Court Opinion

ID: 5130428
Source: CourtListenerOpinion
Date Created: 2021-12-01 15:09:28.26443+00
Date Added: 2024-06-11T08:23:17.720668
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NOT FOR PUBLICATION WITHOUT THE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-2806-19

IN THE MATTER OF THE
ESTATE OF ROSALIE JEAN
RYAN, Deceased.

               Argued September 30, 2021 – Decided December 1, 2021

               Before Judges Alvarez and Mitterhoff.

               On appeal from the Superior Court of New Jersey,
               Chancery Division, Gloucester County, Docket No. P-
               16-705.

               John H. Shindle argued the cause for appellants Patrick
               Kirschling, Thomas Kirschling, William Kirschling,
               John Kirschling, and Michael Kirschling (Ward,
               Shindle & Hall, attorneys; Thomas H. Ward and John
               H. Shindle, on the briefs).

               Daniel L. Mellor argued the cause for respondent
               Veronica A. Kirschling (Kulzer & DiPadova, PA,
               attorneys; Daniel L. Mellor, on the brief).

PER CURIAM
        Plaintiffs, the five Kirschling brothers—Patrick, Thomas, William, John,

and Michael1—appeal from a January 30, 2020 judgment awarding them

$15,0002 after a bench trial. The sum was to be paid by their sister, Veronica

(Bonnie) Kirschling. We affirm.

        Plaintiffs' verified complaint sought an accounting of the estate of

decedent Rosalie Jeanne Ryan, the parties' aunt. The complaint alleged Bonnie

breached her fiduciary duty towards decedent, for whom she held a power of

attorney (POA), and further alleged causes of action arising from the alleged

breach. At the time of her death, Medicaid had a $232,619.57 lien against her

estate for unreimbursed nursing home and medical care accrued during the last

four years of decedent's life. She died on March 29, 2014.

        Prior to this litigation, plaintiffs had sued Bonnie regarding their mother's

estate. Their mother, Vera Kirschling, died on November 4, 2010. The same

judge heard both matters. Plaintiffs in that litigation sued Bonnie for breaching

her fiduciary duty with regard to the mother's estate and for malicious

interference.

1
    For clarity, the parties are referred to by their first names.
2
  The judge directed the $15,000 be paid by Bonnie to decedent's estate, thereby,
as stated in the judgment, "subject[ing] it to the Medicaid lien."
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                                           2
      During discovery in that litigation, plaintiffs obtained records and

financial information regarding decedent.      They deposed Bonnie regarding

decedent's direct deposit authorizations, annuity statements, the POAs she

signed in favor of Bonnie in 2003, and correspondence with the United States

Internal Revenue Service.

      When plaintiffs settled the litigation in August 2013 regarding Vera's

estate, the agreement included a provision that made Patrick a signatory on all

accounts "maintained for the benefit of" decedent. It was further agreed that at

her death all such accounts would be distributed equally.         The settlement

agreement resolved "all claims which were raised or which could have been

raised in the [l]itigation[.]" Further, plaintiffs agreed to release any claims

against Bonnie, "including but not limited to all claims which" could have been

brought at that time. In this case, the judge held that the settlement did not bar

claims regarding an account about which plaintiffs were unaware when the

agreement was reached.       When she died, decedent's estate consisted of

$5,583.85, spent entirely on funeral expenses.

      By the time this lawsuit was filed in 2016, the relevant financial

institutions had destroyed any records regarding decedent's accounts more than

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                                        3
five years old.   Additionally, Bonnie discarded many records herself in

accordance with common tax advice, and she lost some records to flooding.

      In 2003, Bonnie moved decedent, then eighty-three, into the home she

shared with her mother. Patrick helped decedent relocate and informed the other

plaintiffs of decedent's change in residence. Everyone in the family had been

concerned for some time about decedent's diminishing capacity to care for

herself.

