SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0929-16T1

IN THE MATTER OF THE

TRUST OF RAY D. POST.

_______________________

Argued May 3, 2018 – Decided August 15, 2018

Before Judges Haas, Rothstadt and Gooden 

Brown.

On appeal from Superior Court of New Jersey, 

Chancery Division, Probate Part, Morris 

County, Docket No. P-000817-2012.

Michael A. Saffer argued the cause for 

appellant/cross-respondent Valley National 

Bank (Mandelbaum Salsburg, PC, attorneys; 

Michael A. Saffer, of counsel and on the 

briefs; Arla D. Cahill and Brian M. Block, on 

the briefs).

Andrew J. Cevasco argued the cause for 

respondent/cross-appellant Sarah E. PostAshby (Archer & Greiner, PC, attorneys; Andrew 

J. Cevasco, of counsel and on the briefs; 

Andrew T. Fede, on the brief).

Deborah Post, respondent/cross-appellant, 

argued the cause pro se.

PER CURIAM

Valley National Bank (Valley), trustee for The Trust of Ray 

D. Post, appeals from a judgment awarding damages to beneficiaries, 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." 

Although it is posted on the internet, this opinion is binding only on the 

parties in the case and its use in other cases is limited. R. 1:36-3.
2 A-0929-16T1

the grantor/decedent's granddaughters, Deborah Post and her 

sister, Sarah Post-Ashby. The trial judge held that Valley 

breached its fiduciary duty to the sisters when it diversified the 

trust's corpus, a portfolio of stock, in contravention of a 

retention provision in the trust agreement that directed the stocks 

not to be sold. Although the judge awarded damages to the sisters, 

he also awarded commissions and fees to Valley.

On appeal, Valley asserts numerous arguments, the gist of 

which is that the judge erred in finding that Valley's actions 

were not authorized by the Prudent Investor Act (PIA), N.J.S.A.

3B:20-11.1 to -11.12, especially since the corpus of the trust 

changed in nature over the years due to various corporate 

reorganizations. Deborah and Sarah1 cross-appeal, claiming that 

Valley was not entitled to certain fees and commissions the trial 

judge credited to Valley, and that he failed to correctly calculate 

damages and should have awarded counsel fees. For the reasons 

that follow, we affirm.

The facts developed at the bench trial in this matter are 

summarized as follows. Ray owned and operated a fuel oil 

distribution business in Newark. He and his business were

customers of the Peoples National Bank & Trust Company of 

 

1 We refer to the individuals by their first names to avoid any 

confusion caused by their common surnames.
3 A-0929-16T1

Belleville (Peoples) and he was a member of its board of directors 

until the mid-1980s. Ray created the subject irrevocable trust, 

appointing Peoples as trustee, pursuant to a trust agreement dated 

July 23, 1975. The corpus of the trust consisted of 2550 shares 

of common stock of AT&T, 304 shares of Exxon Corporation, and a 

$4500 AT&T thirty-year bond due May 5, 2000. The value of the 

trust assets at that time was $156,550.25.

The trust agreement contained a retention provision that 

stated: "The Trustee shall retain, without liability for loss or 

depreciation resulting from such retention, the property received 

from the Grantor." It also provided that the trustee was "entitled 

to compensation for its services . . . in accordance with a 

separate agreement between it and [Ray], to be entered into on or 

before the execution of this Agreement." On September 24, 1975, 

Ray and Peoples entered into a letter agreement that stated: "In 

order to induce Peoples . . . to act as Trustee . . . I hereby 

agree to pay a fee of 5% per annum on the total income collected." 

Pursuant to the trust agreement, the trust's income was paid 

to Ray in monthly or other installments during his life and, upon 

his death, the income was paid to Ray's wife, Enid Post, whom he 

had married in 1974, until her death or remarriage.

2 Upon the 

 

2 Enid was not Deborah's or Sarah's grandmother.
4 A-0929-16T1

occurrence of either of those two events, the trustee was directed 

to distribute the corpus to Deborah and Sarah.

Ray died on May 5, 1989. At the time of his death, the value 

of the trust's assets was $483,172. The trust corpus consisted 

of 1169 shares of Bell South, 520 shares of NYNEX, 1040 shares of 

Pacific Telesis, 780 shares of South Western Bell, 1040 shares of 

U.S. West, 2432 shares of Exxon and 2200 shares of AT&T.3 

Deborah, who held a Masters of Business Administration from 

Harvard Business School, was appointed executrix of the estate 

and, in 1990, filed the first Form 706 Estate Tax Return. Deborah, 

as executrix, also participated in a litigation filed in 

approximately 1991 by Enid over Ray's estate in which the trust 

and its assets were a topic of the dispute. See In re Estate of 

Post, 282 N.J. Super. 59, 64 (App. Div. 1995).

In June 1993, Valley acquired Peoples and became the trustee. 

The trust assets Valley received from Peoples, according to Valley, 

totaled $157,436.86. The stock included 2600 shares of AT&T, 2432 

shares of Exxon, and approximately 7000 shares of seven companies 

 

3 To the extent the portfolio contained different stock than what 

Ray had deposited, the difference was caused by the divestiture 

of AT&T and the creation of its "spin offs" that were required by 

the 1984 anti-trust action against AT&T. See Verizon N.J., Inc. 

v. Hopewell Borough, 26 N.J. Tax 400, 408 (Tax Ct. 2012); In re 

Estate of Strauss, 521 N.Y.S.2d 642, 644 (N.Y. Sur. Ct. 1987).
5 A-0929-16T1

that had also been created as part of AT&T's divestiture. When 

Valley became trustee, it began to take statutory corpus 

commissions4 from the trust in addition to the five percent income 

commissions provided for in the fee agreement, even though Peoples 

had never done so while it was trustee. 

In May 2000, Valley's in-house counsel wrote a memo addressing 

the bank's trust investment management committee's concern about 

whether the trust was adequately diversified in light of the 

enactment of the PIA in 1997. In response, Valley obtained advice 

from outside counsel in July 2000, who concluded that the trust's 

retention provision did not relieve Valley of its duty to diversify 

the portfolio.

