January 18, 2013
IN THE MATTER OF THE ESTATE OF ELIZABETH TANKSLEY, DECEASED.
On appeal from the Superior Court of New Jersey, Chancery Division, Camden County, Docket No. CP-0049-2011.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 15, 2012
Before Judges Espinosa and Guadagno.
Iris Randells appeals from an order entered on September 23, 2011, dismissing her complaint with prejudice. Appellant had sought to revoke the appointment of her sister, Dorothy Steele, as administratrix of their mother's estate and to vacate Steele's subsequent transfer of their mother's house to herself. As the motion judge failed to consider whether Steele's conduct constituted a fraud on the court and decided contested issues of fact without a hearing, we reverse and remand for a plenary hearing.
Elizabeth Tanksley (decedent) died intestate on January 13, 2000. She was survived by six adult children, including Randells and Steele. Until her death, decedent resided in a house in Camden (Property). Decedent's estate included a life insurance policy and the Property, which was unencumbered at the time of her death. The proceeds of the insurance policy were used to pay decedent's funeral costs, but the estate was not administered for several years. After decedent's death, the Property remained vacant and appellant relocated to Florida. At some point, Steele moved into the Property and began to maintain it.
On September 26, 2005, Steele submitted an Affidavit of Heir to the Camden County Surrogate seeking title to the Property. In the portion of the affidavit requiring the listing of the names, residences, and relationships of all heirs of the decedent, Steele listed only herself. Steele also certified that she had "presented for filing the consent of all of said heirs who have capacity to consent" and was therefore entitled to the Property without Letters of Administration in accordance with N.J.S.A. 3B:10-4.
On September 27, 2005, after her appointment as administratrix, Steele executed a deed, transferring the Property to herself for consideration of $1.00. In 2006, Steele obtained a mortgage on the Property in the amount of $52,000 to finance renovations.
In 2007, Randells returned to New Jersey for a visit and learned that Steele had transferred title to the Property to herself. Randells informed the Camden County Surrogate's Office of her status as an heir. The Surrogate's Office referred Randells to the county prosecutor who questioned Steele and at least one other sibling, Cynthia Shanklin, before declining prosecution. Later that year, Randells moved from Florida back to New Jersey. In February 2008, Steele obtained a second mortgage for $61,500 from Wells Fargo Home Mortgage (Wells Fargo) and satisfied the 2006 mortgage.
On February 17, 2011, Randells filed a complaint seeking to revoke Steele's appointment as administratrix of the estate, to vacate the deed granting Steele sole possession of the Property, to revoke the mortgage placed upon the Property, and to appoint herself as administratrix of the estate in place of Steele. Oral argument was heard on June 17, 2011. Steele claimed the action was barred by Rule 4:85-1, which requires any challenge to probate or to the grant of letters of appointment to be filed within six months, if the aggrieved person is an out-of-state resident.
Randells claimed that she did not file in 2007 as she could not afford counsel. By 2011, she had saved enough money to hire an attorney to file this action. Randells also argued that under Rule 4:50-3, the statute of limitations can be extended if there has been a fraud on the court. The Chancery judge requested supplemental briefs on the Rule 4:50-3 issue.
On September 23, 2011, the Chancery judge dismissed Randell's complaint with prejudice, finding it time-barred. The judge held that Rule 4:85-1 required Randells to file within six months following the issuance of letters of administration. Additionally, the court found that the equitable doctrine of laches applied as Randells "did nothing" after discovering the alleged fraud on the part of Steele. In finding that Steele had been prejudiced by the delay, the judge accepted Steele's claims despite the fact that many were contested by Randells. Finally, the judge found, without elaboration, that Rule 4:50-3 did not extend the statute of limitations.
On appeal, Randells argues that: (1) the judge erred in granting summary judgment; (2) she was entitled to a plenary hearing as to unresolved issues of material fact; (3) the estate remains open as no administrator has ever been appointed; (4) the judge failed to give proper consideration to her arguments under Rule 4:50; (5) the judge misapplied the doctrine of laches; and (6) the judge should have applied the six-year statute of limitations for fraud under N.J.S.A. 2A:14-1.
Steele does not deny that she submitted a false document to the surrogate and does not refute Randells' claim that she first learned of Steele's false submission in 2007, when she returned to New Jersey from Florida.*fn1 We now consider Randells' argument that the trial court erred by failing to give proper consideration to her claim under Rule 4:50. Since Randells was seeking relief under Rule 4:50-1(d) (the judgment or order is void) and Rule 4:50-3 (fraud upon the court), she was required to file her complaint within "a reasonable time under the circumstances." R. 4:85-1. While the judge found that "no statute of limitations applied . . . up until the time [Randells] discovered the fraud[,]" once the fraud was discovered, Randells "had to move forward and comply with Rule 4:85.1 . . . ." The judge concluded that "because [Randells] was out of state, she had six months from the time she discovered that her sister had [fraudulently] indicated she was an only child to file, and she did not."
Although the judge acknowledged Steele's fraudulent submission and Randells' reliance on Rule 4:50-3, there was no discussion of the rule or any determination that the rule applied to these facts.
