IN RE: THE ESTATE OF JANE P. SOGLIUZZO.
This estate dispute pits a brother against a sister over the spoils of their mother's estate. Jane E. Adkins appeals from portions of the Chancery Division's February 23, 2012 final judgment, and John B. Sogliuzzo cross-appeals from the same final judgment, as well as from an August 6, 2009 interlocutory order striking Sogliuzzo's answer and suppressing his defenses. We affirm in part, and reverse and remand in part.
We glean the facts from the seven-day testimonial hearing —— referred to by the Chancery Division judge and the parties as a proof hearing —— conducted on intermittent days between February 2011 and January 2012.
Decedent Jane P. Sogliuzzo was married to Walter Sogliuzzo until his death in January 1999. They owned and resided in a three-story brownstone building in Hoboken. The couple had three children: Adkins, who lived in Virginia; Sogliuzzo, who lived in Short Hills; and Gerald Sogliuzzo, who predeceased his mother. Decedent died on February 29, 2008, at age ninety-three.
Decedent's husband handled the couple's finances until 1998, when an infirmity limited his abilities. Because Sogliuzzo lived nearby, he helped with his parents' finances, and after his father's death, he handled all of decedent's finances. Sogliuzzo regularly met with his mother at her home, reviewed her bills, wrote checks, and did her banking. According to Sogliuzzo's wife, Gaye Torrance, Sogliuzzo also took his mother shopping and helped with her meals. Decedent called upon her son (and Torrance) “all the time for everything, ․ 24/7.”
In the spring of 2000, decedent fractured her shoulder. The debilitating effects of this injury remained with decedent for the rest of her life. Caretakers were eventually hired to assist decedent with household chores, and later with her personal needs. Because of decedent's limited range of motion in her right arm, Sogliuzzo regularly “assist[ed] her in executing checks.” Adkins did the same, but only about twenty times.
By 2005, as she entered her tenth decade, decedent's health steadily declined. She rarely ventured anywhere alone. She suffered from chronic obstructive pulmonary disease (COPD) and was easily winded when walking. She had cataracts and glaucoma, and was unable to read anything but large print. According to Adkins, “[decedent] would mistake the dog for a coat on the sofa.” Decedent placed her chair two or three feet away from the television so that she could see it. At the end of September 2007, decedent was hospitalized for complications associated with COPD. Adkins was told that decedent often could not take full breaths and therefore could not get enough oxygen to the brain, thus occasionally leaving her confused.
Adkins maintained that throughout her mother's life, it was decedent's “mission or position ․ to treat [her children] equally.” Adkins acknowledged that in an early version of decedent's will, the Hoboken home was to be given to Gerald Sogliuzzo because he did not then “have a home of his own.” Later, after Gerald Sogliuzzo obtained a house, and after Walter's death, decedent changed her will to direct that Gerald Sogliuzzo would receive forty percent of the proceeds from the eventual sale of the Hoboken property, with thirty percent each going to Adkins and Sogliuzzo. The remainder of the estate was to be divided equally among the children.
At some undisclosed time after her husband's death, decedent opened an individual investment account with Deutsche Bank Alex. Brown (Alex.Brown). Decedent was referred to Alex. Brown by her daughter-in-law. Hendry Thompson Rodman, an Alex. Brown certified financial planner —— who did not testify at the testimonial hearing —— explained in a deposition that he did not recall how the first contact with decedent was initiated, but he met with her at his office to open the account in the presence of either Sogliuzzo or Torrance, or both.
On October 17, 2007, Rodman met decedent for the second time, at a restaurant in Hoboken. Rodman did not recall exactly how the meeting was arranged, but Sogliuzzo picked him up at the ferry and drove him to the restaurant. Decedent told Rodman that she wanted to convert her existing individual investment account to a transfer on death (TOD) account. Rodman filled out the paperwork in the restaurant, and decedent signed it there, listing Sogliuzzo as the beneficiary, with Sogliuzzo's children as the contingent beneficiaries. Rodman also handwrote a note that decedent signed giving Rodman authorization to make the change. Rodman stated that he never before transacted such business in a restaurant, and he usually did the paperwork for all of his other accounts in his office.
Adkins was unaware of this transaction until the day after decedent's funeral, approximately four months later. Sogliuzzo mentioned his good fortune in response to Adkins's inquiry about decedent's “liquid assets.” Later that day, when Adkins telephoned Sogliuzzo to ask more about the TOD account, he refused to talk about it saying, according to Adkins, “We are not going to talk about this TOD or anything more. If you have any problems, sue me for undue influence.”
Adkins maintained that in October 2007, decedent would not have been able to read the small font of the TOD agreement. Adkins conceded, however, that the signature on the TOD agreement was her mother's. The TOD account's gross value on decedent's date of death was $273,685. The net amount left to Sogliuzzo was much less because many of decedent's funeral and other end-of-life expenses were paid from the TOD account.