In his letter to Valley, counsel stated that he "believe[d]

that a court would conclude that the language of [the retention 

provision] did not deprive [Valley] of power to sell the 

stock . . . ." Counsel advised that if Valley determined that 

"non-diversification [was] prudent," it could take no action and 

"rely" on the retention provision, or it could "develop and 

implement a plan to diversify the portfolio," if it "decide[d] 

that that is the most reasonable and prudent course of action." 

If Valley chose to diversify the portfolio,

 

4 N.J.S.A. 3B:18-14.
6 A-0929-16T1

it could choose to notify [Enid] and [Deborah 

and Sarah] of its plans and seek out their 

consent or other points of view. Finally, to 

fully protect itself for its course of action, 

[Valley] could file an action . . . 

judicially . . . and . . . seek authorization 

to deviate from the language of the trust and 

diversify the portfolio.

Valley began diversifying the trust assets on September 12, 

2000, selling 864 shares of ExxonMobil stock and purchasing other 

stocks with the proceeds without either court approval or notice 

to Enid or the sisters.5 In a follow-up letter from outside counsel 

in November 2000, Valley was advised that it not unilaterally

deviate from the retention provision because it would then be 

"acting at its own peril" in light of recent (unpublished) case 

law.6 "Rather, to fulfill its investment responsibilities . . ., 

[Valley] should apply to [the] Court for advice and restrictions 

to satisfy its obligation to protect the interests of the 

beneficiaries." By so doing, it would have an "insurance policy" 

against future liability. Despite that advice, and while Valley

understood that the trust language severely restricted its ability 

to sell or reinvest the trust assets, it continued the 

 

5 Exxon became ExxonMobile after an intervening merger in 1999. 

See In re Exxon Mobil Corp. Sec. Litig., 387 F. Supp. 2d 407, 410 

(D.N.J. 2005), aff'd, 500 F.3d 189 (3d Cir. 2007). 

6 In re Vivos Trust of Ackerson, No. A-159-99 (App. Div. Oct. 23, 

2000).
7 A-0929-16T1

diversification until shortly before Enid's death in 2008, without 

expressly notifying Enid or the sisters or seeking court approval.

Although Valley did not seek Deborah's or Sarah's prior 

approval for not retaining the trust's stocks, or provide either 

of them with a copy of the trust agreement until Enid died, it did 

send statements and other information about the trust's holdings

that reflected the sale of the original stocks. Deborah began 

receiving information about the trust after she made a request in 

March 1998 for information. She started receiving annual 

statements from Valley in 2002 and they continued until Enid died 

in 2008 at which time Deborah began to receive monthly statements. 

In April 2004, Valley also sent Deborah and Sarah a letter 

seeking their approval for a "30% fixed income and the

balance . . . in equity/growth positions" asset allocation. They 

both gave their approval to the allocation. At the time, neither 

Deborah nor Sarah had seen a copy of the trust agreement. 

According to Deborah, Ray never showed her a copy, she did not 

recall seeing it in connection with her filing of estate tax 

returns or during the estate litigation, and she only became aware

of the trust assets after Ray's death.

According to Sarah, she did not read or view the trust 

agreement until she received Valley's letter in April 2004 seeking 

her approval of the trust's asset allocation. When Sarah approved 
8 A-0929-16T1

the April 2004 proposed assets allocation, she also requested that 

she be provided the same information regarding the trust that 

Deborah had been receiving. After that time, Sarah began receiving 

annual statements. However, according to Sarah, none of the 

ensuing letters she received from Valley contained information 

about the terms of the trust.

Enid died on March 27, 2008, triggering Valley's obligation 

to distribute the corpus to the sisters. Valley wrote to Deborah 

and Sarah on May 2, 2008, enclosing a copy of the trust agreement 

and setting forth the trust assets. According to an account 

investment synopsis prepared by Valley, as of July 31, 2001, the 

value of the trust was $1,431,869.06, as of April 30, 2006; 

$1,084,988.51, as of August 2007, $1,286,678.88; and as of May 2, 

2008, $1,218,556. Valley informed the sisters that the process 

of preparing a final accounting had begun and would take several 

months to finalize, due to the extended term of the trust. 

The first time Deborah or Sarah saw the trust agreement was 

when Valley sent it to them on May 2, 2008. When they did, Deborah 

"probably skimmed it," and Sarah "did a casual review" of the 

document, but neither recalled reading the retention provision. 

The granddaughters only became aware of the provision when, in 

March 2012, Valley filed its complaint for approval of its final 

accounting.
9 A-0929-16T1

In 2009 and 2010, Valley sent requests to Deborah and Sarah 

asking them "what type of accounting you would like us to prepare 

for your review and approval in order that we may conclude the 

administration of the Trust." According to Deborah, she did not 

respond to these requests because Valley had been unresponsive to 

her requests for information, such as any previous accountings and 

financial statements prior to 2001. Sarah too did not respond 

because she did not understand the requests. The fact they did 

not respond, however, did not prevent Valley from preparing an 

interim accounting for submission to the sisters. 

On October 6, 2010, Valley's attorney sent a letter to Deborah

and Sarah requesting that they sign a waiver of a formal 

accounting, and provided them with an informal accounting. Deborah 

did not sign the waiver because of Valley's failure to provide 

information she previously requested about the trust for the period 

from 1975 to 1992. Sarah also did not respond to the attorney's 

letter because she was not provided with sufficient information 

and felt the formal accounting was "pressuring" her with more 

fees.

Deborah met with Valley's trust officer Steven Gudelski in 

January 2011 and complained about the trust's performance, 

Valley's failure to provide information and an accounting, and 

Valley taking what she considered to be excessive fees. The 
10 A-0929-16T1

retention clause and diversification of the stock were not 

discussed, but Deborah asked for a copy of the fee agreement and 

was told there was no written agreement. A month later, however, 

Gudelski provided Deborah with copies of annual statements from 

between 2002 and 2010, and a copy of the trust fee agreement, 

which Gudelski discovered after a further review of the file. In 

June 2011, Deborah wrote to Gudelski asking that he provide her 

with records from Peoples and Valley's computer records in 

connection with the trust from June 1993 until February 2001. 

Valley eventually provided a final accounting during discovery 

after it filed its complaint.

