July 25, 2011
IN THE MATTER OF THE ESTATE OF YUNG-CHING WANG, DECEASED.
On appeal from Superior Court of New Jersey Chancery Division, Essex County, Docket No. CP-0111-2009.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 3, 2011
Before Judges Wefing, Payne and Baxter.
Yung-Ching Wang ("Y.C. Wang" or "Y.C.") died on October 15, 2008, in Short Hills, New Jersey at the age of ninety-two. Although Y.C. Wang died in New Jersey, he was not a resident of the state and never had been. He was born in Taiwan and remained a resident of that country for his entire life. At the time of his death, he had assets that Forbes magazine had valued at between $5 billion and $7 billion, but he nonetheless died without leaving a will. These appeals involve disputes that arose among his many survivors with respect to his estate after his death. These appeals come to us with a complex factual and procedural background that must be set forth in detail to adequately analyze the parties' respective contentions.
Y.C. was married in Taiwan to Yueh Lan Wang. No children were born of this marriage, and the parties dispute whether the couple ever divorced or whether Y.C. remained legally married to her at the time of his death. Y.C. had a relationship with Chiao Wang Yang from which five children were born.*fn2 For ease of understanding, we shall use only their first names for purposes of this opinion: Margaret, Charlene, Winston, Cher, and Walter. Chiao Wang Yang, and all of her children, are citizens of the United States. Winston, although a citizen of the United States, resides in Taiwan; Yueh Lan Wang, Y.C.'s first wife, has granted him a power of attorney with respect to this action.
Y.C. also had a relationship with Pao-Chu Lee (P.C. Lee), from which four children were born.*fn3 Again, for ease of understanding, we shall use only their first names for purposes of this opinion: Susan, Sandy, Diana and Lora. In addition, through P.C. Lee, Y.C. had a stepdaughter, Vanessa Wong. P.C. Lee and all of her children are citizens of the United States, but Susan, Sandy, Diana and Lora are residents of Taiwan. According to the record before us, Susan does own property in New Jersey, and her daughter did attend school in New Jersey. P.C. Lee lives in Short Hills, and Y.C. died at her home.
Y.C. made his fortune through the development of the Formosa Plastics Group ("FPG"), a global business entity composed of more than twenty corporations. FPG has operations in Taiwan and in the United States, some of which are headquartered in New Jersey. The components of FPG include twenty-one corporations. There is no need to burden this opinion unduly by listing their separate names. The record before us does not indicate that any of these entities were incorporated in New Jersey. Y.C. resigned as chairman of FPG in 2006, and the parties dispute whether he had an ownership interest in FPG or any of its components at the time of his death. A group denominated the FPG Management Committee succeeded to Y.C.'s responsibilities for the overall management of FPG following Y.C.'s resignation as chairman. The members of this management committee included two of Y.C.'s children with P.C. Lee - Susan and Sandy - and two of his nephews - William and Wilfred, sons of his brother Yung Tsai Wong. It did not include any of his five children through Chiao Wang Yang.
There have been no formal proceedings in Taiwan to administer Y.C.'s estate, although an estate tax return was prepared and filed in Taiwan in May 2009. According to the affidavit of Joel Chen, a certified public accountant whom all of Y.C.'s heirs agreed to retain, under Taiwanese law, a fiduciary is not appointed to administer a decedent's estate. Chen identified assets owned by Y.C. at his death as having an approximate value of $1.5 billion for purposes of the estate tax return.
Y.C.'s children through Chiao Wang Yang contended that Y.C.'s holdings at the time of his death were far more extensive than that which Chen had identified and reported on the estate tax return. On May 13, 2009, Y.C.'s oldest son, Winston, filed a complaint and order to show cause on his own behalf and on behalf of Y.C.'s first wife, Yueh Lan Wang, for whom he held a power of attorney, in the Probate Part in Essex County. In this complaint, he sought to be appointed administrator of his father's estate pursuant to N.J.S.A. 3B:10-7 and leave to conduct discovery with respect to Y.C.'s assets pursuant to N.J.S.A. 3B:14-44. Within his complaint, Winston, upon information and belief, alleged that his father had created several trusts, some of which were off-shore trusts, in the period from 2001 to 2005. He estimated the value of the assets held by these trusts to be in excess of $7 billion. He also alleged the existence of an account with Credit Suisse having assets worth more than $1 billion. None of these assets were alleged to have been created in or have a locus in New Jersey. Although the complaint recited that Y.C. died at "his residence" in Short Hills, a subsequent title search showed that the property was in the name of P.C. Lee and had been since 1979, thirty years before Y.C. died.