On March 13, 2008, pursuant to decedent's will, Sogliuzzo was appointed executor of decedent's estate. On August 22, 2008, the Chancery Division entered an order permitting Sogliuzzo to resign as executor, and appointed Adkins as the replacement executor.
Adkins enlisted her husband, Charles Adkins, to compile the paperwork concerning decedent's finances. His company, Adkins & Co., Inc. (Adkins & Co.), performed construction industry consulting and provided litigation support for companies in disputes over costs. Charles Adkins was retained “because of his expertise in the area of analysis,” but Adkins admitted her husband was an engineer, not an accountant. Initially, in March 2008, Adkins signed a contract with Adkins & Co. in her own name, but after she was appointed executor, she signed another contract on behalf of the estate. Adkins never applied to the Chancery Division for permission to retain Adkins & Co.
After alleged irregularities were discovered, Adkins hired Chris Campos, a forensic accountant, “to review documents to determine which ones were relevant to draw a conclusion with respect to potential misappropriation or unaccounted-for funds in connection with the estate of [decedent].” Campos expressed several opinions during the testimonial hearing, including that from 1999 to 2008, Sogliuzzo facilitated payments from decedent's assets to Sogliuzzo, his law firm, and his children's private school, in a net amount of $147,952.
Campos also detected unaccounted-for (and suspicious) withdrawals of $61,150 from decedent's Hudson United Bank savings accounts. He noted an additional unexplained withdrawal of $20,000 from one of the accounts at a time when Walter Sogliuzzo was still alive.
Decedent also maintained a Hudson United Bank checking account from which Campos believed there was an unexplained reduction of $15,712 that occurred sometime in the fourteen months between September 18, 1998, and November 21, 1999. Campos was unable to trace the money. Furthermore, Campos believed that there were unexplained checks written to cash, and insurance reimbursement checks from decedent's insurance company for prescription drugs were not deposited into decedent's account, which together netted $28,726.
On September 23, 2008, Adkins —— individually and as decedent's executor —— filed a verified complaint in the Chancery Division alleging that Sogliuzzo had exercised undue influence over decedent, causing decedent to convert an ordinary investment account to a TOD account in Sogliuzzo's favor.1 The complaint further alleged that “checks and other transfers made from 1999 to 2008 to Sogliuzzo or for his immediate family's benefit during [d]ecedent's lifetime were not gifts,” and are “the result of undue influence and are the property of the Estate.”
In January 2009, Sogliuzzo filed an answer denying the allegations of undue influence and conversion. On January 15, 2009, in response to Adkins's attorney's demand for answers to interrogatories and a response to a request to produce documents, Sogliuzzo's attorney wrote the following:
In light of the fact that your clients have filed various sworn statements with the Court alleging that my client engaged in conduct which could be construed as violations of criminal statutes, a situation has been created whereby I have a reasonable belief, [and] have so advised my client, that any responses provided could be used against him in the context of criminal proceedings.
Accordingly, pursuant to my advice, my client hereby invokes his Fifth Amendment Privilege against self-incrimination and, accordingly, will provide no other response to your discovery requests. To provide any other response may constitute a waiver of said privilege, so no other responses will be forthcoming.
Additionally, at his deposition on June 23, 2009, Sogliuzzo stated, “upon the advice of counsel I'm directed and instructed to invoke my Fifth Amendment Privilege against self-incrimination and refuse to answer ․ question[s].”
As a result of Sogliuzzo's refusal to provide discovery, Adkins moved to strike Sogliuzzo's answer and suppress his defenses. After distinguishing the circumstances of Mahne v. Mahne, 66 N.J. 53 (1974), from the present case, the Chancery Division granted Adkins's motion and signed an order to that effect on August 6, 2009. The court expressly noted that because it viewed Sogliuzzo as shouldering a burden of proof on the undue influence issue, it was equitable to limit Sogliuzzo's participation at a trial. Accordingly, the court treated the matter as if it were proceeding to a proof hearing.
As already noted, the testimonial hearing commenced seventeen months later, and then spanned more than a year. Sogliuzzo was permitted to (1) make evidentiary objections; (2) cross-examine witnesses; (3) offer a very limited number of documents into evidence, but only for credibility assessment purposes; and (4) submit proposed findings of fact and conclusions of law. He was not permitted to present his own witnesses or introduce affirmative documentary evidence.