On March 19, 2012, Valley filed a complaint to approve a 

final trust accounting and to be discharged as trustee. According 

to Valley, it took four years to complete the final accounting 

because it was "waiting to hear from the beneficiaries as to what 

type of accounting they wanted." 

The accounting was ultimately completed between the summer 

of 2011 and November 2011. A vice-president and senior trust 

officer at Valley prepared the accounting covering the period from 

June 22, 1993 to November 30, 2011. The final accounting stated 

that the trust's value was $901,578.73. Approximately $563,000 

was in a cash management account for the period beginning June 22, 

1993 through November 30, 2011; the balance was stocks and mutual 
11 A-0929-16T1

funds. Over the subject time period, $60,225.45 was added to 

principal as a result of tax refunds. Valley took a total of 

$485,491.03 in income commissions and $96,450.51 in corpus 

commissions, constituting .5% on the first $400,000, and .3% on 

the balance. Valley stopped taking fees in November 2010. 

On April 12, 2012, Deborah filed an answer taking exceptions 

to the accounting. She objected to Valley taking commissions on 

the trust's corpus, and claimed that Valley was only entitled to 

a five percent commission on trust income rather than six percent.

The matter was referred for mediation and on the night before 

a scheduled session, Deborah read the trust document "word for 

word with complete comprehension for probably the first time." 

She was "astounded" because she "had no idea . . . that this 

retention clause existed in this document." She "suddenly realized 

[that] they weren't allowed to sell [her] grandfather's good 

stocks." As a result, Deborah amended her answer to add a 

counterclaim for breach of fiduciary duty, negligence, conversion 

and breach of the implied duty of good faith and fair dealing, all 

arising from Valley's violation of the retention provision. She 

claimed an over $900,000 loss as a result of Valley's failure to 

"abide by and honor Ray Post's wishes pursuant to their fiduciary 

duty of care" to the beneficiaries. Sarah filed a similar answer

and counterclaim. 
12 A-0929-16T1

On April 15, 2015, a judge signed an order granting Valley's 

motion for summary judgment as to all counts of the sisters' 

counterclaims, except for breach of fiduciary duty and the implied 

covenant of good faith and fair dealing, and granted in part the 

sisters' motion to compel discovery and distribution of the trust 

assets. 

Trial was held before a different judge, Stephen C. Hansbury 

in April 2016. The trial initially addressed the sisters' 

counterclaims and Valley's liability. At the trial, in addition 

to Valley's representatives and the sisters, who testified about 

the history of the trust as set forth above, the parties presented

testimony from experts.

Richard Greenberg, a lawyer and certified public accountant, 

testified for the sisters as an expert in trust administration. 

He concluded that Valley breached its fiduciary duty as trustee 

by violating the retention clause of the trust agreement. He 

cited the PIA, which grants the trust settlor the right to restrict 

the general duty to diversify as long as the settlor expressly 

provides for that restriction in the trust document. As Greenberg 

explained, if a trustee believes the restriction is not in the 

best interests of the beneficiary, it should seek the consent of 

the beneficiary or apply to the court for approval to diversify.
13 A-0929-16T1

John Langbein, a trust and estates law professor, who has 

trained bank trust officers and served on an advisory panel for 

the drafting of the Restatement (Third) of Trusts, testified for 

Valley as an expert in the standard of care applicable to a trustee 

and trust assets. He stated that the trust portfolio was underdiversified because the stocks did not involve "a wide number of 

different industries" and confining the portfolio to two 

securities was "capricious." Valley had a "duty to diversify" in 

order to avoid the risk of "catastrophic loss." Langbein concluded 

that Valley's decision to diversify was "routine good trust 

administration." Failure to do so, he stated, would have put 

Valley at risk of a breach of fiduciary duty by violating the duty 

to diversify. He did not believe that a trust beneficiary was 

entitled to prior notice or to give its consent prior to the 

trustee diversifying because management of the trust lies with the 

trustee, and a beneficiary has "no voice in investment policy." 

Nor did he believe that Valley was under an obligation to seek 

court approval before diversifying because approval is for the 

trustee's benefit, not the beneficiaries'. Nonetheless, he 

believed it was highly likely that Valley would have received 

judicial approval. He added that Valley's decision to seek the 

advice of outside counsel showed prudence, but that the advice 

provided was not conclusive because, as a general matter, a trustee 
14 A-0929-16T1

could then "keep on shopping" until it found someone "willing to 

. . . do anything [it] wanted." 

Even if the diversification constituted a breach of fiduciary 

duty, Langbein believed that the breach was "innocuous" because 

it was done for the beneficiaries' and not Valley's, benefit. In 

support, Langbein cited to the Restatement (Third) of Trusts § 95 

cmt. d (Am. Law Inst. 2012) "innocuous breach rule," which he 

explained was an "old principle of equity . . . that when the 

trustee has acted in a way that was not driven by trustee self 

interest [and] that was motivated by the effort to benefit the 

beneficiaries, . . . the court has the discretion not to find them 

liable. . . ." 

On April 28, 2016, Judge Hansbury issued an oral decision 

finding in favor of the sisters as to Valley's liability. The 

judge first addressed the trust agreement and found that since its 

inception, the sisters owned the corpus. He then rejected Valley's 

contention that "because the Exxon stock and the AT&T stock 

morphed, . . . that . . . was in itself . . . a diversification 

which then permitted [Valley] to diversify as it chose. . . ." 

According to the judge, there was "not a shred of evidence" that 

the stock held in the trust after the various corporate 

restructurings was "not substantially equivalent" to what was
15 A-0929-16T1

originally held. The judge stated while the stocks may have 

changed, it did not "trigger the right to simply diversify."

Judge Hansbury turned to the PIA and rejected Valley's 

argument that the statute trumped the settlor's intent as expressed 

in the retention provision. Quoting from one of our earlier 

unpublished decisions relied upon by Valley, Judge Hansbury found 

the opinion persuasive as to its statement that "diversification 

of investments, N.J.S.A. 3B:2-11.4, . . . is a default rule that 

may be expanded, restricted, eliminated or otherwise altered by 

express provision of the trust agreement, N.J.S.A. 3B:20-11.2(b)." 