On July 1, 2009, Winston's attorney issued four subpoenas, addressed to Formosa Plastics Corporation, U.S.A.; Nan Ya Plastics Corporation, U.S.A.; Nan Ya Plastics Corporation, America; and Inteplast Group, Ltd., L.P., ("the companies") and scheduled depositions with respect to whether Y.C. had an ownership interest in the named entity, had made any transfers of any ownership interest he may have had, and his ownership, if any, of real or personal property in the United States, "including, without limitation, deeds or other instruments of title, security instruments, stocks, bonds and bank or brokerage accounts, and without regard to whether [Y.C.] owned such real or personal property directly or indirectly, including, without limitation, in trust or by way of a trust company or holding company." These notices called for the production of the companies' stock ledgers from January 1, 2005, to date, stock certificates dated on or after January 1, 2005, the companies' corporate minute book from January 1, 2005, to date and the minutes of all shareholder and directors meetings from January 1, 2005, to date.
On July 16, 2009, the companies filed a motion to quash these subpoenas and shortly thereafter filed an affidavit of Alice Nightingale, the corporate secretary of the companies. In that affidavit, Nightingale stated that she had reviewed the respective share registers, and Y.C. was not a shareholder of any of these companies when he died, had never owned shares in Inteplast Group, Ltd., L.P., had not owned shares in Nan Ya Plastics Corporation America since 1989 and in Nan Ya Plastics Corporation U.S.A. since 1982. She also stated that he had not owned any shares in Formosa Plastics Corporation U.S.A. since 2006.
On July 28, 2009, Chiao Wang Yang and three of her children, Charlene, Cher and Walter, filed an answer to Winston's complaint. They agreed that an administrator should be appointed for Y.C.'s estate and that discovery with respect to his assets should be conducted but disputed that Winston should serve as that administrator or engage in that discovery. Instead, they contended that Walter should be appointed. The positions of Winston and Walter diverged in one other regard. Winston conceded from the outset that Y.C. was a domiciliary of Taiwan, and he thus sought ancillary administration, not general administration. Walter's counsel was unwilling to accept that limitation without first engaging in discovery.
Susan, Sandy, Diana and Lora, Y.C.'s four children through P.C. Lee, did not immediately file an answer to Winston's complaint. Rather, they filed a motion to dismiss Winston's complaint pursuant to Rule 4:6-2.
The trial court held a hearing on August 13, 2009, on the return date of plaintiff's order to show cause, the motion to dismiss plaintiff's complaint, and the motion to quash plaintiff's subpoenas. At the end of that hearing, the trial court set a schedule for further briefing. Thereafter, it issued several letter opinions, setting forth its determinations that ancillary administration was limited to a decedent's assets located in New Jersey, that the discovery sought by plaintiff was overly broad, adjourning the applications of Winston and Walter to be appointed administrator, and scheduling a case management conference. It denied without prejudice the motion to dismiss plaintiff's complaint.
The parties returned for a case management conference on September 11, 2009. Following that conference, the trial court entered three orders, two on October 2, 2009 and one on October 15, 2009. The first limited plaintiff's discovery from the four companies to "documents showing Y.C. Wang's direct ownership of the Companies at or near the date of his death [and] of real or personal property in New Jersey at or near the date of his death." The order specified that the entities did not have to respond to discovery with respect to any indirect ownership of such property. The second, Case Management Order I, set a date for Susan, Sandy, Diana and Lora to file an answer to plaintiff's complaint and set a schedule for "jurisdictional discovery" limited to documents and testimony on "the claim that [Y.C.] owned property located in New Jersey at or near the time of his death that requires ancillary administration." The third order supplemented the case management order and provided for exchange of interrogatories.
