition.
On February 25, 2004, Lawrence and Sandra placed a settlement of the will contest on the record. Counsel for Norman was present at the time. Alexandra had reached the age of majority, and counsel on her behalf and on behalf of Norman as the guardian of Benjamin, objected to the settlement, stating that they still had a motion pending with respect to the payment of attorney's fees out of the Estate. The judge asked if Alexandra and Benjamin had filed an answer in the will contest, but the attorney was unable to represent that they had done so. The court then stated, "So at this juncture, as far as I am concerned, . . . there are two parties to this proceeding. The
[E]state as represented by the executrix, and Lawrence Mazer who has filed a complaint." The court would not entertain the objections of Alexandra and Benjamin to the settlement. Their counsel then asked if his clients would be entitled to object to the settlement on a final accounting of the Estate. The dialogue continued:
THE COURT: Oh, I'm not -- I'm making no comment prospectively. I'm talking about the claims made by Lawrence Mazer by virtue of a formal complaint and with respect to the Estate's response by way of answer. That's all I'm making reference to.
MR. MELLETZ: I understand that. And what I am referring to, Your Honor, so that the record is clear, was the final accounting and the objections to the accounting. Because I don't want anybody saying hey no one said anything at the time of this --
THE COURT: No, no.
MR. MELLETZ: -- putting on the record.
THE COURT: Your client's -- if your client's children are heirs under the law, and an accounting is filed, they have a right to file any objection as any beneficiary would have the right to file. The court would then rule on it.
MR. MELLETZ: And that's what I'm referring to, Your Honor.
THE COURT: At this juncture, there's a piece of litigation. The executrix has been involved, continues to be involved, and has through counsel settled this piece of litigation on behalf of the Estate. That is what has occurred here. . . . The filing against her thus far was in her representative capacity.
MR. MELLETZ: Right. And Your Honor I believe that eventually the court has to rule on the settlement in terms of the Estate, in terms of the final . . . account.
THE COURT: When the accounting is filed, then definitely the rationale of the settlement will be set forth and if called upon to do so, then of course I will have to pass on the propriety and the sufficiency of the settlement.
MR. MELLETZ: And that's all I'm referring to, Your Honor.
THE COURT: So noted. [Emphasis added.]
Two weeks later, Lawrence and Sandra were examined with respect to their understanding of, and consent to, the settlement. The settlement was placed on the record within the hearing of Lawrence, via conference call, and in the presence of Sandra. Initially, the court referred to a letter from counsel for Alexandra and Benjamin, and the court then placed the following statements on the record, although Norman, Alexandra, and their counsel were not present that day:
The record should be clear that Norman Mazer, who Mr. Melletz represents, is not a party to this adversary proceeding. Mr. Melletz made it quite clear when they last met that the settlement in his opinion would in no way adversely affect his client's perceived right to object to the final accounting of the executrix or for that matter to appeal the settlement and the Court's acceptance of it as reached by the parties here at some point within the Rules of Court.
And my comment, I believe, at that time was Mr. Melletz should do whatever he believes his client wants him to do, and that his client has the right to take whatever action he believes that he is entitled to take and we will rule on that if and when it's done. And I'm sure the Appellate Division will give any appeal its appropriate due when it's filed.
But since Mr. Mazer, Norman Mazer, was not a party to this proceeding, and while it was of course that we attempted to include him, I should say the parties attempted to include him in the global settlement, his failure or more accurately his refusal to do so is his decision and that the parties here nonetheless have a right to settle the litigation. Lawrence Mazer brought the action. Sandra Mazer-Moss defended the action. They are the parties to the proceeding. They have determined that they are proceeding and their dispute is now settled. And Norman's refusal to participate is his refusal, and I'll not comment any further. So I want the record to be clear about that.
The purpose of a voir dire is simply to find out what the terms of the settlement are and then to address the parties as opposed to counsel, and to determine that they have authorized the settlement of the matter and the terms as placed on the record, that they understand the settlement, that they had full advice from counsel with respect to it, that they authorize counsel to enter into the settlement, and that they are satisfied with the advice that their attorneys have provided to them.
The terms of the settlement were then placed on the record and the court voir dired both Sandra and Lawrence. The court made no ruling that the terms of the settlement were appropriate visà-vis the Estate and the five natural grandchildren who were its residuary beneficiaries.
