Court Opinion

ID: 4550078
Source: CourtListenerOpinion
Date Created: 2020-07-22 14:08:03.233047+00
Date Added: 2024-06-11T08:37:53.048526
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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.

                                                     SUPERIOR COURT OF NEW JERSEY
                                                     APPELLATE DIVISION
                                                     DOCKET NO. A-3747-18T3

IN THE MATTER OF THE ESTATE
OF ELIZABETH J. SISTO,
     Deceased.
______________________________

                Submitted May 19, 2020 – Decided July 22, 2020

                Before Judges Fisher, Accurso and Gilson.

                On appeal from the Superior Court of New Jersey,
                Chancery Division, Somerset County Docket No.
                P-12-01201.

                Donnelly Minter & Kelly LLC, attorneys for
                appellants/cross-respondents John M. Sisto, Jr., and
                Donald E. Sisto (Patrick B. Minter, of counsel; Seth
                Alan Abrams, on the briefs).

                McElroy, Deutsch, Mulvaney & Carpenter, LLP,
                attorneys for respondents/cross-appellants Susan Sisto
                Cusick and James Sisto (John P. Beyel, George H.
                Parsells, III, and Vimal K. Shah, on the brief).

PER CURIAM

      This appeal concerns the disposition of a probate action filed by two

siblings (Donald and John, Jr.) for an accounting of their mother Elizabeth's
estate from the co-executors, the two other siblings (Susan and James). The

accounting was provided, Donald and John, Jr. lodged their exceptions, and the

judge conducted an evidentiary hearing to evaluate those exceptions. Because

our standard of review requires deference to judge-made fact findings when

supported by credible evidence, we reject the arguments posed by Donald and

John, Jr. We also find no merit in Susan and James's cross-appeal.

      To put the issues in perspective, we briefly outline the circumstances

that preceded the action. The four parties to this appeal and cross-appeal are

the children of John Sisto, Sr., and Elizabeth Sisto. John, Sr. and his brother

conducted a demolition and excavation business through an entity known as

United Excavating Company. When, in the 1970's, litigation arose with his

brother's estate, John, Sr. started a new company that conducted the same type

of business, Dallas Contracting. To avoid entanglement with the litigation

with his brother's estate, John, Sr. placed ownership in the new entity in the

names of his two oldest sons, Donald and John, Jr. Notwithstanding, John, Sr.

operated the company; Donald and John, Jr. were his subordinates. Susan

joined the business in 1983.

      The family was later shattered when, in 1986, Donald and John, Jr. gave

notice that they were taking over Dallas Contracting, cutting out both John,

Sr., and Susan. Having settled the litigation with his brother's estate, John, Sr.

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became the outright owner of United Excavating, and, once squeezed out at

Dallas Contracting by his elder sons, John, Sr. operated United Excavating

along with Susan and his youngest child, James.

      John, Sr. died in 2003. His Will expressly disinherited Donald and John,

Jr.1 John, Sr. bequeathed the bulk of his tangible personal property to his wife,

Elizabeth. His business interests, however, were divided and placed into a

Marital Trust and a Residuary Trust. Susan and James were named as the co-

trustees of the two trusts and co-executors of John, Sr.'s estate.

      At the time of John, Sr.'s death, United Excavating owned four

commercial rental properties:

                • a twenty-five percent interest (Susan and James
                  owned the rest) in South River Storage
                  Company;

                • a fifty percent share of H&S Management,
                  which owned retail property;

                • a warehouse in South Plainfield; and

                • retail space in Westfield.

United Excavating also then owned: three vacant parcels of land, snow-

removal equipment, and stock in various publicly-traded companies.

1
 "I specifically and intentionally make no provision for my sons, JOHN
MICHAEL SISTO, JR., and/or DONALD E. SISTO or their issue in my Will."

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      John, Sr. directed that the net income from both trusts be paid to

Elizabeth during her lifetime. He also gave Susan and James - the co-trustees -

the sole discretion to make payments to Elizabeth from the principal of both

trusts for her health, maintenance, and support, without taking "into

consideration any other resources any person may have." He also expressed a

desire that the co-trustees' decisions not be questioned: "The trustees'

determination as to the advisability of making any such payment shall be

binding on all persons interested in said trust." Through the inclusion of other

broad language, John, Sr. expressly imbued Susan and James with complete

discretion in running, managing, liquidating and investing in the business's

interests, which were valued at the time of his death, at over $5,000,000.

      Susan and James served in their positions as co-trustees from the time of

their father's death in 2003 until their mother's death in 2012. During that

period, Elizabeth received more than $1,200,000 in distributions from the

trusts, an amount that was – as the judge later found – greater than that to

which she was actually entitled. Despite being the owners of seventy-five

percent of South River Storage, Susan and James distributed to Elizabeth all

that entity's income; they also relinquished any fees to which they were

entitled as co-trustees.

