Court Opinion

ID: 4676014
Source: CourtListenerOpinion
Date Created: 2021-04-09 14:09:07.871264+00
Date Added: 2024-06-11T08:03:30.059497
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NOT FOR PUBLICATION WITHOUT THE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-4986-18

IN THE MATTER OF THE
ESTATE OF AMRATLAL C.
BHAGAT, deceased.
_________________________

                Argued March 15, 2021 – Decided April 9, 2021

                Before Judges Mayer and Susswein.

                On appeal from the Superior Court of New Jersey,
                Chancery Division, Essex County, Docket No.
                P-000063-13.

                John J. Segreto argued the cause for appellant Ranjana
                Jethwa (Segreto & Segreto, LLP, attorneys; John J.
                Segreto, of counsel and on the briefs).

                John W. Bartlett argued the cause for respondent
                Temporary Limited Administrator of the Estate of
                Amratlal C. Bhagat (Murphy Orlando, LLC, attorneys;
                John W. Bartlett, of counsel and on the brief).

                Jonathan I. Epstein argued the cause for respondent
                Bharat A. Bhagat (Faegre Drinker Biddle & Reath,
                LLP, attorneys; Jonathan I. Epstein and Karen A.
                Denys, on the brief).

PER CURIAM
      Ranjana Jethwa1 (Ranjana) appeals from a June 4, 2019 final judgment

authorizing the temporary limited administrator of the Estate of Amratlal C.

Bhagat (Estate) to settle an action pending in the Superior Court of New Jersey,

Burlington County, Chancery Division, entitled Amratlal C. Bhagat (deceased)

v. Bharat A. Bhagat, et al., Docket No. C-179-03 (Burlington County litigation).

We affirm.

      We provide a brief overview of the facts. This appeal involves three

distinct litigations in different jurisdictions: Burlington County, the Bombay

High Court in India, and Essex County. The Burlington County litigation

involved a business dispute between Amratlal C. Bhagat (Amratal) 2 and his son,

Bharat A. Bhagat (Bharat). The Bombay High Court matter, presently pending,

involves a will contest among Amratlal's heirs regarding the Estate's assets,

including proceeds from the settlement of the Burlington County litigation. The

Essex County matter (Essex County litigation) involved the appointment of a

1
  We refer to the parties by their first name to differentiate the family members.
No disrespect is intended by this informality. Ranjana is the decedent's
daughter.
2
 Amratlal died in 2012 during the pendency of the Burlington County litigation.
The Estate was substituted as the plaintiff in that action.

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temporary limited administrator to handle the Burlington County litigation on

the Estate's behalf.

      The Burlington County litigation, spanning more than fifteen years,

involved ownership of a hotel in New Jersey. In 2003, Amratlal sued Bharat,

alleging his son improperly transferred the hotel, which was held by a family

corporation, to a limited liability company wholly owned by Bharat.

      The circumstances leading to the Burlington County litigation are detailed

in Bhagat v. Bhagat, 217 N.J. 22 (2014), and need not be repeated here. In

Bhagat, the trial court and this court found the shares in the hotel conveyed by

Amratlal to Bharat were a presumptive gift.      Amratlal filed a petition for

certification, which the New Jersey Supreme Court granted. Bhagat v. Bhagat,

208 N.J. 382 (2011).

      In 2014, the Court ruled for Amratlal, 3 holding the burden to overcome

the "presumption that the transferred property was a gift" required "clear and

convincing evidence." Bhagat, 217 N.J. at 47. The Court explained a rebutting

party would be "limited to evidence antecedent to, contemporaneous with, or

immediately following the transfer. In addition, a party seeking to rebut the

3
  Because Amratlal died after his petition was granted, the Court allowed his
Estate to be substituted as the plaintiff.
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presumption may also adduce proof of statements by the parties concerning the

purpose and effect of the transfer." Ibid. Based on the adoption of a clear and

convincing evidence standard, the Court reversed summary judgment for Bharat

in the Burlington County litigation, concluding the matter presented a "a close

case" with "sufficient factual issues to preclude summary judgment and to

require a trial." Id. at 49.

