United States District Court, D. New Jersey
A. OUDA PETER A. OUDA, LLC On behalf of Plaintiff
L. SLIMM MARSHALL, DENNEHEY, WARNER, COLEMAN & GOGGIN On
behalf of Defendant Dennis P. McInerney
L. HILLMAN, U.S.D.J.
matter arises from almost a decades' worth of litigation
regarding the Estate of Richard D. Ehrlich
(“Decedent”). In this federal court action,
Plaintiff Jonathan Ehrlich, Decedent's nephew, brings a
breach of fiduciary duty claim against Defendant Dennis P.
McInerney, the temporary administrator of the
filed a Motion to Dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(1) and 12(b)(6). The Court does not find the
Rooker-Feldman doctrine precludes this Court from
exercising jurisdiction over this matter and thus does not
find this matter can be dismissed under Rule 12(b)(1). The
Court will, however, grant the motion to dismiss pursuant to
Rule 12(b)(6), as the Court finds N.J.S.A. 3B:17-8 and the
entire controversy doctrine require dismissal of the breach
of fiduciary duty claim against Defendant.
Court takes its facts and procedural posture not from
Plaintiff's complaint, but from the various state court
decisions preceding and related to this federal case, as a
more thorough recitation of the facts and procedural history
following background facts come from the New Jersey Superior
Court, Appellate Division (“Appellate
Division”)'s June 29, 2012 decision, In re
Estate of Ehrlich, 47 A.3d 12 (N.J.Super.Ct.App.Div.
2012), certif. denied, 59 A.3d 602 (N.J. 2013),
appeal dismissed, 64 A.3d 556 (N.J. 2013). Decedent
was a trust and estates attorney in Burlington County, New
Jersey. Id. at 13-14. He died on September 21, 2009,
with his only next of kin being his nephews, Todd Ehrlich and
Plaintiff, and his niece Pamela Venuto. Id. at 14.
While Decedent had not had contact with Todd or Pamela for
over twenty years, he maintained a close relationship with
Plaintiff, who he had told friends was the person to contact
if he were to die and was the person to whom he would leave
his estate. Id.
learning of Decedent's death, a search for Decedent's
will ensued. Id. Plaintiff located a copy of a
purported will in a drawer in Decedent's home.
Id. On December 17, 2009, Plaintiff filed a
complaint seeking to have the purported will admitted to
probate. Id. Todd and Pamela objected. Id.
Defendant, who had previously been named as Trustee of
Decedent's law practice, was appointed as temporary
administrator. Id. While Defendant was ordered to
inspect Decedent's home, no other document purporting to
be Decedent's will was ever located. Id.
purported will that was recovered provided a specific bequest
of $50, 000 to Pamela, a specific bequest of $75, 000 to
Todd, twenty-five percent of the residuary to pass through a
trust to a friend, and seventy-five percent of the residuary
to pass to Plaintiff. Id. On April 20, 2011, the
proffered will was admitted to probate. Id. at 13.
The court then denied a motion for reconsideration on June
20, 2011. Id. The Appellate Division then affirmed,
finding the will was properly admitted to probate.
Id. at 19. While the decision was appealed to the
New Jersey Supreme Court, Plaintiff's complaint provides
that the matter was settled by the siblings.
January 18, 2013, Judge Karen L. Suter of the Superior Court
of New Jersey, Chancery Division granted Defendant's
motion for instructions and to allow a settlement with regard
to two actions pending against the Estate arising from
Decedent's law practice: IMO Estate of Farias v.
Estate of Ehrlich and Farias v. Estate of
Ehrlich. Defendant filed the motion for instructions
believing settlement of the matters was in the best interest
of the Estate, as he believed the Estate could potentially be
liable for more than the settlement amount. Plaintiff opposed
the motion, arguing “more information is required
before a determination of the propriety of the settlement can
be made." Judge Suter determined Defendant was
“acting within his powers as temporary
administrator” and thus approved the settlement. The
settlement was thereafter consummated.
15, 2011, Judge Michael J. Hogan of the Superior Court of New
Jersey, Chancery Division approved Defendant's first
intermediate account on behalf of the Estate. By a May 23,
2012 Order, Judge Suter denied Plaintiff's motion to
vacate the July 15, 2011 court order. Plaintiff appealed the
denial of his motion to vacate. In re Estate of
Ehrlich, 2013 WL 2476490. The Appellate Division
The present case provides no basis for disturbing the July
15, 2011 order approving respondent's intermediate
accounting. Appellant, by his own admission, knew the
accounting to be incomplete upon his receipt of the document
yet neither filed any exceptions nor voiced any objection to
the accounting at the hearing on its approval. Moreover, all
acknowledged that the accounting was interim in nature and
that the final accounting would include the assets belatedly
brought to the administrator's attention by appellant.
