The Ehrlich saga continues

In re the Estate of Richard Ehrlich, Deceased, No. A-4033-19 (N.J. Super. Ct. App. Div.  March 11, 2022)

This appeal is the latest development in the ongoing litigation of the estate of Richard Ehrlich – the seminal (and nationally recognized) case involving a writing intended as a will.

The underlying litigation began with the death of Richard Ehrlich, plaintiff’s uncle on September 21, 2009.  Ehrlich, an attorney, left an unsigned will, which was admitted to probate pursuant to the Appellate Division case – Estate of Ehrlich, 427 N.J. Super. 64 (App. Div. 2012).  The will favored plaintiff over his brother and sister.  Following the Appellate Division’s decision, plaintiff and the siblings reached a settlement.

In December 2009, the trial court appointed a temporary administrator of the estate.  On July 15, 2011, the temporary administrator’s first intermediate account was approved.  At the time no exceptions were filed.  A few months later, plaintiff subsequently filed a motion to remove the administrator and to vacate the order approving the accounting.  The application was denied pursuant to N.J.S.A. § 3B:17-8, which provides that a judgment allowing an account operates as res judicata.

Because of a conflict, the matter was transferred to a different county.  In July 2014, the trial court found, among other things, that none of plaintiff’s “exceptions” satisfied the requirements of Rule 4:87-8.  Plaintiff filed a motion for reconsideration that was denied, and on January 20, 2015, the trial court entered an order denying plaintiff’s “exceptions” and including directions for the administrator as to the sale of real estate.

In 2019, plaintiff filed a complaint in federal court alleging the administrator had breached his fiduciary duty as administrator and violated the rules for professional conduct as an attorney.  During the federal court proceedings, the administrator was deposed.  The information disclosed in the deposition included that he was advised to list the property for a lower price and that if he had done so, the property would have been sold sooner for a more favorable sum.  Further, the administrator produced documents from 2015 regarding tax sale certificates that were never redeemed.  Plaintiff claimed that this was newly-discovered evidence, and thus filed a motion to vacate previous court orders.  The District Court found the evidence was not new, as the state court had previously addressed the issues.

This led to a “new” complaint filed by plaintiff in the state trial court in February 2020, seeking to vacate all prior orders regarding the accountings.  He based the complaint on the alleged “newly” discovered evidence regarding the sale of the property and the tax certificates.  The administrator responded by filing a motion to dismiss the complaint, and the trial court granted the motion, stating that the specific allegations in the complaint were previously addressed and were barred by res judicata.  Plaintiff appealed.

The Appellate Division first addressed plaintiff’s challenge to the trial court’s resolution of the motion to vacate the prior orders approving the accountings.  The Appellate Division found that even if those claims had been brought in timely manner, i.e., within one year of the judgment, they would nonetheless fail because plaintiff had the obligation to perform due diligence and did not fulfill that responsibility.  For instance, plaintiff could have done precisely the same search prior to the final accounting as to the real estate and the tax certificates and it was plaintiff’s burden to establish that the administrator had erred.

With regard to plaintiff ’s claims related to subsection (f) of Rule 4:50-1, which permits relief from orders or judgments for reasons not provided in the Rule’s other subsections, the Appellate Division found that the trial court did not abuse its discretion by not allowing plaintiff relief under that subsection of that Rule.  Plaintiff had asserted that the administrator’s conduct in withholding and suppressing the discovery of the tax sale liens was the type of misconduct that the Rule is designed to remedy.  However, the record did not support that claim, since plaintiff did not object to the final accounting.

Next, the Appellate Division addressed plaintiff’s argument that there was an exception to N.J.S.A. § 3B:17-8.  Plaintiff argued that an exception to the statute arises because of this newly-discovered evidence.  The Appellate Division disagreed, finding that the plaintiff ’s claims were barred by res judicata. More specifically, his claims occurred from the same set of facts, between the same parties, and out of the same transaction or occurrence – i.e., the accounting, which had previously and repeatedly denied in state and federal court.

With regard to the motion to dismiss, plaintiff argued on appeal that it should not have been granted without discovery, testimony, or a hearing.  The Appellate Division affirmed the trial court’s decision, finding that there was no newly-discovered evidence and plaintiff’s relief was barred by legal preclusion doctrines.

Finally, the Appellate Division addressed an argument from plaintiff regarding the fact that he could not be found to have waived exceptions to the final accounting because it was his attorney’s actions that prevented him from doing so.  The trial court did not rule on this argument, because it was not raised at the trial level.  However, the Appellate Division found that plaintiff had no legal right to distinguish between exceptions he raised through his attorney and exceptions he now claims he would have raised based on alleged newly-discovered evidence.  “Plaintiff employed counsel, counsel raised exceptions on behalf of his client, and that ends the matter.”   Id. at *19.