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Estate of Reese v. Speedway Investments, Inc.

United States District Court, D. New Jersey, Camden Vicinage

May 8, 2018

ESTATE OF JOSEPH P. REESE, Plaintiff,
v.
SPEEDWAY INVESTMENTS, INC., et al., Defendants.

          OPINION [Doc. No. 14]

          JOEL SCHNEIDER, United States Magistrate Judge

         This matter is before the Court on the “Motion for Summary Judgment” (“motion”) [Doc. No. 14] filed by plaintiff. The Court is called upon to address whether the decedent's son is responsible to pay a loan from his father after his father's death. The Court received defendants' opposition [Doc. No. 16] and plaintiff's reply [Doc. No. 19]. The Court exercises its discretion to decide the motion without oral argument. See Fed.R.Civ.P. 78; L. Civ. R. 78.1. For the reasons to be discussed, plaintiff's motion is DENIED.[1]

         Background

         The Court will begin with a summary of the background facts. As required in the present context, defendants will be given the benefit of all reasonable inferences from the facts of record and the evidence will be viewed in the light most favorable to defendants. Plaintiff in this action is the executor of the Estate of Joseph P. Reese. See Compl. [Doc. No. 1]. Joseph P. Reese (“decedent”) died on June 26, 2015. Pl.'s SOF ¶ 1. Decedent at all relevant times was a domiciliary of the State of New Jersey. Id. On August 18, 2015, decedent's Last Will and Testament (“will”) was admitted to probate in Cape May County, New Jersey. Id. at ¶ 2.

         Plaintiff brings this action against Patrick Reese (“Patrick”), Leslie Reese (“Leslie”) and Speedway Investments, Inc. (“Speedway”). Id. at ¶ 13. Patrick is the son of decedent and Leslie is Patrick's wife. Speedway is a Pennsylvania corporation operating as Reese's Tavern and Pizzeria in Warminster, Pennsylvania. Id. at ¶ 3. Patrick is the sole shareholder, president and secretary of Speedway. Id. at ¶ 4.

         The complaint alleges on August 1, 2015, defendants defaulted on loan payments due to the Estate and plaintiff now demands payment of the entire unpaid balance in the sum of $238, 563.61 together with interest, late fees, costs of suit and counsel fees.[2]Compl. at ¶¶ 13, 14.

         On March 12, 2010, defendants executed the loan at issue in favor of decedent in the sum of $480, 000 payable with interest over a period of ten years. Pl.'s SOF ¶ 6. Defendants contend the loan was a refinance of a previous debt Patrick owed to decedent (his father) and no additional debt was incurred through the March 12, 2010 loan.[3] Def.'s SOF ¶ 1. Under the terms of the loan, upon default, the entire unpaid amount of interest and principal would become immediately due and defendants would be liable for costs and reasonable attorney fees. Judgment Note, Pl.'s Ex. A.

         Defendants allege they were relieved of their obligation under the loan pursuant to decedent's December 20, 2009 will and by a separate writing dated June 8, 2005. Answer at 5-6 [Doc. No. 3]. In the will, decedent directed that five of his seven children share equally in his estate. Last Will and Testament, Pl.'s Ex. 1 at ¶ 2. As for his remaining children, the third paragraph of the will states: “I have made no provision in my Will for my daughter, Tracy Reese Wible, or my son, Patrick Reese, as I have taken care of them sufficiently during my lifetime.” Id. at ¶ 3. Defendants contend this paragraph refers to forgiveness of the subject loan and that Patrick was excluded from taking under the will because decedent had forgiven the loan. The June 8, 2005 writing refers to a receipt of payment in the amount of $8, 000 “towards the purchase of 2160 Old York Rd. and Reese's Pizza/Tavern” (“2005 receipt”). See Pl.'s SOF ¶ 20; June 8, 2005 Payment Receipt, Def.'s Ex. H. The 2005 receipt included a typed notation stating, “In the event of my death, any and all debts owed to me by my son Patrick Reese will be forgiven. This is for his years of service to me as an employee for over 26 years.” June 8, 2005 Payment Receipt. The 2005 receipt was signed at the bottom by decedent and Patrick Reese.[4] Id.

