February 22, 2010
IN THE MATTER OF THE ESTATE OF HOWARD C. HOPE, SR., DECEASED.
On appeal from Superior Court of New Jersey, Chancery Division, Camden County, Docket No. CP-108-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: November 5, 2009
Before Judges Cuff, Payne and C.L. Miniman.
Appellants James Hope and Dorothy Hope-Delayo (Delayo) appeal from a January 16, 2009, order denying their post-judgment application to remove respondent S. David Brandt as the Administrator Cum Testamento Annexo*fn1 (Administrator CTA) of the Estate of Howard C. Hope, Sr., deceased. This is their second appeal in connection with the administration of this estate. In re Estate of Howard C. Hope, Sr., Deceased, 390 N.J. Super. 533 (App. Div.), certif. denied, 191 N.J. 316 (2007). We now affirm.
Hope and Delayo are two of four adult children of Howard C. Hope, Sr., who died testate on May 7, 2001. Decedent's other children are Carol Hope Pepe and Deborah Hope Duble. All four children are heirs of his estate. In his Last Will and Testament, Howard C. Hope, Sr., named his son as the executor of his will and bequeathed his personal property to him. Id. at 536-37. He bequeathed the remainder of his estate to his four children, "share and share alike." Id. at 537.
In July 2003, Duble filed a complaint in the Probate Part of the Chancery Division seeking to remove Hope as executor of the estate due to a dispute among the siblings over Hope's failure to distribute two pieces of real estate, including a piece of real estate on which Hope resided. On July 20, 2004, the judge entered an order removing Hope as executor and appointing Brandt as the Administrator CTA.
After Brandt was appointed, Hope and Delayo filed a verified complaint and sought a ruling that Brandt was required to distribute in kind the larger piece of real estate, known as 1500 New Brooklyn Road in Gloucester Township. We described that larger parcel and its development potential in our prior opinion as follows:
The primary asset in the residuary estate is a sixteen-acre parcel of land, zoned R-1 Residential for single-family dwellings. To assess the property's value, Brandt retained the Ragan Design Group. According to Ragan's report, "[t]he site is largely wooded with a small wood frame house located [on] the site. . . . The house is dilapidated and is in desperate need of repair." The report questioned "whether the home is habitable" or "meets current code standards for occupancy."
While the report indicates that the property "could conceivably be evenly divided without substantial detriment or significant loss of value to the estate," it concluded, and appellants do not dispute, that developing half of the property, as opposed to developing the entire property, diminishes the total development potential and the concomitant revenue that could be generated from the property. Developing the entire parcel consistent with the R-1 standards would yield eleven lots, while developing half of the parcel would yield five lots. Developing only one-half of the property, as suggested by appellants, would increase the cost per buildable lot.
James Hope has lived in the home on the property for the past fifty years. Neither he nor Delayo presented the trial court with a proposal as to how the property should be subdivided. [Ibid.]
The Chancery judge at the time ultimately entered an order on February 2, 2006, directing Brandt to sell the larger piece of real estate.*fn2 Hope and Delayo filed their first appeal from that order, contending that the property should be distributed in kind, relying on N.J.S.A. 3B:23-1 and -3. Ibid. We concluded that N.J.S.A. 3B:23-1 "d[id] not apply in the given circumstances." Id. at 538. Although we found that N.J.S.A. 3B:23-3 was "applicable to the distribution of the decedent's residuary estate, we disagree[d] that it require[d] distribution in kind under the facts present here." Ibid. This was so because the will did not "direct how the property should be distributed" and the statute only allowed distribution in kind "'if there is no objection to the proposed distribution and it is practicable to distribute undivided interests[;] otherwise[,] those assets shall be converted into cash for distribution.'" Id. at 539 (quoting N.J.S.A. 3B:23-3). Because the siblings of Hope and Delayo objected to in-kind distribution, it was not required; "instead, the mode of distribution is subject to the equitable discretion of the personal representative of the estate, and ultimately, of the court." Id. at 540.
We found no mistaken exercise of discretion by Brandt or the court. Id. at 541. We also noted that in-kind distribution was impracticable because (1) the siblings objected to it; (2) Hope and Delayo never submitted a plan for subdividing the property; and (3) the Ragan report concluded that developing only half the property "would diminish the total development potential, increasing the cost per lot" and "lessen the value of the shares of the residuary estate." Id. at 541-42. This result would be contrary to Brandt's duty to settle and distribute the estate in the best interests of all four siblings. Id. at 542.
