October 18, 2010
IN RE ESTATE OF FRANCESCO RACAMATO.
On appeal from Superior Court of New Jersey, Chancery Division, Probate Part, Passaic County, Docket No. P-185868.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 14, 2010
Before Judges Wefing, Payne and Baxter.
Francesco Racamato died on November 3, 2003. In his will, executed on March 9, 2002, he directed that in the event that his wife predeceased him, as occurred, his tangible personal property should be distributed to his six children "as they shall agree" and, in the absence of an agreement, as decided by the executor. Additionally, he directed that his residual estate should be distributed in equal shares to the children. Decedent named his son and a daughter, Domenica Racamato Pignatello as co-executors. However, the son renounced his appointment, leaving Pignatello as sole executor. She retained the firm of Hartman & Winnicki, P.C., her parents' former counsel, to provide legal advice.
Claiming that she had only received an informal, inaccurate accounting of the estate's assets, on December 4, 2008, petitioner Marie Victoria Cole (also known as Bruna Maria Racamato Cole), a daughter of decedent who, prior to the death of her parents, became estranged from the family, filed a verified complaint, supporting certification and order to show cause to compel a formal accounting of the assets of the estate and to obtain appointment as executor in place of Pignatello for the limited purpose of administering estate property located in Italy. Following several non-evidentiary hearings, on August 7, 2009, the probate judge, sua sponte, determined to dismiss Cole's action, declaring that it was time-barred under Rule 4:85-1, not having been filed within four months after the will was admitted to probate. However, the judge refrained from signing an order of dismissal. Thereafter, several additional hearings took place at which new counsel for Cole, made further arguments on Cole's behalf. However, they were unavailing, and on December 1, 2009, an order of dismissal was issued. In a letter accompanying the order, the judge stated, in part:
Having reviewed all of the documentation and heard the arguments of counsel, this court is even more convinced that its original decision that was placed upon the record on August 7, 2009 and will be embodied in an Order prepared by Mr. Kummer who is a member of the firm representing the estate and the executrix in this matter was correct. It is crystal clear to this court that both the executrix and counsel attempted to be as fair and reasonable with all of the parties in this matter as was possible under all of the circumstances. A review of Ms. Cole's own certification shows that she acknowledges correspondence with counsel for the executrix back to 2003. She admits to receiving the informal accounting that was prepared in 2004 and still she did nothing to challenge the probate of the estate or the distribution to family members. It is very unfortunate that Ms. Cole and her siblings have a family dispute that is as heartbreaking as the dispute described in her certifications. However, there is no new information that would cause this court to keep this matter open and there is nothing that rises to the level of fraud or misrepresentation of the inability of this petitioner to clearly understand the circumstances that have been present since 2004 in this case.
This appeal followed. In it, Cole claims that Rule 4:85-1 is not applicable to her action, and she seeks reversal of the judge's ruling. We agree and reverse, remanding the matter to permit a formal accounting to be filed.
As stated, Francesco Racamato died on November 3, 2003. Within a week of his death, Cole contacted attorneys for the estate to request copies of both of her parents' wills and living wills. On January 10, 2004, Pignatello wrote a letter to her siblings, including Cole, "asking each of you to inform me as to your interest in acquiring" any items of decedent's personal property, including wearing apparel, jewelry, household furniture and furnishings within thirty days. Cole did not respond and denies receipt of the letter.
Thereafter, on April 29, 2004, an attorney retained by Cole wrote to Dariusz Winnicki to "inquire as to the status" of the estate. Winnicki responded by letter dated August 2, 2004 advising that Pignatello was "in a position to make residuary distributions to the beneficiaries" in accordance with decedent's will. He enclosed an informal estate accounting, "which incorporate[d] the checkbook register for receipts and expenses with proposed disbursements and distributions for each beneficiary," copies of the five promissory notes given in connection with loans to the estate by Cole's five siblings, and a copy of the uniform settlement statement for the sale of decedent's residence. Winnicki requested, if Cole found the estate accounting acceptable, that she sign and return a refunding bond and release so that cash distributions could be made. The informal accounting identified the total value of the estate as $581,566.63, the value of the residual estate as $400,715.46, and Cole's share of the residual estate as $66,785.90. The residence had been sold for $450,000; personal and household property was valued at $500.
By letter dated October 4, 2004, Winnicki sought Cole's response to his August letter. Cole's attorney responded that he had promptly forwarded the materials to Cole, but had not heard further from her. No activity was evident thereafter until January 10, 2007 when Winnicki wrote to Cole, reminding her that an estate accounting, refunding bond and release had been forwarded to her in August 2004 and that no response had been received. Winnicki stated that: "The Executrix may not release the funds to you until our office receives the executed documents signed by you."
