Denial of Damages In Probate Litigation



2015 NJ Super Unpub LEXIS 2921


Jane P. Sogliuzzo died in 2008.  She left a son, John Sogliuzzo, and a daughter, Jane Adkins.

Individually and as executor of her mother’s estate, Jane filed a complaint alleging that John had exercised undue influence over their mother.  John refused to answer interrogatories or deposition questions, or produce documents; he invoked his Fifth Amendment right against self-incrimination.

A forensic accountant raised questions as to:  improper payments to John’s law firm and his children’s private school totaling $147,952; unexplained withdrawals from a bank account totaling $61,150; an unexplained $20,000 withdrawal; an unexplained reduction of $15,712 from the same account; and unexplained checks for cash and insurance checks totaling $28,726.

A default judgment was entered against John.  He was found to have exerted undue influence over his mother.  John was ordered to pay damages and prejudgment interest.  Later, the trial court ordered him to pay counsel fees because he committed undue influence and the counsel fee award was necessary to make the estate whole.  John appealed that ruling.

The Appellate Division summarized the standards on the award of counsel fees in the context of probate litigation, including In re Niles, 176 N.J. 282, 298-99 (2003).

John argued that Niles applies where a non-beneficiary under a will or trust exerts undue influence over a decedent.  Since the allegations against him concerned inter vivos transfers unrelated to his mother’s will, John asserted that the estate was made whole by the judgment entered against him related to those inter vivos transfers.

The Appellate Division rejected John’s argument:

Although John did not hold the position of executor or trustee as in Niles, he exerted undue influence over the decedent to obtain a significant financial benefit for himself.  The rationale for the award of counsel fees in Niles was that the estate should be made whole when undue influence creates or expands the fiduciary’s beneficial interest in the estate.  Niles, supra, 176 N.J. at 299.

Id. at *5.

John also cited In re Vayda, 184 N.J. 115 (2005), noting that the Supreme Court declined to allow fee shifting in a will contest where the executor had brought meritless claims against the estate in bad faith.  The Appellate Division agreed with the trial judge that Vayda included a breach of fiduciary duty, but not undue influence, and so that case was distinguishable.

The appellate court also rejected John’s argument that he should not be required to pay counsel fees because the estate had already been made whole by the judgment against him:  “John’s misappropriations compelled the Estate to file this action and counsel fees and costs are additional expenses that the Estate is entitled to recover.”  Id. at *5.

Finally, the Appellate Division affirmed the trial judge’s finding that that prejudgment interest should be calculated from the dates of defalcation.  John sought accrual from the filing of the litigation.  The Appellate Division explained:  “Rule 4:42-11 addresses post-judgment interest on tort action judgments and generally provides for simple interest calculated from the date of the institution of the action.  However, under some circumstances, interest may be assessed from the date of the actual defalcations.”  Id. at *6.  The court continued, “The dates of misappropriation mark the point at which John benefitted from his wrongdoing as well as the point at which the Estate was injured.  Equity compels calculating prejudgment interest from the date of defalcation in accordance with” the forensic accountant’s calculations.  Id. at *7.