Before the appeal was decided, Brandt resumed negotiations on a contract for the sale of the larger piece of property. On June 2, 2006, Brandt wrote to John R. Bennie, counsel for Paparone Housing Co., Inc. (Paparone), explaining that two heirs sought distribution of the estate in kind and two sought cash. He explained that the judge had ruled that the entire property be sold and the cash distributed four ways, but two disgruntled heirs appealed. He then proposed changes to a draft contract, which had earlier been submitted to the Chancery judge as an exhibit to Brandt's January 28, 2005, affidavit in opposition to the motion of Hope and Delayo to compel in-kind distribution.
On August 30, 2006, Brandt sent a final draft of the contract to Bennie, providing copies to all beneficiaries; Barry J. Beran, counsel for Hope and Delayo at the time; and the Chancery judge. On September 1, that counsel acknowledged receipt of the contract and suggested some changes to ¶ 9(h). On September 11, 2006, Brandt executed the contract with Paparone. The contract made the sale contingent on Paparone securing approval for a minimum of sixteen single-family dwelling lots. The purchase price would be $792,000 if Paparone secured approval for twenty-four lots with an additional $40,000 per lot for excess lots or a reduction of $30,000 per lot below twenty-four, but in no event would the purchase price be less than $700,000.
Paparone filed a development application with the Gloucester Township Board of Adjustment on June 15, 2007, seeking zoning variances to convert the property into twenty-eight lots. Brandt kept the heirs apprised of this filing and the expected and actual dates of Board of Adjustment hearings thereafter, including one scheduled for October 27, 2007. Sometime shortly prior to that meeting, Hope circulated the following flyer to members of the public:
SAVE THE "HOPE"STEAD I, JAMES HOPE, AM BEING FORCED OFF MY PROPERTY AGAINST MY WILL. THESE 16 ACRES AT THE END OF DEL SORDO DR. (#1500 NEW BROOKLYN RD., ERIAL) WERE PURCHASED BY MY PARENTS, HOWARD AND JEAN HOPE, BACK IN 1954. I HAVE LIVED HERE FOR OVER 50 YEARS. THOMAS PAPARONE BUILDERS INTEND TO PUT 28 HOUSES ON OUR FAMILY'S LAND.
SAY NO TO DEVELOPMENT AND REZONING.
MY FATHER, HOWARD C. HOPE, HAD A WILL NAMING ME AS EXECUTOR AND I WAS REMOVED UNJUSTLY BY JUDGE M. ALLAN VOGELSON. HE THEN APPOINTED DAVID BRANDT, ADMINISTRATOR TO OUR FATHER'S ESTATE. WE HAVE BEEN IN COURT FOR 41/2 YEARS FIGHTING THIS.
A PUBLIC HEARING IS SCHEDULED ON THURS. OCT. 25TH AT 7:30PM, BEFORE THE GLOUCESTER TWP. PLANNING BOARD. PLEASE SUPPORT US IN OUR FIGHT BY ATTENDING THIS VERY IMPORTANT MEETING.
Apparently, responding to an inquiry about this flyer, Brandt faxed a letter on October 25, 2007, advising Paparone that Hope lived in a house on the property, had been removed as the executor of the estate because he failed to act appropriately, and had appealed the order directing Brandt to sell the property, but the appeal was denied.
On October 29, 2007, Brandt responded to two letters from the attorney for Hope and Delayo, reviewing the history of the administration of the estate, the various appraisals of the estate's properties, his efforts to sell them, and the Board of Adjustment meetings. He enclosed an offer to purchase from Hooper Builders, a copy of his request for proposals with the service list showing the parties solicited, and a letter he sent that day to the heirs. In the letter to the heirs, Brandt acknowledged they had all attended the Board of Adjustment meeting on October 25 and expressed that he was hopeful the Board would approve around twenty-three lots, which would make the sale price $762,000. He expected the next meeting to be in December. On December 18, 2007, Brandt advised the heirs that Paparone had revised the variance plans for the lots in accordance with the Board's requests and that Paparone was trying to get the revised plans on the Board's agenda as soon as possible.
Paparone filed its amended application on January 4, 2008, seeking zoning variances to construct twenty-two lots. On February 8, Brandt advised the heirs that he expected the revised application would be heard in March. On February 22, Brandt provided each of the heirs with a copy of the amended application. On June 26, 2008, the Board of Adjustment adopted a resolution approving the application of Paparone for variances to subdivide the larger piece of property into twenty-two lots. The resolution noted that approximately eight people spoke in opposition to the project, expressing concerns about construction traffic and the value of their property. They also contended that only fifteen houses should be built on the property. The Board found "that the benefits outweigh[ed] any detriment and the concerns of the residents could be alleviated."