Cole answered Winnicki's letter on February 6, 2007 demanding an extensive list of documents pertaining to both of her parents, including deeds, last wills and testaments, powers of attorney and other legal documents, closing statements for two properties owned by the parents, as well as various documents relating to services rendered by Winnicki's firm and documents pertaining to time periods from December 1997 to January 1998 and from January to March 2002. Additionally Cole requested that Winnicki re-send all materials forwarded to her in August 2004. In a letter dated February 16, 2007, Cole noted that she had not received the requested documents and asserted that she "will hold no one harmless nor indemnify anyone for any actions and/or involvement" in the estate matter.
At some point, the assets of the estate, with the exception of Cole's portion, were distributed. Decedent's furniture and other personal effects were distributed among Cole's siblings. Those in poor condition were discarded.
Following another hiatus, on December 4, 2008, Cole filed her verified complaint and order to show cause with an accompanying certification, dated September 11, 2008. In her certification Cole stated that since the opening of the estate she had received "nothing" from the executor; she had received what she believed to be an inaccurate, informal accounting; and she had not been allowed to participate in the disposition of decedent's tangible personal property. Additionally, she noted the existence of real property in Italy owned by decedent that should have been included in the estate. She stated that her siblings had renounced their interest in that property, but that she had not, and that the executrix had failed to take any action to deliver to Cole her interest in the property in cash or in kind. Cole concluded by stating: "I am entitled to an accurate accounting of the estate assets; to know what happened to all of the tangible personal property in the estate; and my share of the real estate in Italy." The complaint sought judgment ordering a formal accounting, discovery of "documents and information regarding the tangible property belonging to the estate and the real property located in Italy, an accounting for her portion of decedent's personal property, and an order relieving the executor of her duties and appointing Cole as executor for the sole purpose of administering the estate's Italian assets. Additionally, Cole sought damages and attorney's fees.
A conference was held in the matter on January 30, 2009. At that time, Winnicki agreed to permit Cole to inspect his file in the matter, stating: "We've offered to do that some time ago before Mr. DePinto [Cole's second attorney] got involved and the petitioner never made the appointment." The matter was relisted for February 13, 2009, at which time Cole renewed her request for a formal accounting, claiming that decedent's personal property had not been properly accounted for, assets passing from Cole's mother to her father at the mother's death did not appear in the accounting, real estate may have been undervalued, and possible gifts to Cole's siblings were not acknowledged. The judge responded by requesting briefing as to "why [she] should, in fact, require anything further of the Executrix at this point in time. Because it does not appear to this court that [Cole] responded in a timely fashion to the settlement of the estate."
On August 7, 2009, a further hearing was held, but Cole's attorney was not in attendance. At this time, as we previously noted, the judge denied the relief sought by Cole, stating that her complaint was untimely under Rule 4:85-1 and relying on Garruto v. Cannici, 397 N.J. Super. 231 (App. Div. 2007) for the principle that in probate matters, there is a need for finality.
Although the judge had determined to dismiss Cole's action, on October 16, 2009, she convened an additional hearing at the request of Cole's fourth attorney, Cathyanne A. Pisciotta, who expressed new concerns regarding the tax aspects of the case. Although New Jersey returns had been filed and were not being challenged, Pisciotta thought that they inaccurately reflected the value of decedent's personal property and did not disclose his ownership of the Italian real estate. An accurate accounting, in Pisciotta's view, might subject the heirs to estate taxes.*fn2 The judge responded:
This is what I'm going to do. The burden is on you. You have two weeks to sit down in a reasonable, professional fashion with Mr. Kummer [a partner of Winnicki] and go over everything and look at the documents, ask your questions, document the questions that you've asked and answers you've gotten.
I'll hear you both one more time . . .
[a]nd then I will consider whether or not I will sign your Order [of dismissal] . . . .
At a final hearing that was conducted on October 30, 2009, Pisciotta continued to insist that the informal accounting in the matter was inaccurate, raising again the undervaluation of decedent's personalty and the omission of the Italian property. Additionally, Pisciotta questioned what had happened to proceeds of a $50,000 IRA that passed from decedent's wife to decedent at her death. The judge declined to address the matter arising from the mother's estate, holding that was not properly before her. She ordered Winnicki to respond in writing to a letter addressed to the judge expressing concerns that she received from Pisciotta that morning, and otherwise, she reserved decision.
The judge denied relief to Cole in a December 1, 2009 order that additionally provided that $66,785.90 plus interest be delivered by the executrix to Cole; discharged the estate from all further claims; required Cole to refund the estate such funds as necessary should future debts arise; and upon delivery of her share of the estate to Cole, authorized the executrix to close the estate. Cole's complaint was dismissed with prejudice.
