Appellate Division Affirmed Frivolous Litigation Sanctions

In the Matter of the Estate of Yoram Koby, Deceased, 2018 WL 1660580 (N.J. Super. Ct. App. Div. April 6, 2018).

This is an unpublished Appellate Division opinion arising out of Bergen County. The case involves the standards for reconsideration, frivolous litigation sanctions and the importance of a properly drafted notice of appeal.

Yoram Koby was a relatively wealthy individual. He had homes in New York, New Jersey, Florida, Spain and Israel.  Yoram had joint American and Israeli citizenship.

Yoram and his first wife, Yakobina, lived in Alpine, New Jersey with their two children. Yoram and Yakobina divorced in 2000.

Yoram married Limor Elbaz in July, 2012. The parties filed for divorce in New York in 2015. On December 20, 2015,Yoram and Elbaz executed a stipulation of settlement which  specifically relinquishes each party’s interest in the other party’s estate.  A final judgment of divorce incorporating the stipulation of settlement was entered in New York on April 13, 2016.

Yoram died unexpectedly on July 15, 2016, in Tel Aviv. The written judgment of divorce entered by the court on April 13, 2016 was not filed by the county clerk’s office until shortly after Yoram died.

Yoram’s 1993 will devises the bulk of his estate to trusts for his two children. Elbaz contested essentially three points: (1) The proponent of the 1993 will had not met the standard for probate of an unsigned  will; (2) since the April 13, 2016 divorce judgment was not filed by the county clerk until about a week after Yoram’s death, Elbaz was still Yoram’s spouse and (3) jurisdiction properly rested in New York, not New Jersey.

The trial court found that Yoram and Elbaz were divorced on April 13, 2016, a finding which comports with New York law, which describes the filing of a final judgment by the clerk as a “mere ministerial act.” Cornell v. Cornell, 7 NY2d 164, 170 (1959).  The trial court also noted that the December 20, 2015 stipulation of settlement specifically waived Elbaz’s interest in Yoram’s estate.  On November 10, 2016, the trial court ruled (1) Elbaz did not have standing, (2)  New Jersey had jurisdiction and (3) the unsigned 1993 will should be admitted to probate.

On November 23, 2016 Elbaz filed a motion for reconsideration. Elbaz supported her motion with additional proofs regarding decedent’s domicile. Elbaz disputed the court’s  determination that Yoram was a New Jersey domiciliary and argued that the court therefore lacked jurisdiction.   On November 30, 2016 the estate served Elbaz’s attorney with a “safe harbor” notice pursuant to R. 1:4-8(b)(1), advising that the estate would seek frivolous litigation sanctions against Elbaz’s attorney unless the reconsideration motion was withdrawn.

The trial court denied the reconsideration motion. The judge found that he had not overlooked any law or facts that would warrant reconsideration pursuant to R. 4:49-2.  The judge again found that Elbaz lacked standing because she “remains neither a beneficiary, testate or intestate, nor surviving spouse.”  The estate then filed a motion for sanctions, arguing that the reconsideration motion was frivolous.  On February 10, 2017, the trial court ordered Elbaz’s attorney to pay the estate $12,500.00 as a frivolous litigation sanction.  The trial court emphasized that Elbaz focused her reconsideration motion entirely on the issue of whether Yoram was a New Jersey or New York domiciliary, but failed to address the court’s threshold determination that Elbaz lacked standing to challenge the court’s jurisdiction.  The judge entered a memorializing order on May 5, 2017.

Elbaz then filed a notice of appeal challenging the order that denied reconsideration. She subsequently filed an amended notice of appeal to add a challenge to the order imposing frivolous litigation sanctions.  The Appellate Division observed, “Notably, Elbaz’s notice of appeal does not reference the November 4, 2016 order that was the subject of a reconsideration motion.”  The appellate court continued “R. 2:5-1(f)(3)(A) states “In civil actions the notice of appeal shall . . . designate the judgment, decision, action or rule, or part thereof, appealed from.”  The court cited multiple cases for the policy that where the notice of appeal lists a reconsideration order but not the underlying judgment or order which was the subject of the reconsideration motion, it is only the reconsideration motion and not the judgment or order that generated the reconsideration motion that may be reviewed.

Accordingly, the appellate division never addressed Elbaz’s arguments regarding jurisdiction or whether plaintiff had met its burden to secure a probate judgment for an unsigned will. The appellate division limited its review to (i) whether Elbaz had met the standard for reconsideration and (ii) whether imposition of frivolous litigation sanctions was an abuse of discretion.

On appeal Elbaz argued that “Because subject matter jurisdiction is lacking in this probate matter, all orders entered by the trial court are void ab initio.” The appellate division noted “A trial court’s order on a motion for reconsideration will not be set aside unless shown to be a mistaken exercise of discretion.  Reconsideration should only be granted in those cases in which the court based its decision upon a palpably incorrect or irrational basis or did not consider, or fail to appreciate the significance of probative competent evidence.”  (citations omitted).

The court continued, “A motion for reconsideration cannot be used to expand the record and reargue a motion. A motion for reconsideration is designed to seek review of an order based upon evidence before the court on the initial motion, not to serve as a vehicle to introduce new evidence in order to cure an inadequacy in the motion record.”  The appellate division noted that in limited circumstances a court may, in the interest of justice, consider new evidence on a motion for reconsideration, but only when the evidence was not available prior to the decision by the court on the order that is the subject of the reconsideration motion.

The appellate division agreed with the trial court that Elbaz had completely ignored the trial court’s ruling that Elbaz lacked standing to contest jurisdiction and upheld the order denying the motion for reconsideration.

On appeal Elbaz also argued that frivolous litigation sanctions were not warranted because counsel had a reasonable and good faith belief that the lack of subject matter jurisdiction was a threshold issue that merited his filing a motion for reconsideration.

The appellate division opinion discusses R. 1:4-8(a) briefly, noting that the rule has a punitive purpose designed to deter frivolous litigation and that a trial court’s award of sanctions pursuant to R. 1:4-8 is reviewed under an abuse of discretion standard.  The court noted “The imposition of sanctions under the Rule is not restricted to a situation where an attorney files a frivolous complaint.  We have recognized in the context of the frivolous claims statute N.J.S.A. 2A:15-59.1, that ‘continued prosecution of the claim or defense may, based on facts coming to be known to the party after the filing of the initial pleading, be sanctionable as baseless or frivolous even if the initial assertion of the claim or defense was not.’” Iannone v. McHale, 245 N.J. Super. 17, 31 (App. Div. 1990).  In this case, even if Elbaz’s initial challenge to jurisdiction was not frivolous, the motion for reconsideration was frivolous because of the intervening ruling that Elbaz lacked standing, a ruling that Elbaz’s counsel ignored in the reconsideration motion.

The appellate division affirmed the order denying reconsideration and the order granting frivolous litigation sanctions.