Id. at *1.
July 25, 2014 decision, Judge Mary C. Jacobson of the
Superior Court of New Jersey, Chancery Division considered
exceptions to a final accounting filed for Decedent's
Estate, a motion seeking removal of Defendant as temporary
administrator and appointment of Plaintiff as executor, and
applications by Defendant and two other attorneys for fees
payable from the Estate. In the course of considering the
exceptions to the accounting, Judge Jacobson considered
Plaintiff's complaint that the sale price of
Decedent's home was substantially less than its value as
set forth in prior appraisals. Judge Jacobson found, while
the property had originally been appraised around $350, 000
at Decedent's death and for a couple years thereafter,
Defendant had only received offers well below the original
appraisal value. Defendant thus sought two updated
appraisals, which determined the appraisal value had dropped
to somewhere around $225, 000 to $250, 000, with necessary
repairs approximating over $107, 000. Defendant thus sought
instructions from the court as to whether he should accept an
offer of $212, 500 or make repairs to the property to try to
rent it until the market improved. After hearing
Plaintiff's opposition, Judge Suter approved and
authorized the proposed sale.
The record reveals no action taken by Mr. Ehrlich to stop the
sale after Judge Suter's ruling. Moreover, Mr. Ehrlich
has presented no evidence that would allow this court to set
aside Judge Suter's Order . . . . To allow Mr. Ehrlich to
re-litigate this issue after the property has been sold in an
effort to obtain a surcharge would be unjust and oppressive
to the Temporary Administrator. When a fiduciary has properly
applied to the probate court for advice and direction with
respect to a transaction involving the administration of the
estate and acts in accordance with the court's
instructions, it would be inequitable to allow an exceptant
who had an opportunity to be heard at the time of the
application to the court for instructions to later pursue the
same objection through an exception to the final accounting.
By that time the Temporary Administrator's actions had
been sanctioned by the court and should be given res
judicata effect. To allow otherwise by an exceptant
would create havoc in the administration of estates, leaving
none but the foolhardy willing to serve as fiduciaries. Mr.
McInerney proceeded to sell the property only after court
approval and an opportunity for Mr. Ehrlich to be heard. Mr.
Ehrlich's exception to the sale of the property must
therefore be denied.
Court also addressed Plaintiff's allegation that
Defendant did not take adequate steps to locate
Decedent's will on his computer:
Even if this claim is true, Mr. Ehrlich offers no explanation
as to how this failure caused any loss to the Estate. The
writing that was admitted to probate pursuant to N.J.S.A.
3B:3-3 by Judge Hogan, who issued a Judgment to this effect
that was upheld by the Appellate Division, was a paper copy
of a will, unsigned by the decedent and any witnesses, but
which bore a notation in the handwriting of the decedent
stating, “original mailed to H. W.Van Sciver
5/20/00.” . . . Because this document was admitted to
probate, any failure to locate a draft of this document on
the decedent's computer caused no loss to the Estate or
to Mr. Ehrlich. Whether the decedent had any other draft of a
different purported will on his computer and whether that
different draft would have benefited Mr. Ehrlich is mere
speculation. Moreover, any draft of an alleged will retrieved
from the decedent's computer would lack the handwritten
notation that both the chancery court and the Appellate
Division relied upon in deciding that the decedent intended
to constitute his will.
addressing the exceptions, the state court stated
Plaintiff's “numerous allegations of duplicitous
conduct” by Defendant were “factually
unsupportable in the record before the court.” Rather,
the court found Defendant “acted appropriately in
bringing issues to the attention of the court for direction
and presenting his accountings to the court for
approval.” Later in the opinion, in addressing the
motion to remove Defendant as temporary administrator, the
court stated: “Mr. Ehrlich has not demonstrated that
there has been a flagrant dereliction of duty by the
Temporary Administrator . . . .” Judge Jacobson
ultimately approved the account in all respects.
October 30, 2015 Motion Hearing, Judge Jacobson considered a
motion by Defendant seeking an order awarding attorneys'
fees and costs to him, providing direction as to payment of
an attorneys' fee award, and seeking direction as to the
distribution of the balance of the Estate, among other
requests. Plaintiff opposed the motion, largely based on the
alleged failure of Defendant to pursue a particular asset of
the Estate - a condominium titled in Decedent's name in
the Harbour House Towers of Freeport in the Grand Bahamas.
