On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Morris County, Docket No. P-547-02.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Cuff, Sapp-Peterson and Simonelli.
Plaintiff, Cheryl Cantor (Cheryl),*fn1 filed a complaint in this probate matter in which she alleged that family members and business associates of her father frustrated her reconciliation with her father and exercised undue influence over him to disinherit her in favor of others, primarily her brother. Following a thirty-five-day bench trial, the court found no undue influence, but pursuant to Rule 4:42-9(a)(3), awarded Cheryl $399,658 in counsel fees and costs.*fn2 The Estate of Edward A. Cantor ("Estate") appeals from that portion of the March 31, 2009 order awarding those fees and denying its motion for reconsideration of the court's January 23, 2009 order denying its motion to impose frivolous litigation sanctions. Cheryl cross-appeals from that portion of the March 31, 2009 order dismissing her complaint after the court found no undue influence in the execution of Edward's last will and testament of April 6, 2001. We affirm the dismissal of plaintiff's complaint and the denial of the Estate's application for sanctions. We reverse the award of counsel fees to Cheryl.
The evidence presented at trial was as follows. Edward died testate on February 19, 2002. The estimated value of his estate was approximately $90 million, wealth amassed primarily from his ownership and management of commercial and industrial properties in northern New Jersey through twenty-seven entities. He was survived by his third wife, Jane, and two children, Michael and Cheryl. The will left Edward's residuary estate to Michael, expressly disinheriting Cheryl, from whom Edward was estranged for fifteen years before resuming contact with Cheryl sometime in 2000.
The background surrounding the estrangement between Edward and Cheryl stems from a dispute that arose in the early eighties over five properties. The properties were deeded to Cheryl by Edward in exchange for Cheryl's fifty percent interest in real estate known as the Malestrom property. Although Edward conveyed title to the five properties to Cheryl, he continued to manage them until Cheryl decided that she wanted to terminate the management arrangement. In response, Edward, acting as attorney-in-fact, conveyed title to three of the properties to himself. Cheryl brought a declaratory judgment action against her father, seeking a declaration of ownership and management rights over all five properties. Before Cheryl filed her complaint, Michael tried to dissuade her from pursuing it, warning his sister that their father would disinherit her. Cheryl told Michael that she intended to proceed with the litigation despite knowing that she would make her brother "a rich man" in doing so.
In response to Cheryl instituting the lawsuit referred to as the Five Properties litigation, Edward took away the car he leased for her, cancelled the health and automobile insurance he paid on her behalf, and foreclosed on a mortgage he held on the property in which she lived. Cheryl prevailed in the litigation. The court ordered Edward to pay Cheryl $1.3 million in compensatory damages and $200,000 in punitive damages. Cheryl's husband, Tom Trabocco, with whom Edward had previously engaged in extensive business enterprises until serious hostilities arose between the two men, took the judgment check Edward paid, enlarged it, and had it displayed on a billboard near one of the five properties.
As a result of the Five Properties litigation, Edward ceased speaking to Cheryl, as did Michael. Edward considered Cheryl to be dead and, according to Michael, had a rabbi give a "Kaddish," a prayer for the dead, for Cheryl.
Cheryl's adversarial relationship with Edward did not end with the conclusion of the Five Properties litigation. She sought to recover civil remedies against Edward in accordance with New Jersey's RICO*fn3 statute. In a court proceeding, she referred to her father as a thief. Cheryl and Tom arranged, through a deputy attorney general who was a friend of Tom's, to have Edward arrested on criminal RICO charges at his home at 5:00 a.m. As Edward was led out in handcuffs, Cheryl and Tom sat in a car across the street and watched, having been tipped off that the arrest would take place. They then drove to Edward's office and watched as the police searched it. Cheryl did not deny any of these incidents, but testified that Tom, from whom she was eventually divorced, "had a nine millimeter pulled to [her] head" and that she "wouldn't do anything against what he said[.]"
Edward accused Cheryl of trespassing on his Florida estate and got a restraining order against her. He also accused her of harassing his employees and business associates and slandering him by putting letters in the mailboxes of his Florida neighbors. Edward also believed that Cheryl cancelled a flight he had scheduled from Los Angeles to New York as he was heading home from Australia, leaving him stranded.
