Court Opinion

ID: 4547002
Source: CourtListenerOpinion
Date Created: 2020-07-09 14:08:37.805237+00
Date Added: 2024-06-11T08:53:04.887753
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NOT FOR PUBLICATION WITHOUT THE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-3835-18T2

IN THE MATTER OF MARILYN
NIPPES, an Incapacitated Person.

                Argued telephonically May 7, 2020 –
                Decided July 9, 2020

                Before Judges Alvarez and Suter.

                On appeal from the Superior Court of New Jersey,
                Chancery Division, Monmouth County, Docket No. P-
                000448-16.

                Barbara A. Nippes, appellant, argued the cause pro se
                (Lawrence Bluestone, on the briefs).

                Michael J. Canning argued the cause for respondent
                Scott Napolitano (Giordano, Halleran & Ciesla,
                attorneys; Michael J. Canning, of counsel and on the
                brief).

PER CURIAM
      Appellant Barbara A. Nippes 1 appeals from a March 22, 2019 Probate Part

order approving a partial settlement and denying, on procedural grounds, her

cross-motion for the removal of a court-appointed guardian of the property of

Marilyn Nippes, Barbara's mother. A May 15, 2018 consent judgment declared

Marilyn an incapacitated person (Consent Judgment). Barbara also appeals the

Probate Part's May 3, 2019 order, approving the final aspect of the settlement

with a third defendant. For the reasons that follow, we affirm.

      In 1980, Marilyn, along with her late husband Paul, founded Magnetic

Products & Services, Inc. (MPS). The company distributes a groundbreaking

portable lightweight machine created by Paul that controls, reduces, or

eliminates residual magnetism in certain materials.

      In   2013,   MPS    sued    former   employees    and       consultants   for

misappropriation of trade secrets (IP litigation). A parallel proceeding was

initiated in federal court but stayed pending the outcome of the state case. The

named plaintiff alleged defendants stole MPS's design, creating a competing

company to sell a similar product. MPS's expert report calculated the company

1
  We refer to the parties by their first names in order to distinguish between
family members. No disrespect is intended by the usage.
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suffered nearly $2.5 million in damages from defendants' wrongful actions and

added $1.3 million as fees and costs to that figure.

      Marilyn was MPS's chief financial officer and became the sole

stockholder in the company following Paul's death. In 2016, Marilyn's daughter

Pamela filed the complaint for guardianship, which resulted in the 2018 Consent

Judgment. Barbara was appointed Marilyn's guardian of the person, while Scott

Napolitano, MPS's accountant, was appointed guardian of her property. It was

Napolitano who sought approval of the settlement terms and who Barbara sought

to remove.

      After the initiation of Marilyn's guardianship proceeding, the Probate Part

appointed Michael Canning, Esquire, as temporary guardian. In a report to the

court discussing the Nippes family's positions on the status of the IP litigation,

he indicated that Elizabeth and Pamela, Barbara's sisters, both identified Barbara

as the driving force behind the litigation. Elizabeth and Pamela were concerned

about litigation expenses, while Barbara, although cognizant of the legal fees,

strongly supported the litigation. Unsurprisingly, Marilyn, who is incapacitated,

was not aware of the amount of fees and was confused as to the litigation's status.

      In 2013, years before Pamela initiated the guardianship proceeding, but

shortly after the IP litigation was filed, the family met to discuss a potential

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settlement.    Because Barbara wanted the IP litigation to continue, and

represented that Marilyn did not want to settle, it proceeded for over three years

funded with money from the company and from Marilyn's accounts.

      Canning, on the other hand, recommended that the matter be resolved by

way of settlement, if possible, within a certain budget. Settlement was a major

focus of the activities engaged in by the attorneys handling the litigation.

      After his appointment, Napolitano also engaged in vigorous settlement

efforts. Eventually, the defendant company agreed to pay $300,000 in four

installments, redesign its own machine without use of MPS's trade secrets, pay

a fifteen percent royalty on products sold during the redesign period, and not

sell any infringing products in the future. An additional defendant agreed to pay

$60,000 and not to use MPS's trade secrets going forward. Napolitano sought

court approval of the settlement terms. In addition to opposing the settlement,

Barbara cross-moved seeking Napolitano's removal.

