June 30, 2008
IN THE MATTER OF THE ESTATE OF WILTON J. HALBIG.
On appeal from the Superior Court of New Jersey, Chancery Division, Passaic County, Docket No. P-174-43.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 3, 2007
Before Judges A. A. Rodríguez and C. L. Miniman.
In 1953 decedent Wilton J. Halbig married his first wife, Nancy D. Halbig. Three children were born of the marriage: James Halbig, Elizabeth Weller and Donna Parisi (Respondents). Wilton and Nancy divorced in January 1993. Incorporated into the dual judgment of divorce was an inter-spousal agreement (Agreement), providing among other things:
The Husband [Wilton] agrees that notwithstanding his remarriage, any inheritance which he may receive from any source whatsoever, shall, upon his death, be devised by him to [Respondents] in equal shares, share and share alike.
Shortly after the divorce, Wilton's mother, Frieda Burns, died testate, leaving Wilton a house in Hewitt, along with its contents, a 1980 Ford Futura and one-quarter of the remainder of her estate. Wilton also inherited a number of bank accounts and certificates of deposit from his mother.
In April 1994, Wilton married appellant Arlyne J. Halbig. Subsequently, he named her executrix of his estate. In June 1994, Wilton sold the Hewitt property to his son James and James's wife for $130,000. James executed a mortgage to Wilton for $125,000.
Wilton died testate in 1998. Arlyne, as executrix, assigned the mortgage, the balance of which was amortized at $115,401.17, to Respondents. By that time, James and his wife had paid $37,511.92 towards the mortgage.*fn1
Upon application by Respondents, Judge Michael K. Diamond entered an order enjoining the Estate and Arlyne from distributing, encumbering, devising, converting, transferring, selling or disbursing any of the Estate proceeds until further order of the court.
In a May 22, 2002 written decision, Judge Ernest Caposela found that the Agreement was binding on the Estate. Therefore, the Estate was liable to Respondents. Judge Caposela found:
Wilton J. Halbig had an obligation to devise to his children the following inheritance he received from Frieda Burns: (a) the property located [in] Hewitt, . . . valued at $145,000 at the time of Ms. Burns'[s] death; (b) the contents of the property . . . valued at approximately $1,500.00; (c) a 1980 Ford Futura, valued at $500.00; and (d) one-quarter of the residuary estate. By failing to do so, the late Wilton J. Halbig violated the Inter-spousal Agreement.
Neither the Estate nor Arlyne appealed Judge Caposela's decision. Discovery was taken. According to her 2002 deposition testimony, in 2001, while Judge Diamond's restraining orders were in effect, Arlyne sold a condominium jointly owned by her and Wilton in Pine Island, Florida for $160,000. With those proceeds she purchased a condominium in Naples, Florida for $95,000. With the remaining $65,000 she paid bills and traveled.
In September 2005, Judge Diamond, in response to Respondent's motion for summary judgment, ordered that the matter "be transferred to the Probate Division of the Chancery Court for further proceedings."
Respondents filed a verified complaint, seeking to enjoin the Estate and Arlyne, individually and as Executrix, from dissipating the assets of the Estate and for other relief. Two days later, Judge Margaret Mary McVeigh entered an order to show cause why she should not grant the relief Respondents sought. Judge McVeigh referred the matter to Judge Peter Ciolino for mediation. The parties could not reach a compromise. The parties agreed to submit the matter to the court as a summary action, pursuant to Rule 4:67.
Judge McVeigh issued a written opinion and noted that the issues before her were "rather limited." She found Judge Caposela's 2002 opinion, which held Wilton obligated under the Agreement to provide certain benefits to Respondents and found that Wilton failed to do so, controlling. She found the Estate liable to Respondents in the amount of $35,499.06, which represents Wilton's share of mother's estate.
Judge McVeigh also found compelling Respondent's argument that James should not have made mortgage payments to Wilton, and found that the Estate must return $37,511.92 to Respondents. The decision concluded:
It is eminently clear that Wilton Halbig knew at the time that he entered into this inter-spousal agreement he stood to inherit substantial amounts from his mother. As Judge Caposela's decision pointed out decisions were made based upon the conditions of assets as to what his spouse was willing to take at that point and what the parties intended as a protection for their children. Clearly the discussion of subsequent marriage was foreseen by the parties and this Court sees no impediment to a finding that plaintiffs are entitled to those amounts agreed upon by the parties and decided by Judge Caposela in 2002.