Next, Judge Hansbury considered Valley's "standard of 

conduct" and concluded it breached its duty to the sisters by not 

following the advice of its own attorneys to seek their approval 

or the court's approval before diversifying, and its failure to 

keep the sisters informed as to the status of the corpus. The 

judge relied upon the experts' testimony and the provisos of 

Restatement (Third) of Trusts, which set forth a trustee's 

obligation to keep a beneficiary reasonably informed. The judge 

found that "months, years went by and no information was provided" 

to the sisters. 

Judge Hansbury also found that contrary to Valley's 

arguments, neither laches, equitable estoppel nor the sisters' 

conduct provided Valley with legitimate defenses to the sisters' 
16 A-0929-16T1

counterclaims. He stated that Valley unjustifiably delayed its 

preparation of the accounting and seeking court approval for four 

years following Enid's death. 

Judge Hansbury concluded that there was a breach of Valley's

fiduciary duty, but he did not find that Valley acted in bad faith. 

The judge, therefore, found Valley liable to the sisters under 

that cause of action, but dismissed their claim for a violation 

of the covenant of good faith and fair dealing.

The judge considered counsels' arguments regarding the 

valuation date to be applied in his calculation of damages based 

upon what the value of the portfolio should have been had the 

retention provision been honored compared to its actual value. 

The sisters contended the date was the day of the judge's decision. 

Valley argued it should be when the sisters knew or should have

known about the retention provision. It contended that the date 

Deborah filed the first estate tax return, or the commencement 

date of the estate litigation that Deborah participated in were

appropriate dates for valuation because Deborah should have known 

about the retention clause at those times. It also argued as an 

alternative, October 6, 2010, when Valley sent the waiver and 

release to Deborah and Sarah as the appropriate date. 

Judge Hansbury determined that the proper date for valuation 

of the stocks' value was May 2, 2008, when Valley sent the trust 
17 A-0929-16T1

agreement and portfolio value to the sisters. He found that on 

that date, Deborah and Sarah had the "the trust agreement, they 

ha[d] the statements that they've been getting for several

years[,]" and they first learned that the retention provision was 

not being followed.

Trial on damages was held on June 13, 2016. After considering 

an in limine motion filed by Valley, Judge Hansbury granted the

motion, barring the sisters from presenting any evidence regarding 

Valley not investing trust money held in Valley's Cash Management 

Fund. The judge found that the sisters failed to present any 

evidence at the liability trial about Valley's failure to invest.

At the ensuing damages trial, Michael Gould, a certified 

public accountant, testified for Valley and concluded that the 

estimated value of the trust assets, assuming that Valley had not 

diversified the portfolio, as of May 2, 2008 was $1,739,248, which 

was $520,692 more than the actual value of $1,218,556. Gould 

utilized the first quarter 2008 income taxes, $9606, actually paid 

by the trust in determining the hypothetical portfolio's after tax 

value. He added: "It's not necessarily related to any particular 

sale of securities. It was just an estimate . . . ." He denied 

that constituted double counting, adding for clarification:

[W]hat the [$]9606 represents are the 

estimated income taxes for 2008 that were paid 

by the trustee in April of 2008. And we used 
18 A-0929-16T1

it as a reduction of the hypothetical 

portfolio on the basis that dividends . . .

and interest would have been received by the 

trust and income taxes would have had to been 

paid in some amount. And rather 

than . . . try to calculate what the 

hypothetical tax would have been, we just used 

the estimates that were paid. It was just an 

estimate. An imprecise estimate. . . .

Joseph Matheson, a certified public accountant, testified on 

behalf of the sisters and concluded that the estimated value of 

the trust assets, assuming that Valley had not diversified the 

portfolio, as of May 2, 2008 was $1,833,306, which was $616,467 

more than the actual value of $1,216,839. Matheson testified that 

he determined the share amount for the stocks by averaging the 

"daily high and the daily low on May 2nd" because the stocks 

"probably would have sold . . . sometime . . . during the day." 

Next, he stated that he "subtract[ed] the [capital gains] tax and 

then . . . added the net proceeds" that totaled $1,833,306. 

Matheson also admitted that Gould's report reflected $2600 of 

"dividends between Enid's death and May 2nd" that was missing from 

his calculations in his report, which increased the difference 

between the value of the hypothetical portfolio and the actual 

value by $619,897. 

On July 8, 2016, Judge Hansbury signed an order for judgment 

approving the accounting submitted by Valley through 2011, and 

entered judgment against Valley in favor of the sisters for
19 A-0929-16T1

$520,548 based upon Gould's calculations. Attached to the judgment

was a statement of reasons in which he identified September 2000 

as the date when Valley breached its agreement by selling trust 

assets. He also concluded that consistent with Ray's intent as 

expressed in his agreement with Peoples, Valley was entitled to 

the income commissions expressed in the agreement as well as 

statutory corpus commissions under N.J.S.A. 3B:18-2. Relying upon 

the court's holding in Babbitt v. Fidelity Trust Co., 72 N.J. Eq. 

745 (1907), he also concluded Valley was entitled to commissions

even though it breached its fiduciary duty by diversifying because 

it did not do "anything 'willfully wrong.'" 

On August 31, 2016, Judge Hansbury signed an order awarding 

the sisters $57,423.08 in prejudgment interest from May 2, 2008, 

to July 8, 2016, denying the parties' cross-motions for counsel 

fees and Valley's application for corpus commissions from November 

1, 2010, to July 27, 2016.

7 In his attached statement of reasons, 

the judge explained how he applied the Rules' provision for prejudgment interest, see R. 4:42-11, for the period during which the 

sisters were deprived of their funds, which he identified as May 

 

7 On September 20, 2016, Judge Hansbury signed an amended 

supplemental order of judgment reducing the amount of prejudgment 

interest awarded to $48,654.13, pursuant to N.J.S.A. 4:42-11(b). 

In support of the order, he issued a written decision, explaining 

in detail the error he made in its original calculation and showing 

how the corrected amount was calculated. 
20 A-0929-16T1

2, 2008 to July 8, 2016. He turned to the parties' claims for 

counsel fees and rejected them. As to Valley, he concluded it was 

not entitled to fees for defending itself, especially in light of 

his finding that it breached its fiduciary duty. He rejected

Valley's reliance upon the frivolous litigation statute, N.J.S.A. 