The settlement was, thereafter, reduced to writing and executed by the parties on June 8 and June 18, 2004. The settlement was filed with the court attached to a consent order regarding the settlement, which was entered on June 24, 2004. That order provided that the agreement and release had the effect of an order of the court and that the parties were bound by the terms of the agreement and release. It also dissolved the injunction against Sandra with respect to disposing of, alienating, or hypothecating any assets coming into her possession or control from the Estate of Marvin Mazer.
The settlement document provided that Lawrence's complaint would be dismissed, Marvin's gift of the Florida Condominium to Sandra would remain a valid, intact gift, and the 1999 will would be admitted to probate. It also provided that Lawrence's assertion that Sandra should reimburse the Estate for litigation costs and that the Estate should reimburse Lawrence "will not be honored." Sandra agreed to pay $100,000 "to the Estate" and to provide Lawrence with certain items of personal property. The agreement went on to list personal property that Lawrence agreed Sandra could retain as personal property and set forth a list of personal property from which Lawrence could make three selections. Sandra waived her right to take a commission. The settlement agreement recited that the cash in the residuary estate after the payment of all Estate debts and administration expenses was to be paid to the natural grandchildren equally. However, as to the $100,000 that Sandra was putting into the Estate, the parties agreed to an unequal distribution: $12,500 would go to each of Sandra's children; $15,000 would go to each of Norman's children; $25,000 would go to Lawrence's natural-born child Zachary; and $20,000 would go to Lawrence's stepchild Erick. The settlement agreement contained a severability clause providing that "[t]he invalidity or unenforceability of any provision shall not affect or impair the remaining provisions which shall continue in full force and effect." The consent order and settlement agreement ended the will-contest lawsuit. With that litigation as background, we turn to the summary proceeding for an accounting, which is before us on this appeal.
In July 2004 the executrix filed a complaint for approval of accounting and approval of legal fees and expenses pursuant to R. 4:87-1. Norman, as the natural guardian of Benjamin, who was still a minor, and Alexandra filed exceptions to the final accounting pursuant to R. 4:87-8. Specifically, they contended that the entire cost of the will contest litigation "should be disallowed on the grounds that the litigation defense was not for the benefit of the Estate but for the sole benefit of the Executrix, Sandra Mazer Moss, personally and should be paid by her personally and the Estate should be reimbursed for those funds paid out." The second exception was the distribution of the proceeds of the settlement, which they contended should be distributed in accordance with Marvin's longstanding intent to distribute his residuary estate equally to all five natural-born grandchildren.
Although not permitted by R. 4:87, Sandra filed a certification in response to the exceptions. She averred that under the 1999 will she was to receive the condominium in Florida, and that the natural grandchildren would receive the remainder. As to the personalty, she stated she understood that her father's intent was to have her distribute it between herself and her two brothers. Sandra repeated the conclusory allegations she had made in opposition to the motion respecting counsel fees to the effect that Norman not only failed to participate in the litigation, but impeded the efforts to resolve that litigation.*fn5
Sandra did not explain the rationale for distributing $20,000 to Erick when both of her father's wills and both of the living trusts provided Erick with only $5000 in all, which he had already received at the time of the settlement. Neither did Sandra express the rationale for giving Zachary $25,000, but only giving $15,000 each to Alexandra and Benjamin, and $12,500 each to Deborah and David.
In her certification, Sandra pointed out that Norman had attempted to object to the settlement when it was placed on the record, but the court told his counsel that Norman was not a party to the suit and did not have a right to object to the terms of the settlement.*fn6 Sandra argued that the exception with respect to counsel fees was a "rehashing" of an issue that had been resolved in the settlement.*fn7 Sandra then pointed out that she had reimbursed the Estate for $100,000, which amounted to about half of the litigation expenses.*fn8 She contended that Norman and his daughter should look to Lawrence if they wanted to recoup the balance of the litigation expenses because Lawrence instituted the lawsuit. Finally, she contended that the objection to the distribution of the residuary estate was "nothing more than Norman Mazer's attempt to collaterally attack the settlement to which he was precluded from objecting, due to his decision to not intervene in the lawsuit."
