March 31, 2010
IN THE MATTER OF THE ESTATE OF PAUL BROWN, DECEASED.
On appeal from the Superior Court of New Jersey, Chancery Division - Probate Part, Gloucester County, Docket No. 07-1019.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 15, 2010
Before Judges Lisa and Baxter.
This appeal involves a dispute between the decedent Paul Brown's third and final wife, Pamela Brown, and the two adult sons from his first marriage, Paul H. Brown, III and Malik O. Brown, over their respective rights to the proceeds of decedent's $436,800 life insurance policy. The judge resolved that dispute by applying equitable principles to the interpretation of the language of the Property Settlement Agreement (PSA) between decedent and his sons' mother, Iskla, which required decedent to:
Keep in full force and effect . . . those life insurance policies in existence at the time of this Agreement . . . and to designate the minor children, [Paul III and Malik,] as beneficiaries of such policies and the wife [Iskla] as trustee therefor[e] until both children have attained 25 years of age at which time husband shall name his then living children as beneficiaries thereof to take under the policy in equal shares.
It is undisputed that: at the time the PSA was adopted, decedent's life insurance policy, which had been issued to him by his employer, the New York Times, had a face value of $63,300 equal to one year's salary, for which decedent paid no premium; by the time of his death, decedent was earning an annual salary of $109,200; decedent, in violation of the express provisions of the PSA, deleted his sons as beneficiaries on each of the three occasions that he increased the face value of the policy; decedent paid additional premiums throughout his life commensurate with each of those three increases; the final of those three increases on January 18, 2006 resulted in a face value of $436,800, four times his yearly salary, with Pamela, whom decedent had married on December 9, 2005, as the sole beneficiary; and when decedent died on July 14, 2007, the Times paid the entire $436,800 policy to Pamela.
Recognizing that decedent's final designation of Pamela as the sole beneficiary on January 18, 2006 was in violation of the terms of the PSA, Judge Rafferty was faced with the decision of how to equitably apportion the $436,800 policy proceeds. The judge concluded that the most equitable distribution was one that recognized both decedent's obligations under the PSA and decedent's desire to provide financial security to Pamela. In a thorough and well-reasoned written opinion, the judge held that the sons were entitled to "an amount equal to decedent's base salary plus the first and second increases, . . . a total of $327,600." The judge reasoned:
Based on an analysis of the case law, this issue can only be resolved by a balancing of the equities. It is clear that Decedent named [Pamela] as the beneficiary on the Policy because he wanted to be able to provide her with some support should he pass away. If the Court were to agree with [Paul III and Malik's] argument, the intent of the Decedent would be completely ignored. That being said, the increases to the policy that were made after the [PSA was executed] were not all made while decedent and [Pamela] were together. According to the New York Times Company Flexible Benefits Program Enrollment Forms provided to the Court, the first two increases went into effect on January 1, 1991 and January 1, 1992. If [the sons] should not be entitled to this increase because they didn't contribute to it or Decedent did not intend for them to benefit from these increases, [Pamela's] entitlement to these increases must also fail. The beneficiary named at the time of the first increase was Decedent's sister and the beneficiary named at the time of the second increase was Decedent's then fiancée and soon-to-be second wife, Marilyn Moore. Equity dictates that these increases would more appropriately go to the [sons] than [Pamela] who was not even an anticipated beneficiary at the time of these increases.
In regards to the final increase, [the sons] point out that Decedent and [Pamela] were not married at the time of this increase. The Court does not accept this argument as persuasive as the Decedent and [Pamela] were together for many years before they were married. The court can infer that the Decedent intended to provide for his widow by the fact that he named her as the sole beneficiary before he died. As she was the anticipated beneficiary at the time of the final increase, equity dictates that this increase should go to her regardless of her and Decedent's marital status at the time.
Based on the foregoing, the Court holds that [the sons] are entitled to an amount equal to Decedent's base salary plus the first and second increases, which would be a total of $327,600. [Pamela] is entitled to the final increase that Decedent intended to go towards her support in the amount of $109,200. Because both parties acknowledge that the gift from Decedent to [the sons] came out of the Policy proceeds, [the sons'] total should be decreased by $50,000, the gift amount, so that [they] are entitled to a recovery of $277,600 from [Pamela].
On appeal, Pamela raises the following claims:
I. THE COURT ERRED WHEN IT DISPOSED OF A PORTION OF THE INSURANCE PROCEEDS BY ATTEMPTING TO ASCERTAIN THE INTENT OF THE PARTIES TO THE PROPERTY SETTLEMENT AGREEMENT AND IMPOSING A CONSTRUCTIVE TRUST WITHOUT A HEARING.
II. WHILE THE COURT BELOW CORRECTLY FOUND THAT [THE SONS] WERE ENTITLED TO ONE YEAR OF DECEDENT'S SALARY, THE COURT ERRED IN DETERMINING THAT THE AMOUNT WAS DECEDENT'S ANNUAL SALARY AT THE TIME OF HIS DEATH, AND IN DETERMINING THE EQUITABLE AMOUNT DUE TO [THE SONS] FROM THE SUPPLEMENTAL POLICY.