      The matter before the Bombay High Court involves three different wills

executed by Amratlal: a 1997 will, a 2003 will, and a 2011 limited will/codicil.

In 2012, Bharat sought to probate the 1997 will before the Bombay High Court

because he was disinherited in the 2003 will after he transferred ownership of

the hotel.

      In February 2013, Ranjana filed suit in Essex County to probate the 2003

will and void the 1997 will.     Bharat moved to dismiss the Essex County

litigation. The judge denied Ranjana's application to probate the 2003 will in

Essex County based on the will contest before the Bombay High Court.

However, the judge in the Essex County litigation recognized the potential need

to appoint a neutral administrator to represent the Estate in the Burlington

County litigation depending on the Court's decision in Bhagat.

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      After the Court rendered its decision in Bhagat, Ranjana returned to court

in the Essex County litigation. Ranjana requested the judge in the Essex County

litigation take jurisdiction of the Estate matter.       While the judge denied

Ranjana's application, he ordered a neutral third party to serve as temporary

limited administrator of the Estate's interests in the Burlington County litigation.

In an August 1, 2014 order, the judge appointed John W. Bartlett, Esq., as the

Estate's temporary limited administrator (Administrator), authorizing him to

"prosecute the pending litigation in Burlington County" but not to "take control

of any other assets of the [E]state or make any distribution[s] . . . without court

approval . . . ."

      Subsequent to his appointment, the Administrator reviewed the Burlington

County litigation from its inception in 2003 through the date of the Court's

decision in 2014. 4 He also attempted to locate bank accounts belonging to

Amratlal to fund the Estate's pursuit of its claimed ownership to the hotel in the

Burlington County litigation. However, the Administrator's efforts to obtain

funds from Amratlal's bank accounts were unsuccessful.

4
   There were more than eighteen boxes of material reviewed by the
Administrator related to Burlington County litigation.
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      The Administrator then contacted counsel for Ranjana and Bharat to

explore a possible settlement of the Burlington County litigation and the probate

matter.   The Administrator sought to pursue a potential settlement of the

Burlington County litigation after learning the Estate was "impecunious" and

lacked sufficient assets to fund a trial.

      After assessing the evidence, the legal standard for determining gift

transfers enunciated by the Court in Bhagat, and the Estate's likelihood of

prevailing at a trial, the Administrator concluded settlement of the Burlington

County litigation with Bharat was "the best course of action" for the Estate.

      The Administrator agreed with the Court that the Burlington County

litigation was "a close case." He also noted the Estate had limited evidence to

support its contention the transfer of shares from Amratlal to Bharat were not a

gift. The Administrator believed the "contemporaneous" evidence offered at a

trial would likely result in a determination that Amratlal's transfer of shares to

Bharat was an unconditional gift. The Administrator also recognized Bharat

would testify the transfer of shares was a gift from his father. Because Amratlal

was deceased, the Estate would be "unable to provide an alternative narrative"

to Bharat's testimony.

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      Based on this analysis, the Administrator decided to pursue settlement of

the Burlington County litigation on the Estate's behalf.       According to the

Administrator, a settlement would dispose of the Estate's only asset in the United

States, the hotel, and allow the Estate to recover cash funds to be held in escrow

pending resolution of the matter before the Bombay High Court.

      Because the hotel was solely owned by Bharat's corporation, the

Administrator required Bharat's approval to sell the property. The terms of the

proposed sale were extensively negotiated between Bharat and the

Administrator. Ultimately, they agreed upon a $4 million sale price for the

hotel. The term sheet also accounted for the distribution of net proceeds from

the hotel's sale after the payment of all outstanding debts and attorney's fees.