In their answer, Susan, Sandy, Diana and Lora opposed the appointment of an ancillary administrator for Y.C.'s estate, contending that Y.C. had no assets in New Jersey requiring administration and that there was no basis for any discovery in New Jersey.
Plaintiff responded to the case management order by serving twenty-six subpoenas to various businesses, most of which were not located in New Jersey and some not in the United States, together with extensive document requests, interrogatories and a request to inspect the house in Short Hills at which Y.C. died. Plaintiff also filed two "omnibus motions" for the issuance of commissions and letters rogatory seeking discovery in various jurisdictions, including Arizona, California, the District of Columbia, Florida, Louisiana and New York. Some sought information back to 2003. Winston also sought discovery from William Pan, Esq., who had served as an attorney and adviser to Y.C. for approximately thirty years. In support of this expansive period of time, Winston contended that Taiwanese law provided that a surviving spouse could recover fifty percent of the assets transferred within five years of a decedent's death without spousal consent. Walter, in turn, served his own subpoenas and document requests, some seeking information from the 1970s and 1980s. Predictably, there were motions to quash and for protective orders, which were heard by the trial court in December 2009.
In opposing these motions, Walter submitted a brief certification that his father followed the Taiwanese practice of not having assets in his name but rather in the name of a nominee. According to this certification, when Walter moved to New Jersey for a period of time in the 1990s (nearly twenty years before this litigation), Y.C. directed his step-daughter Vanessa to write a check for $600,000 from an account in her name for Walter's purchase of a house. He also said that his father had directed Susan to reimburse him for medical expenses he incurred when he was diagnosed with cancer but that he declined the offer.
Following argument on these motions, the trial court issued a letter opinion setting forth its conclusions that any discovery was to be restricted to whether Y.C. left a valid will at the time of his death, the ownership of the house in which he died, and whether he had an ownership interest in four entitities doing business in New Jersey - Formosa Plastics Corporation, U.S.A.; Nan Ya Plastics Corporation, U.S.A.; Nan Ya Plastics Corporation, America; and Inteplast Group, Ltd., L.P. The trial court limited this discovery to the period ninety days prior to Y.C.'s death and precluded any discovery directed to whether Y.C. had a beneficial interest in property in the name of another, as well as any inspection of tax returns or the Short Hills residence.
Winston and Walter and his mother and siblings filed separate motions for leave to appeal, which we granted, Winston's under docket number A-3036-09T3, Walter's under docket number A-3035-09T3. Susan and her siblings filed a cross-appeal under both docket numbers while Pan and certain third parties to whom discovery requests had been directed filed a cross-appeal under A-3036-09T3, while the remaining third parties filed a cross-appeal under A-3035-09T3. These appeals were listed back-to-back, and we now consolidate them for purposes of this opinion. Despite the extensive and expansive briefs that have been submitted, the positions of the contestants may be stated simply: Winston and Walter contend that the trial court erred in the restrictions it placed upon their efforts to locate assets of their father; Susan and her siblings and certain of the third parties contend that absent the appointment of a fiduciary for Y.C.'s estate, no discovery should proceed and further, that Winston and Walter had not provided a basis to permit them to engage in any discovery; others of the third parties contend that no discovery should have been permitted with respect to out-of-state corporations.
The principles and procedures applicable to the estate of a nonresident intestate are contained in N.J.S.A. 3B:10-7. The statute provides as follows:
Where a nonresident dies intestate seized of real property or possessed of personal property in this State, or where the evidence of his personal property shall be in the hands of any resident of this State, the surrogate's court of the county wherein any of the real or personal property or evidence thereof, is situate, or the Superior Court, shall, in an action upon satisfactory proof of intestacy, issue letters of administration upon the estate of the nonresident to the administrator of his estate or, on notice to the administrator as the court shall require, to any person who would be entitled to administration if the intestate had been a resident at his death.