The exceptions to the accounting were heard on November 15, 2004. No testimony was taken. During oral argument, counsel for Alexandra and Benjamin specifically advised the judge that his clients disputed Sandra's contention that they sabotaged the efforts to mediate and settle the will-contest litigation, and reminded the judge of their long-pending motion objecting to payment of litigation counsel fees by the Estate. The judge stated that the motion had been made on June 18, 2003, that he began to assume the duties of the Chancery Division at about that time, and that the case settled months later.*fn9 The judge reserved decision on the final accounting, but did not issue an opinion until October 12, 2005, almost eleven months after the date of argument. The judge found the facts in a lengthy bench opinion and responded to the arguments of counsel. For example, the judge noted:
The exceptants argue that here we have the unusual situation of the attorneys for the executrix fighting to keep an asset out of the Estate. Well, the Court notes that the asset was never in the Estate because it had been conveyed previously by Mr. Mazer to his daughter while he was alive.
Of course, Lawrence in his suit was seeking to void that, not because the will was unduly obtained but because apparently he argued that his father did not have the capacity and/or to the extent that he had capacity was overborne by his daughter to make the inter vivos gift.
The judge summarized the arguments made by counsel for Alexandra and Benjamin as well as counsel for Sandra. He found that Norman made a conscious decision not to become a formal party to the litigation, that Norman refused to participate in settlement discussions and mediation efforts, and that Norman rejected any settlement. The judge found:
When the settlement was arrived at Norman was invited to participate. Once again, he rejected it. It appears to the court that the exceptants are seeking another bite at the apple.
Here, there is no question that Norman . . . never sought to intervene, although he could have, on behalf of his children. He never wanted to participate in the mediation, although invited to, until ordered to do so.
And, it appears that the court should consider the exceptions in the context that there's a strong policy favoring the settlement of litigation in New Jersey, that the matter has been litigated and settled, and apparently barred by res judicata as that concept as well as the Entire Controversy Doctrine, applies to settlements.
The judge went on to recite on the record all of the settlement efforts Sandra had detailed in her certification and concluded,
"So, that's the settlement background or attempts at settlement background which I might add is uncontradicted."
As to the $100,000 being paid by Sandra to the Estate, the court made the following findings:
Norman wasn't a party to the lawsuit so he was advised by the Court that he had no standing. That was true then, that's true now, but it is noteworthy that the $100,000 that Sandra agreed to pay was never part of the Estate. It occurs as a result of the settlement, so there is no requirement, as I see it, to be distributed in keeping with the will. It was paid as a result of the litigation.
The litigants to that litigation determined how it should be apportioned. Norman had a right to participate. He chose not to. He had a right to intervene. He chose not to as provided by Rule 4:33-1.
Clearly, it was the intent of Norman through counsel to block a settlement.
There was no basis for that, and that was the basis that this court ruled.
The judge interpreted the exceptions to the accounting as an attempt to attack the settlement and rejected both exceptions, despite the fact that the judge had previously assured counsel for Norman and Alexandra that the judge would review the terms of the settlement as part of the final accounting if any interested person filed an exception to the final accounting based on the settlement. This appeal followed.
On appeal, Alexandra and Benjamin contend that the judge abused his discretion in approving the award of counsel fees on behalf of the Estate and in approving the distribution of Estate assets in a fashion other than that provided by the will. Specifically, as to the counsel fees, they contend that (1) the Estate should not be required to expend funds to keep assets out of the Estate; (2) counsel fees may only be awarded where the attorney aided directly in creating, preserving or protecting the fund; and (3) allowance of $189,737.61 already paid to Cozen O'Connor as counsel fees together with $12,729.92 in costs, which amounted to 47% of the Estate, was excessive, and (4) the record did not support the judge's finding that Norman was an obstacle to settlement of the litigation.
As to the distribution of the proceeds from the settlement, Alexandra and Benjamin contend that they sought to be heard at the time the settlement was placed on the record, but the judge refused to hear them at that time. However, he stated that their concerns about the settlement would be heard at the time of a final accounting, but refused to address any of their concerns after they filed their exceptions to the accounting. They urge that only the $100,000 paid into the Estate should be used to pay counsel fees and that the balance of the fees should have been surcharged to Sandra.
In reviewing the judgment on appeal, we note that "[a] trial court'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. of Manalapan, 140 N.J. 366, 378 (1995). Where the issue presented is entirely a question of law, de novo review on appeal is appropriate. Rowe v. Hoffmann-La Roche Inc., 383 N.J. Super. 442, 452 (App. Div. 2006).
