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In the Matter of the Estate of Lillian Schmidt

July 11, 2012

IN THE MATTER OF THE ESTATE OF LILLIAN SCHMIDT, DECEASED.


On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Bergen County, Docket No. P-461-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted May 21, 2012

Before Judges Grall, Alvarez and Skillman.

Loel Welch appeals from a December 10, 2010 judgment approving the account provided by John Teagno, who held a Power of Attorney (POA) for decedent Lillian Schmidt, of his management of decedent's funds from the date of the issuance of the POA until her death. Welch also appeals the July 27, 2011 order denying her counsel fees, court costs, and the cost of a private investigator retained by her attorney. For the reasons that follow, we affirm.

Decedent's date of death was November 30, 2004. Welch filed her verified complaint to compel an accounting and for other relief on October 31, 2006. Teagno provided an informal accounting in 2007, and no further proceedings were conducted until February 24, 2009, when Welch, apparently dissatisfied with the information Teagno provided, filed a motion to enforce litigant's rights related to the accounting. In March 2010, Welch acknowledged that the only real dispute was over Teagno's management of decedent's affairs prior to her death, not the administration of her estate.

Judgment was rendered after the Probate Part judge conducted a hearing approving Teagno's accounting except for $8036, which he ordered be paid into the estate. Plaintiff then filed the unsuccessful motion seeking $48,345 in counsel fees, $5740.13 in costs, and $12,146.36 in fees owed to a private investigator.

Decedent was Welch and Teagno's aunt, a sister to Teagno's mother. She moved in with Teagno and his mother in 2001 after she broke her arm, and never left. By that time, decedent had stopped driving. She executed the POA on March 27, 2001. Decedent did not pay rent to Teagno's mother but maintained her former apartment until the fall of 2003. She could not be left alone or with only her sister, which meant any time Teagno was absent, a home health aide had to be present. As time passed, decedent became incontinent and could not cook for herself.

Teagno, an admittedly poor recordkeeper, provided copies of decedent's bank records, including cancelled checks, by way of documentation for his management of decedent's funds. He and Welch both received cash gifts from decedent. In addition to often paying for her expenses in cash, Teagno also borrowed funds from decedent which he then repaid, with the exception of the $8036 the trial judge found was owed to the estate. During the trial, the court heard testimony from: Welch, Teagno, Teagno's accountant, Welch's private detective, a friend of Teagno who had spent time at his home and had known decedent, the former occupant of a garden apartment at Teagno's mother's home who had also spent time with the family and by virtue of physical proximity, observed the manner in which decedent was cared for in Teagno's home, one of the home health aides, and a branch manager at the bank where decedent maintained her account.

Decedent's will named Martha Teagno as the residuary beneficiary,*fn1 and made bequests of $20,000 each to Teagno and Welch. Teagno contended that as a result Welch had no standing to challenge his administration of decedent's affairs prior to her death due to her limited interest in the estate. Welch took the position that because Teagno had declined to reimburse her substantial attorney's fees and expenses for her investigation into his wrongdoing, she was entitled to proceed to attempt to establish that wrongdoing in order to recoup her expenditures. The court allowed Welch to proceed on the theory that if she could prove that decedent's funds were misappropriated in some fashion, it might result in her entitlement to reasonable attorney's fees and costs regardless of her limited interest in the assets of the estate.

In reaching its ultimate decision, rendered orally from the bench, the court found the relevant proofs were limited to Teagno's management of decedent's NVE bank account in Englewood during the three years and eight months in which he acted as her attorney-in-fact. He observed that Teagno kept poor records, that he made checks out to cash, including in payment of home health aides, and that although he spent the funds for the benefit of decedent, by writing checks payable to cash, he unwittingly raised the specter of misappropriation of the funds.

The judge also found that decedent and Teagno's mother were close, and although decedent maintained her apartment for some time, she lived exclusively in Teagno's home from mid-2001 until the time of her death. Teagno's mother needed a walker, but was otherwise in good health, in contrast to decedent, who was forgetful and unable to be left alone safely by 2001. Decedent required the presence of a third party round-the-clock to provide assistance in the event she fell or became disoriented, but Teagno worked full-time and spent most weekends at his shore home. It was actually at Welch's urging that Teagno retained health care aides to assist when he was not present.

The court found the proofs did not support Welch's position that the home health care aides were also retained to assist with the care of Teagno's mother. Although they occasionally did so, they were retained exclusively because of the level of care decedent required. When Teagno was present in the home he cared for decedent, a fact corroborated by the home health care aide who testified and by his other witnesses. The judge concluded Teagno was guilty of fulfilling his role under the POA "in an amateurish fashion[,]" but that his failings were the product of carelessness and convenience, "and not for purposes of evasion or deceit." The court considered Teagno to be a credible witness, who expended his aunt's funds for her benefit.

Teagno acknowledged borrowing money from decedent, but those transactions were made with her knowledge and consent. When Teagno used decedent's funds for his own business expenses, the bank records demonstrated repayment of those sums close in time to when the withdrawals were made. The difference between loans Teagno made to himself and repayments, the only discrepancy, ...


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