         Plaintiff filed the instant motion seeking judgment in its favor, arguing: 1) the notation on the 2005 receipt does not constitute forgiveness of the debt because defendants are unable to establish the elements of an inter vivos gift, and 2) the terms of decedent's will do not relieve defendants of their obligations under the loan. Defendants contend: 1) there remains a genuine issue of material fact as to whether decedent forgave defendants' obligations under the loan by way of an inter vivos gift, and 2) there exists a genuine issue of material fact as to decedent's intent under the will. For the reasons set forth below, although defendants cannot show all of the elements of a valid inter vivos gift, they have shown a genuine issue of material fact exists as to decedent's probable intent in his will. Accordingly, plaintiff's motion for summary judgment is denied.

         Discussion

         A. Summary Judgment Standard

         A court should grant summary judgment when the record demonstrates “there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue of material fact exists if the evidence is such that a reasonable jury could find for the non-moving party on an issue affecting the outcome of the litigation. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). To determine if a material fact exists a court must view the evidence in the light most favorable to the non-moving party. “The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255.

         The moving party has the initial burden to demonstrate the absence of a genuine issue of material fact. See Celotex, 477 U.S. at 323. The burden then shifts to the non-moving party to identify specific facts that contradict those of the moving party. See Anderson, 477 U.S. at 256. If the non-moving party comes forward with “specific facts showing that there is a genuine issue for trial, ” such that a verdict may be returned in his favor, summary judgment must be denied. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A mere “scintilla of evidence, ” without more, does not give rise to a genuine dispute for trial. Anderson, 477 U.S. at 252.

         B. Inter Vivos Gift[5]

         Plaintiff's argument is straightforward. It contends there is no fact question defendants defaulted on their March 12, 2010 debt and therefore summary judgment should be entered in its favor. Defendants do not deny they did not pay the debt. However, as an affirmative defense defendants allege the debt was forgiven by way of the notation on the 2005 receipt indicating Patrick's debts would be forgiven on decedent's death. See Answer at 6. In response, plaintiff contends the 2005 receipt does not operate to forgive the debt because defendants are unable to establish the elements of an inter vivos gift. Pl.'s Br. at 2. Specifically, plaintiff contends the 2005 receipt is not sufficient to establish a gift because there was no actual or symbolic delivery of the alleged gift and decedent never absolutely relinquished ownership and dominion over the alleged gift. Id. at 10. The Court rejects defendants' inter vivos gift defense.

         “An inter vivos gift is, as its name suggests, a gift between the living.” In re Estate of Link, 328 N.J.Super. 600, 604 (Ch. 1999). Even assuming a valid inter vivos gift may be effectuated by the death of the donor, [6] defendants fail to establish the requisite elements of an inter vivos gift. Three elements are required to establish a valid inter vivos gift: 1) actual or constructive delivery; 2) donative intent; and 3) acceptance. Bhagat v. Bhagat, 217 N.J. 22, 40 (2014) (citing Pascale v. Pascale, 113 N.J. 20, 29 (1988)). The New Jersey Supreme Court has “also recognized that the donor must absolutely and irrevocably relinquish ‘ownership and dominion over the subject matter of the gift, at least to the extent practicable or possible, considering the nature of the articles to be given.'” Id. (quoting In re Dodge, 50 N.J. 192, 216 (1967)). Essentially, “[t]o constitute an inter vivos gift, not only must the donor have a clear intention to give a gift, but the gift must be completed.” Jennings v. Cutler, 288 N.J.Super. 553, 562 (App. Div. 1996).

         “The burden of proving an inter vivos gift is on the party who asserts the claim.” Bhagat, 217 N.J. at 41 (quoting Sadofski v. Williams, 60 N.J. 385, 395 n.3 (1972)). However, when “the transfer is from a parent to a child, the initial burden of proof on the party claiming a gift is slight, ” and such a transfer is presumed to be a gift. Id. (citing Metropolitan Life Ins. Co. v. Woolf, 136 N.J.Eq. 588, 592 (Ch. 1945)). Nonetheless, “[a]s the child matures and acquires experience and independence the presumption weakens and at last ceases.” McDermott-Guber v. Estate of McDermott, Docket No. A-1210-15T3, 2017 N.J.Super. Unpub. LEXIS 1240, *13 (App. Div. May 19, 2017) (quoting Peppler v. Roffe, 122 N.J.Eq. 510, 516 (E. & A. 1937)).

         While defendants have arguably established a genuine issue of material fact as to the elements of donative intent, acceptance and delivery, they cannot show that decedent absolutely and irrevocably relinquished ownership and dominion over the gift. This is true because it is undisputed the decedent continued to receive the loan payments throughout his lifetime.[7] Accordingly, defendants have ...


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