The title of the statute, with its reference to "ancillary administration" indicates the limited nature of proceedings under it; it is not intended to authorize the administration in New Jersey of the foreign assets of a foreign decedent. That is the responsibility of the jurisdiction of the decedent's domicile. The statute is concerned solely with property within this state. I/M/O Estate of Roche, 16 N.J. 579, 586 (1954) (stating that "[i]t is a jurisdictional sine qua non of the statutory ancillary administrative function that there be a chose in action or other property of the deceased nonresident 'within' New Jersey, or 'the evidence' of a chose in action 'in the hands of a resident' of New Jersey.").*fn4 "To authorize the granting of an ancillary administration it must appear that there is property in the jurisdiction where the grant is applied for, which at the time of the application, is unadministered, and also, that it is of such a character as may be denominated local assets, or such as has its situs for purposes of administration in that jurisdiction." In re Unglaub, 119 N.J. Eq. 287, 288-89 (Prerog. 1936) (quoting 24 C.J. 1112-1113).
The grant of administration on the personal estate of a deceased is vested primarily in the courts of his domicile. Administration taken out in another state is ancillary to the administration in the forum of the domicile. Such an administration depends upon the fact that there is property within the foreign jurisdiction to be administered upon and debts there to be paid, or for the purpose of collecting the property of the deceased, realizing upon it and remitting the proceeds to the primary administrator. The grant of administration operates only within the jurisdiction where it is granted. It gives no legal right to collect debts or recover the possession of property elsewhere. When a foreign administrator is appointed in another state, his appointment is ancillary to the administration in the place of the domicile. For property which he obtains within the jurisdiction where his letters are granted, after payment of debts in that locality, he accounts to the administrator at the domicile of the deceased.
[Pisano v. B.M. & J.F. Shanley Co., 66 N.J.L. 1, 6-7 (Sup. Ct. 1901).]
"Where it becomes necessary to obtain ancillary letters in a state other than that of the domicile for the purpose of collecting debts, the inventory of the ancillary administrator should include only the property within the jurisdiction where his letters are granted." In re Estate of Healey, 4 N.J. Misc. 785, 786-87 (Orph. Ct. 1926). The situs of the property, if any, is, moreover, not material to the manner in which it is distributed in the case of intestacy.
For several hundred years, upon the continent and in England, from the reported cases for a hundred years, the rule has been that personal property, in cases of intestacy, is to be distributed by the law of the domicile of the intestate at the time of his death. It has been universal for so long a time that it may now be said to be a part of the jus gentium.
[Caruso v. Caruso, 106 N.J. Eq. 130, 144-45 (E. & A. 1930) (quoting Ennis v. Smith, 55 U.S. 400, 424 (1853)).]
"It is the law of the state of domicile of an intestate decedent which governs and determines the rights of intestate succession." Estate of Fisher, 118 N.J. Eq. 599, 600 (Prerog. 1935).
Two other principles must be noted: first, a corporation's domicile is the state in which it is incorporated, not the state in which it conducts its business. State v. Garford Trucking, Inc., 4 N.J. 346, 351-52 (1950). Similarly, "[t]he situs of stock is in the state of the corporation's domicile," regardless of the location of the physical stock certificates. Warren v. N.J. Zinc Co., 116 N.J. Eq. 315, 326 (Ch. 1934). Of the four business entities with respect to which the trial court permitted discovery whether Y.C. had an ownership interest, the record before us indicates that none is a New Jersey corporation.
Finally, it must be kept in mind that the jurisdiction invoked for ancillary administration is jurisdiction in rem, that is, over a decedent's assets, not jurisdiction in personam, over individuals. It is thus immaterial whether any of the individual parties may have sufficient minimum contacts with New Jersey to justify exercising personal jurisdiction over them.
We acknowledge the argument of Susan and her siblings that the trial court should not have permitted Winston and Walter to engage in discovery because this litigation commenced as a summary action. "[P]rotracted discovery" is improper in "actions . . . that are inherently summary by nature and expedited in manner." MAG Entm't, L.L.C. v. Div. of Alcoholic Beverage Control, 375 N.J. Super. 534, 552 (App. Div. 2005). We reject that procedural argument. A summary action may be converted to a plenary action on motion. R. 4:67-5. Reversing the trial court's orders because the parties failed to file such a motion would not advance any substantial interests in a situation such as this.
Our courts have recognized in a variety of contexts the concept of jurisdictional discovery. While that concept arises most frequently when there is a question of personal jurisdiction, see YA Global Inv., L.P. v. Hackett-Cliff, 419 N.J. Super. 1, 12 (App. Div. 2011), there is no analytical reason why it is not equally applicable to in rem jurisdiction.