Edward asked his third wife, Jane, whom he married in 1992, to help him compile a list of all the things Cheryl had done over the years to hurt him, and he kept the list either under his desk blotter or in his wallet until he eventually asked Jane to hold onto it. She later produced the list at her deposition. Edward showed the list to his longtime personal secretary, Charlene Jacobs. Charlene's husband, Charles Jacobs, who was Edward's accountant and designated as a co-executor of his estate, testified that Edward read the list at a dinner not long before his death. Charles stated that "[i]t was painful" when the list was read, and following the reading, Edward announced that he would not change his will, as too many things had happened.
Prior to the Five Properties litigation, Edward had executed a will, leaving his residuary estate in trust for Cheryl and Michael. In April 1991, however, Edward executed a will, leaving nearly the entire estate to Michael and making no mention of Cheryl. One year earlier, Edward had executed a notarized directive with a message to be read at his funeral, which ordered Cheryl, Trabocco, and Edward's brother and sister-in-law, Saul and Mabel Cantor, to leave the funeral or be removed by the police, "[s]ince you saw fit to sever your family connections with me during my lifetime."
Several months after executing the April 1991 will, Edward executed another will in which he gifted Cheryl ten dollars, stating that he "intentionally [made] no other provision for her[.]" In September 1997, Edward executed a new will in which he left his residuary estate to Michael and "intentionally [made] no provision for [his] daughter, Cheryl[.]"
Cheryl and Trabocco separated in 1991, and in 1998 Trabocco filed for divorce. As part of the dissolution action, he sought equitable distribution of the five properties, which Cheryl resisted. Cheryl was living in Italy at the time and, in early 1999, started to make overtures to her father in an effort to reconcile with him. She sent letters to him apologizing for her previous actions and attributing her behavior to "passivity and intimidation" by Trabocco. Edward did not respond to the letters but forwarded them to Michael, who likewise did not respond to Cheryl.
On June 16, 1999, Edward executed another will. The will was prepared by attorney Alan Adler, who had begun the planning of the will in March 1999, after he had been contacted by Charles, who worked in the same building as Adler. Charles looked at the will and discussed the tax consequences with Adler at Edward's behest. According to Adler, Charles was Edward's "point man" and was aware of all aspects of the 1999 will through meetings between the three of them. Michael was the sole residuary beneficiary of the June 1999 will. The will also gave Jane the option of accepting the provisions offered under her prenuptial agreement or the will, whichever were more favorable. The will stated, "I intentionally make no provision in this will for my daughter," and Adler recalled conversations with Edward regarding his continuing intention to disinherit Cheryl.
The execution of the 1999 will was videotaped and the tape was played in court. On the tape, Edward said that he was "ashamed" of Cheryl, given that she never had a job, never finished school, and "always quit in the middle of things." He set forth his view of the situation underlying the Five Properties litigation and the other transgressions Cheryl had committed against him. Edward indicated that his relationship with her had "totally deteriorated" and that the two had not spoken since 1985. He noted that Cheryl had tried to contact him but he "refused to acknowledge anything in connection with her[.]" He disinherited her based on "all of her actions accumulatively over the period of [fifteen] years." Edward stated, "I am very adamant about my decision to disinherit her . . . . There are so many more things that developed over the years. I just picked out a few of the major incidents . . . [.]
[I]n no way is she to inherit anything or any part of the will[.]" Edward also made clear in the video that Jane never sought a greater portion of his assets or to withhold them from Cheryl. He also indicated that as to Michael, "he stays completely out of it." Michael testified that he did not attend the will signing, did not know it had been executed, and did not receive a copy of it.
In September 1999, Edward sued Cheryl over a right-of-way on a business property, which Cheryl testified he withdrew one year later. She continued to attempt to contact her father. She testified that it was her Uncle Saul, Edward's brother, who was able to arrange a meeting between Edward and her divorce attorneys that ultimately resulted in Edward signing a certification in February 2000 concerning the Five Properties litigation:
This litigation, and the events surrounding it caused a serious rift in my relationship with Cheryl. While it may be too early to apply the old expression "time heals all wounds[,]" Cheryl and I have started speaking with each other again, and are moving forward towards repairing the deep rift which had existed between us for many years now.
According to Cheryl, one day in early 2000, she waited outside her father's office, and when he exited the office, she greeted him. The two subsequently went to an office underneath the building where they "started talking . . . about everything." He asked for her contact numbers and told her to only call him at the office because he did not want Jane or Michael to know that they had re-established contact, as he was afraid they would "retaliate." After Cheryl explained why she had acted the way she had in the Five Properties litigation, Edward said that although it was difficult, he could forgive her. Before they parted, Edward gave her a "big . . . bear hug and [a] kiss." Many times after that, he told her that he loved her.