On July 3, 2008, Brandt advised the heirs that the Board granted the requested variances for a subdivision containing twenty-two lots. As a result, the contract price would be $732,000. He expected the closing to take place that fall. The contract with Paparone required the parties to close title within sixty days after Paparone received final approval, memorialized by resolution. It also provided that closing had to occur within eighteen months of the date of the agreement, which the parties could agree to extend for an additional six months, or until September 11, 2008.
On September 2, 2008, Paparone wrote to Brandt stating that the contract was about to expire and he was seeking a contract extension to December 31, 2009, in order to proceed with the preliminary submission and get approval for all utilities. Almost immediately thereafter on September 5, Hope and Delayo instituted an action in lieu of prerogative writs challenging the June 26 resolution. They asserted the action of the Board of Adjustment was arbitrary, capricious, and unreasonable for seven reasons and sought to have it set aside. Of course, such an action would significantly delay the development.
On October 9, 2008, counsel for Hope and Delayo filed a motion in the prerogative writs action seeking to remove Brandt as Administrator CTA. Brandt's counsel notified the Law Division judge and the Chancery Division judge that the motion should have been filed in the probate case and suggested ways to handle this error. The court transferred the Law Division motion to the Chancery Division, Probate Part, where it was scheduled as a post-judgment motion in the action to remove Hope as executor, to be argued on January 16, 2009.
In support of their motion, Hope and Delayo jointly certified to the history of the administration of the estate. They sought to remove Brandt, first "because he liquidated the Kearsley Road property for substantially less than its fair market value and the value established by the [c]court appointed appraiser." Second, they averred that "the Administrator entered into an Agreement for Sale for the New Brooklyn Road property, which was not submitted to the [c]court for approval." Third, the contract "fails to appropriately protect the Estate in the event the Buyer fails to [timely] obtain governmental approvals" because it did not give the estate a right to cancel the contract and Paparone had delayed securing subdivision approval. Hope and Delayo then recounted the evidence supporting these three propositions in detail.
Brandt opposed the motion, certifying to his acts in the administration of the estate. He explained why he had taken the steps he did to sell both pieces of property and advised the court that Paparone had sought approvals for variances, which had been granted by the Board. He discussed the appraisals on both properties and explained why the court-appointed appraiser's work was deficient and unreliable. He explained his efforts to sell the Kearsley Road property and why he sold it for $100,000. As to the New Brooklyn Road property, he explained that litigation by Hope and Delayo to preclude the sale of the property effectively stopped his sale effort for three years. He verified that he submitted the proposed contract for the New Brooklyn Road property as an attachment to his affidavit of January 28, 2005, which was submitted in opposition to their original motion to compel him to subdivide and distribute the property in kind. He pointed out that the contract had a definite expiration date, making a right to terminate unnecessary. He further advised the judge that as of December 30, 2008, Paparone was unwilling to invest further money in obtaining approvals for zoning variances for the property until appellants' prerogative writs action was decided.*fn3
On the date set for oral argument, the judge found the facts from the undisputed evidence before him. He observed that Hope and Delayo had not raised any issue about the sale of the Kearsley Road property prior to its sale on December 1, 2004, after the sale, or after the property was resold for double the price eighteen months later. It was not until the October 9, 2008, motion that any issue was raised about it. He found that Hope and Delayo had the appraisal from the court-appointed expert and had their own appraisal for $128,000 before the property was sold and knew that it was an as-is sale with no commissions.
The judge also found that even if Brandt executed the contract without the court's approval, Hope and Delayo were aware of same because Brandt sent the contract to them several years before their motion to remove him, and their attorney had suggested some changes to it at a time when Hope and Delayo had a copy of the order requiring court approval of the contract. He found Hope and Delayo "were in a position to address the Court at a more apropos time, that is several years ago," but they had chosen not to do so.
