Will Beneficiary Bound by Settlement Agreement
Matter of Estate of Clarkin, No. A-1898-21, 2023 WL 3993261 (N.J. Super. App. Div. June 13, 2023)
The decedent, Thomas Clarkin, executed his last will, married Geraldine, and post-marriage, executed a power of attorney in Geraldine’s favor. Matter of Estate of Clarkin at *1.
Following Thomas’ marriage to Geraldine and a year prior to Thomas’ death, Geraldine utilized her power of attorney status to transfer Thomas’ business shares – and the bulk of what became his estate – into a living trust which would ultimately benefit Geraldine. Id.
After Thomas died the following year, Thomas’ son, Joseph, filed suit to probate his father’s will, under which Joseph inherited and to invalidate the living trust to the extent it attempted to transfer assets to Geraldine. Id.
Following litigation and negotiations, the parties, each represented by counsel, executed a 2012 settlement agreement which was approved by court order but not placed on the record. Id. Under the settlement agreement, the parties agreed to file a consent order to admit the will to probate subject to express conditions, including selling Thomas’ businesses and dividing the proceeds through Joseph making $2,000.00 monthly payments to Geraldine. Id. at *2.
The settlement agreement also contained two pertinent provisions regarding the entitlement of attorneys’ fees. Id. The first provided that if Joseph was more than forty-five (45) days late in making a monthly payment, Geraldine could file a suit to enforce the agreement and seek her attorneys’ fees and costs incurred. Id. This provision also permitted Geraldine to assess Joseph a $50 per day late fee. Id. The second fee-related provision clarified that for fees and costs incurred by Geraldine but unrelated to enforcing the settlement agreement (e.g., contesting Thomas’ will), Geraldine could not seek reimbursement from Joseph for those fees and costs. Id. at *3.
Beginning in 2014, Joseph defaulted in his monthly payments, as he began paying Geraldine only half the required amount allegedly due to her, and allegedly because of the “adverse impact on the decedent’s businesses caused by Superstorm Sandy.” Id. The parties unsuccessfully arbitrated their dispute and in 2018, Geraldine filed suit seeking, inter alia, enforcement of the settlement agreement, including nearly $85,000.00 in attorneys’ fees. Id. Joseph asserted equitable affirmative defenses, including waiver, unclean hands, laches, and legal and equitable estoppel. Id.
In April of 2021, the trial judge converted Geraldine’s complaint and order to show cause into a motion for summary judgment – over Joseph’s protest– and several months later, entered partial summary judgment, finding Joseph breached the agreement terms but that it would determine damages following a plenary hearing. Id. at *4. The trial court reasoned that Joseph essentially argued that Geraldine did not contest the reduced payments and thus waived her right to receive the full settlement payments or alternatively, unduly delayed in bringing suit and thus was guilty of laches but upon review of the record, the court found that she filed well within the applicable statute of limitations and through counsel, attempted to resolve her claims in good faith before filing suit. Id. at *4-5. Therefore, Joseph was in violation of the agreement and not successful in his defenses.
Following the plenary hearing, the trial court awarded Geraldine a total of $236,972.09, including $90,000.00 in payments, $135,100.00 in late fees, $11,636.00 in attorneys’ fees, and $236.09 in costs. Id. at *4. The trial court awarded late fees per the agreement terms, and while declining most of the sought attorneys’ fees and costs as unrelated to enforcing the payments, the trial court permitted Geraldine to submit trial-related fees and costs resulting in another award of almost $20,000 in additional fees and costs related to trial. Id. at *5-7. Despite Joseph having the opportunity to respond to the revised fee certification, he did not do so and thus owed more and lost his right to appeal this order. Id.; see also id. at n. 14.
Joseph appealed the trial court’s other orders, arguing that (1) the trial judge abused its discretion in granting summary judgment and ordering a plenary hearing to address entitlement to and the amount of damages, and (2) the trial judge erred in concluding a hearing was required to measure damages. Id. at *7.
The Appellate Division affirmed, finding no abuse of discretion nor error in the trial court’s decisions. The appeals court rested mainly upon the undisputed fact that Joseph breached his settlement agreement with Geraldine. Id. at *8. In reasoning that applicable factors for a laches defense include “length of delay; reasons for the delay; and ‘changing conditions of either or both parties during the delay,’” the Appellate Division found that Joseph only provided generalized statements and failed to meet the high burden for laches and that further, Geraldine had another 1.5 years to file suit and her conduct did not warrant the rare remedy of shortening the applicable statute of limitations. Id. at *8; N.J.S.A. 2A:14-1(a) (setting a six-year period to recover from a contractual claim). The Appellate Division further reasoned that the trial judge holding a plenary hearing regarding damages was appropriate, because damages were not part of the parties’ settlement discussions and the settlement was not placed on-the-record. Id. at *8.