      Soon after the move, Bonnie changed the locks on her home, and only

Michael had the code to enter through the garage. Vera and Bonnie used their

own funds to maintain decedent's empty apartment in Pittsburgh for the first

eighteen months she lived with them in Swedesboro. Decedent authorized the

direct deposit of her pension on April 28, 2004, directly into an "835" bank

account in Bonnie's name only.

      When the settlement was reached, plaintiffs were unaware of the account's

existence. At one point, Vera and Bonnie deposited $90,000 into the 835

account from their own funds. Decedent contributed to household expenses

from that account. Decedent's move to a nursing home in January 2010 was not

subsidized by Medicaid for several months—during which time it was funded

by Vera and Bonnie.

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      Pre-trial, plaintiffs could not secure records going back to 2004 because

they did not exist. In discovery, plaintiffs moved to compel Bonnie to author a

detailed financial certification covering the years 2003 to 2014. When they

moved for an order compelling Bonnie to complete the certification, the judge

refused because it would be impossible for anyone to provide such detailed

information from memory.

      Plaintiffs deposed Bonnie over five days in this litigation and were able

to obtain from the bank the history for the 835 account. Plaintiffs identified

twelve "unexplained" transactions, both deposits and withdrawals.         They

claimed the unexplained transactions totaled $254,433.70.      The trial judge

flagged $250,849.70 in unexplained transactions.     However, after appl ying

laches and the statute of limitations, the judge concluded she would only

consider unexplained transactions dating back to May 13, 2010. She entered

judgment for $15,000 because the unexplained transactions falling within this

five-year range totaled that amount. She specified that the funds were not

necessarily wrongfully taken, rather, they were merely unexplained as Bonnie

was unable to recall the reason for the withdrawals. The judge observed that

Bonnie took good care of decedent beginning in 2004 when she moved in.

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      The judge spent an hour and a half rendering her decision in open court.

The first twenty-five pages of the transcript include her findings of fact.

Although the judge did not specifically state that Bonnie was credible, the

majority of her findings presumed her credibility, as there was no other basis for

the finding.

      The trial judge barred an expert plaintiffs proposed to offer during the trial

regarding Bonnie's accounts. The judge considered it reasonable for the parties

to expect discovery to end within one year of the inception of the litigation ,

despite the lack of a formal discovery end date or order. This was particularly

true in this case since plaintiffs proposed their expert after they had already

moved for summary judgment.

      Plaintiffs raise the following points on appeal:

               POINT I

               PRE-TRIAL DISCOVERY WAS IMPROPERLY
               RESTRICTED, RESULTING IN A MISCARRIAGE
               OF JUSTICE.

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                                         6
POINT II

PLAINTIFFS’ EXPERT WAS IMPROPERLY
BARRED BEFORE A TRIAL DATE WAS SET.

POINT III

IT WAS ERROR TO APPLY THE STATUTE OF
LIMITATIONS, AS THE DISCOVERY RULE
TOLLED THE ACCRUAL OF PLAINTIFFS’ CAUSE
OF ACTION.

A.   The legal standard for applying the discovery rule
supports a remand in favor of the [p]laintiffs.

B.    The trial court relied on irrelevant factual
information which did not, and could not, provide
notice of the [d]efendant’s breaches of her fiduciary
duties.

C.    The [p]laintiffs did not have knowledge of their
standing prior to the [d]ecedent’s death.

D.    At a minimum a remand is necessary for a trial
on the issue of when the [p]laintiffs knew, or should
have known, that the [d]efendant first began the
breaches of her fiduciary duties.

POINT IV

THE DEFENSE OF LACHES IS NOT APPLICABLE
(1) WHERE PLAINTIFFS DID NOT DELAY IN
BRINGING SUIT AND (2) WHERE DEFENDANT
CONCEALED HER BREACHES OF FIDUCIARY
DUTY.

                                                          A-2806-19
                          7
A.     The [d]efense of [l]aches [d]oes [n]ot [a]pply,
[a]s [a]ccrual [d]oes [n]ot [b]egin [u]ntil the [p]laintiffs
had [r]eason to [k]now of [t]heir [c]laim.