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      Evidence adduced at the plenary hearing, which produced the orders now

under review, demonstrated Elizabeth was a "spender," so that by the time of

her death, she had gone through nearly all the trust distributions. Elizabeth

frequented high-end stores,2 drove an expensive vehicle, and owned an

extensive jewelry collection. She did not save; James testified she "never had

a savings account in her entire life [but] she had a checkbook and all she did

was write checks." At the time of her death, Elizabeth's liquid assets

amounted to $7587.

      John, Sr.'s Will directed that all the trusts' assets would go to Susan and

James when Elizabeth died. Elizabeth's Will named Susan and James co-

executors and directed that they pay all her debts and sell her home "as soon as

practicable . . . at such price and upon such terms and conditions . . . as [they]

may determine." Elizabeth bequeathed her jewelry to Susan, leaving the

balance of her tangible personal property to be divided equally among all four

children, including Donald and John, Jr. Elizabeth's Will placed the remainder

of her property – a condominium, the proceeds of the sale of her Watchung

home, vacant lots adjacent to that home, and a Florida home – in a trust. On

her death, Susan and James became trustees of that trust. The trust directed

2
 James testified that Elizabeth "didn't know Target and she didn't know
Walmart[;] she didn't shop at the [D]ollar [S]tore."

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that the Florida home go to Susan and James; the remainder was to be divided

equally among all four of her children.

      In short, although disinherited by their father, Donald and John, Jr. were

made beneficiaries of their mother Elizabeth's estate as well as the trust

containing some of her property. This arrangement gave them an interest in

demonstrating more funds or assets should have been found in those juridical

entities than revealed in the accounting. In attempting to maximize their

interests, Donald and John, Jr. filed a complaint that sought to challenge the

actions taken by Susan and James in their capacity as co-trustees of the trusts

created by John, Sr. But because they had been disinherited by their father,

who gave Susan and James considerable discretion over the management of

those trusts, the judge correctly ruled that Donald and John, Jr. lacked standing

to complain about Susan and James's actions as co-trustees of the trusts created

by John, Sr.; they do not seek our review of that determination.

      Donald and John, Jr., however, were beneficiaries of both their mother's

estate and her trust and, thus, had standing to seek an accounting of the actions

taken by Susan and James as co-executors of Elizabeth's estate and co-trustees

of her trust. After an evidentiary hearing, the judge filed, on June 26, 2018, a

thorough written opinion and entered a judgment that: rejected all Donald and

John, Jr.'s exceptions; approved the accounting; and allowed Susan and

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                                          6
James's claims for commissions and fees, leaving the quantification of their

claims on submission of their final accounting.

      In October 2018, Susan and James submitted their second and final

accounting and filed a verified complaint seeking its approval. Donald and

John, Jr. served a subpoena for documents from the accountant retained by

Susan and James; the judge quashed that subpoena by order entered on January

25, 2019. On March 22, 2019, the judge issued a final judgment approving the

final accounting for reasons expressed in another written opinion. Susan and

James moved for reconsideration as to the denial of a portion of the fees they

sought; that motion was denied on August 5, 2019.

      Donald and John, Jr. filed this appeal, seeking review of the two

judgments and the order that quashed their subpoena. Susan and James cross-

appealed, seeking review of certain aspects of the judge's ruling about their

fees and about what they claimed was a loan payable to them from the estate.

We affirm in all respects.

      At the heart of Donald and John, Jr.'s appeal is their first point:

            I. [SUSAN AND JAMES] BREACHED THEIR
            FIDUCIARY DUTIES IN THEIR ROLES AS CO-
            EXECUTORS OF [ELIZABETH'S] ESTATE.

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Their attack largely addresses three specific items – the so-called management

fees, the reclassified loan, and the Cusick loan – that we need only briefly

describe.

      In managing the trusts created by John, Sr., the co-trustees – in the

exercise of their considerable discretion – deemed it appropriate to use income

from income-producing assets to keep non-income-producing properties afloat

and to also generate distributions for Elizabeth in the years following John,

Sr.'s death. Labeled by the co-trustees' accountant as "management fees,"

these were dollar-for-dollar transfers designed to reduce or eliminate the tax-

impact on the trusts 3 and had no impact on the amount of net income paid to

Elizabeth during the remainder of her life. These items, despite their label,

were not, as Donald and John, Jr. argued, property management fees. More

importantly, these were transactions between and involving the two trusts

created by John, Sr., as to which Donald and John, Jr., had no interest. The

judge correctly rejected this exception.

