EHRLICH v. MCINERNEY et al
Filing
31
OPINION. Signed by Judge Noel L. Hillman on 12/13/2017. (dmr)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
JONATHAN EHRLICH,
Plaintiff,
1:17-cv-879 (NLH/KMW)
OPINION
v.
DENNIS P. McINERNEY, ESQ., et
al.,
Defendants.
APPEARANCES:
PETER A. OUDA
PETER A. OUDA, LLC
19 NORTH BRIDGE STREET
SOMERVILLE, NEW JERSEY 08876
On behalf of Plaintiff
JOHN L. SLIMM
MARSHALL, DENNEHEY, WARNER, COLEMAN & GOGGIN
15000 MIDLANTIC DRIVE, SUITE 200
P.O. BOX 5429
MOUNT LAUREL, NEW JERSEY 08054
On behalf of Defendant Dennis P. McInerney
HILLMAN, District Judge
This matter arises from almost a decades’ worth of
litigation regarding the Estate of Richard D. Ehrlich
(“Decedent”).
In this federal court action, Plaintiff Jonathan
Ehrlich, Decedent’s nephew, brings a breach of fiduciary duty
claim against Defendant Dennis P. McInerney, the temporary
administrator of the Estate. 1
Defendant filed a Motion to Dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(1) and 12(b)(6).
The Court does
not find the Rooker-Feldman doctrine precludes this Court from
exercising jurisdiction over this matter and thus does not find
this matter can be dismissed under Rule 12(b)(1).
The Court
will, however, grant the motion to dismiss pursuant to Rule
12(b)(6), as the Court finds N.J.S.A. 3B:17-8 and the entire
controversy doctrine require dismissal of the breach of
fiduciary duty claim against Defendant.
I.
The Court takes its facts and procedural posture not from
Plaintiff’s complaint, but from the various state court
decisions preceding and related to this federal case, as a more
thorough recitation of the facts and procedural history is
necessary. 2
1
Plaintiff also brings claims against Re/Max World Class
Realty, Thomas W. Sasaki, O’Hara Appraisals, and Martin T.
O’Hara. These defendants are not part of this motion to
dismiss. In this Opinion, the Court refers to McInerney, the
sole moving defendant, as “Defendant” for ease of reference.
2
As detailed later in this Opinion, the Court’s
consideration of these state court decisions is permissible both
in considering objections to its exercise of jurisdiction over
this matter pursuant to Federal Rule of Civil Procedure 12(b)(1)
and in consideration of the motion to dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6), which implicates New
Jersey preclusion doctrines.
2
The following background facts come from the New Jersey
Superior Court, Appellate Division (“Appellate Division”)’s June
29, 2012 decision, In re Estate of Ehrlich, 47 A.3d 12 (N.J.
Super. Ct. App. Div. 2012), certif. denied, 59 A.3d 602 (N.J.
2013), appeal dismissed, 64 A.3d 556 (N.J. 2013).
Decedent was
a trust and estates attorney in Burlington County, New Jersey.
Id. at 13-14.
He died on September 21, 2009, with his only next
of kin being his nephews, Todd Ehrlich and Plaintiff, and his
niece Pamela Venuto.
Id. at 14.
While Decedent had not had
contact with Todd or Pamela for over twenty years, he maintained
a close relationship with Plaintiff, who he had told friends was
the person to contact if he were to die and was the person to
whom he would leave his estate.
Id.
Upon learning of Decedent’s death, a search for Decedent’s
will ensued.
Id.
Plaintiff located a copy of a purported will
in a drawer in Decedent’s home.
Id.
On December 17, 2009,
Plaintiff filed a complaint seeking to have the purported will
admitted to probate.
Id.
Todd and Pamela objected.
Id.
Defendant, who had previously been named as Trustee of
Decedent’s law practice, was appointed as temporary
administrator.
Id.
While Defendant was ordered to inspect
Decedent’s home, no other document purporting to be Decedent’s
will was ever located.
Id.
The purported will that was recovered provided a specific
3
bequest of $50,000 to Pamela, a specific bequest of $75,000 to
Todd, twenty-five percent of the residuary to pass through a
trust to a friend, and seventy-five percent of the residuary to
pass to Plaintiff.
Id.
was admitted to probate.
On April 20, 2011, the proffered will
Id. at 13.
The court then denied a
motion for reconsideration on June 20, 2011.
Id.
The Appellate
Division then affirmed, finding the will was properly admitted
to probate.
Id. at 19.
While the decision was appealed to the
New Jersey Supreme Court, Plaintiff’s complaint provides that
the matter was settled by the siblings.