B.    The [d]efense of [l]aches is [n]ot [l]egally
[a]vailable to a [d]efendant/[f]iduciary [w]ho
[e]ngaged in [f]raud.

D.    New Jersey [c]ourts have consistently found
laches do not apply in the case of a breaching fiduciary.

POINT V

THE TRIAL COURT FAILED TO CONDUCT A
FACTUAL ANALYSIS TO ADDRESS TWELVE
INSTANCES      OF      “UNEXPLAINED”
TRANSACTIONS.

POINT VI

THE TRIAL COURT FAILED TO MAKE
CREDIBILITY DETERMINATIONS AS TO THE
DEFENDANT’S CONFLICTING TESTIMONY.

POINT VII

THE TRIAL COURT’S ORAL DECISION,
COMPLETED WITHOUT ANY PRE OR POST
TRIAL BRIEFING IS AMBIGUOUS AND SUBJECT
TO INTERPRETATION.

POINT VIII

THE TRIAL COURT DID NOT ADDRESS
DEFENDANT’S BURDEN TO PROVE THAT
THERE WAS NO BREACH IN HER FIDUCIARY
DUTY.

                                                               A-2806-19
                             8
            POINT IX

            THE RELEVANT POWER OF ATTORNEY
            STATUTES, 20 PA. C.S.A. § 5601.3 AND N.J.S.A. §
            46:2B-8.13(B), IMPOSE A NON-DELEGABLE
            DUTY UPON THE POWER OF ATTORNEY TO
            MAINTAIN HER OWN RECORDS INDEPENDENT
            OF A BANK’S RECORDKEEPING PRACTICES.

                                      I.

      A judge's discovery decision is reviewed for abuse of discretion.

Pomerantz Paper Corp. v. New Cmty. Corp., 207 N.J. 344, 371 (2011). Such an

abuse of discretion occurs when a decision is "made without a rational

explanation, inexplicably departed from established policies, or rested on an

impermissible basis." Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002)

(quoting Achacoso-Sanchez v. I.N.S., 779 F.2d 1260, 1265 (7th Cir. 1985)). We

defer to a court's disposition of discovery matters absent such an abuse of

discretion or a misunderstanding of the law. Rivers v. LSC P'ship, 378 N.J.

Super. 68, 80 (App. Div. 2005).

      The judge did not abuse her discretion by denying plaintiffs' motion to

compel Bonnie to certify her financial information. The requested information

included:

            a balance sheet with supporting schedules and income
            statements; cash and bank money market funds; [any]
            life insurance carried, including group insurance;

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            readily marketable securities and mutual funds;
            nonmarketable securities; real estate for personal use;
            real estate investments; income statements, including
            salary, bonuses, commissions, rental income, interest
            and dividends, capital gains, and other; annual
            expenditures, including property taxes, income taxes,
            mortgage payments, other loan payments, insurance
            payments, rental payments, alimony, child support
            maintenance paid or received, tuition, living and
            medical expenses and other expenses and that’s for a
            per annum for the years from 2003 to 2014.

      First, it is self-evident that certified financial statements do not fall within

the discovery rules. Furthermore, as the judge observed, no one could be

expected to recreate eleven years of detailed financial information without any

access to records. Additionally, plaintiffs did depose Bonnie, providing another

avenue through which to obtain whatever information was available to her .

Thus, it was not an abuse of discretion to deny plaintiffs' application both

because the records were unavailable and alternate means of obtaining the

information were available through interrogatories or deposition.

      Nor was it an abuse of discretion for the judge to have barred the financial

expert, a decision also subject to abuse of discretion review. See Townsend v.

Pierre, 221 N.J. 36, 52 (2015); Brenman v. Demello, 191 N.J. 18, 31 (2007).

      Civil discovery deadlines range from 150 to 450 days.            R. 4:24-1(a).