      Donald and John, Jr. next argued about a 2007 entry in Sisto Realty's

general ledger that identified a loan payable to Elizabeth that was later

"reclassified" as a loan payable to Susan and James. The judge found from the

3
  This was explained by Susan and James's accounting expert who testified
that through this process United Excavating was "virtually" freed of any
"income tax" obligation.

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testimony of Richard Parness, the accountant who prepared the ledger, that the

earlier entry was simply wrong. Parness testified that the $182,838 loan was

owed by Sisto Realty to John, Sr. When making the earlier entry, Parness

believed that Elizabeth had inherited John, Sr.'s assets and, so, he noted in the

ledger that the loan was payable to Elizabeth. On learning the truth, Parness

reclassified the loan as payable to Susan and James 4; in fact, that was also

erroneous since the right to payment of the loan belonged to the trusts. In any

event, the judge considered all the evidence, rejected Donald and John, Jr.'s

arguments,5 and found "the loan never belonged to Elizabeth," so Susan and

James had no duty to pay to Elizabeth's estate the amount of the loan from the

trusts.

          The third plank of Donald and John, Jr.'s arguments about the June 26,

2018 decision, concerns the so-called "Cusick loan." The evidence revealed

that when John, Sr. died, Elizabeth no longer wished to reside in their

Watchung home. She was instead desirous of purchasing a condominium then

under construction, so Susan and her husband, George Cusick, took out a home

4
  Susan and James, as the evidence reveals, were not aware of these
accounting entries.
5
  Donald and John, Jr., allude to the fact that this loan wasn't, but should have
been, listed on John, Sr.'s IRS Form 706. That may be true, but it doesn't alter
the fact that the loan was payable to John, Sr., and that on his death that loan
payable was an asset of the trusts.

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                                          9
equity loan and lent the proceeds to Elizabeth for the purchase of the

condominium. The proceeds from the Cusick loan were also used to enhance

and repair the Watchung home to maximize its sale price and to subdivide the

property so as to create two vacant adjoining lots. The amount lent by the

Cusicks to Elizabeth totaled $389,243.

      As the judge observed in her written findings, Donald and John, Jr.

"conceded at trial that Susan and her husband, George, had loaned money to

Elizabeth" but "they assert that the absence of documentation of its existence

and of its total amount, somehow renders it invalid" and that "an independent

executor would have spent the [e]state's resources suing Susan to recover its

entire amount." The judge rejected this thesis, concluding there was "nothing

wrong" – as Donald and John, Jr.'s own expert acknowledged – with Susan and

her husband's decision not to extract a promissory note or other documentation

from Susan's mother to memorialize either the loan or the amount. The judge

found that the loan was made and in the amount in question. The co-executors

were obligated by the terms of Elizabeth's Will, which required that her debts

be paid, to repay Susan and her husband.

      As our examination of the extensive record reveals, Donald and John, Jr.

largely quarrel with the judge's view of the evidence. That limits our role. We

do not independently review the evidence. Unless "wholly insupportable as to

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result in a denial of justice," we will not disturb a judge's factual findings

when supported by credible evidence. Rova Farms Resort, Inc. v. Investors

Ins. Co., 65 N.J. 474, 483-84 (1974). The judge's findings are all well-

supported by the evidence the judge found credible. We, thus, reject Donald

and John, Jr.'s first point that Susan and James breached their fiduciary duties

as co-executors of Elizabeth's estate, for the reasons briefly outlined above and

substantially for the reasons set forth in Judge Margaret Goodzeit's

comprehensive and thoughtful written opinion.

      Donald and John, Jr. present three other points for our consideration:

            II. THE COURT ERRED WHEN IT FAILED TO
            ANALYZE AND APPLY N.J.S.A. 2A:65-5 AS
            [SUSAN AND JAMES'S] CONDUCT RESULTED IN
            WASTED INHERITANCE.

            III. THE COURT ERRED IN GRANTING [SUSAN
            AND JAMES'S] MOTION TO QUASH THE
            SUBPOENA TO MR. PARNESS FOR DOCUMENTS
            HIDDEN/NOT PROVIDED DURING DISCOVERY.

            IV. THE COURT ERRED IN AWARDING
            ATTORNEYS FEES TO [SUSAN AND JAMES]
            BECAUSE THEIR ACTIONS DEPLETED, NOT
            INCREASED, THE FUND IN COURT.

We find insufficient merit in these arguments to warrant further discussion in a

written opinion beyond what we have already stated. R. 2:11-3(e)(1)(E). We

reject these arguments substantially for the reasons set forth in Judge

Goodzeit's written opinions.