After reviewing the record presented at the testimonial hearing, the court found prima facie evidence that Sogliuzzo had a confidential relationship with his mother and her inter vivos transfers to him were suspicious. Because this shifted the burden of proof to Sogliuzzo to demonstrate the absence of undue influence by clear and convincing evidence, “the default that was entered,” rendered Sogliuzzo unable to satisfy that high standard. On February 23, 2012, finding several, but not all, of Campos's opinions helpful, the court entered a final judgment against Sogliuzzo for $520,414, including prejudgment interest, and ordered the estate to pay attorneys' fees and expenses of $191,815. The appeal and cross-appeal followed.
On her appeal, Adkins presents the following points for our consideration:
POINT I: THE TRIAL COURT ACTED CONTRARY TO LAW WHEN IT WEIGHED EVIDENCE IN PROOF HEARING REJECTING TWO CLAIMS PRESENTED BY THE EXECUTRIX.
A. STANDARD OF REVIEW.
B. THE TRIAL COURT ENGAGED IN INAPPROPRIATE WEIGHING OF EVIDENCE IN CONNECTION WITH TWO CLAIMS PRESENTED BY THE EXECUTRIX.
1. THE TRIAL COURT IMPROVIDENTLY REJECTED THE PROOFS OF THE EXECUTRIX REGARDING “CASH IN EXCESS OF ORDINARY EXPENSES.”
2. THE TRIAL JUDGE IN DISALLOWING THE CLAIM FOR UNEXPLAINED REDUCTION IN JANE SOGLIUZZO'S CHECKING ACCOUNT FAILED TO GIVE ALL LEGITIMATE INFERENCES TO EXECUTRIX.
POINT II: THE TRIAL COURT MISTAKENLY ABUSED ITS DISCRETION IN FAILING TO ALLOW ANY PAYMENT TO ADKINS & CO. AS IT WAS INSTRUMENTAL IN OBTAINING THE UNDERLYING RECORDS AND IDENTIFYING THE BROAD SCOPE OF THE MISAPPROPRIATIONS BY JOHN SOGLIUZZO.
A. STANDARD OF REVIEW
B. BACKGROUND TO THE RETENTION AND ACTIVITIES OF ADKINS & CO.
C. THE TRIAL COURT'S BASES FOR DENYING THE EXPENSE OF ADKINS & CO.
POINT III: THE ATTORNEY'S FEES OF EXECUTRIX SHOULD HAVE BEEN ASSESSED AGAINST JOHN SOGLIUZZO UNDER THE NILES EXCEPTION.
A. THE STANDARD OF REVIEW ON APPEAL.
B. THE TRIAL COURT FAILED TO ADEQUATELY EXPLAIN THE BASIS FOR ITS RULING.
C. THE BREADTH AND DEPTH OF THE MISAPPROPRIATIONS ALLOW FOR THE AWARD OF COUNSEL FEES AGAINST JOHN SOGLIUZZO UNDER NILES .
Sogliuzzo presents the following issues for our consideration of his cross-appeal:
POINT I: PLAINTIFF'S APPEAL MUST BE DISMISSED AS SHE IS ENFORCING AND COLLECTING ON THE JUDGMENT.
POINT II: THE TRIAL COURT ERRED BY STRIKING THE ANSWER AND ENTERING DEFAULT JUDGMENT AGAINST THE DEFENDANT FOR INVOKING HIS FIFTH AMENDMENT PRIVILEGE AGAINST SELF INCRIMINATION.
POINT III: THE TRIAL COURT ERRED BY FINDING THAT DEFENDANT EXERTED UNDUE INFLUENCE OVER HIS MOTHER.
POINT IV: PLAINTIFF WAS NOT ENTITLED TO A JUDGMENT UNDER THE EQUITABLE DOCTRINE OF UNCLEAN HANDS.
POINT V: THE TRIAL COURT WAS CORRECT IN REJECTING PLAINTIFF'S CLAIMS REGARDING “CASH IN EXCESS OF ORDINARY EXPENSES” AND REDUCTION OF DECEDENT'S CHECKING ACCOUNT.
POINT VI: TRIAL COURT WAS CORRECT AND THERE WAS NO ABUSE OF DISCRETION IN DENYING ANY PAYMENTS TO PLAINTIFF'S HUSBAND AND HIS COMPANY.
POINT VII: IF THE AWARD OF ATTORNEY FEES WAS APPROPRIATE THEY WERE CORRECTLY AWARDED AGAINST THE ESTATE AND NOT AGAINST THE DEFENDANT AS “THE NILES ” EXCEPTION IS NOT APPLICABLE.
POINT VIII: TRIAL COURT ERRED IN THE CALCULATION OF THE FINAL JUDGMENT AGAINST THE DEFENDANT.
Except for parts of (1) Adkins's Point III and (2) Sogliuzzo's Point VIII, we conclude that none of the parties' arguments are persuasive.