Cheryl continued to see Edward for lunch when she was in New Jersey and spoke to him by phone regularly. At one of the lunches, Cheryl's Italian boyfriend joined them, and photographs taken of the three of them were put into evidence. When Cheryl talked of marrying her boyfriend, Edward said that he would come to Italy for the wedding.
Cheryl testified Edward told her that if she called the office and Charlene answered, that she should hang up. Charlene admitted that Jane instructed her to block Cheryl's calls. However, she claimed that when she told Edward of Jane's instruction, he told her that if Cheryl called, Charlene should let him know, and he would decide whether he would speak to her. Jane admitted that she told Charlene not to put through Cheryl's calls, but claimed that it was at Edward's request, although she admitted that Edward was "tentatively" prepared to resume a relationship with Cheryl. At another point in her testimony, Jane said that she instructed Charlene not to put through calls only in June 2000, after Edward was hospitalized. Longtime employee, Rose Frank, testified that she answered the office phone if Charlene was not there and connected Cheryl with Edward two or three times. Charlene never instructed her not to take Cheryl's calls. Edward's longtime bookkeeper, Dottie Mnich, testified that Cheryl called the office "many times."
In May 2000, Edward asked Cheryl to reach out to Michael because he "wanted peace before he died[,]" so she wrote Michael a letter seeking contact, but he did not respond. Cheryl testified that after their "reconciliation," Edward told her that she had nothing to worry about, as he had every intention of putting her in his will, and she and Michael would be treated equally.
In June 2000, Edward was hospitalized with cardiac problems. According to Jane, Saul and Mabel came to visit Edward the day before Father's Day. Jane, who admittedly "didn't care for" Mabel and "wasn't impressed" with Saul, testified that Mabel kept "badgering" Edward about Cheryl when Edward said he did not want to see or speak to her, and about hiring a private duty nurse. The next day, Saul returned to the hospital without Mabel and again "badgered" him about the private duty nurse and about "putting Cheryl back into his will." Edward asked Saul to leave, but Saul refused. When Jane asked Saul to leave, he told her to "shut up." After Saul again refused to leave, Jane went to the nurses' station to get assistance. When she returned, Saul "struck" her with his cane. Security escorted Saul out.
The next day, Saul wrote a letter to Edward, which was delivered to Edward in the hospital. With Jane present, Edward made hand-written comments on the letter. For instance, when Saul wrote, "I strongly feel that you should meet with Cheryl and make provisions for her in your will[,]" Edward wrote, "I did already! On tape, in writing & verbally. Zero." Jane denied attempting to influence Edward's writings on the letter. After the "Father's Day incident," the parties obtained mutual restraining orders and never spoke again.
Cheryl and Edward met in person for lunch on September 22, 2000, which turned out to be their last meeting before Edward's death in 2002. Six days following this last meeting, Charles told Adler that Edward wanted to speak with him about taking steps to insure his recent meetings with Cheryl did not "undermine his intent to disinherit her." The next day, Adler spoke with Edward on the telephone and made notes that said: "Make very strong!! despite dinners & meetings --" Adler "vivid[ly]" recalled the phone conversation in which Edward made "very clear" that his meetings with Cheryl were "not to be construed in any way as modifying his intention to disinherit her."
Adler prepared the codicil on October 4, 2000, and gave it to Charles on October 6, to give to Edward. Although Charles initially denied having any knowledge of a codicil, he later remembered that Edward wanted to make the codicil to "reemphasize and solidify" that he did not want Cheryl to be a beneficiary. Robert Fair, another longtime employee of Edward who also described himself as Edward's friend, testified that he had been encouraging Edward to reconcile with Cheryl, but also recalled Edward telling him that he was going to execute the codicil so that no one, including him, felt that the meetings meant that he had changed his feelings regarding Cheryl.