We are, however, required to give substantial deference to an award of attorney's fees as that determination is committed to the sound discretion of the trial judge. Packard-Bamberger & Co., Inc. v. Collier, 167 N.J. 427, 444 (2001). Such a determination "will be disturbed only on the rarest occasions, and then only because of a clear abuse of discretion." Rendine v. Pantzer, 141 N.J. 292, 317 (1995). The exercise of that discretion, however, must be supported by an adequate factual record and comply with applicable law.
Initially, Alexandra and Benjamin urge that counsel fees may only be awarded where the attorney aided directly in creating, preserving or protecting the fund. "When a fiduciary retains an attorney, he enters into a contract and as in the case of any other contract, he binds, not the estate, but himself personally to pay for the attorney's services, even though the services are rendered solely for the benefit of the estate." 7A New Jersey Practice, Wills and Administration § 1546, at 95 (Alfred C. Clapp & Dorothy G. Black) (rev. 3d ed. 1984) (footnotes omitted) (hereinafter 7A Clapp, Wills and Administration).
Where services "were rendered primarily to and for the benefit of the individuals whom [the attorney] represents and not to the estate . . ., [the attorney] should look to his individual clients for compensation for his services and not to the estate itself." In re Estate of Stone, 21 N.J. Super. 117, 131 (Ch. Div. 1952). "[A]n allowance will not be made where the action is in the interest, not of the estate, but of some beneficiary . . . ." 7A Clapp, Wills and Administration, supra, § 1545, at 89. For example, no allowance of fees should be made when the attorney was appearing for the benefit of a party antagonistic to the estate. See In re Estate of Katz, 40 N.J. Super. 103, 109-10 (Ch. Div. 1956). See also Bush v. Riker, 77 N.J. Super. 243, 247 (App. Div. 1962). Where the object of the litigation, or defense of it, is not to benefit the estate but to diminish it for the party's own benefit, the litigant is not entitled to a fee from the estate. Schmerer v. Estate of Kirschenbaum, 39 N.J. Super. 475, 479-80 (App. Div. 1956).
Where only a portion of an estate is at issue, counsel fees should not be awarded from the entire estate. Bankers Trust Co. of N.Y. v. Crane, 78 N.J. Super. 447, 457 (App. Div. 1963). For example, "[w]here the services of counsel are rendered with a view to protect or enrich the corpus of a trust or an estate, they should be charged to corpus; but if they benefit income alone, they should be charged solely to income." 7A Clapp, Wills and Administration, supra, § 1546, at 97; Commercial Trust Co. of N.J. v. Mason, 119 N.J. Eq. 376, 377 (E. & A. 1936). Additionally, "[w]here exceptions to an account are in part overruled and in part sustained, the estate may be charged for the counsel fees incurred as to those which are overruled, leaving the accountant to pay personally for the legal services rendered as to the exceptions which are sustained." 7A Clapp, Wills and Administration, supra, § 1547, at 98; Sherman v. Lanier, 39 N.J. Eq. 249, 258 (Prerog. Ct. 1884).
In an action for removal where a fiduciary has reasonable grounds for defending the action, a court may allow counsel fees to be paid out of the estate. Hauser v. Hauser, 92 N.J. Eq. 615, 617 (Prerog. Ct. 1921). Schindel v. Brenauer, 135 N.J. Eq. 88, 91 (Ch. Div. 1944), rev'd on other grounds, 136 N.J. Eq. 94 (E. & A. 1945). However, a fiduciary may be deprived of such a counsel fee because of acts of wrongdoing on the part of the fiduciary, even though not removed. Behrman v. Egan, 31 N.J. Super. 95, 100 (Ch. Div. 1953), modified, 16 N.J. 97 (1954). Furthermore, counsel fees should not be awarded to an unsuccessful party. In re Will of Sebring, 84 N.J. Eq. 453, 454-55 (Prerog. Ct. 1915); In re Will of Wintermute, 27 N.J. Eq. 447, 458 (Prerog Ct. 1876), aff'd sub nom, Wintermute v. Wilson, 28 N.J. Eq. 437 (E. & A. 1877); Perrine v. Applegate, 14 N.J. Eq. 531, 536-37 (Prerog. Ct. 1862).
Applying these legal principles to the facts before the court, it is abundantly clear that any fees incurred in connection with the litigation instituted by Lawrence may only be paid out of the $100,000 paid to the Estate by Sandra. This is so because neither the pre-settlement corpus of the estate nor its income was at issue in the litigation. Commercial Trust Co., supra, 119 N.J. Eq. at 377; Bankers Trust Co., supra, 78 N.J. Super. at 457; 7A Clapp, Wills and Administration, supra, § 1546, at 97. Any other result would unfairly burden the natural-born grandchildren, none of whom participated in the litigation between Lawrence and Sandra.