Rule 4:50-3, provides:
A motion under R. 4:50 does not suspend the operation of any judgment, order or proceeding or affect the finality of a final judgment, nor does this rule limit the power of a court to set aside a judgment, order or proceeding for fraud upon the court or to entertain an independent action to relieve a party from a judgment, order or proceeding.
When fraud is committed upon the court, Rule 4:50-3 allows relief to "be obtained 'without limitation as to time.'" Tara Enters., Inc. v. Daribar Mgmt. Corp., 369 N.J. Super. 45, 52 (App. Div. 2004) (quoting Shammas v. Shammas, 9 N.J. 321, 327 (1952)). Equitable principles guide the inquiry and no preordained time limitations are applicable. Von Pein v. Von Pein, 268 N.J. Super. 7, 15-17 (App. Div. 1993) (holding that one party's material misrepresentation of existing facts for the purpose of evading equitable distribution entitled the other spouse to reopen the fraudulent judgment two years after the divorce was granted).
"[A] fraud on the court occurs 'where it can be demonstrated, clearly and convincingly, that a party has sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party's claim or defense.'" Triffin v. Automatic Data Processing, Inc., 411 N.J. Super. 292, 298 (App. Div. 2010) (quoting Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir. 1989)). "[U]nlike common law fraud on a party, fraud on a court does not require reliance." Ibid. The Court in Shammas indicated that "[p]erjurious testimony alone and not accompanied or concealed by other and collateral acts of fraud may be a ground for relief [from judgment] as a fraud upon the court in a proper case." Shammas, supra, 9 N.J. at 328.
Our review of the record satisfies us that Randells made a sufficient showing under Rule 4:50-3 to warrant a hearing on her claim. It is evident that Steele knowingly filed a false affidavit with the surrogate, claiming to be the sole heir of her mother's estate. By failing to list Randells as an heir, Steele denied her the opportunity to contest Steele's appointment as administratrix and claim an interest in the Property.
If Steele committed a fraud upon the court, Randells was not required to file her motion for relief from judgment within any particular period of time. Von Pein, supra, 268 N.J. Super. at 15. Instead, the judge was required to apply equitable principles in deciding whether defendant's motion was timely.
We also reject the judge's finding that the delay by Randells in filing this complaint caused Steele prejudice, as that determination was based, in part, on the judge's resolution of genuinely disputed issues of material fact without a plenary hearing. When Steele filed the Affidavit of Heir, she valued the Property at $5,500 and has consistently maintained that initial valuation. Randells disputed this, noting that defendant obtained a mortgage on the Property, approximately one year after deeding it to herself, in the amount of $52,000 and refinanced that mortgage in February 2008 with a mortgage in the amount of $61,500. In a June 2011 affidavit, Steele claimed the Property "is worth no more than approximately $30,000[,]" even though this is well below the amount of both mortgages obtained by Steele. In spite of this conflict, and in the absence of any proofs as to the initial or current value of the Property, the judge accepted Steele's valuations in concluding that Steele was prejudiced by the delay:
[Steele], relying on the fact that [Randells] was aware that [Steele] had taken this property over and deeded it to herself, incurred a mortgage for which she has made the payments, and bettered the property from a $5,000 -- or under $5,000 valued property that was subject to vandalism cannot now come forward and say she wants the home sold, she wants her share of it.
[Steele] is, therefore, prejudiced in that she has made this home into a lovely home, which she indicates is probably valued at 39,000 some dollars here from a vandalized -- potentially vandalized property.
Where facts are disputed or depend on credibility evaluations, a plenary hearing is required. Tancredi v. Tancredi, 101 N.J. Super. 259, 262 (App. Div. 1968); see also Scott v. Salerno, 297 N.J. Super. 437, 452 (App. Div.), certif. denied, 149 N.J. 409 (1997); Harrington v. Harrington, 281 N.J. Super. 39, 47 (App. Div.), certif. denied, 142 N.J. 455 (1995); Dunne v. Dunne, 209 N.J. Super. 559, 571-72 (App. Div. 1986).
Finally, we conclude that the judge's reliance on the doctrine of laches was flawed. "Laches is an equitable doctrine, operating as an affirmative defense that precludes relief when there is an 'unexplainable and inexcusable delay' in exercising a right, which results in prejudice to another party." Fox v. Millman, 210 N.J. 401, 417 (2012) (quoting Cnty. of Morris v. Fauver, 153 N.J. 80, 105 (1998)). "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." Knorr v. Smeal, 178 N.J. 169, 181 (2003).
In addition, the doctrine of unclean hands is an "equitable principle that a court should not grant relief to one who is a wrongdoer with respect to the subject matter in suit." Borough of Princeton v. Bd. of Chosen Freeholders, Cnty. of Mercer, 169 N.J. 135, 158 (2001). "In a court of equity, . . . the rule of laches is never applied in favor of . . . a carefully designed and studied scheme of fraud . . . ." Gallagher v. New England Mutual Life Ins. Co. of Boston, 19 N.J. 14, 23 (1955). Here, Steele's misrepresentations to the surrogate, and her failure to provide the required notice to her siblings, are the very factors that should have caused the judge to refrain from applying the equitable doctrine of laches.
As we are remanding for a plenary hearing, we need not address plaintiff's other claims of error. The September 23, 2011 order is reversed and the matter is remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.
Reversed and remanded.