Therefore this court will grant judgment in favor of the [Respondents] against the estate in the amount of $73,010.98.
Arlyne appeals, contending that she "did not breach her N.J.S.A. 3B:10-19, et. seq., duty of care and is therefore not liable to the plaintiffs for any damages they may have suffered". We disagree.
No special standards of appellate review govern summary actions conducted pursuant to Rule 4:67. The usual standards of review for civil cases apply. See, e.g., O'Connell v. N.J. Mfrs. Ins. Co., 306 N.J. Super. 166, 172-73 (App. Div. 1997) (applying substantial-credible-evidence standard in reviewing a decision from a summary action), certif. granted, 153 N.J. 405, appeal dismissed, 157 N.J. 537 (1998). However, when a court makes findings of fact based on documentary evidence alone, no special deference is warranted. See Clowes v. Terminix Int'l, Inc., 109 N.J. 575, 587 (1988); Jock v. Zoning Bd., 371 N.J. Super. 547, 554 (App. Div. 2004), rev'd on other grounds, 184 N.J. 562 (2005).
Arlyne misinterprets Judge McVeigh's order. The judge did not rule that Arlyne, individually, was liable to Respondents, but only that the Estate was liable. There were no findings as to Arlyne's individual liability and the order appealed from does not name her in an individual capacity. The order unequivocally states: "Judgment in favor of the [Respondents] against the estate in the amount of $73,010.98[.]" (emphasis added).
Arlyne also argues that she, as executrix, is neither liable for acts committed by Wilton during his lifetime nor bound by the agreement between Wilton and his first wife. Respondents counter that the Estate is liable for Wilton's acts of conversion and Judge Caposela's 2002 decision bars Arlyne from rearguing Wilton's liability under the Agreement. We agree with Respondents.
Any suit against a person for conversion survives the death of the tortfeasor and the action may be brought against his estate. N.J.S.A. 2A:15-4 provides:
Where any testator or intestate shall, in his lifetime, have taken or carried away or converted to his use, the goods or chattels of any person, or shall, in his lifetime, have committed any trespass to the person or property, real or personal, of any person, such person, his executors or administrators, shall have and may maintain the same action against the executors or administrators of such testator or intestate as he or they might have had or maintained against the testator or intestate, and shall have the like remedy and process for the damages recovered in such action as are now had and allowed in other actions against executors or administrators.
The rule is the same for breach of contract actions. See Flicker v. Chenitz, 55 N.J. Super. 273, 279-80 (App. Div.), certif. granted, 30 N.J. 152, appeal dismissed, 30 N.J. 566 (1959). Therefore, if Respondents could have brought a breach of contract or conversion action against Wilton during his lifetime, they could bring the same actions against the Estate now after his death against his representative.
Conversion is "the wrongful exercise of dominion and control over property owned by another inconsistent with the owner's rights." Port-O-San Corp. v. Teamsters Local Union No. 863 Welfare & Pension Funds, 363 N.J. Super. 431, 440 (App. Div. 2003) (quoting Commercial Ins. Co. of Newark v. Apgar, 111 N.J. Super. 108, 114-15 (Law Div. 1970)). Judge Caposela found that Wilton was bound by the Agreement and that he should have transferred his inheritance from his mother to Respondents. He did not do so, and by keeping the entire inheritance and selling the Hewitt property to James, he both breached the Agreement and acted inconsistently with Respondents' interest. Holding the Estate liable for Wilton's breaching the Agreement and converting the property was wholly proper.
Respondents are also correct that the doctrine of collateral estoppel bars the Estate from arguing certain issues in this proceeding. In order to rely on the doctrine of collateral estoppel, the party alleging issue preclusion must show:
(1) the issue to be precluded is identical to the issue decided in the prior proceeding;
(2) the issue was actually litigated in the prior proceeding;
(3) the court in the prior proceeding issued a final judgment on the merits;
(4) the determination of the issue was essential to the prior judgment; and
(5) the party against whom the doctrine is asserted was a party to or in privity with a party to the earlier proceeding.
[Hennessey v. Winslow Twp., 183 N.J. 593, 599 (2005) (quoting In re Estate of Dawson, 136 N.J. 1, 20-21 (1994)) (internal citations omitted)].