Plaintiffs' aim of forensically reconstructing Bonnie's financial history was

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                                        10
raised hundreds of days after the rule timeframe. Plaintiffs were over 600 days

late under even the most generous deadline available for a Track IV case, which

is 450 days. See ibid. As the judge said, plaintiffs had already filed for summary

judgment, and it is customary for discovery to be completed before a motion for

summary judgment is filed. In this case, the judge did not abuse her discretion

by denying the admission of an expert report or any of her other rulings

regarding discovery.

                                       II.

      The meaning of "accrued" and the applicability of the discovery rule are

matters of law, which we review de novo. The Palisades at Fort Lee Condo.

Ass'n, Inc. v. 100 Old Palisade, LLC, 230 N.J. 427, 442 (2017).

      A cause of action accrues when the right to file arises. Johnson v. Roselle

EZ Quick LLC, 226 N.J. 370, 394 (2016). The purpose of statutes of limitation

is to enable parties to defend themselves with reliable recollection before

evidence is lost to the passage of time. Lopez v. Swyer, 62 N.J. 267, 274 (1973).

      Although the discovery rule is an equitable rule intended to avoid harsh

consequences from a mechanical application of a statute of limitation, it is not

applicable when a reasonable person exercising ordinary diligence knew or

should have known of the injury at issue. Szczuvelek v. Harborside Healthcare

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                                       11
Woods Edge, 182 N.J. 275, 281, 283 (2005). The party invoking the discovery

rule bears the burden of proof. Caravaggio v. D'Agostini, 166 N.J. 237, 246

(2001); see also Ben Elazar v. Macrietta Cleaners, Inc., 230 N.J. 123, 134-35

(2017).

      In determining whether the discovery rule applies, judges turn to factors

such as:

            the nature of the alleged injury, the availability of
            witnesses and written evidence, the length of time that
            has elapsed since the alleged wrongdoing, whether the
            delay has been to any extent deliberate or intentional,
            [and] whether the delay may be said to have peculiarly
            or unusually prejudiced the defendant.

            [Lopez, 62 N.J at 276.]

We are unconvinced that plaintiffs should avoid application of the statute of

limitations through the discovery rule.

      The judge found that the family knew of decedent's cognitive issues and

inability to care for herself independently as early as 2003. Thus, the judge

rationally applied the six-year statute of limitations beginning in 2004 when

Bonnie first commingled funds in the 835 account. Thus, plaintiffs' claim was

long expired by the time they filed their complaint on May 13, 2016. The judge

rationally found that, had plaintiffs been diligent, they would have learned of

their potential claims years earlier. They knew decedent was unable to manage

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                                      12
her affairs, and they had the opportunity to address the issue when she moved in

with Bonnie. They could have anticipated these potential claims when they

litigated their mother's estate and settled under terms that included decedent's

estate. At that juncture, plaintiffs did not know decedent's will made everyone

a beneficiary, but they obviously suspected Bonnie's management of their aunt's

funds—otherwise, the settlement agreement would have been silent as to their

aunt's finances.

                                          III.

         Plaintiffs claim the trial judge's application of the doctrine of laches was

error.     Laches is an equitable affirmative defense barring recovery where

unexplainable and inexcusable delay in bringing suit prejudiced another party.

Fox v. Millman, 210 N.J. 401, 417 (2012). The trial court has discretion to apply

laches based on the particular circumstances of the case. Mancini v. Twp. of

Teaneck, 179 N.J. 425, 436 (2004). The factors that control the decision include

the length of delay, reasons for the delay, and changes in the parties' conditions

attributable to the delay. Cnty. of Morris v. Fauver, 153 N.J. 80, 105 (1998);

see also Knorr v. Smeal, 178 N.J. 169, 181 (2003) ("The core equitable concern

in applying laches is whether a party has been harmed by the delay."). Decisions

regarding application of the doctrine are reviewed for abuse of discretion. See

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                                         13
United States v. Scurry, 193 N.J. 492, 503-04 (2008) (holding "the application

of the doctrine of laches . . . constituted an abuse of discretion . . . ."). Laches

may apply if a party has both knowledge and opportunity to assert his rights in

the proper forum. Fauver, 153 N.J. at 105.