2A:15-59.1, and Rule 1:4-8 because the sisters prevailed on their 

claim and "frivolous litigation theories were not appropriate to 

examine . . . the basis of each claim to determine whether a 

particular claim was continued in good faith and not to harass a 

party in light of defendants' success." Addressing the sisters' 

claim, Judge Hansbury relied upon his and the summary judgment 

motion judge's finding that Valley did not act in bad faith, and 

therefore the sisters did not "fit one of the exceptions" to the 

"American Rule which requires each party to pay its own counsel 

fees."

The judge turned to Valley's entitlement to income and corpus 

commissions for the period from November 1, 2010 to July 26, 2016 

and rejected the claim. The judge observed that "no management 

of the trust took place after Enid's death," citing to N.J.S.A. 

3B:17-3's requirement for the timely completion of an accounting, 

the inexplicable delay in Valley completing it by November 1, 

2010, and N.J.S.A. 3B:31-71 and N.J.S.A. 3B:31-84 for authority 

to reduce compensation due to a trustee "as a remedy for breach 
21 A-0929-16T1

of trust." Finally, the judge addressed claims arising from Valley

not investing the trust corpus after November 30, 2011 and noted,

as he had in response to Valley's motion in limine, that there was 

"[in]sufficient evidence" presented about the claim as it had not 

been "prosecuted."

Deborah filed a motion for reconsideration that Judge 

Hansbury denied on October 21, 2016. In his written decision, the 

judge considered the applicable law, explained errors in Deborah's

arguments regarding the effect of the summary judgment motion 

judge's order and his own order regarding commissions, and contrary

to Deborah's arguments, that he had properly accounted for tax 

consequences in his calculation of damages. On the same date, the 

judge signed an order discharging Valley as trustee and approved

the final accounting. This appeal followed.

Our review of a trial court's fact-finding in a non-jury case 

is limited. Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 

169 (2011). "The general rule is that findings by the trial court 

are binding on appeal when supported by adequate, substantial, 

credible evidence. Deference is especially appropriate when the 

evidence is largely testimonial and involves questions of 

credibility." Ibid. (quoting Cesare v. Cesare, 154 N.J. 394, 411-

12 (1998)). The trial court enjoys the benefit, which we do not, 

of observing the parties' conduct and demeanor in the courtroom 
22 A-0929-16T1

and in testifying. Ibid. Through this process, trial judges 

develop a feel of the case and are in the best position to make 

credibility assessments. Ibid. We will defer to those credibility 

assessments unless they are manifestly unsupported by the record. 

Leimgruber v. Claridge Assoc., 73 N.J. 450, 456 (1977) (citing

Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. 

Div. 1963)). However, we owe no deference to a trial court's 

interpretation of the law, and review issues of law de novo. 

Mountain Hill, LLC v. Twp. Comm. of Middletown, 403 N.J. Super. 

146, 193 (App. Div. 2008).

On appeal, Valley first argues that Judge Hansbury did not 

satisfy his obligation "to find the facts and state [his] 

conclusions of law" under Rule 1:7-4 because his decision was not 

based on facts in the record and his conclusions of law were 

inadequate. Although couched in terms of the Rule, Valley's 

argument is in actuality that the judge "ignored salient facts in 

his finding of facts and issued patently erroneous conclusions of 

law." We disagree. As discussed infra, we conclude that Judge 

Hansbury's decision clearly set forth his reasons, was supported 

by substantial evidence in the record, and was legally correct.

We turn to Valley's contention that Judge Hansbury misapplied 

the PIA by holding that the retention provision of the trust 

agreement took precedence over the PIA's mandate for a trustee to 
23 A-0929-16T1

diversify. We reject that contention and conclude the judge 

correctly applied the statute.

The PIA mandates the diversification of investments. It 

states that "[a] fiduciary shall diversify the investments of the 

trust unless the fiduciary reasonably determines that, because of 

special circumstances, the purposes of the trust are better served 

without diversifying." N.J.S.A. 3B:20-11.4. Even outside of the

PIA, "[d]iversification is a uniformally recognized characteristic 

of prudent investment and, in the absence of specific authorization 

to do otherwise, a trustee's lack of diversification would 

constitute a breach of its fiduciary obligations." Robertson v. 

Cent. Jersey Bank & Trust Co., 47 F.3d 1268, 1274 n.4. (3rd Cir. 

1995).

However, the PIA recognizes that despite the mandate, the

grantor's intent controls and, if there is any doubt as to that 

intent, application should be made to the court. It states: 

The prudent investor rule is a default rule 

that may be expanded, restricted, eliminated, 

or otherwise altered by express provisions of 

the trust instrument. A fiduciary is not 

liable to a beneficiary to the extent that the 

fiduciary acted in reasonable reliance on 

those express provisions. Nothing herein 

shall affect the jurisdiction of the Superior 

Court to order or authorize a fiduciary to 

deviate from the express terms or provisions 

of a trust instrument for the causes, in the 

manner, and to the extent otherwise provided 

by law.
24 A-0929-16T1

[N.J.S.A. 3B:20-11.2(b).]

Applying to Ray's trust agreement the PIA and well settled 

requirements for ascertaining a trust's settlor's intent, see In 

re Trust of Duke, 305 N.J. Super. 408, 418 (Ch. Div. 1995), aff'd, 

305 N.J. Super. 407 (App. Div. 1997), it is beyond cavil that he 

directed Peoples, as trustee, to retain the stock he deposited and 

specifically insulated his trustee from liability against any 

claim being raised if it failed to diversify. The provision did 

not make retention optional. Compare Robertson, 47 F.3d at 1271

(where the trust instrument authorized but did not require the 

trustee to "retain, temporarily or permanently, any or all of the 

stock"); Americans for the Arts v. Ruth Lilly Charitable Remainder 

Annuity Trust #1, 855 N.E.2d 592, 595 (Ind. Ct. of App. 2006)

(where the trust instrument stated "any investment made or retained 

by the trustee in good faith shall be proper despite any resulting 

risk or lack of diversification"). 

Moreover, to the extent Valley believed that despite the 

retention provision, it would be better to diversify, it was 

obligated to seek authorization from the court before selling the 

trust's corpus. N.J.S.A. 3B:20-11.2(b); Matter of Wold, 310 N.J. 