On January 18, 2013, Judge Karen L. Suter of the Superior
Court of New Jersey, Chancery Division granted Defendant’s
motion for instructions and to allow a settlement with regard to
two actions pending against the Estate arising from Decedent’s
law practice: IMO Estate of Farias v. Estate of Ehrlich and
Farias v. Estate of Ehrlich.
Defendant filed the motion for
instructions believing settlement of the matters was in the best
interest of the Estate, as he believed the Estate could
potentially be liable for more than the settlement amount.
Plaintiff opposed the motion, arguing “more information is
required before a determination of the propriety of the
settlement can be made."
Judge Suter determined Defendant was
“acting within his powers as temporary administrator” and thus
approved the settlement.
The settlement was thereafter
4
consummated.
On July 15, 2011, Judge Michael J. Hogan of the Superior
Court of New Jersey, Chancery Division approved Defendant’s
first intermediate account on behalf of the Estate.
By a May
23, 2012 Order, Judge Suter denied Plaintiff’s motion to vacate
the July 15, 2011 court order. 3
his motion to vacate.
Plaintiff appealed the denial of
In re Estate of Ehrlich, 2013 WL 2476490.
The Appellate Division affirmed, stating:
The present case provides no basis for disturbing the
July 15, 2011 order approving respondent’s intermediate
accounting. Appellant, by his own admission, knew the
accounting to be incomplete upon his receipt of the
document yet neither filed any exceptions nor voiced any
objection to the accounting at the hearing on its
approval.
Moreover,
all
acknowledged
that
the
accounting was interim in nature and that the final
accounting would include the assets belatedly brought to
the administrator’s attention by appellant.
Id. at *1.
In a July 25, 2014 decision, Judge Mary C. Jacobson of the
Superior Court of New Jersey, Chancery Division considered
3
The Appellate Division provided the following background
information regarding the underlying motion. In re Estate of
Ehrlich, No. 4714-11, 2013 WL 2476490, at *1 (N.J. Super. Ct.
App. Div. June 11, 2013). Plaintiff did not file any exceptions
to the first intermediate accounting, but after an order was
entered approving it, Plaintiff filed a motion to remove the
temporary administrator, sought the turnover of all papers and
files, and sought an audit and investigation of the
administration of the Estate. Id. After that motion and a
motion for reconsideration were denied, Plaintiff moved to
vacate the order approving the accounting, predominantly on the
grounds that the accounting failed to include certain assets of
the Estate. Id.
5
exceptions to a final accounting filed for Decedent’s Estate, a
motion seeking removal of Defendant as temporary administrator
and appointment of Plaintiff as executor, and applications by
Defendant and two other attorneys for fees payable from the
Estate.
In the course of considering the exceptions to the
accounting, Judge Jacobson considered Plaintiff’s complaint that
the sale price of Decedent’s home was substantially less than
its value as set forth in prior appraisals.
Judge Jacobson
found, while the property had originally been appraised around
$350,000 at Decedent’s death and for a couple years thereafter,
Defendant had only received offers well below the original
appraisal value.
Defendant thus sought two updated appraisals,
which determined the appraisal value had dropped to somewhere
around $225,000 to $250,000, with necessary repairs
approximating over $107,000.
Defendant thus sought instructions
from the court as to whether he should accept an offer of
$212,500 or make repairs to the property to try to rent it until
the market improved.
After hearing Plaintiff’s opposition,
Judge Suter approved and authorized the proposed sale.
Judge Jacobson concluded:
The record reveals no action taken by Mr. Ehrlich
to stop the sale after Judge Suter’s ruling. Moreover,
Mr. Ehrlich has presented no evidence that would allow
this court to set aside Judge Suter’s Order . . . . To
allow Mr. Ehrlich to re-litigate this issue after the
property has been sold in an effort to obtain a surcharge
would be unjust and oppressive to the Temporary
6
Administrator. When a fiduciary has properly applied to
the probate court for advice and direction with respect
to a transaction involving the administration of the
estate and acts in accordance with the court’s
instructions, it would be inequitable to allow an
exceptant who had an opportunity to be heard at the time
of the application to the court for instructions to later
pursue the same objection through an exception to the
final accounting.
By that time the Temporary
Administrator’s actions had been sanctioned by the court
and should be given res judicata effect.
To allow
otherwise by an exceptant would create havoc in the
administration of estates, leaving none but the
foolhardy willing to serve as fiduciaries.
Mr.
McInerney proceeded to sell the property only after
court approval and an opportunity for Mr. Ehrlich to be
heard.
Mr. Ehrlich’s exception to the sale of the
property must therefore be denied.
