02.14.2023

Case Summary: Particular Refunding Bond Deemed Essential Term of Settlement Agreement

In re: Estate of Harriet Ross, Docket No. A-3757-20 (N.J. Super. App. Div. January 20, 2023)

Defendant Jeffrey Ross (“Jeffrey”) appealed three orders: (1) an April 16, 2021, Order granting the motion to enforce a second settlement agreement filed by Plaintiff Leslie Ross (“Leslie”); (2) a May 21, 2021, Order amending the April 16, 2021, Order; and (3) a June 30, 2021, Order denying reconsideration and a stay.  The Appellate Division affirmed in part and remanded in part.

The procedural history of this case is extensive.  Harriet Ross (“Decedent”) died in December 2014.  Decedent’s will appointed Jeffrey as executor, and Jeffrey and Leslie were named the primary beneficiaries, with a trust set up for each of them.  Leslie filed a verified complaint and order to show cause based on disputes over the administration of the estate.  Jeffrey and Leslie reached a settlement agreement at court-ordered mediation.  This settlement, however, was far from the end of the litigation.

After a series of motions, primarily brought by Jeffrey, the parties reached a second settlement agreement on February 24, 2020 (“Agreement II”).  In relevant part, Agreement II required Jeffrey to pay Leslie almost $80,000 in installments.  Both Jeffrey and Leslie were required to execute release and refunding bonds (“R&Rs”) as to certain funds that were deposited into Leslie’s trust account.  Agreement II also released the parties from all claims or causes of action subject to the performance of the agreement.

Leslie refused to sign the R&R, and Jeffrey only made the first installment payment to Leslie required under the agreement.  Leslie filed a motion to enforce Agreement II.  Jeffrey filed a cross-motion, arguing that Leslie violated the agreement by failing to execute the R&R, to which Leslie responded that she disputed the language in the R&R.

On April 16, 2021, the court granted Leslie’s motion to enforce Agreement II. The judge also wrote at the bottom of the Order that Leslie could sign a revised R&R to comply with Agreement II.  A May 21, 2021, Order was entered correcting a mathematical error in the April 16, 2021, Order.  On July 30, 2021, the court entered an Order (1) denying Jeffrey’s motion to reconsider the May 21, 2021, Order and (2) denying Jeffrey’s request for a stay of the order.

Jeffrey appealed, demanding that Agreement II must be vacated because (1) the judge ignored the requirement that Leslie execute the original R&R; (2) Leslie allegedly engaged in fraud by failing to disclose contests to the Estate’s 2018 tax filings and by providing three allegedly fraudulent R&Rs, (3) Leslie allegedly committed fraud  by her failure to disclose her tax contest and her failure to execute the original R&R, and (4) the July 30, 2021, Order overlooked evidence presented by Jeffrey.  Jeffrey raised other issues on appeal for the first time that were denied for not being raised initially with the trial court.

The Appellate Division found that the parties irrefutably settled the case on February 24, 2021.  The court noted that “when the intent of the parties is plain and the language is clear and unambiguous, a court must enforce the agreement.”  Ross at *12 (citing Quinn v. Quinn, 225 N.J. 34, 45 (2016)).  Settlement agreements are governed by contract law, and it is not the court’s place to rewrite a contract when the intent of the parties is clear.  The Appellate Division found that Agreement II was valid and enforceable because the parties “agreed on all essential terms and bound themselves to them.”  Id. at *14.   The court further found that Jeffrey’s arguments that Agreement II should be vacated because of Leslie’s alleged failure to disclose a tax contest is misplaced because the agreement contained a release of all future claims or causes of action.

The appellate court further found that the execution of the original R&R was an essential term of Agreement II, such that it must be enforced, because it was specifically drafted to address a potential tax repayment obligation.  As a result, Leslie is obligated to execute the original R&R, not an amended R&R that included different terms regarding repayment of any taxes.  Leslie’s argument that the execution of the R&R was a “mere formality” was not supported by the surrounding facts and circumstances.  Id. at *17.  Thus, the court affirmed the portions of the April 21, May 21, and July 30, 2021, Orders concluding that Agreement II was valid.  The Appellate Division remanded for the trial court to order Leslie to execute the original R&R, consistent with the terms of agreement.