Super. 382, 387 (Ch. Div. 1998); see also Restatement (Second) of 

Trusts § 167(1) (1959) (stating that a court will deviate from the 
25 A-0929-16T1

express terms of the trust instrument "if owing to circumstances 

not known to the settlor and not anticipated by him compliance 

would defeat or substantially impair" the purpose of the trust). 

Notably, Valley's counsel explained these options to his client,

but Valley chose to act at its own peril despite counsel's advice. 

Under these circumstances, we have no reason to question Judge 

Hansbury's legal conclusion regarding the impact of the PIA and 

Valley's obligation to retain the stock in Ray's trust.

We similarly agree with Judge Hansbury's rejection of 

Valley's related argument that the sisters' claims were barred by 

the doctrine of laches, equitable estoppel, avoidable 

consequences, or ratification because they had obtained sufficient 

knowledge by January 2001 when the 2000 statement reflecting its 

diversification was sent to Enid, and did not object to it for 

over a decade. We conclude Valley's arguments are without 

sufficient merit to warrant discussion in a written opinion. R.

2:11-3(e)(1)(E). We only observe that Judge Hansbury found that 

the sisters should have known about the retention provision in May

2008 and his finding was based on credible evidence presented at 

the trial. Moreover, his decision to reject defenses asserted by 

Valley were legally correct as they are "not regarded with favor 

where the parties stand in a confidential relation[ship,]"

Weisberg v. Koprowki, 17 N.J. 362, 378 (1955), and where a party's 
26 A-0929-16T1

actions have contributed to or caused the delay, its equitable 

claims will not be sustained. See Rolnick v. Rolnick, 262 N.J. 

Super. 343, 364 (App. Div. 1993).

Valley also contends that the passive changes to the trust's 

stocks that occurred as a result of the AT&T "spin offs" and the 

merger of Exxon and Mobile voided the retention provision. We 

disagree and again conclude that Valley's contentions on appeal

are without merit. We agree with Judge Hansbury's finding that

there was absolutely no evidence that the stocks that resulted 

from the spinoffs or the merger were substantially different than 

the original stocks deposited by Ray into the trust. "[N]ew stock 

[issued] as a result of a merger, reorganization or other cause" 

is treated as the same stock as the old "if the new stock is the 

equivalent or substantially the equivalent of the old." Fidelity 

Union Trust Co. v. Cory, 9 N.J. Super. 308, 312 (Ch. Div. 1950); 

see also Restatement (Second) of Trusts § 231 cmt. f (1959). The 

new shares are considered substantially equivalent to the original 

shares in companies if the resulting companies are conducting 

business that is of the same nature as the original companies. 

See Fidelity, 9 N.J. Super. at 313; In re Estate of Riker, 124 

N.J. Eq. 228, 231-32 (Prerog. Ct. 1938), aff'd o.b., 125 N.J. Eq. 

349 (E. & A. 1939). There was no evidence that the Bell stocks 
27 A-0929-16T1

or ExxonMobile represented any substantial change in the nature 

of the portfolio. 

Contrary to Valley's contention that Judge Hansbury should 

have taken judicial notice under N.J.R.E. 201 of the fact that the 

"[n]ew [c]ompanies were wholly unrelated" to their predecessors,

that fact, even if judicially noticeable, did not satisfy Valley's

burden to demonstrate a substantial change in the stocks subject 

to the retention clause. That evidence, as Valley points out in 

its discussion of Mertz v. Guaranty Trust Co. of N.Y., 247 N.Y. 

137, 139-4 (N.Y. 1928), must establish that the "identity and 

substance" of the original shares were "destroyed." Here, there 

was no such evidence.

Next, we address Valley's contention that even if it breached

its fiduciary duty to the sisters, it did so in good faith and

should, therefore, be excused from paying any damages under the 

"innocuous breach" doctrine. The doctrine is an exception to the 

general rule that a trustee shall be held liable for a loss it 

causes by failing to adhere to the trust instrument without 

judicial sanction, even if it acts in good faith. See Conover v. 

Guarantee Trust Co., 88 N.J. Eq. 450, 458 (Ch. 1917), aff'd o.b., 

89 N.J. Eq. 584 (E. & A. 1918). A court can invoke the doctrine 

"[i]f [it] concludes that . . . it would be unfair or unduly harsh 

to require the trustee to pay, or pay in full . . . ." Restatement
28 A-0929-16T1

(Third) of Trusts § 95 cmt. d (Am. Law Inst. 2012). "Ordinarily, 

such relief would be based on a finding that the trustee had made 

a conscientious effort to understand and comply with applicable 

fiduciary standards and the duties of the trusteeship." Ibid.

When determining whether to relieve the trustee of liability, a 

court must consider "whether the trustee was aware of the 

availability (in an appropriate situation) of court 

instruction . . . and, if so, the reasons for the trustee's 

decision not to seek instruction." Ibid.

Applying these guiding principles here, we conclude there was 

ample evidence in the record to establish that Valley was aware 

from its counsel's advice about the wisdom of seeking the

beneficiaries' or the court's approval before deviating from the 

retention provision. Yet, there was no evidence explaining why 

Valley chose to ignore that advice. Under these circumstances, 

we see no reason for the application of the doctrine either to

relieve Valley from liability for damages, or, as Valley also 

argued, for pre-judgment interest.

We also disagree with Valley's contention that Judge Hansbury 

improperly denied it additional corpus commissions for the period 

from November 2010 through July 2016. In support of its argument,

Valley relies upon In re Armour's Will, 61 N.J. Super. 50, 57 

(App. Div.), rev'd on other grounds, 33 N.J. 517 (1960), a case 
29 A-0929-16T1

that addressed commissions on income, not corpus commissions. We 

find its reliance inapposite. There, in reversing our decision 

to approve an executor/trustee receiving double income commissions 

based on its dual capacity, the Supreme Court stated that in 

determining entitlement to commissions, a court should look to the 

service performed. It stated that commissions should be paid when 

a trustee "h[e]ld, manage[d] and invest[ed] . . . assets and 

pa[id] over the income thereon as well as the principal to the 

specified beneficiary." In re Armour's Will, 33 N.J. 517, 524 

(1960). In denying commissions here, Judge Hansbury did just that 

when he determined Valley was not entitled to such commissions

because it was "clear that no management of the trust took place 

after Enid's death." Moreover, N.J.S.A. 3B:31-71(b)(8) permitted 

the judge to deny compensation to Valley for its "breach of trust." 

