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In re Estate of Luxembourg

Superior Court of New Jersey, Appellate Division

July 16, 2013

IN THE MATTER OF THE ESTATE OF MORTON LUXEMBOURG, Deceased.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 30, 2013

On appeal from Superior Court of New Jersey, Chancery Division, Probate Part, Monmouth County, Docket No. P-411-10.

John L. Pritchard argued the cause for appellant Jacqueline Pasternak Mazur.

John G. Hoyle, III, argued the cause for respondent Henry Waldron, Successor Executor of the Estate of Morton Luxembourg (Hoyle Law, LLC, attorneys; Mr. Hoyle, of counsel and on the brief).

Jonathan B. Peitz, Deputy Attorney General argued the cause for respondent State of New Jersey, Acting as Protector of the Public Interest in Charitable Gifts (Jeffrey S. Chiesa, Attorney General, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Mr. Peitz, on the brief).

Before Judges Grall, Simonelli and Accurso.

PER CURIAM

Appellant Jacqueline Pasternak Mazur, a beneficiary under decedent Morton Luxembourg's will, appeals from an April 4, 2012 final judgment against Laura J. Luxemburg (Luxemburg), the executor named in the will, which, among other things, denied appellant's request to make her award of attorney's fees an administration expense payable by the estate. Because the fee issue is moot and appellant's remaining issues utterly without merit, we affirm.

Two months after Morton Luxembourg's death, letters testamentary were issued to Luxemburg, a California resident. Although Luxemburg timely filed the estate tax return, she made no distributions to beneficiaries. Dissatisfied with the pace of the administration, appellant filed an action to force Luxemburg to perform her fiduciary duties. Henry Waldron, also a beneficiary, and identified in the will as the executor in the event Luxemburg failed to serve, sent a letter to the court in response. Although noting that the administration had not proceeded as quickly as he expected, Waldron declined to express an opinion as to Luxemburg's performance, not being familiar with the details of the administration. He provided an account of his dealings with Luxemburg and his understanding of her actions on behalf of the estate. Waldron expressed his willingness and ability to serve as successor executor should the court determine to remove Luxemburg at appellant's request. Finally, Waldron expressed his concern about the legal expenses appellant would incur by the action and her apparent desire that they be borne by the estate. Waldron asked the court to consider whether appellant was serving the interests of the estate by her filing, and if not, that any legal costs be borne by appellant and Luxemburg and not by the estate.

Judge Del Bueno Cleary issued an order directing Luxemburg to account, list the real estate (a condominium) for sale, and make an interim distribution. Luxemburg promptly listed and sold the condominium and made an interim distribution to beneficiaries. She did not, however, file an accounting. On appellant's further motion, the judge again ordered Luxemburg to account and removed her as executor, appointing Waldron in her stead and ordering Luxemburg to turn over the estate's assets and records to him. The judge awarded appellant attorney's fees of $2, 183.83 to be paid personally by Luxemburg upon distribution.

Upon appointment, Waldron began to do all that was required to responsibly administer the estate, including filing a pro se motion to compel Luxemburg to turn over all estate assets and records when Luxemburg failed to deliver them as promised. Even though Waldron had advised appellant's counsel of his intention to file the motion against Luxemburg, appellant filed her own motion seeking the same relief and also a default against Luxemburg for her failure to account as ordered. The court entered orders granting the relief requested by both the estate and appellant. After communicating with Waldron, Luxemburg wired $235, 000 into the estate account. She did not, however, tender the remaining assets.

Appellant thereafter filed a motion for the entry of a default judgment against Luxemburg and to recover attorney's fees from the estate. While supporting some of the requested relief, Waldron opposed appellant's efforts to surcharge Luxemburg for her failure to promptly sell the condominium, and to compel the estate to pay appellant's legal fees and expenses, including those of an appraiser to value the condominium.

Although noting his fiduciary obligation to maximize the value of the estate for the named beneficiaries and being critical of Luxemburg's delay in winding up the administration, Waldron advised the court he could not support appellant's efforts to value the condominium at more than the $300, 000 price for which it was sold. Waldron explained that the appraisal offered by appellant exceeded the listing proposals Luxemburg obtained from local realtors in 2008. Further, despite numerous listings for condominiums in decedent's building, several offered for less than $400, 000, no unit comparable to decedent's was sold in the eighteen months following decedent's passing. Thus, the estate's position was that it was without proof that it had suffered any harm by Luxemburg's delay in selling the condominium.

