Appellate Division Reviews Whether a Release Bars Imposition of Sanctions on Executors

In the Matter of the Estate of Rudolph Hauke, et. al., No. A-4528-19, 2022 WL 274266 (App. Div. Jan.31, 2022).

Gregory and Thomas Hauke filed an action against Paul Hauke involving non-probate assets and change of beneficiary claims.  The parties reached a settlement which they framed into a consent judgment and a mutual general release, with one limitation.  Specifically, the release provided that the parties retained the right to file exceptions to the estate and trust accountings.

The executor, Hoyle, filed accounts to which Paul filed exceptions, to which Gregory and Thomas replied.  Over the course of five days, the court conducted a hearing to address the accounts and Paul’s exceptions. Gregory and Thomas did not introduce the release into evidence, but instead waited until closing arguments to assert, for the first time, that the release barred any relief based on Paul’s exceptions.  Paul’s counsel objected, noting that the argument was not supported by any evidence of record.  The court sustained the objection and ordered a surcharge of $157,533.47 against Gregory and a surcharge of $160,817.86 against Thomas.

The Appellate Division affirmed the decision on the accounting and the exceptions, but remanded to the Chancery Division for consideration of (1) whether the release barred Paul’s filing of the exceptions that resulted in the surcharges and (2) whether Gregory and Thomas waived their right to rely on the release.  In the Matter of the Estate of Rudolph Hauke, No. A-5200-17 (App. Div. Mar. 25, 2020).  In the remand order, the Appellate Division pointedly noted that the parties had spent 23 months preparing for trial and five days in trial, but Gregory and Thomas waited until closing arguments to raise the release as an issue.

On remand, the trial court determined that the release did not bar Paul’s filing of exceptions or the resulting surcharges imposed on Gregory and Thomas, and that Gregory and Thomas had waived their right to rely on the release by not raising it as a defense until their closing argument.

Gregory and Thomas filed a second appeal.  The Appellate Division affirmed both of the trial court’s determinations.