There was no error in denying the commissions.

We next address Valley's challenge to Judge Hansbury's 

finding that May 2, 2008 was the proper date for valuation of the

trust for the purpose of calculating damages. We review the 

determinations for an abuse of discretion, see Musto v. Vidas, 333 

N.J. Super. 52, 64 (App. Div. 2000), and find none. 

Here, Judge Hansbury rejected Valley's contention that the 

proper date should have been as early as 2000, when Valley began

to diversify and its actions were disclosed in statements sent to 
30 A-0929-16T1

Enid and later to Deborah. In his oral decision, Judge Hansbury 

explained why the earlier date was not appropriate and why he 

relied upon the May 2008 date. The judge's findings were supported 

by the record and his determination of the date was consistent 

with principles of fairness and justice. Graziano v. Grant, 326 

N.J. Super. 328, 342 (App. Div. 1999). 

In sum, as to Valley's contentions, we conclude neither the 

PIA nor any of the sisters' actions, as argued by Valley, warrant 

our interference with the outcome in this matter as to Valley's 

liability or the damages assessed against it by the judge. To the

extent we have not specifically addressed any of Valley's remaining 

arguments, we find them to be without sufficient merit to warrant 

discussion in a written opinion. R. 2:11-3(e)(1)(E).

Turning to the cross-appeals filed by the sisters, we begin 

by rejecting their argument that the stock portfolio's valuation 

date should have been the date of the judge's final "decree" for 

the same reason we rejected Valley's contention about an earlier 

date being used. We find the sisters' reliance on the opinion in 

the New York case of In the Estate of Rothko, 401 N.Y.S.2d 449, 

455-56 (N.Y. 1977), to be inapposite. In that case, the court 

held an executor, who ignored a testamentary direction that certain 

paintings be retained, liable for the value of paintings he sold 

as of the date of judgment to account for "appreciation damages" 
31 A-0929-16T1

between the date of sale and the date of judgment. Here, as to 

the stock portfolio, the judge's use of the May 2008 date and his 

award of pre-judgment interest fully compensated Deborah and Sarah

for their loss, including any rise in the portfolio's value had 

the stocks been retained. We are satisfied the court's award 

properly compensated them for loss of money that rightfully should 

have been turned over to them upon Enid's death, after taking into 

consideration their failure to take action for a period of four

years after they learned of Valley's breach. Penpac, Inc. v. 

Passaic Cty. Util. Auth., 367 N.J. Super. 487, 504 (App. Div. 

2004). Their contentions to the contrary are without any merit.

We turn next to Sarah's argument that all or part of the 

commissions Judge Hansbury and the summary judgment motion judge 

awarded to Valley should be reversed because Valley violated the 

retention provision and performed in a materially deficient 

manner. Sarah claims that Valley was not entitled to corpus 

commissions under N.J.S.A. 3B:18-14 based upon Ray's fee agreement 

with Peoples, as well as Peoples choosing to not take such 

commissions. 

In granting summary judgment to Valley on the question of 

corpus commissions, the motion judge stated that Valley was 

"entitled to its corpus commissions, because in the absence of any 

expressed commission, N.J.S.A. 3B:18-2 clearly provides that those 
32 A-0929-16T1

commissions be allowed." With respect to income commissions, he 

held that Valley was bound by the five percent commission set 

forth in the fee agreement. Later, in response to Valley's motion 

in limine to exclude evidence regarding the corpus commissions, 

Judge Hansbury granted the motion relying upon the motion judge's

determination with which Judge Hansbury independently agreed. 

Ultimately, Judge Hansbury awarded Valley corpus commissions from 

August 13, 1993 to May 2, 2008, totaling $80,181, after concluding 

that Valley did not do anything "willfully wrong." We agree with 

both judges.

"The allowance of corpus commissions is a discretionary 

determination which will not be disturbed unless there has been 

an abuse of discretion[,]" or "the court did not utilize 'the 

proper legal approach[.]'" In re Estate of Summerlyn, 327 N.J. 

Super. 269, 272 (App. Div. 2000).

N.J.S.A. 3B:18-2 provides:

On the settlement of the account of a 

nontestamentary trustee, as defined in 

N.J.S.A. 3B:17-9, the court shall allow him 

the compensation as may have been agreed upon 

by the instrument creating the trust; and in 

the absence of any express provision 

concerning compensation, shall allow him 

commissions in accordance with this chapter.

[(Emphasis added).]
33 A-0929-16T1

Here, it was undisputed that the fee agreement between Ray 

and Peoples was silent about the trustee's entitlement to a corpus 

commission and there was no agreement with Valley. Both judges 

properly applied the statute and permitted Valley to recover those 

commissions. Valley's entitlement to a corpus commission was not 

altered by Peoples' earlier decision to forgo payment of those 

commissions because Valley as successor trustee was not bound by 

Peoples' decision. See, e.g., In re Loree's Trust Estate, 24 N.J. 

Super. 604, 607 (Ch. Div. 1953) (noting that a court must allow 

compensation to a successor trustee where there are no express 

terms regarding compensation, entitling successor trustee to the 

commissions set forth by statute).

Finally, the sisters argue that even if Valley was entitled 

to claim a commission, its request should have been denied or at 

least reduced, due to its "materially deficient performance," 

N.J.S.A. 3B:18-14,

8 including violation of the retention clause, 

 

8 The statute states in relevant part:

Such commissions may be reduced by the court 

having jurisdiction over the estate only upon 

application by a beneficiary adversely 

affected upon an affirmative showing that the 

services rendered were materially deficient or 

that the actual pains, trouble and risk of the 

fiduciary in settling the estate were 

substantially less than generally required for 

estates of comparable size.
34 A-0929-16T1

filing improper capital gains tax returns, and holding money uninvested in a bank account. We find this contention to be without 

sufficient merit to warrant further discussion in a written 

opinion. R. 2:11-3(e)(1)(E). We only observe that there was no 

finding that while Valley acted as trustee it performed in a 

materially deficient manner. Cf. In re Will of Landsman, 319 N.J. 