Meanwhile, on October 2, 2000, Edward was admitted to the hospital with "life-threatening" sepsis after developing a fever on September 30. When he arrived at the hospital, he was "confused," "non-verbal" and, according to his treating cardiologist, George Demidowich, "at death's door[.]" Edward remained in the hospital until October 17, and was on intravenous antibiotics for six weeks. Dr. Demidowich said it was usual for a patient in Edward's condition on October 2 to have been "normal" two days prior to hospitalization. According to Dr. Joshua Kaplan, a nephrologist and expert witness who testified on Cheryl's behalf, and also according to Dr. John Sensakovic, a Ph.D. in clinical microbiology who testified as the Estate's expert, if Edward had been suffering from sepsis on September 28 or 29, he would not have lived until October 2, when he was admitted to the hospital. When Dr. Demidowich examined Edward on October 30, he found no mental problems.
Edward executed a codicil on October 31, 2000, which referenced Cheryl's disinheritance under his June 16, 1999 will, and stated that the codicil was to "reaffirm in the strongest possible way" that "no portion of the assets of my estate shall be distributed to . . . my daughter[.]" Edward stated further in the codicil:
I have determined that it is necessary for me to reaffirm and reinforce in the strongest terms my decision to completely disinherit my daughter . . . because within the recent past on several occasions I have met with my daughter . . . and on a few of those occasions I have had lunch with her and I do not want those meetings with my daughter or any future meetings with my daughter to be construed or interpreted in any way or to otherwise serve as support for the position that my determination to disinherit my daughter . . . no longer represents my intention.
To the contrary, my decision and determination to disinherit my daughter . . . remains steadfast and unmodified.
Edward was diagnosed with chronic renal failure and commenced dialysis treatment in November 2000. He underwent treatment twice each week. The treatments primarily left him fatigued, according to Jane and Edward's office staff, but he continued to work full-time on non-dialysis days and half-days on the days of his treatment. No one, including his treating nephrologist, who saw Edward weekly, or his cardiologist, who saw Edward monthly, observed any deterioration in Edward's mental faculties once Edward started dialysis.
On April 6, 2001, Edward executed his final will, which revoked the 1999 will and codicil, and which stated:
I intentionally make no provision in this my Will for my daughter . . . . In the event that at any time or times subsequent to the date on which I am executing this my Will I shall meet with my daughter . . ., any such meeting or meetings with my daughter . . . shall not be construed or interpreted as a modification to any extent of my determination to disinherit my daughter[.]
The will also referred to the videotaping of June 16, 1999, and stated it was Edward's "express intention and direction that all of such discussions and explanations [shall] be utilized to the extent which may be necessary after my death to clarify and understand the distributive plan which I have established in this Will." He did not videotape the 2001 will because, according to Jane, he did not want to spend the money.
Among other gifts, Edward provided $10,000 each to Charlene Jacobs, Rose Frank, and Robert Fair, and then devised the remainder of his estate to Michael. Michael and Charles were named co-executors, and Charles was named trustee of a marital trust for Jane. The will provided compensation of $100,000 to Charles, as co-executor and, as trustee, the greater of a commission allowed by a court or .05 percent of the assets in the trust.
Neither Adler nor Charles attended the signing of the April 6, 2001 will, and Charles insisted he had no input into its execution. Adler never received an executed copy of the will. Adler said Edward was "very bright," "grasped things very quickly[,]" and had a "strong ego[.]" Adler described Edward as a "frustrated lawyer" who reviewed every document that Adler prepared, word for word, line by line, fought with Adler over language, and questioned why certain words or expressions were used.
Adler never saw Michael or Jane attempt to influence Edward about any will, and said that Edward was "not the kind of man that can be influenced by anybody." Adler admitted speaking to Michael on the phone five times between January and April 2001 regarding a proposed "family limited partnership agreement" and an "irrevocable family trust" and billing the calls to Edward.
Adler characterized these calls as "academic" and "conceptual" and not focused on Edward's specific plans.
Adler testified that he never saw Charles try to influence Edward, despite Charles's presence at the 1999 will signing and his frequent meetings with Charles and discourse about the will. Adler indicated that none of the language in the June 1999 will, the codicil, or the 2001 will came from Charles. Adler stated, "I'm not sure either of us [Adler or Charles] could persuade [Edward] to do anything."
Charles testified that although he was aware of the disinheritance provisions, he and Edward "did not discuss family business." Charles described Edward as the "brightest, most intelligent guy I ever met in my entire life." He indicated Edward could also be "an absolute terror" and a "very overpowering guy." He explained that it was difficult to reason with Edward, and once he made up his mind, that was the way it would stay, and Edward was "not going to change his mind [about Cheryl]." Charles testified that despite Edward's illness, he saw no mental confusion or memory loss in him and never saw Michael trying to exert undue influence over Edward.