      The relevant paragraphs of the Consent Judgment, which controlled the

trial judge's decision as well as our own, state:

              [Paragraph seven]
              Scott G. Napolitano shall serve as Guardian of the
              property in connection with all aspects of the Estate of
              Marilyn Nippes, with the exception of decisions
              affecting Magnetic Products and Services, Inc.
              (“MPS"). Any decisions affecting MPS, except for

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           decisions related to day to day operations [sic], shall be
           guided by an advisory panel consisting of Barbara
           Nippes, Pamela Brittingham and Elizabeth Galano (the
           “Sisters.") The Sisters shall confer on a monthly basis
           to discuss and decide any such decisions affecting MPS
           by a majority vote. Any decisions voted by the Sisters
           shall be recommended to Scott G. Napolitano for
           action, at which Scott G. Napolitano will be guided, but
           not bound, by such recommendation. Any material
           decisions affecting MPS shall require a unanimous vote
           among the Sisters. In the event of a disagreement
           among the Sisters regarding a decision requiring a
           unanimous vote, the Sisters shall agree to resolve the
           dispute by binding arbitration. If any of the Sisters
           intends to begin an arbitration to resolve the lack of
           unanimous vote, such Sister shall provide written
           notice (the “Arbitration Request") to the other Sisters
           of such intention and a statement of the dispute.

                 ....

           [Paragraph ten]
           GUARDIAN LIMITATIONS: If applicable, the
           authority of the guardian(s) is limited as follows, and
           all limitations shall be stated in the Letters of
           Guardianship. The Guardian(s) of the Property, Scott
           G. Napolitano, may not alienate, mortgage, transfer or
           otherwise encumber or dispose of real property and/or
           shares of stock in MPS and may not terminate a
           litigation pending in Union County entitled Magnetic
           Products and Services, Inc. v. Demag Solutions, LLC,
           et al., UNN-C-89-13 and the Federal Copyright Case,
           without court approval.

     Pamela and Elizabeth supported the terms of the proposed settlement. In

a certification, Pamela stated four different law firms had recommended that

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they settle the IP litigation. Napolitano's position is that the monetary damages

reflect the financial resources of the defendants, although obviously less than

the expert's estimate of damages.       Settlement would stop the substantial

expenditure of legal fees and costs.        Barbara asserts that Marilyn opposes

settlement, and that it is a waste of time and money to pursue it given the very

strong likelihood of success at trial. Barbara did not believe the settlement terms

were fair. She further objected to the fact that Napolitano did not seek to

ascertain Marilyn's view on the litigation, and did not go through the process

she alleged was necessary before a final settlement could be reached—binding

arbitration among the sisters pursuant to paragraph seven of the Consent

Judgment.

      Having considered the moving papers and heard oral argument on the

motions, the judge, the same person who signed the Consent Judgment, applied

ordinary rules of construction to the interpretation of the two paragraphs. She

opined the language was plain and unambiguous, and that Barbara's suggested

enforcement of the arbitration language in paragraph seven would render the

language of paragraph ten superfluous. She characterized the inherent logic of

her decision as mirroring the logic of the agreement, including that paragraph

ten governed the issue of the termination of the IP litigation. The lengthy

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process of arbitration, complete with discovery and hearings, would require "a

mini trial" which would delay and make superfluous any court approval of a

settlement. The judge further observed that the IP litigation was difficult, highly

technical, and the settlement extracted a lifetime injunction from a defendant.

Although the damages were substantially less than just the legal fees already

paid, given defendants' financial resources, they were realistic. Thus, the judge

held that arbitration was not necessary before the court acted on Napolitano's

application. The second order merely approved the settlement agreement with

a different IP litigation defendant, and the judge did so for the same reasons as

stated when she approved the initial settlement. The court denied the cross-

motion for removal of Napolitano on the basis it was procedurally improper, and

should have been pursued under N.J.S.A. 3B:12-24 and Rule 4:86.

      By way of appeal, Barbara raises the following points:

            I. THE TRIAL COURT ERRED IN DENYING
            BARBARA'S CROSS-MOTION FOR REMOVAL OF
            THE GUARDIAN OF THE PROPERTY UNDER
            RULE 4:86-7 ON PROCEDURAL GROUNDS.

            II. THE TRIAL COURT'S APPROVAL OF THE
            SETTLEMENT       AGREEMENTS       WAS
            PROCEDURALLY     AND    SUBSTANTIVELY
            FLAWED.

            A. The Trial Court Misinterpreted the Consent
            Judgment.

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               B. The Approval of the Settlement Agreements Was
               Substantively Flawed Because the Trial Court Ignored
               Evidence Regarding the Guardian's Failure to Properly
               Follow the Requirements of the Consent Judgment,
               Including the Requirement to Consult with His Ward.

                                         I.

         The parties dispute the relevant standard of review. Barbara urges us to

apply a de novo standard, while Napolitano urges a deferential de novo standard.

Napolitano contends federal caselaw supports the position that a trial court's

interpretation of its own consent judgment is owed deference by a reviewing

court.