We first address Sogliuzzo's contention that Adkins's appeal should be jettisoned because she has been enforcing and collecting upon the very judgment that her appeal attacks. “It is a well recognized rule that a litigant who voluntarily accepts the benefits of a judgment is estopped from attacking it on appeal.” Tassie v. Tassie, 140 N.J.Super. 517, 524 (App.Div.1976).
The rule that a litigant cannot seek appellate review of a judgment under which [she] has accepted a benefit is but a corollary to the established principle that any act upon the part of a litigant by which [she] expressly or impliedly recognizes the validity of a judgment operates as a waiver or surrender of [her] right to appeal therefrom.
[Id. at 525.]
In Simon v. Simon, 148 N.J.Super. 40, 42 (App.Div.), certif. denied, 75 N.J. 12 (1977), we said that the Tassie principle
governs only where the appeal constitutes a repudiation of the judgment under which the benefits were received or is materially inconsistent therewith. Generally, appellate review is barred where it may lead to a result showing that appellant is not entitled to what was received under the judgment appealed from.
Moreover, in Adolph Gottscho, Inc. v. American Marking Corp., 26 N.J. 229, 242 (1958), our Supreme Court held that “[t]he plaintiff's acceptance of the sum found by the trial court to be due, and its delivery of the warrant of satisfaction while it at all times continued to assert that an additional sum was due, was in nowise inconsistent and furnished no real basis for an estoppel.” The Court recognized the “right of a party to accept a sum to which he is in any event entitled and still pursue his request for a legal ruling on appeal which would increase that sum.” Ibid.
Adkins concedes that she has been attempting to collect the judgment. However, she argues that her appeal only seeks to increase the award; she does not reject the judgment. We agree. The acceptance-of-benefits doctrine will generally bar an appeal only where it is inequitable for the litigant both to pursue the appeal and to accept the benefits of the judgment attacked. Here, the appeal asserts that the Chancery Division erred in rejecting some of her monetary claims and that the attorneys' fees awarded should have been assessed against her brother instead of the estate. If Adkins were successful on these claims, the judgment to the estate would only increase. Additionally, she does not seek to overturn any portion of the judgment concerning the sums she is collecting. The appeal is neither inappropriate nor improvident.
We next turn to Sogliuzzo's argument that by striking his answer and suppressing his defenses, the Chancery Division unduly punished him for invoking the Fifth Amendment's privilege against self-incrimination. We do not agree that the court erred.
In considering the impact of Sogliuzzo's refusal to provide discovery, we recognize that the invocation of the privilege against self-incrimination during a civil proceeding often causes considerable difficulties. However, in Mahne, supra, 66 N.J. at 58, the Court observed that “[i]n civil proceedings the courts have, in the interests of truth and justice, displayed understandable readiness to impose noncriminal sanctions for refusal to submit to pretrial discovery on the basis of the privilege[.]” See also Woodward–Clyde Consultants v. Chem. & Pollution Scis., Inc., 105 N.J. 464, 475 (1987); Costanza v. Costanza, 66 N.J. 63, 67–68 (1974); Innes v. Carrascosa, 391 N.J.Super. 453, 499 (App.Div.), certif. denied, 192 N.J. 73 (2007).
The Court established that a plaintiff who invokes the right against self-incrimination to avoid pretrial discovery may face dismissal, but that a different approach is often required when a defendant invokes the same right because, unlike a plaintiff, the defendant “is in court involuntarily.” Mahne, supra, 66 N.J. at 59. In the latter circumstance, “courts have generally declined to strike [defendant's] answer and thus permit a default judgment ․ although they have, in seeking a proper balance, been willing to impose lesser sanctions.” Ibid.
In Whippany Paper Board Co. v. Alfano, 176 N.J.Super. 363, 375–76 (App.Div.1980), we further explicated the available sanctions when a defendant justifiably invokes the right against self-incrimination. In that case, the judge ordered civil defendants to testify and turn over documents, subject to a protective order, despite the defendants' assertion of the privilege against self-incrimination. Id. at 369–70. We concluded that the trial court's order was improper for several reasons, none of which are pertinent here. Id. at 370–72. However, we further noted even if the plaintiff did not want a stay pending the outcome of the defendants' criminal charges, it “would almost certainly be entitled to other relief if defendants persist in [their] claim of privilege.” Id. at 374.