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        In their cross-appeal, Susan and James argue:

              I. THE COURT'S APPLICATION OF JUDICIAL
              ESTOPPEL WITH RESPECT TO ITS
              DISALLOWANCE OF [SUSAN AND JAMES'S]
              $147,000 LOAN TO THE ESTATE[] WAS IN
              ERROR.

              II. AS A MAT[T]ER OF LAW AND EQUITY, THE
              COURT ERRED BY DENYING THE ENTIRETY OF
              THE FEES [SUSAN AND JAMES] INDISPUTABLY
              PAID THEIR FIRST COUNSEL, DAY PITNEY.

              III. THE COURT ERRED BY REDUCING THE
              ALLOWED FEES OF [SUSAN AND JAMES'S]
              LITIGATION COUNSEL AND TESTIFY[]ING
              ACCOUNTING EXPERT.

We find insufficient merit in these arguments to warrant discussion in a written

opinion. R. 2:11-3(e)(1)(E). We add only the following few comments on

each.

        In the first of these points, Susan and James argue that the judge

erroneously applied the doctrine of judicial estoppel in refusing to allow their

claim that the estate was obligated to repay them $147,000. This amount, they

claim, is the sum of various payments they personally made on behalf of the

estate, namely, mortgage payments, real estate taxes, income taxes, utility bills

and other similar items. They claimed they made these payments because the

estate was illiquid.

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                                         12
      The judge did not consider the factual basis for this item but instead

estopped Susan and James from seeking this compensation because the claim

was inconsistent with the earlier accounting. We agree with the judge's

disposition.

      In the earlier accounting, Susan and James characterized this $147,000

item as "income transferred to principal," not a loan payable to them. Because

of that description, it is not surprising that Donald and John, Jr. neither

excepted nor complained. It was only after the judge's final disposition of the

factual disputes – following years of litigation, a three-day plenary hearing,

and extensive findings rendered by the judge in her forty-five-page written

decision – that Susan and James changed course and asserted that this

$147,000 item was a loan payable to them.

      The judge properly applied the doctrine of judicial estoppel. Susan and

James had succeeded in gaining the judge's approval of the first accounting,

which included this item as "income transferred to principal," but then made a

180 degree turn and claimed the item represented a loan payable to them from

the estate. The doctrine of judicial estoppel is applied when a party prevails in

one suit by arguing that a fact or position is true and then contradicts that fact

or position in later litigation. See Bhagat v. Bhagat, 217 N.J. 22, 36 (2014);

Kimball Int'l., Inc. v. Northern Metal Prods., 334 N.J. Super. 596, 607 (App.

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                                        13
Div. 2000). Susan and James were not entitled to characterize this $147,000

item one way in the proceedings about the first accounting and then assert a

contrary factual position when seeking approval of their final accounting.

      In their second point on the cross-appeal, Susan and James argue that the

judge erred in rejecting their claim for reimbursement of nearly $100,000 in

fees generated by the activities of their prior counsel, Day Pitney. The judge

explained in a written decision that the materials submitted in support of that

claim were insufficient. The judge noted, for example, that Susan and James

did not submit a certification from a Day Pitney attorney that contained the

information mandated by RPC 1.5, and that the invoices submitted did "not

indicate the respective levels of experience of the named billing individuals or

what their billing rates were." In short, the judge viewed the application for

payment from the estate of Day Pitney's fees as "woefully deficient."

      We agree. A court cannot ascertain the reasonableness of a fee request

without the presentation required by RPC 1.5 and without basic information

about the billing attorneys and their hourly rates. The application was properly

denied, and we find no abuse of discretion in the judge's denial of the

reconsideration motion that for the first time provided greater support for these

fees. The Day Pitney firm was replaced by current counsel years before the

fee application was presented. There was no reasonable excuse for the failure

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                                       14
to marshal the facts necessary for the judge's original decision, and the judge

was not required to allow a second bite of the apple by way of a

reconsideration motion.

      We lastly reject the cross-appeal's third point, which questions the

factual grounds upon which the judge relied in trimming certain aspects of

current counsel's fee request – as well as the request for the fees of a testifying

expert – in ultimately fixing reasonable fees chargeable to the estate. The task

then before the judge was fact sensitive and the judge, who presided over this

litigation for years, was certainly in a far better position than this court to

ascertain what was fair and reasonable under the circumstances. Because the

judge fully explained the factual basis for the award, we cannot conclude there

was any abuse of discretion. Packard-Bamberger & Co. v. Collier, 167 N.J.
427, 444 (2001). Instead, having closely examined the record and the judge's

thorough explanation for her disposition of the fee requests in question, we

affirm substantially for the reasons set forth by Judge Goodzeit in her written

decision.

      Affirmed.

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