The proceeds from the sale of the hotel would be distributed with Bharat

receiving 41% and the Estate receiving 59%.5

      The Administrator then filed a motion in the Essex County litigation,

seeking leave to approve the settlement of the Estate's interest in the Burlington

County litigation. In a supporting certification, the Administrator explained the

term sheet represented "fair and reasonable terms for the settlement of [the

5
   The 59% allocation approached the percentage shares Amratlal claimed
represented his ownership interest in the hotel.
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Burlington County litigation]." According to the Administrator, the "settlement

w[ould] result in the Estate's recovering a substantial part of the value of the

Burlington County property in cash; those funds w[ould] then be available to

whichever of A[mratlal]'s heirs . . . eventually prevail[ed] in the Bombay High

Court." The Administrator also highlighted proof problems confronting the

Estate in the event the Burlington County litigation proceeded to trial.

      Ranjana did not agree with the proposed settlement terms and opposed the

Administrator's motion.      Ranjana claimed the settlement was "wholly

inadequate," resulting in a "windfall" to Bharat.

      Ranjana also argued the Administrator abruptly reversed course regarding

his earlier position the Estate had a strong claim and the value of the Estate's

claim was closer to Ranjana's estimated worth rather than Bharat's estimated

worth. According to Ranjana, the Estate's claim against Bharat in the Burlington

County litigation was worth $29 million. However, in his certification, the

Administrator explained in detail why he changed his thinking and pursued

selling the hotel to resolve the Burlington County litigation.

      After hearing counsels' arguments, as well as the Administrator's position,

and conducting his own cost-benefit analysis, the judge in the Essex County

litigation concluded it was "in the best interest of the Estate to compromise the

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claim . . . ." The judge noted "[c]ourts place a high value on settlement" and

determined the Burlington County litigation "should be settled."

      Regarding Ranjana's $29 million valuation of the Estate's claim in the

Burlington County litigation, the judge determined her value was "fanciful" and

she lacked evidence supporting her valuation. In approving settlement of the

Burlington County litigation as fair and reasonable, the judge concluded

            Tak[ing] into account the . . . risks that are involved
            here, the liability on the liability issues, on the damage
            issue, on the cost issue[,] . . . and recoverability, I think
            . . . it's a case that . . . warrants a settlement so we can
            move on and . . . resolve the issue, instead of taking
            another five years or ten years, in a worse-case
            scenario, before we know what to do with the litigation
            in Burlington and what to do with this ancillary
            administration here in New Jersey.

      In a February 15, 2019 order, the judge in the Essex County litigation

authorized the Administrator to "negotiate and consummate" settlement of the

Burlington County litigation. In a June 4, 2019 order, the judge issued a final

judgment, reaffirming the February 15, 2019 order authorizing the settlement of

the Burlington County litigation.

      On appeal, Ranjana contends the Essex County judge erred in approving

the settlement of the Burlington County litigation. We disagree.

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      "Settlement of litigation ranks high in our public policy." Kaur v. Assured

Lending Corp., 405 N.J. Super. 468, 475 (App. Div. 2009) (quoting Nolan by

Nolan v. Lee Ho, 120 N.J. 465, 472 (1990)). "An agreement made to forestall

pending litigation and a family dispute has a goal which is considered with high

favor by the courts." In re Seabrook's Will, 90 N.J. Super. 553, 559 (Ch. Div.

1966) (citing DeCaro v. DeCaro, 13 N.J. 36 (1953)).

      We review approval of a settlement for abuse of discretion. See S.T. v.

1515 Broad Street, LLC, 455 N.J. Super. 538, 566 (App. Div. 2018), rev'd on

other grounds, 241 N.J. 257 (2020). Trial judges "routinely perform" damages

calculations so "'the question [of] whether the settlement proceeds are adequate'

is left to the discretion of the trial court." Ibid. (quoting Werner v. Latham, 332
N.J. Super. 76, 85 (App. Div. 2000)). The exercise of judicial discretion by a

trial court "may be disturbed only if it is 'so wholly insupportable as to result in

a denial of justice.'" Gillman v. Bally Mfg. Corp., 286 N.J. Super. 523, 528

(1996) (quoting Goodyear Tire and Rubber Co. v. Kin Props., Inc., 276 N.J.