In citing Mahne, we found that an appropriate remedy for a plaintiff stymied by a privilege-invoking defendant may be to preclude the party claiming the privilege from testifying at trial. Id. at 374–75. In addition, also citing Mahne, we confirmed that if a plaintiff convinced the trial court that he or she was unable “to proceed without discovery from defendants,” the “judge may well be justified in striking the answer of a defendant claiming the privilege against self-incrimination and entering judgment against him without proof of the claim or perhaps on the basis of less persuasive evidence than might otherwise be required.” Id. at 375. We said that Mahne “should [be] read” as
permitting a plaintiff such relief [ (dismissal of the answer) ] in some cases when a defendant relies on the privilege against self-incrimination to avoid discovery. If those decisions always precluded entry of a default judgment, an anomalous situation could arise. A defendant declining to answer questions without a privilege and persisting in his position notwithstanding a court order to answer could have a default judgment entered against him. R. 4:23–2(b)(3). In such circumstances defendant's conduct resulting in the judgment would likely be less egregious than that of a defendant who could justifiably plead the privilege against self-incrimination to avoid discovery. But if the defendant who justifiably pleads the privilege against self-incrimination as a basis for refusing to answer may not be defaulted, the result would be that in some cases the greater the wrong done the plaintiff the more difficult it would be for him to recover. For example, the victim of a simple automobile accident would have discovery procedures not available to a person seeking damages for a violent assault that could result in criminal charges. The absence of discovery could mean that the latter plaintiff would not be able to establish his claim. It is difficult to justify such a result.
We further noted that in Mahne, a judgment for the defendant would have only avoided a liability; it would not permit a defendant to retain improperly acquired property. Id. at 376. But in other cases, a defendant might be able to “retain improperly acquired property.” Ibid. Because it is “against public policy for a wrongdoer to profit by his illegal conduct ․ it may well be that if [a] defendant[ ] continue[s] to avoid discovery, a default judgment may appropriately be entered” against the party to avoid that result. Ibid. (internal citation omitted).
In the present case, Adkins asserted a claim of undue influence against Sogliuzzo. A grievance based upon undue influence may be sustained by showing that the beneficiary had a confidential relationship with the party who established the account. See Estate of DeFrank, _ N.J.Super. _, _ (2013) (slip op. at 13). Accordingly,
if the challenger can prove by a preponderance of the evidence that the survivor had a confidential relationship with the donor who established the account, there is a presumption of undue influence which the surviving donee must rebut by clear and convincing evidence.
[Estate of Ostlund v. Ostlund, 391 N.J.Super. 390, 401 (App.Div.2007).]
Although perhaps difficult to define, the concept “encompasses all relationships ‘whether legal, natural or conventional in their origin, in which confidence is naturally inspired, or, in fact, reasonably exists.’ ” Pascale v. Pascale, 113 N.J. 20, 34 (1988) (internal citation omitted). “And while family ties alone may not qualify, parent-child relationships have been found to be among the most typical of confidential relationships.” DeFrank, supra, slip op. at 13 (citing Ostlund, supra, 391 N.J.Super. at 401).
In the context of inter vivos gifts, “a presumption of undue influence arises when the contestant proves that the donee dominated the will of the donor or when a confidential relationship exists between the donor and done.” Pascale, supra, 113 N.J. at 30 (internal citations omitted). “Where parties enjoy a relationship in which confidence is naturally inspired or reasonably exists, the person who has gained an advantage due to that confidence has the burden of proving that no undue influence was used to gain that advantage,” In re Estate of Penna, 322 N.J.Super. 417, 423 (App.Div.1999), and “the donee has the burden of showing by clear and convincing evidence not only that ‘no deception was practiced therein, no undue influence used, and that all was fair, open and voluntary, but that it was well understood.’ ” In re Estate of Mosery, 349 N.J.Super. 515, 522–23 (App.Div.2002) (citing In re Dodge, 50 N.J. 192, 227 (1967)).
Thus, assuming a confidential relationship and a subsequent burden shifting to Sogliuzzo, the present facts are distinguishable from those in Mahne, in which the defendant had no burden. Mahne specifically acknowledged that the striking of an answer was too harsh in cases in which the defendant asserted “no affirmative defenses or matters as to which he has any burden of proof.” Mahne, supra, 66 N.J. at 59. But here, Sogliuzzo had a burden to show no deception was practiced and that all of the transactions were fair, open and voluntary, and that they were well understood. Further, a judgment for Sogliuzzo as a result of his unwillingness to produce discovery would not only allow him to avoid liability, but also would permit him to retain improperly acquired property at the estate's expense, a result that would be against public policy. Whippany Paper Bd., supra, 176 N.J.Super. at 376.
Although Adkins was in possession of many financial documents, she would have suffered undue prejudice had Sogliuzzo remained mute during the discovery period and yet be permitted to present evidence concerning his burden of proof at trial. Beyond not being able to investigate —— through Sogliuzzo's deposition —— the tangle of family financial records, Adkins would have been subjected to trial by ambush. She could not effectively (1) prepare for cross-examination of Sogliuzzo's and his other witnesses' testimony, (2) anticipate the identities of Sogliuzzo's witnesses, and (3) review in advance any documentary evidence offered by Sogliuzzo. The Fifth Amendment was never intended to reward, rather than protect, those who invoke its protections. In short, there was nothing inequitable or improper about the Chancery Division's imposition of capital punishment upon Sogliuzzo's pleadings.