Federal courts have explained that when jurisdiction is based on the presence of local assets in the forum, jurisdictional discovery requires the pleading of a prima facie case of their existence, not just conjecture that they may exist. Frontera Res. Azer. Corp. v. State Oil Co. of Azer. Rep., 479 F. Supp. 2d 376, 387 (S.D.N.Y. 2007), vacated and remanded on other grounds, 582 F. 3d 393 (2d Cir. 2009). Jurisdictional discovery would be unjustified if "'the allegations of jurisdictional facts, construed most favorably in the plaintiff's favor, fail to state a basis for the exercise of jurisdiction or where a plaintiff's proposed discovery, if granted, would not uncover facts sufficient to sustain jurisdiction.'" Ibid. (quoting Daventree Ltd. v. Republic of Azer., 349 F. Supp. 2d 736, 761 (S.D.N.Y. 2004)).*fn5
We reject the argument of third-party defendant Pan that there could be no discovery without the prior appointment of an ancillary administrator. Absent such existence of assets, appointment of an ancillary administrator is impossible.
The fundamental issue before us is whether the trial court either improperly limited the discovery efforts of Winston and Walter or whether it rather improperly afforded them discovery that was too expansive. We conclude that the answer to the first query is no, and the answer to the second is yes.
We turn first to the question whether the trial court improperly restricted the discovery efforts of Winston and Walter, and specifically whether they were entitled to engage in discovery with respect to assets in which Y.C. may have held a beneficial interest, such as through a trust. We see no error in the trial court's restrictions.
We reach these conclusions in light of the nature of the interests Winston and Walter asserted that Y.C. held in various assets, as well as the nature of the support they offered for those allegations. During his lifetime, Y.C. was free to structure his assets in any form he wished. If he did so in a manner that did not confer any interest upon Winston, Walter or their siblings, his death did not create for them an interest in those assets.
We turn first to the discovery permitted by the trial court as to whether Y.C. had an ownership interest in the Short Hills property. We are satisfied that the record presented did not provide any support for engaging in discovery on this issue. According to the record before the trial court and before us, the house was in the name of P.C. Lee and had been since 1979. Winston and Walter presented nothing of substance to refute that record proof or to call it into question. They pointed to references on Y.C.'s death certificate that referred to him dying at "his residence" in Short Hills, and a similar reference in a company newsletter; neither, whether singly or in combination, is sufficient to call into question the duly recorded title records. Further, whether Y.C. paid the expenses of maintaining the property would not equate with an ownership interest in the property.
We consider the allegations of Winston and Walter similarly deficient with respect to the four entities as to which the trial court permitted discovery with respect to whether Y.C. had an ownership interest in them. We have already noted that the record before us indicates that none of these entities was created under New Jersey law. That they may transact business in New Jersey may be material for purposes of personal jurisdiction, but that was not the question before the trial court. If there were shares in these corporations owned by Y.C. (despite the affidavit of Nightingale to the contrary), the situs of those shares was in Delaware, not New Jersey. Warren, supra, 116 N.J. Eq. at 326.
The only remaining issue with respect to which the trial court permitted discovery was whether Y.C. left a will. Throughout their various appearances before the trial court, counsel for Winston and Walter appeared to concede that Y.C. died intestate. We are thus uncertain of the basis upon which the trial court permitted this inquiry. Responsibility for the administration of Y.C.'s estate, moreover, lies with Taiwan, not New Jersey.
Winston and Walter and their siblings are not residents of New Jersey; Winston resides in Taiwan, Walter in California. New Jersey's only connection with this litigation is that Y.C. died in our state and certain businesses related to FPG conduct business here. Our courts should not be burdened with proceedings that seek world-wide discovery and present issues, the ultimate resolution of which will turn upon interpreting the law of Taiwan. If Winston and Walter believe they have been unable to obtain sufficient information with respect to the state of their father's affairs at the time of his death, they must seek recourse from Taiwan, not New Jersey.
The orders under review are reversed, and the matter is remanded for entry of an order dismissing plaintiff's complaint.