Although not objecting to an award of fees to appellant from Luxemburg, Waldron opposed appellant's fees being paid by the estate. Waldron contended that the estate was not served by "the services of multiple lawyers with the unintended consequence of making the estate fiscally liable for the costs of multiple sides (and in some instances, opposing sides) of court applications." The Attorney General, a respondent in his role as protector of the public interest in charitable bequests, of which there were several in the will, also filed an objection to appellant's request for fees from the estate. He argued the estate was not in default, and that appellant, a non-fiduciary, had not proffered any legal basis for an award of fees from estate assets.

At the proof hearing, appellant presented an appraiser who opined that the condominium would likely have sold for over $400, 000 if listed promptly. Judge Cleary rejected the testimony as too speculative. The judge noted that the appraiser had never entered the unit and thus could offer nothing as to its condition. Further, the judge noted that the condominium was on a lower floor and overlooked the parking lot and not the ocean. In addition, the State audited the estate tax return and apparently increased the estate's assigned date of death value of $290, 500 for the unit to $300, 000. Finally, the judge took judicial notice of the drop in the condominium market in the year after the decedent's death. She accordingly accepted the value of the condominium at $300, 000, the price at which it was sold, and credited Luxemburg with the brokerage commission and carrying costs pending its sale.

Judge Cleary entered a judgment against Luxemburg for $586, 668.39, arrived at by valuing the gross estate at $1, 112, 882.94, deducting appropriate credits, including disbursements, funeral expenses, and taxes, to arrive at a net gross estate of $558, 539.08, to which interest of 1.45 percent was added for a total of $572, 318.45, along with an award of attorney's fees to appellant of $14, 349.94, including $2, 183.83 previously awarded that was to be paid at distribution. Neither the estate, Luxemburg's counsel, who Judge Cleary allowed to participate in the proof hearing, nor the Attorney General objected to appellant's fees being included in the judgment.

Judge Cleary, however, declined appellant's request to require her fees to be paid by the estate from a fund in court pursuant to Rule 4:42-9(a)(2), noting that she did not "see where the fund in court is." The judge did, however, provide in the judgment that the estate was to pay appellant's counsel fee award out of any monies collected on the judgment against Luxemburg before making any other disbursement. This suggestion was made by the deputy appearing on behalf of the Attorney General.

Appellant filed her appeal, and the estate immediately undertook efforts to execute on its April 4, 2012 judgment by docketing it in California. Before appellant's brief was due in this court, the estate learned that Luxemburg was selling certain assets and would immediately satisfy the judgment against her. Counsel for the estate advised appellant's counsel of same on July 16, 2012, and offered to consent to an extension of the briefing schedule expecting the issues to be mooted almost immediately. Luxemburg promptly paid the judgment, and on August 3, 2012, the estate sent appellant's counsel a check for $14, 636.04, representing the full amount of the fee award and interest of two percent.

Appellant's counsel has refused to cash the check, insisting in his brief and at oral argument that the issues are not moot "as there is an issue as to whether counsel fees will be allowed for the present appeal."

Appellant has raised the following issues in her brief on appeal.