Sogliuzzo argues that the Chancery Division erred in actually finding that he exerted undue influence over decedent because the court failed to consider certain testimony and the credibility proofs he offered to attack his sister's theory of liability. An additional claim is that Sogliuzzo should have been permitted to counter Adkins's proffer of selected portions of Rodman's deposition testimony with the entirety of Rodman's deposition testimony. Sogliuzzo argues that he was surprised by the truncation because Adkins violated N.J.R.E. 807's exclusion-if-no-notice provision, and he offered the full transcript, presumably pursuant to the doctrine of completeness. N.J.R.E. 106.
Our standard of review of all of these contentions is highly deferential. All that is required is that the facts, as discerned by the judge, be supported by adequate competent evidence in the record. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483–84 (1974). So long as the judge's findings are “supported by adequate, substantial and credible evidence,” they will be affirmed. Id. at 484. Our appellate function is, therefore, limited. We will not “ ‘engage in an independent assessment of the evidence as if [we] were the court of first instance.’ ” N.J. Div. of Youth & Family Servs. v. Z.P.R., 351 N.J.Super. 427, 433 (App.Div.2002) (quoting State v. Locurto, 157 N.J. 463, 471 (1999)). Therefore, “ ‘we do not disturb the factual findings and legal conclusions ․ unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.’ ” Ibid. (quoting Fagliarone v. Twp. of N. Bergen, 78 N.J.Super. 154, 155 (App.Div.1963)).
A related standard guides our scope of review of a judge's rulings concerning the presentation of evidence. “[A] trial court's evidentiary rulings are ‘entitled to deference absent a showing of an abuse of discretion․’ ” State v. Brown, 170 N.J. 138, 147 (2001) (quoting State v. Marrero, 148 N.J. 469, 484 (1997)). The scope of our review of a judge's evidentiary ruling is generally limited to ascertaining whether this discretion was mistakenly exercised, provided the ruling is not inconsistent with applicable law. State v. Burns, 192 N.J. 312, 332 (2007) (citing Brenman v. Demello, 191 N.J. 18, 31 (2007)).
In light of these principles and our independent review of the record, we conclude that these arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11–3(e)(1)(E). All of the Chancery Division judge's factual determinations were well-developed and supported by the record, even if they were well-challenged. We have no basis to disturb them as we cannot agree with Sogliuzzo that the court “ignored” his efforts to erode Adkins's evidence of undue influence. In like vein, we do not detect an abuse of discretion by the court in its evidentiary rulings, particularly its refusal to allow the entire Rodman deposition transcript to become part of the record when Sogliuzzo had already been barred from submitting affirmative proofs. The deposition plainly had nothing to do with the assessment of any witness's credibility.
Sogliuzzo further argues that the doctrine of unclean hands disenfranchises Adkins's entitlement to a judgment. He asserts that the doctrine should bar recovery because as executor, Adkins depleted the estate of over $580,000 by making payments to lawyers and her husband's consulting firm, “without notice to [Sogliuzzo] nor approval from the trial court.”
The essence of [the] doctrine [of unclean hands], which is “discretionary on the part of the court,” Heuer v. Heuer, 152 N.J. 226, 238 ․ (1998), is that “[a] suitor in equity must come into court with clean hands and he must keep them clean after his entry and throughout the proceedings.” A. Hollander & Son, Inc. v. Imperial Fur Blending Corp., 2 N.J. 235, 246 ․ (1949). “In simple parlance, it merely gives expression to the equitable principle that a court should not grant relief to one who is a wrongdoer with respect to the subject matter in suit.” Faustin v. Lewis, 85 N.J. 507, 511 ․ (1981).
[Borough of Princeton v. Bd. of Chosen Freeholders of Mercer Cnty., 169 N.J. 135, 158 (2001).]
Additionally, the doctrine of unclean hands is an affirmative defense. Iliadis v. Wal–Mart Stores, Inc., 191 N.J. 88, 111 (2007).
Because Sogliuzzo's answer was stricken and his defenses suppressed, he is not entitled to assert this claim. Moreover, Sogliuzzo himself arguably came to court with unclean hands and failed to “keep them clean after his entry and throughout the proceedings.” A. Hollander & Son, Inc., supra, 2 N.J. at 246.
Turning now to Adkins's appeal, we address her claim that the judge acted “contrary to law” when he “weighed evidence in a proof hearing” and rejected two of her damage claims, specifically, the claim for “cash in excess of ordinary expenses” and the unexplained reduction in decedent's checking account. We do not discern error in the Chancery Division's conclusions concerning these issues.