      There is no doubt that plaintiffs knew of decedent's failing state of mind

and inability to care for herself. Had plaintiffs initiated legal action in 2003, the

financial records would have been available, and Bonnie's recollection would

have been fresh. Yet, over the years, as the judge observed, "there was never

any action taken to check to see what decedent's status was, what Vera's status

was, or to bring an action so they could get access to these two elderly women

who were becoming increasingly frail."

      During the litigation regarding Vera's estate, Patrick demanded in

discovery and photographed documents relating to decedent's financial status,

including her Form 1099, annuity statements, and the POA. The discovery in

that litigation alerted Patrick to at least some of the same issues regarding

Bonnie's control of decedent's accounts. He even accused Bonnie of isolating

the two women from plaintiffs. Plaintiffs had the same concerns then as now;

they should have filed then. Instead, they did nothing for years. The judge's

application of laches to bar their claims is thus proper.

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                                        14
      There is no discernible reason why plaintiffs delayed litigation about

decedent's estate when they were suspicious of Bonnie's management of

decedent's funds as early as 2011. Their failure to sue earlier left Bonnie without

the records necessary to defend herself, essentially without recourse.

      Bonnie's argument that laches is unavailable to persons who commit fraud

is inapposite. The judge found no fraud. Additionally, given that the three

women lived together for years, and shared expenses before decedent went to

the nursing home, innocent commingling of funds was to be expected. Although

the judge did find that Bonnie breached her fiduciary duty by commingling, the

judge also concluded the breach did not damage plaintiffs. Bonnie did not

actively or maliciously engage in conduct hidden from plaintiffs. Hence, the

judge was justified in applying laches because plaintiffs' unexplained and

inexcusable delay prejudiced Bonnie. See Millman, 210 N.J. at 412.

                                       IV.

      As required by Rule 1:7-4, the judge made the required factual findings

and thoroughly explained her legal conclusions. Because trial judges have

opportunities to view demeanor, and decide matters that are largely testimonial

and involve questions of credibility, we review their decisions in that arena

deferentially. Slutsky v. Slutsky, 451 N.J. Super. 332, 344 (App. Div. 2017).

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                                       15
We disturb such factual findings, and even legal conclusions, only when

convinced they are "so manifestly unsupported by or inconsistent with the

competent, relevant, and reasonably credible evidence as to offend the interests

of justice." In re Forfeiture of Pers. Weapons and Firearms Identification Card

belonging to F.M., 225 N.J. 487, 506 (2016) (quoting Rova Farms Resort v.

Invs. Ins. Co., 65 N.J. 474, 484 (1974)). The judge's findings do not fit that

category.

      Applying the statute of limitations and laches, the judge only found

Bonnie failed to account for an October 7, 2013, withdrawal of $15,000. This

was the basis for her award to the estate. Despite the judge's conclusion that

there were other unexplained transactions, she barred recovery for those

transactions because they fell within the timeframe covered by the statute of

limitations and laches.

      By designating certain transactions as "unexplained," the judge did not

characterize them as a wrongful taking of decedent's assets. This was reasonable

in terms of the payments that Bonnie made towards the care of both her elderly

relatives and of "unexplained" deposits. For example, the judge found no

reimbursement for credit card expenses—yet Bonnie testified that she was

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                                      16
reimbursed from the 835 account for credit card expenses incurred on decedent's

behalf.

      Plaintiffs assert the unexplained withdrawals total $254,433.70. This sum

is less than the Medicaid lien. As it stands, the award of $15,000 payable by

Bonnie passes through the estate in satisfaction of the Medicaid lien. We see no

error in any of the judge's findings of fact or conclusions of law, and we are

frankly unclear as to how plaintiffs could recover any damages given the amount

of the Medicaid lien.

                                       V.

      Plaintiffs' other alleged points of error are so lacking in merit as to not

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

      Affirmed.

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                                      17