April 24, 2008
IN THE MATTER OF THE ESTATE OF JOHN C. SASSON, DECEASED.
On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Morris County.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 14, 2008
Before Judges Lintner and Graves.
In a prior appeal, we affirmed Judge MacKenzie's March 28, 2005, Chancery Division order dismissing defendant, Emily Springer's palimony counterclaim against plaintiff, the Estate of John C. Sasson (Estate), thereby foreclosing her claim to certain Estate assets, including a townhouse condominium located in Randolph. In this appeal, Emily challenges, pro se, a subsequent order entered on January 11, 2007, requiring her to reimburse the Estate $60,518.67 for costs associated with her approximate two-year occupancy of the Estate's townhouse following John Sasson's death. The order also gave Emily thirty days to retrieve the bedroom set she asserted decedent gave her as a gift. We vacate that order insofar as it included payments made by the Estate toward monthly principal on the townhouse's mortgage and remand to the Chancery Division for reconsideration in accordance with this opinion. In all other respects, we affirm the order entered.
The underlying facts are set forth in the August 16, 2006, reported decision, In re Estate of John Sasson, 387 N.J. Super. 459 (App. Div.), certif. denied, 189 N.J. 103 (2006), and need not be repeated here. Our prior opinion was limited to an appeal of the order dismissing defendant's palimony counterclaim insofar as it related to her claim on the assets of the Estate, including decedent's townhouse condominium. We determined that the two year and one-half month period that Emily and decedent lived together did not amount to "a significant period of time" to support her palimony claim when considering Emily's failure to present proofs that she was induced to live with John by a promise of support for the rest of her life. Id. at 467-68 (internal quotations omitted).
In addition to dismissing defendant's palimony claim, Judge MacKenzie's order required defendant to vacate the townhouse no later than May 31, 2005, and "reimburse the Estate for all carrying costs, including, but not limited to, mortgage, utilities, and condominium association fees incurred from October 12, 2004 until the day she vacates . . . ." However, on May 2, 2005, while Emily's earlier appeal was pending, Judge MacKenzie granted her motion to stay summary judgment and permitted her to "continue [to] use and occupy" the townhouse and required the Estate to pay the monthly mortgage payments and condominium association fees. The stay order, however, required Emily to post a bond in the amount of $56,000 "in order to satisfy any judgment affirming the March 28 . . . Order . . . and any monies that may be due to plaintiff as a result of defendant's use and occupancy of the . . . premises, as well as any cost that . . . may [be] award[ed] to [the Estate]." Notably, Judge MacKenzie supplemented the prepared order, inserting in handwriting that the reason for granting Emily's motion was because she had "a bona fide argument on appeal, although the court believes its grant of summary judgment will be upheld."
On August 5, 2005, Judge MacKenzie entered an order modifying the May 2, 2005, stay order by allowing Emily, "an attorney at law of the State of New Jersey" to maintain $56,000 in her Sequoia IRA in lieu of posting a $56,000 bond. The August 5 order also provided, with the express consent of Emily, that she "waive[d] her right under N.J.S.A. 25:2-1 to be protected from any claim that the plaintiff Estate may have to recover up to $56,000 from her Sequoia Fund IRA in the event defendant-counterclaimant's appeal . . . is not successful and agrees to pay same to plaintiff estate."
On September 7, 2006, following our decision, Judge MacKenzie vacated the stay, requiring Emily to give up her occupancy of the townhouse and "reimburse the Estate . . . for all of the carrying costs, including, but not limited to, mortgage, utilities and condominium association fees, incurred from October 12, 2004 until the day she vacates." Emily vacated the townhouse on October 4, 2006, following our denial of her emergent application seeking to stay the October 12 order.
On December 26, 2006, the Estate moved to enforce the order requiring her to reimburse the Estate. Because Judge MacKenzie had retired, the motion was assigned to another judge. In support of the motion, the Administrator certified the following carrying costs paid by the Estate on the Randolph property.