Hope Cantor, Saul's daughter and Edward's niece, testified that she visited Cheryl in Italy in July 2001. While there, she talked to Edward on the telephone twice, and when she told Edward that "things were hard" financially for Cheryl, Edward said, "[D]on't worry, I'll take care of her." In a certification submitted during the course of the pretrial proceedings, Hope contended that Edward was "very much controlled by his wife, Jane, who kept him isolated from my parents and Cheryl." She certified that Edward had been abandoned as a child and "was terrified of being abandoned and dying alone." She admitted, during her testimony, that she based that statement on what her father told her and not through personal discussions with Edward.
Michael testified that he did not know his father was preparing a will in April 2001, was not present at its signing, and never saw a copy of this will until after his father's death. He denied ever attempting to influence Edward in the disposition of his assets. Although Michael was the residuary beneficiary of his father's will, he testified that their relationship, during the last three years of Edward's life, was not close. He briefly worked for his father in the seventies and eighties, but after his father wanted him to renege on a lease agreement, he stopped working for him. Independent of his father, he became a successful businessman through his commercial real estate acquisitions and other ventures. He testified that his father "lied" to him and to others and he also believed that his father stole from him. He never sued his father because he knew that in doing so, his father would disinherit him.
According to Michael, in the latter part of 2001 and early 2002, tensions between him and his father arose over several issues: (1) his claim that his father owed him between $40 to $45 million, plus interest; (2) a dispute over their respective interests in ELM Realty, which they owned along with a business partner, Leo Masin, who died; and (3) Edward's refusal to undertake estate planning measures that would reduce estate taxes upon his death.
In her testimony, Jane denied exerting any undue influence over Edward regarding his wills. She explained that she was "taken care of" so "why would I be concerned?" She indicated that in late December 2001, Edward expressed his dissatisfaction with Michael's behavior and told her that if he did not "straighten up and fly right" he would take him out of his will. He also told Jane that he no longer trusted Adler and had scheduled an appointment with Citibank to change his will, at which time, he intended to disinherit Michael. The meeting was scheduled for February 20, 2002. However, Edward died on February 19. Michael testified that he was aware of his father's scheduled appointment at Citibank and that the purpose of the appointment was not to disinherit him but to restructure a loan and to obtain another loan.
The April 6, 2001 will was admitted to probate on March 5, 2002. Charles served as accountant for the Estate and Michael's personal business interests until November 2002, when animosities between him and Michael resulted in a severance of ties. Adler represented Michael as co-executor of the Estate from Edward's death to at least the time of his testimony at trial. Adler never represented Michael prior to Edward's death.
On appeal, the Estate raises the following points for our consideration:
R[ULE] 4:42-9(a)(3) DOES NOT PERMIT A FEE AWARD TO A CONTINGENT FEE ATTORNEY.
FRIVOLOUS LITIGATION SANCTIONS SHOULD HAVE BEEN AWARDED TO THE ESTATE.
A. PLAINTIFF'S BAD FAITH FILING OF COMPLAINT, ADMITTEDLY WITHOUT INVESTIGATION OR EVIDENTIARY SUPPORT.
[1.] THE TRABOCCO CERTIFICATION LAID BARE PLAINTIFF'S PRE-FILING SCHEME TO EXTORT MILLIONS OF DOLLARS FROM HER BROTHER AND THE ESTATE.
[2.] PLAINTIFF'S PRE-FILING KNOWLEDGE OF THE FALSITY OF HER TRUMPED-UP CLAIMS.
[3.] PLAINTIFF'S CONTINUANCE OF THIS LAWSUIT AFTER DISCOVERY ALSO WARRANTS THE IMPOSITION OF SANCTIONS.
IN ALL EVENTS, PLAINTIFF WAS NOT ENTITLED TO AN AWARD OF COUNSEL FEES PURSUANT TO R[ULE] 4:42-9(a)(3).
In her cross-appeal, Cheryl raises the following points:
THE TRIAL COURT'S FAILURE TO CREATE AND APPLY THE PRESUMPTION OF UNDUE INFLUENCE AND FAILING TO SHIFT THE BURDEN OF PROOF TO THE ESTATE WAS A MISAPPLICATION OF THE LAW. THE ESTATE'S FAILURE TO SUSTAIN ITS SHIFTED BURDEN OF PROOF SHOULD ...