Applying these requirements, the Estate cannot now argue the Agreement did not bind Wilton or the Estate.
First, the issues are the same. Here, Arlyne asserts that the Estate is not bound by the Agreement as a defense to the present action. Judge Caposela's 2002 opinion stated the issue as follows: "whether [Wilton] may enter into an Inter-spousal Agreement, whereby he agrees to devise to [Respondents] any property he receives through inheritance despite the exclusion of inheritance contained in [the alimony statute]." Judge Caposela found the Agreement valid, that Wilton should not have sold the Hewitt property, and that the Estate is liable to Respondents for that property, its contents, the 1980 Ford Futura, and one-quarter of the residual estate of Frieda Burns. These issues, validity and liability, were the same in both actions.
Second, the parties actually litigated those issues, as they were the major points of contention in the proceeding before Judge Caposela. Third, Judge Caposela's order served as a final judgment. Fourth, that determination was essential, again because they were the sole points of contention between the Estate and Respondents. Fifth, both parties are the same, thus there is no issue as to privity.
Because the doctrine of collateral estoppel applies, Arlyne, on behalf of the Estate, cannot now argue that 1) the Estate is not bound by the Agreement or 2) the Estate is not liable to Respondents.*fn2
Arlyne also contends that the judge "improperly considered non-probate assets, when calculating the residual estate." Specifically, she contends Wilton and his mother held property located on Bayonne Drive, also in Hewitt, as joint tenants, and therefore it could not be part of Burns's residual estate and thus not part of what the Estate owes Respondents under the Agreement. We agree.
The law presumes a tenancy of two or more persons is a tenancy in common unless the grant or device expressly provides otherwise. N.J.S.A. 46:3-17. The "'grand incident' of joint tenancy is the right of survivorship; on the death of any joint tenant, title descends to the survivors . . . ." Capital Fin. Co. of Del. Valley, Inc. v. Asterbadi, 389 N.J. Super. 219, 226 (Ch. Div. 2006), aff'd in part and rev'd in part, 398 N.J. Super. 299 (App. Div. 2008). Upon death of one of the joint tenants, the sole survivor acquires an "undivided fee ownership in the entire" property. Gauger v. Gauger, 73 N.J. 538, 544 (1977). The transfer is "[t]ruly automatic[.]" Historic Smithville Dev. Co. v. Chelsea Title & Guaranty Co., 184 N.J. Super. 282, 291 (Ch. Div. 1981), aff'd in part and rev'd in part, 190 N.J. Super. 567 (App. Div. 1983). A joint tenancy may be converted into a tenancy in common only "by the mutual agreement of the joint tenants or by the unilateral act of one of them in alienating or transferring his interest in the jointly owned property so as to destroy one or more of the four constituent unities of interest, title, time and possession." Brodzinsky v. Pulek, 75 N.J. Super. 40, 49-50 (App. Div.), certif. denied, 38 N.J. 304 (1962).
Wilton did not alienate his interest in the Bayonne Drive property through the Agreement with his first wife because that agreement only affected any property that would pass to Wilton by inheritance. The Agreement provides only that "any inheritance" Wilton receives would go, "upon his death," to Respondents equally. The right of survivorship under joint tenancy does not pass through inheritance, but automatically, by operation of law, to the sole survivor. Because it was not part of Wilton's inheritance from his mother, the Bayonne Drive property is outside the scope of the Agreement and Judge McVeigh erred in considering it.
Judge McVeigh found the value of one-quarter of Burns's estate to be $35,499.06. She reached this amount based on James's certification, which relies on Burns's 1993 New Jersey Inheritance Tax Return. The return valued her estate as follows:
Schedule A (Real Property) Bayonne Drive, Hewitt, N.J.$61,675.00
Schedule B (Personal Property) Securities, CDs and Bank Accounts$107,291.77
Schedule D (Deductions)($10,645.52)
Schedule E (Beneficiary Interests) Other beneficiary bequests($16,000.00)
Total Net Estate$142,351.25
One-quarter of Total Net Estate$35,587.81
One-quarter of Total Net Estate $35,587.81 In her responsive certification, Arlyne contended that the Bayonne Drive property, which Burns and Wilton held in joint tenancy, passed to Wilton directly upon Burns's death "by operation of law" and should not have been included in Burns's estate.*fn3 Supporting her contention is the deed to the Bayonne Drive property, which indicates that the property was deeded to Wilton and Burns in 1979 "as joint tenants with right of survivorship." Burns's tax return also indicates the Bayonne Drive property was "held in joint tenancy with right of survivorship between decedent Frieda Burns and Wilton J. Halbig." Respondents do not dispute the fact that Wilton and Burns held the Bayonne Drive property in joint tenancy.