* Mortgage and property taxes: $60,833.16
* Condominium association dues: 7,122.77
* Homeowners insurance: 363.00
* Water and sewer/utilities: 1,806.74
* TOTAL $70,125.67
The certification indicated that additional mortgage prepayments totaling $9607 on the principal, above the minimum monthly payments, were made by the Estate. It noted that that the above quoted total figure would be reduced to $60,518.67, "[i]f the additional mortgage prepayments are deducted."
At oral argument on the motion, the Estate conceded that it was not entitled to the additional mortgage prepayments because they would go to the benefit of the estate by increasing its equity in the townhouse. However, it maintained that the monthly principal and interest payments were carrying costs previously ordered for reimbursement. Emily argued that the $56,000 bond ordered by Judge MacKenzie represented the maximum amount of damages that could be recovered by the Estate. She also argued that the mortgage interest, not the principal, should be figured in determining the award "because the principal reduces the amount the estate ultimately owes on the mortgage." She maintained that she was entitled to a credit of $2500 for the pink faux marble bedroom set that she left in the townhouse at the time she vacated the premises because it was "too bulky" to take. She also argued that the Estate was not entitled to any damages because the property increased in value by $86,000 during the time she occupied it. However, when the judge pointed out that the Estate could have sold the property any time they wanted to and had the money to invest, counsel for Emily responded, "I'm not disagreeing with your Honor. . . . But I think at the very least . . . [Emily] should not have to pay for the reduction in the mortgage. Because they . . . would have to pay that in any event . . . ."
Following oral argument on the motion, the judge entered the order requiring Emily to reimburse the Estate $60,518.67. In rendering her decision, the judge noted that every order previously entered by Judge MacKenzie required Emily to "reimburse the estate for all of the carrying costs . . . which I deem and cannot conclude otherwise . . . mean[s] both the [principal] and the interest, the utilities, which [are] water and sewer . . . and the condominium association fees." The judge reasoned that she did not "see anything that Judge MacKenzie wrote, nor could [she] conclude that there's anything that [she could] assume that he intended mortgage not to mean [principal] and interest payments. . . ." She, however, concluded that the carrying costs as designated in the prior orders would not include the additional principal prepayments but only the principal and interest made on the monthly payments.
Rejecting Emily's assertion that she was entitled to a credit of $2500 for the bedroom furniture, the judge noted that Emily left it behind when she vacated the premises because it was too bulky, notwithstanding the Estate's agreement that she could take it. The judge, however, ruled that "the estate should give her the opportunity to take [the bedroom furniture]" and, in the January 11, 2007, order memorializing her ruling, provided Emily with thirty days to take the furniture. On February 2, 2007, the Estate inquired in writing whether Emily intended to retrieve the bedroom furniture, indicating further that it would consider the furniture abandoned if it was not retrieved by February 10, 2007. Counsel for the Estate received no response to the February 2 letter.
Emily filed her notice of appeal of the January 11 Order on February 26, 2007. On March 28, 2007, the Estate filed a motion to dismiss the appeal on the ground that Emily failed to raise any issues regarding the carrying costs in her first appeal.*fn1 We denied the Estate's motion on April 26, 2007.
On appeal, Emily raises the following points:
POINT I THE TRIAL COURT ERRED IN NOT ALLOWING A PLENARY HEARING AS TO THE AMOUNT DUE, IF ANY, BY DEFENDANT TO PLAINTIFF.
POINT II THE JANUARY 11, 2007 ORDER REQUIRING DEFENDANT TO PAY $60,518.67 TO PLAINTIFF SHOULD BE VACATED AS THE VALUE OF THE RANDOLPH PROPERTY INCREASED BY MORE THAN $85,000.00 SINCE DECEDENT'S OCTOBER, 2004 DEATH.
POINT III IN THE ALTERNATIVE, NO AWARD OF MORTGAGE PRINCIPAL AND ESCROW PAID BY PLAINTIFF SHOULD HAVE BEEN GRANTED TO PLAINTIFF.