Adkins's argument is premised on the crabbed view that because the proceeding in the Chancery Division was the functional equivalent of a proof hearing, she only needed to show prima facie evidence of damages, and the court should not have “weighed” the proofs, but rather determined the bare sufficiency of her presentation. While this is arguably the standard for determining liability, see, e.g., Kolczycki v. City of E. Orange, 317 N.J.Super. 505, 514–15 (App.Div.1999); Heimbach v. Mueller, 229 N.J.Super. 17, 24 (App.Div.1988); Morales v. Santiago, 217 N.J.Super. 496, 505 (App.Div.1987), “there may be a different treatment between proofs concerning claims of liability and damages” in a default case. Jugan v. Pollen, 253 N.J.Super. 123, 131 (App.Div.1992), certif. denied, 138 N.J. 271 (1994).
“It is axiomatic that where, following the entry of a default, a plaintiff seeks unliquidated damages, judgment should not ordinarily be entered without a proof hearing, ․ although the question of what proofs are necessary is inherently within the judge's discretion.” Charkravarti v. Pegasus Consulting Grp., Inc., 393 N.J.Super. 203, 210 (App.Div.2007) (citations omitted). This is in accord with Rule 4:43–2(b), which gives the court authority to “determine the amount of damages” through a proof hearing “as it deems appropriate.” Indeed, we stated that after a default, a plaintiff is entitled to “all of the damages” that can be “prove[d] by competent, relevant evidence.” Heimbach, supra, 229 N.J.Super. at 28. Thus, Adkins's contention that damages need only be shown by “bare sufficiency” is not the law in all circumstances.
Adkins also contends that the judge erred in entertaining Sogliuzzo's version of evidence and says “accepting a theory of the defaulting party over the plaintiff goes beyond the permissible limits in a proof hearing.” This too is incorrect. “Even though a defendant who has defaulted has relinquished the right to present affirmative proofs in the matter, the right to challenge a plaintiff's showings in a proof hearing by way of cross-examination and argument should not ordinarily be precluded.” Chakravarti, supra, 393 N.J.Super. at 210–11. Thus, the argument that the judge did not have the authority to agree with, for example, Sogliuzzo's view of Campos's opinions is unconvincing.
The judge had “problems with” Campos's testimony regarding cash in excess of expenses. The judge also believed that Campos acted “selectively” and “unfairly” to Sogliuzzo, failed to consider legitimate expenses in his calculation, and rightly exercised principled discretion in not blindly accepting the expert opinion just because it was uttered in court as part of Adkins's presentation in a proof-like hearing.
As we have already noted, the judge had the discretion to determine what was necessary to prove damages. Charkravarti, supra, 393 N.J.Super. at 210. As there was sufficient evidence in the record to support what the judge found, as well as what he did not find, we have no occasion to intervene. Cesare v. Cesare, 154 N.J. 394, 411–12 (1998) (“The general rule is that [factual] findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence.”). We do not disturb the factual findings of the judge unless we are “convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.” Id. at 412. That circumstance does not exist in this case.
Adkins next contends that the Chancery Division abused its discretion in refusing to award payment to Adkins & Co., the consulting firm in which her husband is a principal, for work performed in furtherance of the estate's case, and in allocating the award of attorney's fees to the estate, not to Sogliuzzo. We conclude that the former contention is meritless, R. 2:11–3(e)(1)(E), but the latter, because the Chancery Division did not explain its rationale for not reallocating counsel fees, requires a remand. See R. 1:7–4(a).
The judge refused to award any fees for Adkins & Co.'s work, stating that he was “appalled” by Adkins self-dealing by hiring her husband's company without first receiving approval from the court and “on the day that she was appointed as the fiduciary in this matter [writing] checks in excess of $150,000 to [Adkins & Co.].” Beyond that, the judge believed that the work provided by Adkins & Co. should have been performed by accountants, paralegals, and lawyers, not a “contracting solutions” firm.
The decision as to whether to award expert fees is within the court's discretion. “While the ‘abuse of discretion standard defies precise definition,’ we may find an abuse of discretion when a decision ‘rest[s] on an impermissible basis' or was ‘based upon a consideration of irrelevant or inappropriate factors.’ ” State v. Steele, 430 N.J.Super. 24, 335 (App.Div.) (quoting Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002) (citations and quotations omitted)), leave to appeal granted, 214 N.J. 233 (2013). None of those conditions exist here.
The judge did not believe the charges of Adkins & Co. were necessary and appropriate under the circumstances, especially considering the appearance of self-dealing. The judge performed his duty in reviewing the requested fees and provided sound reasons for denying them. Based upon the present record, there is not a hint of a mistaken exercise of discretion.