Jacobson explained that, with regard to an earlier motion,
Plaintiff noted that he located a condominium in the Bahamas
in Decedent's name. He provided a deed purported to have
been signed by Decedent. Plaintiff also provided an e-mail
exchange between him and Harbour House, in which Harbour
House confirmed Decedent owned a unit. Judge Jacobson then
recounted a series of e-mails showing Plaintiff was aware of
the possibility that Decedent owned the condominium in the
Bahamas since June 2010.
certified he was not made aware Decedent had an interest in
property in the Bahamas, and if he had been so aware, he
would have taken action to transfer the property to the
Estate. Judge Jacobson concluded:
The Court is not convinced that Mr. McInerney, on the basis
of the record before it, was ever informed about the Bahamas
property and . . . made aware that it was something he should
investigate. Jonathan Ehrlich himself had access to the
decedent's files and documents. It is throughout the
record of this lengthy estate litigation that he had removed
documents and files prior to Mr. McInerney's appointment
as administrator. . . .
. . . .
N.J.S.A. 3B:17-8 provides that a judgment allowing an account
after due notice shall be res adjudicata as to all exceptions
which could or might have been taken to the account and shall
constitute, exonerate and discharge the fiduciary from all
claims of all interested parties, and the statute was relied
upon by the Appellate Division in the earlier estate
litigation in refusing to allow Mr. Ehrlich to raise issues
as to Mr. McInerney's performance that could have been
raised in the first accounting but were not . . . .
Since Mr. Ehrlich was aware of the claim that the decedent
owned a condominium in the Bahamas prior to the first and
second accountings and failed to file an exception in this
regard to either accounting the Court finds that the
judgments approving both accountings constitute res
adjudicata and eliminate any liability on the part of Mr.
McInerney with regard to the Bahamas property.
in addressing Defendant's fee request, the court noted
Plaintiff “claim[ed] that the Estate ha[d] been
mishandled in many respects, ” but the court found
Plaintiff's allegations meritless.
federal court action, Plaintiff's complaint brings only
one count against Defendant for breach of fiduciary duty.
Plaintiff alleges that, as a court-appointed fiduciary,
Defendant “owed a common law and statutory duty of care
to the beneficiaries and to the estate.” The complaint
claims Defendant breached his fiduciary duty to Plaintiff and
breached his duty, as an attorney, to comply with the Rules
of Professional Conduct - specifically Rules 3.3 and 4.1. The
following averments are the bases for Plaintiff's claim
of a breach of fiduciary duty:
• “He had the obligation to perform a thorough
search of the decedent's home and law office to locate
the Will and/or evidence of such and he failed to do
• “He had the obligation to maintain and preserve
all of the papers and property of the decedent but instead he
unilaterally and without court authorization discarded papers
and property which Jonathan directed that he not discard and
or destroy. He had the duty to properly account for and
evaluate all assets and obtain fair market value of assets
disposed of. He failed to do so.”
• “He withheld documents, suppressed, destroyed
and or spoliated evidence needed by Jonathan to review the
accountings he submitted in a proper manner.”
• “Years later, in or about March of 2015, Mr.
McInerney destroyed all of the documents that were in the
decedent's law office, which documents he had been
ordered and or requested to maintain. This was done despite
the fact that he knew that there were ongoing concerns voiced
by Mr. Ehrlich about missing documents. This destruction of
documents was also done in the face of repeated directives of
Mr. McInerney that no items could be removed from the
• “Mr. McInerney in contravention of his fiduciary
role also severely undersold estate assets such as the
decedent's home in Delanco, New Jersey. The home was
appraised at $350, 000.00 but it was undersold by over $100,
• “[H]e had listed for sale the decedent's law
office for $300, 000 but as of 2014 he suggested in open
court before Judge Jacobson that the property should be
donated because it had little value.”
• “He also was placed on notice of an asset of the
estate, namely a condo in the Bahamas but he failed to
undertake any investigation whatsoever to locate it and have
it timely administered.”
• “Mr. McInerney, in his role as a fiduciary,
settled a lawsuit that was filed against the decedent's
estate without fully investigating the merits of the action
and without defending the case in a manner that was
consistent with his obligations to preserve the assets of the
• “Most if not all of the order[s] procured by Mr.
McInerney were procured through fraud deception and or
misrepresentation, including the two accounting orders, the
orders for the sale of the house contents, the orders
relative to the sale of the decedent's personal and real
property and the settlement of the Farias litigation.”
Court first addresses its jurisdiction over this matter. This
Court has diversity jurisdiction pursuant to 28 U.S.C. §
1332(d), as the parties are diverse and the amount in
controversy exceeds $75, 000. However, Defendant argues the
Rooker-Feldman doctrine precludes this Court from
exercising jurisdiction over this matter. Accordingly,
Defendant moves to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(1). For the reasons that follow, the Court
finds the Rooker-Feldman doctrine does not bar the
Court's jurisdiction over this matter.
Standard for Dismissal Pursuant to Federal Rule of ...