POINT IV IN THE ALTERNATIVE, A CREDIT FOR FEDERAL AND STATE TAX DEDUCTIONS FOR MORTGAGE INTEREST AND PROPERTY TAXES TO WHICH PLAINTIFF IS ELIGIBLE SHOULD HAVE BEEN CREDITED TO DEFENDANT.
POINT V PLAINTIFF SHOULD BE ORDERED TO PAY DEFENDANT $2,500.00 FOR THE BEDROOM SET GIFTED TO HER BY DECEDENT.
POINT VI DEFENDANT SHOULD NOT BE PENALIZED FOR THE SEVEN MONTH DELAY IN THE APPELLATE DIVISION DECIDING THE FIRST APPEAL.
POINT VII IN THE ALTERNATIVE, THE AMOUNT AWARDED TO PLAINTIFF, IF ANY, SHOULD BE CAPPED AT $56,000, THE AMOUNT REQUIRED TO BE MAINTAINED IN DEFENDANT'S INHERITED IRA, MINUS ANY CREDITS ALLOWED TO DEFENDANT.
We first address Emily's assertion that the judge erred in denying a plenary hearing and in ordering her to pay monthly mortgage principal payments. On appeal, Emily asserts that, because the mortgage principal payments benefited the Estate by increasing its equitable interest in the property, she should not be liable for them. She asserts that she has derived no benefit from the Estate's payment of principal and, by awarding such payments to the Estate, the judge permitted the Estate to "double dip" because it has received a reduction in principal indebtedness and at the same time obtained reimbursement from her. The Estate argues, for the first time on appeal, that the principal payments, which are approximately $2205 per month, is less than the average fair market rental value the Estate could have received had it rented the property to a tenant.
Initially, we note that Judge MacKenzie's written opinion dismissing Emily's palimony counterclaim and entering summary judgment on the Estate's complaint did not address the reimbursement issues. The March 28, 2005, summary judgment order prepared by the Estate's attorney does not specifically explain what is included in the term "carrying costs" as it relates to the mortgage payments. One of the remedies sought by the Estate's complaint was to require Emily "to pay to the Estate the fair market rental value of the Randolph premises plus any carrying costs from decedent's date of death through the date she vacates the premises."
Judge MacKenzie's May 2, 2005, order prepared by Emily's counsel, staying the summary judgment order pending appeal, provides some insight into Judge MacKenzie's prior ruling. It provides that the $56,000 bond shall be posted "to satisfy any judgment affirming the March 28, 2005 Order of the [c]court and any monies that may be due to plaintiff as a result of [Emily's] use and occupancy of the [townhouse] premises." Supplementing the order, Judge Mackenzie added, "[t]he amount of the bond has been set at a figure which equitably balances the opposing numbers asserted by the respective counsel."
The term "carrying costs" varies depending on the context in which it is used. Here, Judge Mackenzie's May 2 order clarified the meaning of the original summary judgment order's reference to carrying costs as monies due the Estate for Emily's "use and occupancy" of the townhouse. Emily's claim that she derived no benefit from the Estate's payment of mortgage principal ignores the Estate's claim that she occupied the premises rent-free. Indeed, in her papers filed in opposition to the Estate's motion to enforce the prior orders for reimbursement, Emily asserted that the monies due and owing by her for use and occupancy "can only be decided after a proof hearing."
Although the Estate asserts that a proof hearing was not necessary, it argues and refers in its appellate brief, in support of the judge's inclusion of mortgage principal payments, to fair market rental value, a measure of damages sought in its complaint but not presented to the motion judge.
In determining the amount of reimbursement, the motion judge did not address the amount of monies due the Estate for Emily's use and occupancy of the townhouse. There were no witnesses. Indeed, there was no mention of what would constitute a fair rental value for the time Emily remained in the townhouse. Those issues could not be decided on the basis of the papers submitted by the parties. While the results ordered by the motion judge may be fair and her determination to include the principal payments may have been based upon an equitable consideration after weighing the concept of fair market rental value against Emily's unfortunate circumstances, we are unable to determine, on the record provided, whether the amount arrived at was appropriate.