Next, the judge found that the contract had a definite termination date. He observed that Hope and Delayo were asking him to write a better contract than the parties had agreed to enter. He found that the delay in Paparone's efforts to obtain the necessary approvals may well have been affected by the earlier appeal. He found their delay claim "disingenuous" when Hope and Delayo had gone before the Board and "petitioned neighbors to thwart any efforts on behalf of Mr. Paparone to seek approvals." He found that Hope and Delayo had "been doing everything they can to thwart the sale of this property." The judge saw no reason for removal:
I refuse to entertain this application by the movants under the theory of laches. The theory of laches notes that the Court must address the length of the delay[. A]s to the smaller property it was sold in 2004. As to the larger property the contract was entered into in 2006. The reasons for the delay, I've had none set forth although we have argued this matter well over an hour and repeatedly, jokingly and sometimes in a frustrated manner I've said, answer my questions, why haven't they come forward. This Court does not . . . accept that it was strictly any fault of Mr. [Beran]. I'm not passing total judgment on that, but I am saying these clients have appeared in court, have prosecuted this matter for over 4 and a half years. Have gone to the higher court on this matter. Have gone before planning boards in order to delay what is going on here, and to simply sit here and at this point tell the Court they didn't know what was going on the Court finds it is at best an absurd argument.
Changing conditions of either or both parties did . . . help del[a]y what was going on. Here the other heirs have not been able to progress in this matter due to the repeated litigation by the movants. I repeatedly asked where is the prejudice here, and I believe the prejudice ensues to the other heirs in this matter who are waiting for some finality to this matter. I find it ludicrous that at one side they want this contract for the larger property to go forward, I assume, or on the other hand, be terminated. Because by the removal of Mr.
Brandt what they are asking for is for someone to review this contract, I presume, and take action to terminate. While I think it[']s wonderful that if there is termination that Mr. Hope is willing to pay $700,000 for a property which ultimately could sell for as I'm told, at least $900,000. This gentleman has resided on this property rent free and it is obvious through his actions he has no intentions of leaving the property lightly without a fight, which he's obviously given through this court system. The Court finds that under the theory of laches that the delay alone would be enough in this matter to deny the application. But I have combined it with the other elements here which are I think the ultimate criteria is that Mr. Hope doesn't want this property sold, wishes to purchase it for whatever reason and wishes to remain there for the rest of his life. . . . But I think it's rather apparent that this litigation and this motion is to delay the sale of this property for the benefit of Mr. Hope only and . . . not the other heirs in this case.
The judge concluded it would be inequitable to permit the claim of Hope and Delayo to be enforced, citing In re Estate of Mosery, 349 N.J. Super. 515 (App. Div.), certif. denied, 174 N.J. 191 (2002). He found Hope and Delayo had unclean hands in seeking removal, alleging the contract could not be terminated even though Paparone had not timely secured the required approvals when Hope and Delayo obstructed the approval process and sent out the flyers in question. He also concluded that Brandt had not violated any of his duties as administrator of the estate. The order denying the motion to remove Brandt was entered on January 16, 2009, and this appeal followed.*fn4
Hope and Delayo contend that the doctrine of laches does not apply to the removal of an administrator, which must be supported by proof of "the cumulative effect of a course of conduct over time, as opposed to a single act." They urge that it is not a doctrine regarded with favor where the parties share a confidential relationship. Even if it does apply, they assert that the judge did not properly apply the doctrine because it was not inequitable to permit the claim to be enforced.
Hope and Delayo also argue that the judge erred in finding they had unclean hands, and that termination of the contract was not sought by them. They assert that the judge failed to make proper findings of wrongdoing to support application of this doctrine. They contend that their opposition to the applications for zoning variances cannot constitute wrongdoing because these acts "are common and appropriate actions in land use proceedings."
Finally, Hope and Delayo argue that the judge erred in finding that Brandt had not violated his fiduciary duties to them. They urge that Brandt wasted estate assets by selling the Kearsley Road property for so little money, compared to the two appraisals of the property, without first listing the property with a real estate broker. As to the New Brooklyn Road property, they contend Brandt did not submit the contract to the judge for approval before executing it because the August 30, 2006, letter indicated that Brandt had already executed the contract. They further assert that Brandt did not protect the estate's right to terminate the Paparone contract before its expiration, "effectively bankrolling the cost of the land for the benefit of the buyers and to [the estate's] own detriment and that of [Hope and Delayo]." Brandt also allowed Paparone to extend the agreement "indefinitely at the sole discretion of the buyer," and to the detriment of the estate and did not attempt to enforce the terms of the contract against Paparone. They assert that these failures mandated removal of Brandt.