Given the record before us and our scope of review, Judge McVeigh erred in her calculation as to Burns's estate, resulting in her miscalculating the one-quarter amount owed to Respondents. Since property held in joint tenancy with a right of survivorship passes by law to the survivor automatically, it was not part of Burns's estate and should not have been included in determining the judgment against the Estate.
Taking the $61,675.00 out of the total net estate, the new total net estate is $80,676.25, one-quarter of which is $20,169.06. Added to the amount due Respondents on the Hewitt property ($37,511.92), the judgment against the Estate should be for Respondents in the amount of $57,680.98. Accordingly, we remand for entry of judgment in favor of Respondents in the amount of $57,680.98.
Arlyne also argues on appeal that the judge's "rendering of a summary judgment decision without conducting a hearing or taking any testimony, was an abuse of discretion." We disagree.
A trial court may proceed with a case through a summary action when "it is likely that the matter may be completely disposed of in a summary manner." R. 4:67-1. The court must make findings of fact and the non-moving party is not entitled to favorable inferences from the facts, as it would on a motion for summary judgment. Courier News v. Hunterdon County Pros. Office, 358 N.J. Super. 373, 379 (App. Div. 2003) (citing O'Connell, supra, 306 N.J. Super. at 172); Pressler, Current N.J. Court Rules, comment 1 on R. 4:67-1 (2008).
Both Respondents and Arlyne consented to having this matter disposed of by way of a summary action. Judge McVeigh considered all of the evidence presented to her and detailed findings of fact appear in her written opinion. Arlyne was free to provide the court below with any evidence relevant to the determination of the issues before it and present written arguments. In fact, she did submit a number of certifications, exhibits and briefs throughout the course of the litigation. The record contains substantial, credible evidence to support the findings of the trial judge and we perceive no basis to disturb them.
Arlyne also contends that the "doctrine of laches applies and therefore the [Respondents] are precluded from maintaining this action." Specifically, she alleges that the Respondents must have been aware of the potential claims against their father long before they brought suit and their delay was "unconscionable." Respondents counter that they could not have brought their claim prior to Wilton's death because the language of the Agreement did not create a benefit for them until his death. Arlyne's claim must fail, both procedurally and substantively.
Procedurally, Arlyne did not raise the defense of laches in any of her submissions to the trial court. Laches is an affirmative defense and must be pleaded or otherwise timely raised. R. 4:5-4. Because this is the first time Arlyne seeks to assert laches, the defense is waived. See Pressler, Current N.J. Court Rules, comment 1.2.1 on R. 4:5-4 (2008).
Substantively, the doctrine of laches bars a party seeking to enforce a known right on the grounds that the party "engage[d] in an inexcusable and unexplained delay in exercising that right to the prejudice of the other party." Knorr v. Smeal, 178 N.J. 169, 180-81 (2003). Only if "the delaying party had sufficient opportunity to assert the right in the proper forum and the prejudiced party acted in good faith believing that the right had been abandoned" may laches be enforced. Id. at 181. "The key factors to be considered in deciding whether to apply the doctrine are the length of the delay, the reasons for the delay, and the 'changing conditions of either or both parties during the delay.'" Ibid. (quoting Lavin v. Bd. of Educ., 90 N.J. 145, 152 (1982)). The "core equitable concern" is whether there has been harm caused by the delay. Ibid.
The Agreement provides that any inheritance Wilton "may receive from any source, whatsoever, shall, upon his death, be devised by him to [Respondents.]" (emphasis added). Therefore, it was not until Wilton's death in 1998 that Respondents had any rights under the Agreement. They brought their suit thirteen months after Wilton's death, in December 1999. This does not constitute a delay. Furthermore, Arlyne set forth no evidence of prejudice other than her defeat in the court below. As such, her laches defense must fail.
The judgment in favor of Respondents is vacated; the matter is remanded to the Chancery Division for entry of judgment in favor of Respondents in the amount of $57,680.98. We do not retain jurisdiction.