III. THE COURT DID NOT ERR WHEN IT DEDUCTED $50,000, THE AMOUNT OF THE INSURANCE PROCEEDS ALREADY RECEIVED BY [THE SONS], FROM THE AWARD TO [THE SONS].
IV. THE COURT ERRED WHEN IT DISPOSED OF A PORTION OF THE INSURANCE PROCEEDS BY ATTEMPTING TO ASCERTAIN THE INTENT OF THE PARTIES TO THE PROPERTY SETTLEMENT AGREEMENT WITHOUT ANY EVIDENTIARY HEARING.
V. (only raised in Reply Brief). THE COURT ERRED IN DETERMINING THAT ONLY NEW JERSEY LAW SHOULD BE CONTROLLING BECAUSE THE SEPARATION AGREEMENT WAS DRAFTED AND EXPRESSLY PROVIDED THAT IT SHOULD BE INTERPRETED UNDER MARYLAND LAW.
In their cross-appeal, Paul III and Malik raise the following claims:
I. THIS CASE WAS PROPERLY DECIDED ON SUMMARY JUDGMENT BECAUSE THERE WERE NO MATERIAL FACTS IN DISPUTE AND CONTRACT INTERPRETATION ISSUES ARE A MATTER OF LAW.
II. THE CHANCERY COURT CORRECTLY RULED THAT [THE SONS] ENTITLEMENT WAS NOT LIMITED TO ONE TIMES DECEDENT'S SALARY, BUT ERRED IN NOT AWARDING THEM THE ENTIRE AMOUNT OF THE POLICY PROCEEDS AND CONSIDERING DECEDENT'S INTENT TO PROVIDE FOR HIS THIRD WIFE.
With the exception of the comments which follow, we conclude that the arguments raised in the appeal and cross- appeal lack sufficient merit to warrant discussion. We affirm substantially for the reasons express by Judge Rafferty in his well-reasoned and comprehensive written opinion of May 19, 2009. R. 2:11-3(e)(1)(A) and (E).
We add only the following comments. Pamela's claim that the judge erred by rendering a decision without conducting a plenary hearing is unpersuasive for several reasons. First, contract interpretation and construction are matters of law for the court to decide, subject to de novo review. Fastenberg v. Prudential Ins. Co. of Am., 309 N.J. Super. 415, 420 (App. Div. 1998). Pamela does not dispute that Paul III and Malik are entitled to share in the proceeds of their father's insurance policy. The only issue before the judge was the amount to which they were entitled. This is a question of law, rather than fact, and was therefore appropriate for determination by way of summary judgment.
Second, we disagree with Pamela's contention that the only way to determine decedent's intent at the time he entered into the PSA would be through a plenary hearing. The only person who could shed light on his intentions at the time was Paul Brown himself, who is deceased. Pamela did not meet the decedent until 1997, years after the PSA was executed. Consequently, she has no personal knowledge of the circumstances surrounding its execution. The only other party to the PSA was Iskla, whose certification Pamela submitted to the court in support of her summary judgment motion. Thus, any evidence to be provided by Iskla has already been considered. In her certification, Iskla's discussion of her ex-husband's intentions when he signed the PSA was limited to the following statement: "I, Iskla Brown, would not agree to release of his pension and 401K without some type of assurance that the children would be taken care of in the event of his death." Iskla's certification sheds no light on the treatment of any increases in the face value of the policy. It is unlikely she could provide any more information about her ex-husband's intentions were a hearing to be conducted.
Third, we reject the argument advanced by Pamela at appellate oral argument that Iskla's and Paul's divorce lawyers should be called as witnesses during a plenary hearing. Putting aside questions of attorney-client privilege, which might prevent counsel from even testifying at a plenary hearing, Pamela has never provided a certification from either Iskla's or decedent's lawyer attesting to any recollection of the discussions leading up to the signing of the PSA more than twenty years ago.
Moreover, in her certification, Iskla maintains that both she and decedent were represented by the same lawyer, Laura T. Magnuson of the Maryland Bar; however, neither Magnuson's name nor the name of any other lawyer appears on either the PSA or the judgment of divorce.
If Iskla is correct, and Magnuson was the only lawyer representing Iskla and decedent, Pamela could have obtained a certification from Magnuson if Magnuson had any relevant information to provide. In the absence of such certification, it is fair to assume either that Magnuson has no recollection or that her recollection would not be favorable to the position Pamela now advances. For these reasons, we reject Pamela's contention that the attorney or attorneys who represented Iskla and decedent during their divorce could provide relevant information had a plenary hearing been conducted.
Fourth, by filing a motion for summary judgment, Pamela took the position that there were no material facts in dispute and that she was entitled to judgment as a matter of law. For Pamela to now assert that the court erred when it decided the issue without conducting an evidentiary hearing borders on frivolous.
As to Pamela's contention that the judge erred by deciding the matter by applying New Jersey law rather than the Maryland law that the PSA requires, we note that this argument was advanced for the first time in Pamela's reply brief. A party is not entitled to raise a new argument in a reply brief. Borough of Berlin v. Remington & Vernick Eng'rs, 337 N.J. Super. 590, 596 (App. Div.), certif. denied, 168 N.J. 294 (2001). We therefore will not address this contention.
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