         A consent judgment is both a judicial decree and a contract—"it is not

strictly a judicial decree, but rather in the nature of a contract entered into with

the solemn sanction of the court." Cmty. Realty Mgmt., Inc. for Wrightstown

Arms Apartments v. Harris, 155 N.J. 212, 226 (1998) (quoting Stonehurst at

Freehold v. Township Comm., 139 N.J. Super. 311, 313 (Law. Div. 1976)).

Defined differently, a consent judgment is "an agreement of the parties under

the sanction of the court as to what the decision shall be." Ibid.; see also DEG,

LLC v. Twp. of Fairfield, 198 N.J. 242, 261 (2009) ("Indeed, a consent judgment

'is an agreement that the parties desire and expect will be reflected in, and be

enforceable as, a judicial decree that is subject to the rules generally applicable

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                                         8
to other judgments and decrees.'") (quoting Rufo v. Inmates of the Suffolk Cty.

Jail, 502 U.S. 367, 378 (1992)).         Contract principles apply to a consent

judgment, and it is treated as a quasi-contract. See Harris, 155 N.J. at 226.

         In Kaur v. Assured Lending Corp., 405 N.J. Super. 468, 474 (App. Div.

2009), we held that interpretation of a settlement agreement was subject to de

novo review. While not a consent judgment, the court there relied on the well -

known adage that "[a] trial court's interpretation of the law and the legal

consequences that flow from established facts are not entitled to any special

deference." Ibid. (quotations omitted). Given the similarity to a contract,

interpretation of a consent judgment should be reviewed de novo. Cf. Capparelli

v. Lopatin, 459 N.J. Super. 584, 605 (App. Div. 2019).

                                         II.

         We agree with the trial court that Barbara's interpretation of the Consent

Judgment—that the sisters must proceed to binding arbitration before seeking

court approval of the settlement—renders the terms of paragraph ten

superfluous. This is especially true given that Barbara's arguments revolve

around the terms of the settlement itself, not the decision to settle in the first

place.     Her concern was that the compensation defendants would pay was

grossly inadequate in light of the harm done. She was also of the opinion that

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Marilyn's wishes should be consulted.          Thus, our discussion is limited to

Barbara's challenge to the terms of the settlement agreement.

      The terms of the settlement agreement, as described by Napolitano at the

time the trial judge issued her March decision, seem realistic given the nature of

the defendants. $360,000 is significantly less than the alleged damages, but

MPS's own law firm concluded that "none of the Defendants have any

significant assets which could be used to satisfy a large judgment against them."

Obviously, the collection of a judgment equivalent to the millions of dollars

alleged would only lead to further litigation costs, and a further drain on the

incapacitated ward's assets. That assumes that MPS prevailed at trial. A modest

settlement with defendants who each have limited resources, but who agree to

being enjoined from future use of the property at issue, is eminently reasonable.

      Barbara contends that by failing to ascertain Marilyn's views, Napolitano

failed in his duty as guardian. The issue should be addressed if Barbara files a

new application to remove him.         The argument goes to Barbara's concern

regarding his fulfillment of his role and is best left for resolution on another day.

                                        III.

      Rule 4:86-7(c) states that "an interested person on [an incapacitated

person's] behalf, may seek review of a guardian's conduct and/or review of a

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                                        10
guardianship by filing a motion setting forth the basis for the relief requested."

A cross-motion, specifically, "may be filed and served by the responding party

. . . only if it relates to the subject matter of the original motion . . . ." R. 1:6-3(b).

       Here, the trial court determined that Barbara's cross-motion to remove

Napolitano as the guardian of the property was procedurally deficient, in

violation of N.J.S.A. 3B:12-24 and Rule 4:86-1. However, it is clear that Rule

4:86-7(c) allowed Barbara to file the cross-motion; the issue is whether the

cross-motion to remove Napolitano relates to Napolitano's motion to approve

the settlement.

       Barbara's cross-motion to remove Napolitano does not relate to the motion

to approve the settlements. Napolitano sought the court's approval on the exact

terms of the settlement agreements. At the March 22 hearing, Barbara's attorney

made vague allegations as to Napolitano's conduct that were not at all related to

the terms of the settlement agreements. He implied that Napolitano was not

providing access to "information" and claimed he was not "neutral." He also

implied that Napolitano had not ascertained Marilyn's wishes as to the IP

litigation, and failed to provide adequate notice or the "opportunity to go through

things before they're discarded."         However, Barbara makes no attempt to

expound on these allegations, and the record does not support her allegations.

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Nonetheless, her complaints relate to the process leading to the settlements, not

the resolution of the litigation. Her cross-motion was not related to Napolitano's

motion. Therefore, the trial court was correct to deny it on procedural grounds.

      Affirmed.

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