Rule 4:85-1 provides:
If a will has been probated by the Surrogate's Court or letters testamentary . . . have been issued, any person aggrieved by that action may, upon the filing of a complaint setting forth the basis for the relief sought, obtain an order requiring the personal representative, guardian or trustee to show cause why the probate should not be set aside or modified or the grant of letters of appointment vacated, provided, however, the complaint is filed within four months after probate or of the grant of letters of appointment, as the case may be . . . . If relief, however, is sought based upon R. 4:50-3 (fraud upon the court) the complaint shall be filed within a reasonable time under the circumstances.
We agree with Cole that this rule applies only to actions challenging probate of a will or letters appointing a fiduciary.
It is inapplicable to actions such as Cole's challenging the administration of an estate. Pressler, Current N.J. Court Rules, comment on R. 4:85-3 (2010) (citing Marte v. Oliveras, 378 N.J. Super. 261, 268 (App. Div.), certif. denied, 185 N.J. 295 (2005)). If the rule were construed to encompass the present matter, it would conflict with N.J.S.A. 3B:17-2, which prohibits an application for an accounting until one year after a fiduciary's appointment, absent special cause.
Plaintiff's complaint was not filed pursuant to Rule 4:85-1, but rather in accordance with Rule 4:87-1, which permits any interested party to file a complaint to compel an executor to settle the estate's account. That rule, unlike Rule 4:85-1, does not contain a time limitation upon filing. See also 7 New Jersey Practice, Wills & Administration § 1452, at 558 (Alfred C. Clapp & Dorothy G. Black) (rev. 3d ed. 1984) (noting the absence of "any statute limit[ing] the time within which the court may compel an account"); and id. at § 1125, at 390 (stating that an action by a beneficiary against an executor to recover property or enforce performance of the executor's duties is not barred by any statute of limitations).
Garruto, likewise, fails to support the judge's determination. In that case, we held that brothers, disappointed in the dispositions contained in their sister's will, could not collaterally attack the will through an action for tortious interference with an anticipated inheritance when an adequate probate remedy existed. 397 N.J. Super. at 242. However, we also held that the brothers had forfeited their remedy in probate by not filing within the four-month period set forth in Rule 4:85-1. Our statement that the collateral attack would "unnecessarily prolong the settlement of estates" thus was made in connection with factually and legally distinguishable circumstances.
Pignatello argues on appeal that Cole's action is barred by laches. The doctrine of laches is invoked to deny a party enforcement of a known right when the party engages in an inexcusable and unexplained delay in exercising that right to the prejudice of the other party. Laches may only be enforced when 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. The time constraints for the application of laches are not fixed but are characteristically flexible. 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 changing conditions of either or both parties during the delay. The core equitable concern in applying laches is whether a party has been harmed by the delay.
[Knorr v. Smeal, 178 N.J. 169, 180-81 (2003) (internal quotation marks and citations omitted).]
The burden of proving laches is on the party asserting the defense. Enfield v. FWL, Inc., 256 N.J. Super. 502, 520 (Ch. Div. 1991), aff'd, 256 N.J. Super. 466 (App. Div.), certif. denied, 130 N.J. 9 (1992). In that respect, Pignatello points to what appears to have been an inordinate and largely unexplained delay on Cole's part in filing a complaint in December 2009 that challenged an informal accounting that she received in August 2004. However, notably, Pignatello does not offer significant evidence of prejudice, stating in that regard only that, because the estate was distributed but for Cole's share, Cole's siblings have been required to utilize their legacies to cover their own legal defenses, and Pignatello has been required to hold the estate open and to continue to maintain a bank account to hold Cole's inheritance. However, expenditure of a legacy has been held to be an insufficient grounds for invoking laches. Cramer v. Roberts, 19 N.J. Super. 1, 7 (Ch. Div.), aff'd, 22 N.J. Super. 330 (App. Div. 1952). Further, Pignatello could have avoided the need to hold the estate open and to retain Cox's inheritance by filing an action to settle the estate pursuant to N.J.S.A. 3B:17-2 and Rule 4:87-1, which she failed to do. Finally, Pignatello and her siblings could not reasonably have been lulled into thinking that Cole had abandoned her rights, given the animosity between her and her siblings, her refusal to loan the estate funds to permit its administration, her failure to sign the release and refunding bond forwarded to her, and her sporadic demands to counsel for the estate.
As a consequence, we conclude that the doctrine of laches does not operate to bar Cole's complaint in this matter. Having reached that conclusion, we need not address Cole's further argument that the defense would be unavailable to Pignatello if Cole were successful in proving misappropriation by her.
Reversed and remanded.