I. THE JUDICIAL RELIEF OBTAINED BY THE PLAINTIFF PROTECTED THE FUND IN COURT TO THE BENEFIT OF ALL THE BENEFICIARIES OF THE ESTATE.
II. THE TRIAL COURT ERRED BY DENYING COUNSEL FEES TO THE PLAINTIFF TO BE PAID OUT OF THE ESTATE FOR PROTECTING THE ESTATE.
III.THE ORDINARY DEFERENCE TO THE DECISION OF THE TRIAL COURT ON THE MATTER OF COUNSEL FEES DOES NOT APPLY, AS THE TRIAL COURT MADE A SINGLE ERRONEOUS STATEMENT OF LAW REGARDING THE FUND IN COURT DOCTRINE, AND OTHERWISE DID NOT SET FORTH THE REASONS FOR ITS CONCLUSIONS.
IV. THE TRIAL COURT ERRED BY APPLYING AN INCORRECT STANDARD FOR THE PLAINTIFF'S BURDEN AT THE PROOF HEARING.
V. THE TRIAL COURT ERRED IN FAILING TO CHARGE THE FORMER EXECUTOR WITH THE VALUE OF THE CONDOMINIUM NINE MONTHS AFTER THE DATE OF DEATH.
VI. THE TRIAL COURT ERRED BY ALLOWING THE FORMER EXECUTOR A CREDIT FOR THE CARRYING COSTS OF THE CONDOMINIUM FOR PERIODS LONG AFTER THE CONDOMINIUM SHOULD HAVE BEEN SOLD, AND BY ALLOWING INTEREST AND PENALTIES FOR LATE PAYMENT OF REAL ESTATE TAXES AND CONDOMINIUM FEES.
VII.THE TRIAL COURT ERRED BY NOT CHARACTERIZING THE ACTIONS OF THE FORMER EXECUTOR AS A "DEFALCATION".
VIII. THE TRIAL COURT ERRED BY NOT ALLOWING THE PLAINTIFF THE EXPENSES OF AN APPRAISER AS AN ESTATE ADMINISTRATION EXPENSE.
IX. THE TRIAL COURT ERRED BY ALLOWING COUNSEL FOR THE FORMER EXECUTOR TO APPEAR AT THE PROOF HEARING ON A DEFAULT JUDGMENT AFTER THE EXECUTOR HAD BEEN DEFAULTED.

She raises these additional issues in her reply brief.

I. THE SUBSTITUTED EXECUTOR LACKS STANDING TO TAKE A POSITION ON APPEAL WHICH IS CONTRARY TO THE INTERESTS OF THE ESTATE.
II. THE ISSUE OF THE CONTINGENT NATURE OF THE COUNSEL FEE AWARDED IS NOT MOOT, AS THERE IS AN ISSUE AS TO WHETHER COUNSEL FEES WILL BE AWARDED FOR THE PRESENT APPEAL.
III.COUNSEL FEE APPLICATIONS SHOULD TAKE INTO ACCOUNT THE CIRCUMSTANCES OF THE MATTER.

The chief issue on this appeal, the failure to allow appellant an award of fees against the estate, is obviously moot and the remaining issues so utterly devoid of merit that they do not warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

"[A]n issue is moot when the decision sought in a matter, when rendered, can have no practical effect on the existing controversy." Betancourt v. Trinitas Hosp., 415 N.J.Super. 301, 311 (App. Div. 2010) (citation and internal quotation marks omitted). As Luxemburg has satisfied the judgment and the estate has paid appellant the fees awarded to her, the issue of whether those fees should have been awarded from assets of the estate is of no practical importance. Further, we are satisfied that the Attorney General's view on this issue as we understand it, that a fund in court which rests on a judgment can only come into being upon collection of the judgment, is likely to arise in a live controversy at some future time. While Judge Cleary accepted that view and it seems imminently sensible to us, the issue is only a hypothetical one, poorly suited for rigorous analysis here. Cinque v. N.J. Dep't of Corr., 261 N.J.Super. 242, 243-44 (App. Div. 1993) (noting that a contest engendered by the conflicting self-interests of the parties best develops all relevant considerations for the court).

Finally, we address the issue appellant raises in her reply brief that the matter is not moot because of the possibility of fees on appeal. An award of fees on appeal is a question entirely separate from whether the probate judge's failure to have allowed appellant an award of fees against the estate is moot. The potential for fees on appeal in no way affects the analysis that appellant's having already received the fees she contends the estate should have been made to pay makes that issue moot.[1]

Judge Cleary acted well within her considerable discretion in rejecting appellant's proofs as to the estate's damages at the proof hearing. Heimbach v. Mueller, 229 N.J.Super. 17, 26 (App. Div. 1988) (agreeing with the trial court that plaintiff had failed to offer competent testimony to prove damages at a proof hearing). Appellant's position was not supported by the estate for sound reasons well-articulated by the successor executor. Appellant does not specify the credit she claims should not have been allowed Luxemburg for carrying costs, making review of this issue impossible. Isolating as best we can the interest and counsel fees included in a lien filed by the condominium association, it would appear that appellant is complaining about something more than $1300 on a judgment for $572, 318.45, not including attorney's fees. We note that the estate did not seek to recover those costs and chose not to expend its resources in addressing the issue. It would appear probable that the fees necessary to contest those costs would likely exceed the costs themselves. Judge Cleary noted Waldron's conscientious and able approach to his fiduciary duties. Our careful review of the file convinces us of the same.

Affirmed.


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