Super. 96, 106 (App. Div. 1994)).

      Ranjana argues the judge mistakenly approved the settlement because the

Administrator "essentially submitted nothing to the trial court seeking leave to

settle the $29 million lawsuit . . . for [three] cents on the dollar." According to

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Ranjana, the Burlington County litigation should have been tried because the

settlement sum was neither fair nor reasonable. Alternately, she claims the hotel

should have been sold by the Administrator or ordered to be sold by the judge

handling the Essex County litigation, without Bharat's approval, and the

proceeds escrowed until resolution of the will contest before the Bombay High

Court. We reject both arguments.

      First, we review the order issued by the judge handling the Essex County

litigation for abuse of discretion and not, as Ranjana argues, the wisdom of the

Administrator's decision to pursue settlement of the Burlington County

litigation. Here, the judge conducted a cost-benefit analysis to determine the

fair and reasonable value of the Estate's claim in the Burlington County

litigation. The judge considered the risks involved in trying the Burlington

County matter, the costs associated with trial of that case, the existence of "clear

and convincing evidence" consistent with the Court's articulated legal standard

in Bhagat to prove Amratlal's transfer of shares to Bharat were not a gift, and

the Estate's ability to collect on a judgment if it prevailed in the Burlington

County litigation. The judge also considered the hotel's $4 million valuation

provided by a mutually selected real estate broker consulted by the parties in the

Burlington County litigation. Significantly, Ranjana offered no countervailing

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valuation information regarding the hotel. Nor did she propose any alternatives

to the sale of the hotel.

      It is unclear how Ranjana formulated her $29 million valuation of the

claim the Burlington County litigation. Ranjana failed to cite any evidence other

than her own unsubstantiated belief the claim was worth $29 million. The judge

handling the Essex County litigation deemed Ranjana's valuation "fanciful." He

also found no evidence upon which a jury could award $29 million if the Estate

prevailed in the Burlington County litigation

      Further, the Estate's likelihood of prevailing in the Burlington County

litigation was uncertain. In addition, even if there might have been a verdict for

the Estate in excess of $4 million in the Burlington County litigation, there was

a significant risk the Estate would collect nothing based upon the hotel's existing

debts, the outstanding legal fees in the various litigations, and Bharat's own

financial difficulties.

      We are satisfied the judge in the Essex County litigation did not abuse his

discretion in approving the settlement of the Burlington County litigation. The

judge noted the weaknesses in the evidence, the risks to both parties associated

with a trial, and the possibility of a "recoverability issue" because Bharat may

not have the "the assets to . . . pay off a $29 million judgment . . . ." The judge,

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who was intimately familiar with the Essex County litigation, conducted a

thorough cost-benefit analysis of the settlement and determined the settlement

was fair, reasonable, and not overly generous to either Ranjana or Bharat.

      We next consider and reject Ranjana's claim the Administrator could have

sold the property without Bharat's approval or the judge could have ordered the

sale of the hotel. The hotel could not be sold without Bharat's participation

because the Estate did not own the hotel after Amratlal's transfer of stock shares

to Bharat. See Bhagat, 217 N.J. at 27. The Estate could only sell the hotel if it

prevailed at trial in the Burlington County litigation by submitting clear and

convincing evidence to rebut the presumption that stock transfers from Amratlal

to Bharat were gifts. See ibid.

      Based on the record, we are satisfied there was sufficient evidence

supporting the Essex County litigation judge's approval of the settlement of the

Burlington County litigation. We discern no abuse of discretion in the judge's

decision, after completing his own cost-benefit analysis regarding the

Burlington County litigation, that the settlement behalf of the Estate was fair

and reasonable.

      Affirmed.

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