The reallocation of counsel fees also is committed to the sound discretion of the judge. “Although New Jersey generally disfavors the shifting of attorneys' fees, a prevailing party can recover those fees if they are expressly provided for by statute, court rule, or contract.” Packard–Bamberger & Co. v. Collier, 167 N.J. 427, 440 (2001) (citations omitted). Rule 4:42–9 “reposes in the trial court the discretion as to when and under what circumstances to award an allowance.” Pressler & Verniero, Current N.J. Court Rules, comment 2.6 on R. 4:42–9 (2014).
Our review of the judge's counsel fee determination is hampered by the scant rationale provided. The judge stated only the following in refusing to charge Sogliuzzo for reasonable counsel fees:
The fees and expenses in this matter are going to be paid by the estate, not by Mr. Sogliuzzo. I understand that the work that was done was work that was ․ in furtherance of the litigation against Mr. Sogliuzzo, but the fees and expenses in this matter are to be paid by the estate, not solely by Mr. Sogliuzzo.
This is insufficient under Rule 1:7–4(a). A trial judge “shall, by an opinion or memorandum decision, either written or oral, find the facts and state [his or her] conclusions of law thereon in all actions tried without a jury․” R. 1:7–4(a). “The rule requires specific findings of fact and conclusions of law․” Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 1:7–4 (2014). The Supreme Court has expounded on this essential obligation:
Failure to perform that duty constitutes a disservice to the litigants, the attorneys and the appellate court. Naked conclusions do not satisfy the purpose of [Rule ] 1:7–4. Rather, the trial court must state clearly its factual findings and correlate them with the relevant legal conclusions.
[Curtis v. Finneran, 83 N.J. 563, 569–70 (1980) (internal citation and quotation marks omitted).]
Accordingly, we remand and direct the Chancery Division to reconsider, and make the requisite findings of fact and conclusions of law with respect to who is responsible to pay for the approved counsel fee amounts.2
We lastly address the claim that the prejudgment interest calculation was wrong. The judge determined that the amount of prejudgment interest mirrored Campos's arithmetic, which was calculated starting from the various years of defalcation. Specifically, the judge stated the following:
[T]here is an issue of prejudgment interest [pursuant to Rule ] 4:42–11․ This is a tort action, this is not a contract action. Plaintiff is entitled to prejudgment interest in this matter, but it is going to be at the [ ] Rule rate, and I just direct counsel for the plaintiff to look at that [ ] Rule because the interest rates change from year to year and I will award prejudgment interest, at the [ ] Rule rate.
Sogliuzzo argues that, because he committed a tort, see Niles, supra, 176 N.J. at 296 (“Undue influence is a pernicious tort that has been referred to as a “ ‘species of fraud.’ ”) (quoting In re Landsman, 319 N.J.Super. 252, 276 (App.Div.), certif. denied, 161 N.J. 335 (1999)), prejudgment interest should have been calculated from the date the litigation commenced, R. 4:42–11(b), rather than from 1999 as determined by Campos. Contrariwise, Adkins claims that prejudgment interest should have commenced on the “date of defalcation.” In re Estate of Lash, 169 N.J. 20, 34 (2001)).
Because the judge gave no explanation with respect to why the Lash doctrine prevailed over the plain language of Rule 4:42–11(b), we are constrained to remand the issue to the Chancery Division for reconsideration of the duration and calculation of prejudgment interest.
In summary, we affirm all aspects of the final judgment, except for the reallocation of counsel fees and prejudgment interest calculation issues. To the extent that we have not expressly addressed any of the parties' arguments, we conclude that they lack sufficient merit to warrant discussion in a written opinion. R. 2:11–3(e)(1)(E).
Affirmed in part; reversed and remand in part. We do not retain jurisdiction.
1. FN1. In March 2009, on a different front, Adkins and her husband commenced a civil action in the United States District Court for the District of New Jersey seeking tort remedies against Sogliuzzo; Torrance; Alex. Brown; Rodman; TD Bank, N.A.; and the Estate of Mary T. Grimley. An amended complaint in the federal litigation alleged, among other things, that Sogliuzzo committed breach of fiduciary duty, professional and ordinary negligence, defamation, misrepresentation, negligent infliction of emotional distress, fraudulent conveyance, undue influence, and conspiracy to engage in “fraud, conversion, theft by deception, undue influence and numerous other torts,” all in connection with the alleged mismanagement of funds from the estates of decedent and Mary T. Grimley, decedent's elderly first cousin.
2. FN2. In ordering this remand, we are mindful that the judge who presided over this matter retired on the very day that the final judgment was signed. Although we recognize that original jurisdiction might be invoked to avoid delay, see Rule 2:10–5, we believe that a determination of the sensitive issue of reallocation of counsel fees is best decided, in the first instance, in the equitable environment of the Chancery Division, where, among other things, the principles of In re Niles Trust, 176 N.J. 282, 294 (2003) may be considered.