With that limitation in mind, the judge must determine whether Sandra had reasonable grounds to defend the action for her removal of executrix, and if so, what portion of the fees were for the benefit of the Estate, if any, and what portion of the fees were for the benefit of Sandra individually.
Where a cause of action accrues to or a liability is incurred by an executor or administrator in his representative capacity, he should as a matter of form sue or be sued "as" executor or administrator. On the other hand, if he sues or is sued on a cause of action which accrues to him individually or on which he is liable individually, it should be alleged that he is the executor or administrator but he should not sue or be sued "as" executor or administrator.
[7 Clapp, Wills and Administration, supra, at 355 (footnotes omitted).]
Clearly, the will-contest complaint stated claims against Sandra individually (1) with respect to her conduct as a judge; (2) with respect to alleged undue influence in securing the 1999 will; and (3) with respect to the inter vivos gifts on the issue of her undue influence and on Marvin's lack of capacity, but she was not a named defendant, although she should have been. Id. at 356. The balance of the claims went to the capacity of Marvin to make a will and, had Sandra been named, she would have defended those claims "as" executrix. Cozen O'Connor did not move to dismiss the individual claims on the ground that she was an indispensable party, but rather the firm defended them as though she had been named. The record in this regard is not sufficiently developed to permit a determination on the fee issue by either the trial court or by us.
An application for an allowance of fees is governed by R. 4:88-4, which provides:
On every application for attorney's fees, the attorney shall file with the court at least 20 days prior to the day on which the account is settled an affidavit stating, in addition to the information required by R. 4:42-9(b), whether any part of the requested fee is to be paid to or shared with an attorney or firm of attorneys of another state or jurisdiction . . . .
Rule 4:42-9(b), in turn, provides in pertinent part:
[A]ll applications for the allowance of fees shall be supported by an affidavit of services addressing the factors enumerated by RPC 1.5(a). The affidavit shall also include a recitation of other factors pertinent in the evaluation of the services rendered, the amount of the allowance applied for, and an itemization of disbursements for which reimbursement is sought. If the court is requested to consider the rendition of paraprofessional services in making a fee allowance, the affidavit shall include a detailed statement of the time spent and services rendered by paraprofessionals, a summary of the paraprofessionals' qualifications, and the attorney's billing rate for paraprofessional services to clients generally. No portion of any fee allowance claimed for attorney's services shall duplicate in any way the fees claimed by the attorney for paraprofessional services rendered to the client.
In determining the amount of the fees to be awarded, the judge made the following findings:
The Court has reviewed the affidavit of services submitted in the sum of . . . $202,572.17. The Court notes that the fees range from $275 an hour to $150 an hour depending on what attorney did the work. The Court notes that a large number of the hours have been done by those individuals charging . . . $150, $185 per hour.
I have also reviewed the costs. The Court awards the total of $199,572.17 after making certain adjustments based upon the Court's review. This number the Court determines is fair and reasonable for the hours set forth, the tasks ascribed and the time expended.
These are not the type of fact findings required by the applicable case law and rules. They are no more than "[n]aked conclusions [that] do not satisfy the purpose of R. 1:7-4." Curtis v. Finneran, 83 N.J. 563, 570 (1980). As such they cannot sustain the award.
The application for the allowance of fees must "state how much had been paid to the attorney . . . and what provision, if any, has been made for the payment of fees to the attorney in the future." R. 4:42-9(c). Finally, the information required by R.P.C. 1.5(a) must be supplied:
A lawyer's fee shall be reasonable. The factors to be considered in determining the reasonableness of a fee include the following:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; [and]
(8) whether the fee is fixed or contingent.
In Christine A. Grehlinger's certification respecting the services rendered by Cozen O'Connor, she supplied very little of the information required by R.P.C. 1.5(a) and the above-quoted portions of R. 4:42-9. Essentially, her certification merely had attached to it monthly statements of services rendered. On remand, Cozen O'Connor must comply with the applicable rules respecting fee applications.
