Although many other states have increasingly recognized the tort of intentional interference with an inheritance, New Jersey has been slow to do so, flirting with it. Many practitioners prefer to bring the tort action rather than a straight undue influence claim because of the availability of punitive damages, often in the form of attorneys' fees. A New Jersey Superior Court seems to find a new approach to this problem. It allowed the shifting of attorneys' fees in an undue influence case, Blumeling v. Stalker, 2006 WL 721837 (N.J. Super. March 20, 2006.
Gladys Blumeling owned a home in Bergenfield, New Jersey from 1939 until January of 2004. Her grandson, Jon Stalker, lived with her for a period of time. In January of 2004, Gladys, then 91-years-old, deeded the property to Jon and executed a will naming him as executor and primary beneficiary. She also signed a power of attorney designating Jon as her agent. Shortly thereafter, Jon died.
In July of 2004, Gladys was judicially declared incapacitated. Her son, Charles, was appointed as guardian of her person and estate. Charles brought legal action against Norman Stalker, Jon's father, as administrator of Jon's estate. Charles' complaint alleged that Jon had committed undue influence upon Gladys and improperly induced her to execute the deed and will. Charles' complaint sought compensatory and punitive damages as well as attorneys' fees. Charles the guardian wanted the house given back to Gladys.
Norman defended against the action, claiming that Gladys deeded the property to Jon and included him in her will because of the excellent care and dedication he'd shown her. One of the items introduced at the trial was a videotape of Gladys' execution of the documents. But apparently that tape was damning.
The lower court declared that the tape showed Jon to be the "impresario" of a "charade" to deprive Gladys of her primary asset (her home) and that Gladys was not competent to execute the deed or will. Accordingly, the trial court invalidated the deed and will, having found that they resulted from undue influence.
On July 29, 2005, Charles filed a complaint seeking attorneys' fees and costs incurred to prosecute the guardianship action and set aside the deed and will. Norman requested summary judgment. Charles filed a cross-motion for summary judgment.
The court's analysis as to the attorneys' fees issue began with stating the general rule that New Jersey has a strong public policy against shifting attorneys' fees, thus parties must generally bear their own fees and costs (the so-called "American Rule"). The court did note an exception to the American Rule, however, when a plaintiff has been forced by the wrongful conduct of a tortfeasor to institute litigation against a third party.
The court then engaged in a lengthy discussion of a 2003 New Jersey case: In re Niles, 176 N.J. 282, 823 A.2d 1 (2003).
Niles was an undue influence case involving Laura Niles. Laura's sister-in-law, Serena Bono, and Serena's son, Salvatore, unduly influenced Laura to execute various living trusts heavily favoring them. The trusts also named Salvatore as trustee, allowing Salvatore and Serena to embark on what the court described as a 16-month "looting spree" of Laura's trust estate. The lower court found a clear case of undue influence, found the trusts to be void and found an exception to the American Rule when an executor or trustee has committed undue influence:in other words, holding that when a fiduciary commits undue influence, reasonable fees and costs may be assessed against that fiduciary. The Niles court focused on the "'special status' of the undue influence tort" as an "egregious intentional tort that . . . establishes a basis for punitive damages."
The Bluemling court -- in deciding to award attorneys' fees, refined the Niles decision, and stated that the fiduciary status (or lack thereof) of one who commits undue influence is not a necessary condition in determining whether attorneys' fees should be shifted; the focus should be on the undue influence itself. The Blumeling court used several "ious" adjectives to describe undue influence -- including "pernicious," "perfidious" and "insidious" -- and to justify fee shifting in undue influence cases.
The court also rejected Norman's argument that Jon did not receive a significant benefit from his undue influence (a mere $250,000, whereas the wrongdoers in Niles received more than $1 million). As in fraud cases, the court said, there are no meaningful gradations of undue influence.
Moreover, the Blumeling court rejected Norman's efforts to distinguish the case at bar from Niles because Niles involved "strangers organizing and plotting" to swindle the victim, whereas Blumeling involved a grandson taking care of his grandmother. The court found that the relationship between the person committing undue influence and the victim is not pivotal. What are the "take aways" from this case? Several -- and they're pretty interesting.
- Many states recognize a presumption of fraud when a fiduciary benefits at the expense of his principal. The handmaiden of fraud is, of course, punitive damages. The Blumeling court starts from that model, then appears to minimize the relationship as part of the required elements, although it should be noted that Jon held a power of attorney for his grandmother.
- Undue influence itself is now a tort in New Jersey and allows at least for the shifting of fees, if not outright punitive damages. It remains to be seen whether New Jersey extends this holding to other forms of inheritance, such as trusts and life insurance, which are generally covered by tortious interference.
- Here is yet another forum that allows the validity of a will to be adjudicated while the testator is still alive, although in this case legally incompetent.
- Finally, Jon's estate learns the hard way that videotape is no panacea. Will proponents are often better off without such evidence when a testator is likely to look frail or confused.
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