Where an action is dismissed on a motion based on laches, we employ the same standard that governs the trial court. Mosery, supra, 349 N.J. Super. at 522-23. "Moreover, it has long been the practice in reviewing chancery decrees for appellate courts 'to make an independent investigation of the facts.'" Id. at 522 (quoting Graham v. Onderdonk, 33 N.J. 356, 360 (1960)). That same standard of review applies to an order denying removal of an administrator. See In re Breckwoldt, 22 N.J. 271, 273-76 (1956) (independently examining the record in an appeal of an order removing an executor).
Additionally, it is well settled 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) (citations omitted); see also Toll Bros., Inc. v. Twp. of W. Windsor, 173 N.J. 502, 549 (2002). "And for mixed questions of law and fact, we give deference, under Rova Farms,*fn5 to the supported factual findings of the trial court, but review de novo the lower court's application of any legal rules to such factual findings." State v. Harris, 181 N.J. 391, 416 (2004) (citing State v. Marshall, 148 N.J. 89, 185 (1997)), cert. denied, 545 U.S. 1145, 125 S.Ct. 2973, 162 L.Ed. 2d 898 (2005); see also In re Malone, 381 N.J. Super. 344, 349 (App. Div. 2005) (holding award of counsel fees a mixed question of law and fact subject to de novo review).
The removal of an administrator is governed by N.J.S.A. 3B:14-21, which provides in pertinent part:
The court may remove a fiduciary from office when:
c. He has embezzled, wasted or misapplied any part of the estate committed to his custody, or has abused the trust and confidence reposed in him . . . .
It has long been recognized that "'[c]courts are reluctant to remove an executor or trustee without clear and definite proof of fraud, gross carelessness or indifference.'" Braman v. Cent. Hanover Bank & Trust Co., 138 N.J. Eq. 165, 196-97 (Ch. 1946) (quoting In re Estate of Hazeltine, 119 N.J. Eq. 308, 314 (Prerog. Ct.), aff'd, 121 N.J. Eq. 49 (E. & A. 1936)). Furthermore, "a trustee will not be removed for every violation of duty. For acts done in bad faith, or that have diminished or endangered the trust fund without bad faith, it is the duty of the court to remove him." Id. at 197 (internal quotations and citations omitted).
The "power of removal is exercised sparingly and with great caution." Ibid. An administrator should not be removed unless it clearly appears that he was "flagrantly derelict in his duties." In re Estate of Hanretty, 96 N.J. Eq. 716, 718-19 (E. & A. 1924). Mere "friction or hostility" between an administrator and the beneficiaries is not a sufficient ground for removal. Braman, supra, 138 N.J Eq. at 196. Moreover, an administrator "may exercise ordinary discretion within the scope of his powers in administering the estate," and the Chancery judge may exercise similar discretion in determining the proper distribution of estate assets. Hope, supra, 390 N.J. Super. at 541 (citation and internal quotation omitted). In exercising its discretion, the Chancery judge has many remedies available; however, the judge must nonetheless be conscientious of and directed by law and reason. Ibid. (citations omitted). Applying these principles, we find no error in the judge's denial of the motion now before us.
With respect to the Kearsley Road property, an appraisal does not establish a fixed price for the sale of land, but serves as mere guidance to the owner in selling it. Brandt has extensive experience in real estate and estate administration and was of the opinion that the sale price of $100,000 was reasonable in light of the benefit to an as-is sale with no contingencies and no broker, meaning no real estate commission. Hope and Delayo did not submit any competent proof from any expert that Brandt's judgment in this respect constituted "fraud, gross carelessness or indifference." Braman, supra, 138
N.J Eq. at 196-97. They asserted only their own personal dissatisfaction, which is not a ground for removal. Furthermore, viewing the estate as a whole, Brandt obtained a very favorable contract for the larger piece of property, which, had it not been stymied, would have resulted in a very remunerative liquidation of the entire estate.
Turning to the New Brooklyn Road property, there is nothing exceptionable about a contract for sale where the purchaser requires governmental approvals to sustain a higher purchase price than a contract without contingencies would generate. It is clear from the record before us that Hope and Delayo sought to frustrate the contract by delaying and preventing necessary governmental approvals that would have permitted title to close. The estate was not harmed by the absence of a right of termination prior to the expiration of the contract, but it may very well have been significantly harmed by the delay engendered by the actions of Hope and Delayo. As such, they have failed to establish a prima facie case justifying removal of Brandt.
In light of our disposition on substantive grounds, we need not address the concerns of Hope and Delayo respecting the application of the doctrines of laches and unclean hands to them.