Because some of the total fees incurred were for the benefit of Sandra, and because the judge must determine whether any of the fees in connection with the litigation were for the benefit of the Estate, Cozen O'Connor must specifically enumerate those services which were rendered in connection with (1) the probate of the will, (2) the interim and the final accountings, and (3) the defense of the will-contest litigation. With respect to the latter category, the firm should separate those services rendered (1) in defense of the claim that Marvin lacked testamentary capacity, (2) in seeking a dismissal of the second count of the original verified complaint, and (3) in defending the inter vivos gift of the Florida Condominium. Finally, where the firm cannot allocate services between the various claims advanced by Lawrence, it must specifically so state, and explain why allocation cannot be made.
Although not directly controlling, the guidance supplied by our Supreme Court in establishing the lodestar in the context of fee-shifting statutes should be considered. See New Jerseyans for a Death Penalty Moratorium v. N.J. Dep't of Corrections, 185 N.J. 137, 152-156 (2005); Packard-Bamberger & Co., Inc., supra, 167 N.J. at 444-46; Szczepanski v. Newcomb Medical Ctr., Inc., 141 N.J. 346, 354-359 (1995); Rendine, supra, 141 N.J. at 316-336. As the Rendine Court made clear, the attorney's presentation of billable hours should be set forth in sufficient detail to permit the trial court to ascertain the manner in which the billable hours were divided among the various counsel[.]
The trial court must them determine whether the assigned hourly rates for the participating attorneys are reasonable[.]
That determination need not be unnecessarily complex or protracted, but the trial court should satisfy itself that the assigned hourly rates are fair, realistic, and accurate, or should make appropriate adjustments. [Rendine, supra, 141 N.J. at 337.]
Additionally, the judge should consider whether "the total number of hours expended was far in excess of what was reasonably required to resolve the matter." In re Estate of Reisen, 313 N.J. Super. 623, 635 (Ch. Div. 1998). The matter is remanded for reconsideration of the allowance of fees in accordance with the legal principles set forth herein.
In the event counsel fees do not consume the entire $100,000 settlement, the judge must also determine whether Sandra properly exercised her fiduciary duty when, having agreed to pay the settlement to the Estate, she then agreed to distribute the proceeds of the settlement in a manner other than that required by the 1999 will.*fn10 Although the judge stated that Sandra would have to lay bare the rationale for the settlement, and by implication the agreed distribution, she has not done so.
Generally, a fiduciary must adhere to the directions of the instrument under which he or she was appointed. Trustees of Princeton Univ. v. Trust Co. of N.J., 22 N.J. 587, 596 (1956); N.J. Nat'l Bank & Trust Co. v. Lincoln Mortgage and Title Guar. Co., 105 N.J. Eq. 557, 564 (Ch. 1930). Additionally, it is the duty of a fiduciary to deal impartially with the beneficiaries. In re Accounting of the Executors of Koretsky's Estate, 8 N.J. 506, 530 (1951); In re Estate of Bayles, 108 N.J. Super. 446, 453 (App. Div. 1970). The propriety of Sandra's agreement to the distribution of the proceeds of the settlement was made difficult to determine by the nature of the will-contest litigation and the form of its settlement.
An examination of the rationale for the settlement is not inconsistent with our strong public policy favoring settlements. Jersey City Redevelopment Agency v. Clean-O-Mat Corp., 289 N.J. Super. 381, 404 (App. Div.), certif. denied, 147 N.J. 262 (1996); Massar v. Massar, 279 N.J. Super. 89, 93 (App. Div. 1995). This strong public policy is not in any way inconsistent with the duty of the court to review and approve a settlement into which a fiduciary has entered when exceptions are filed.
What Sandra and Lawrence intended to settle with the payment of $100,000 is not entirely clear from the settlement agreement itself.*fn11 However, their intent may well be irrelevant in light of their agreement to pay the $100,000 into the Estate, triggering a duty upon Sandra as executrix to comply with Marvin's directions respecting distribution of his assets. Even if the judge determines the agreement to distribute the funds in a manner inconsistent with the 1999 will was a breach of Sandra's fiduciary duty, the settlement will not be voided by that determination because the settlement agreement contains a severability clause providing that "[t]he invalidity or unenforceability of any provision shall not affect or impair the remaining provisions which shall continue in full force and effect." These and any other issues which involve disputes of fact must be explored in a plenary hearing.*fn12 Because this judge decided issues of credibility based on affidavits, on remand the matter should be assigned to another judge. R. 1:12-1(d).
Reversed and remanded for proceedings consistent with this opinion.