We are thus constrained to remand this matter to the trial court for further proceedings, including a proof hearing to determine whether the mortgage principal payments are equitably consistent with fair rental value for the period of occupancy. We do so reluctantly, as Emily's monetary exposure following a plenary hearing, adjudicated on the basis of fair rental value, could increase, notwithstanding her argument that a proof hearing should have been afforded her. On the other hand, the severe and tragic loss Emily suffered as a result of the untimely and sudden death of her fiancé shortly before they were scheduled to be married, supported in part by Judge MacKenzie's comments regarding the bona fide nature of her appeal, may be considered in weighing the equities.
We stress that, on remand, the chancery court should consider its many options in crafting a judgment. Courts of equity exist for such situations as this, where legal relief may not adequately address the concern raised. Banach v. Cannon, 356 N.J. Super. 342, 360-61 (Ch. Div. 2002).
Courts of equity are not restricted to issue only known remedies. Rather, courts of equity and their remedies "are distinguished for their flexibility, their unlimited variety, their adaptability to circumstances and the natural rules which govern their use. There is in fact no limit to their variety in application; the court of equity has the power of devising its remedy and shaping it so as to fit the changing circumstances of every case and the complex relations of all the parties." [Id. at 361 (quoting Sears Roebuck & Co. v. Camp, 124 N.J. Eq. 403, 411-12 (E. & A. 1938)).]
Our comments, however, should not be taken to indicate any determination by us on the issue. Nevertheless, we would hope that on remand, particularly for the sake of the parties, they will be able to come to some form of agreement.
We briefly address Emily's remaining arguments, all of which, in our view, lack merit. Her argument that the purported increase in value of the property from $423,487 to $510,000 during the period in time that she occupied it, represents unjust enrichment to the Estate because it has suffered no loss, was appropriately addressed by the motion judge when she noted that the Estate, as the fee owner, has the right to sell the property for the benefit of the heirs of the decedent's intestate estate. See N.J.S.A. 3B:1-3; N.J.S.A. 3B:10-30.
Emily's contention, raised for the first time on appeal, that she should be entitled to a credit for any tax deductible payments the Estate made toward the mortgage was not raised in the Chancery Division and, therefore, will not be addressed by us on appeal. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973). Her assertions that (1) she is entitled to a credit for the bedroom furniture and (2) the January 11, 2007, order should be reversed because she was penalized for what she terms "a seven month delay" between oral argument on the prior appeal and the rendering of the appellate panel's decision, lack sufficient merit to warrant further discussion in a written opinion. R. 2:11-3 (e)(1)(E).
Finally, we address Emily's contention that the $56,000 bond represents a cap on the amount that the Estate can recover. "A supersedeas bond is a 'device to protect a party who has been successful at trial but has been forestalled from proceeding during an appeal.' Its terms and conditions are governed by Rules 2:9-5 and 6." Courvoisier v. Harley Davidson of Trenton, Inc., 162 N.J. 153, 158 (1999) (quoting Hudson City Sav. Bank v. Hampton Gardens Ltd., 88 N.J. 16, 20 (1981)). Those "rules balance the interests of litigants after trial by guaranteeing the losing party a stay pending appeal while protecting the successful party, who would otherwise be in a position to execute, from any loss occasioned by the appellate delay."
Ibid. Judge Mackenzie's handwritten notation on the May 2, 2005, order appropriately noted that he set the amount of the bond as "a figure which equitably balances the opposing numbers asserted by respective counsel." It clearly was not intended as a cap.
The order is vacated insofar as it included payments made by the Estate toward monthly principal on the mortgage secured by the townhouse. The matter is remanded to the Chancery Division for reconsideration of the amount of mortgage principal, if any, the Estate is entitled to in reimbursement. We do not retain jurisdiction.