Super. 252, 275 (App. Div. 1999) (undue influence banned executor 

from receiving commissions). To the extent it failed to honor the 

retention clause, Judge Hansbury adjusted Valley's compensation 

and awarded damages against it for its breach. 

Contrary's to Deborah's next argument, we also discern no 

abuse of the judge's discretion, see Magnet Res., Inc. v. Summit 

MRI, Inc., 318 N.J. Super. 275, 297 (App. Div. 1998), in not 

permitting the sisters to present evidence at the damages trial 

related to Valley's failure to invest the money it held in its 

Cash Management Fund. "The evidence [they sought to introduce] 

obviously was not newly discovered" and "had been in the hands of 

the" sisters prior to the liability trial, but they did not present 

it when given the opportunity. Henry Clay v. City of Jersey City, 

84 N.J. Super. 9, 18 (App. Div. 1964). Under these circumstances, 

Judge Hansbury properly ruled it was too late.

 

[N.J.S.A 3B:18-14].
35 A-0929-16T1

Deborah also challenges the summary judgment motion judge's 

determination that the sisters' claim about Valley negligently 

utilizing a cost basis, rather than stepped-up basis, in its 

capital gains tax filings was not cognizable in the probate 

litigation. We conclude that while Deborah correctly states the 

claim was cognizable because it related to a breach of the 

fiduciary's duty, see In re Estate of Lash, 169 N.J. 20, 27 (2001); 

F.G. v. MacDonell, 150 N.J. 550, 564 (1997), the motion judge's 

error was harmless. R. 2: 10-2. We are satisfied that9 because 

the sisters were able to cross examine Grudelski during the 

liability trial about Valley's choice of basis as part of their 

breach of fiduciary duty claim, they suffered no prejudice as a 

 

9 In granting Valley summary judgment on the negligence 

counterclaim, the summary judgment motion judge stated that 

"compensatory damage-type award[s]," such as negligence, are 

usually not permitted in a Probate Part proceeding. Rather, such 

claims are encompassed in breach of fiduciary duty claims. 

Valley's "liability, if any, will be based on a breach of fiduciary 

duty and/or implied covenant of good faith and fair dealing, not 

on a theory of negligence or conversion." As noted earlier, breach 

of fiduciary duty is a tort theory. Lash, 169 N.J. at 27. As a 

result, a fiduciary may be held liable for harm resulting from a 

breach of the duties imposed by the fiduciary relationship, and 

damages may be awarded as a result of that breach. Ibid.; F.G.,

150 N.J. at 564. Therefore, the summary judgment judge was in 

error by concluding that a negligence claim and a breach of 

fiduciary claim were unrelated theories of recovery, and by 

dismissing defendants' negligence claim, in which they sought to 

recover for the payment of unnecessary capital gains tax, on 

summary judgment on that basis.
36 A-0929-16T1

result of the judge's error, especially in light of the sisters' 

success on that claim. 

Deborah also maintains that Judge Hansbury erred by 

accepting Gould's use of the trust's actual 2008 tax payments in 

determining the estimated taxes for that year in the hypothetical 

describing the result had the stock been retained. She claims 

that the damages award should be increased by $8024 to account for 

Gould's error. We disagree.

Gould included $9606 in his hypothetical as the estimated 

taxes that the trustee paid in April 2008. He used it as an 

estimate of income tax that would have been due on interest and 

dividends received by the trust had the stocks been retained.10 

Judge Hansbury, as the factfinder, was free to accept or reject 

Gould's expert testimony, in whole or part. See Torres v. 

Schripps, Inc., 342 N.J. Super. 419, 430-31 (App. Div. 2001); City 

of Long Branch v. Liu, 203 N.J. 464, 491 (2010). Moreover, we 

discern no error, as argued by Deborah, in Gould's accounting for 

the 2008 taxes actually paid on the sale of stock in his estimate.

 

10 The fact that the amount coincided with the capital gains tax 

on the early 2008 sale of Comcast and Exxon shares did not 

constitute double counting since Gould was using the figure as an 

estimate of taxes due on the interest and dividends received by 

the trust in the hypothetical scenario where the stock had been 

retained in the trust.
37 A-0929-16T1

Finally, Deborah contends that Valley should reimburse 

Sarah's counsel fees, an argument not raised by Sarah in her crossappeal. She argues that Valley's failure to adhere to the 

retention provision and its failure to follow its attorney's advice

established the bad faith that Judge Hansbury refused to find when 

he denied the sisters' fee application. We disagree.

The decision whether to award counsel fees rests within the 

sound discretion of the trial court. Maudsley v. State, 357 N.J. 

Super. 560, 590 (App. Div. 2003). When exercising that discretion, 

courts must be cognizant of New Jersey's strong public policy 

against the shifting of counsel fees and our adherence to the 

"American Rule," which prohibits recovery of counsel fees by the 

prevailing party against the losing party, In re Niles Trust, 176 

N.J. 282, 293-94 (2003), unless authorized by statute or rule. 

See Rule 4:42-9; In re Estate of Vayda, 184 N.J. 115, 120 (2005). 

"[L]imited exceptions" have been created in the interest of equity 

in those instances involving claims against an attorney, or when 

an executor or trustee have acted in bad faith such as by acting 

in self-interest or committing "the pernicious tort of undue 

influence." Id. at 122-23; Niles, 176 N.J. at 298; see also In 

re Estate of Stockdale, 196 N.J. 275, 308 (2008) (the tort of 

undue influence is available where breach of fiduciary would be 

inadequate).
38 A-0929-16T1

Judge Hansbury properly determined that Valley did nothing 

to promote its self-interest by diversifying, and acted in what 

it believed was the beneficiaries' best interests. We conclude 

therefore that he properly denied the sisters' fee application and 

we reject Deborah's arguments to the contrary.

In sum, despite the sisters' arguments to the contrary, we 

conclude that all of Judge Hansbury's determinations were 

supported by credible evidence and legally correct. To the extent 

that the summary motion judge erred, we find no harmful error. 

Finally, to the extent we have not specifically addressed any of

their remaining arguments, we find them to also be without 

sufficient merit to warrant discussion in a written opinion. R.

2:11-3(e)(1)(E). 

Affirmed.