The Court also addressed Plaintiff’s allegation that
Defendant did not take adequate steps to locate Decedent’s will
on his computer:
Even if this claim is true, Mr. Ehrlich offers no
explanation as to how this failure caused any loss to
the Estate. The writing that was admitted to probate
pursuant to N.J.S.A. 3B:3-3 by Judge Hogan, who issued
a Judgment to this effect that was upheld by the
Appellate Division, was a paper copy of a will, unsigned
by the decedent and any witnesses, but which bore a
notation in the handwriting of the decedent stating,
“original mailed to H.W. Van Sciver 5/20/00.”
. . .
Because this document was admitted to probate, any
failure to locate a draft of this document on the
decedent’s computer caused no loss to the Estate or to
Mr. Ehrlich. Whether the decedent had any other draft
of a different purported will on his computer and whether
that different draft would have benefited Mr. Ehrlich is
mere speculation.
Moreover, any draft of an alleged
will retrieved from the decedent’s computer would lack
the handwritten notation that both the chancery court
and the Appellate Division relied upon in deciding that
the decedent intended to constitute his will.
Also in addressing the exceptions, the state court stated
7
Plaintiff’s “numerous allegations of duplicitous conduct” by
Defendant were “factually unsupportable in the record before the
court.”
Rather, the court found Defendant “acted appropriately
in bringing issues to the attention of the court for direction
and presenting his accountings to the court for approval.”
Later in the opinion, in addressing the motion to remove
Defendant as temporary administrator, the court stated: “Mr.
Ehrlich has not demonstrated that there has been a flagrant
dereliction of duty by the Temporary Administrator . . . .”
Judge Jacobson ultimately approved the account in all respects.
In an October 30, 2015 Motion Hearing, Judge Jacobson
considered a motion by Defendant seeking an order awarding
attorneys’ fees and costs to him, providing direction as to
payment of an attorneys’ fee award, and seeking direction as to
the distribution of the balance of the Estate, among other
requests.
Plaintiff opposed the motion, largely based on the
alleged failure of Defendant to pursue a particular asset of the
Estate – a condominium titled in Decedent’s name in the Harbour
House Towers of Freeport in the Grand Bahamas.
Judge Jacobson explained that, with regard to an earlier
motion, Plaintiff noted that he located a condominium in the
Bahamas in Decedent’s name.
have been signed by Decedent.
He provided a deed purported to
Plaintiff also provided an e-mail
exchange between him and Harbour House, in which Harbour House
8
confirmed Decedent owned a unit.
Judge Jacobson then recounted
a series of e-mails showing Plaintiff was aware of the
possibility that Decedent owned the condominium in the Bahamas
since June 2010.
Defendant certified he was not made aware Decedent had an
interest in property in the Bahamas, and if he had been so
aware, he would have taken action to transfer the property to
the Estate.
Judge Jacobson concluded:
The Court is not convinced that Mr. McInerney, on
the basis of the record before it, was ever informed
about the Bahamas property and . . . made aware that it
was something he should investigate. Jonathan Ehrlich
himself had access to the decedent’s files and
documents. It is throughout the record of this lengthy
estate litigation that he had removed documents and
files
prior
to
Mr.
McInerney’s
appointment
as
administrator. . . .
. . . .
N.J.S.A. 3B:17-8 provides that a judgment allowing
an account after due notice shall be res adjudicata as
to all exceptions which could or might have been taken
to the account and shall constitute, exonerate and
discharge the fiduciary from all claims of all
interested parties, and the statute was relied upon by
the Appellate Division in the earlier estate litigation
in refusing to allow Mr. Ehrlich to raise issues as to
Mr. McInerney’s performance that could have been raised
in the first accounting but were not . . . .
Since Mr. Ehrlich was aware of the claim that the
decedent owned a condominium in the Bahamas prior to the
first and second accountings and failed to file an
exception in this regard to either accounting the Court
finds that the judgments approving both accountings
constitute res adjudicata and eliminate any liability on
the part of Mr. McInerney with regard to the Bahamas
property.
9
Similarly, in addressing Defendant’s fee request, the court
noted Plaintiff “claim[ed] that the Estate ha[d] been mishandled
in many respects,” but the court found Plaintiff’s allegations
meritless. 4
In this federal court action, Plaintiff’s complaint brings
only one count against Defendant for breach of fiduciary duty.
Plaintiff alleges that, as a court-appointed fiduciary,
Defendant “owed a common law and statutory duty of care to the
beneficiaries and to the estate.”
The complaint claims
Defendant breached his fiduciary duty to Plaintiff and breached
his duty, as an attorney, to comply with the Rules of
Professional Conduct – specifically Rules 3.3 and 4.1.
The
following averments are the bases for Plaintiff’s claim of a
breach of fiduciary duty:
•
“He had the obligation to perform a thorough search of
the decedent’s home and law office to locate the Will
and/or evidence of such and he failed to do so.”
•
“He had the obligation to maintain and preserve all of
the papers and property of the decedent but instead he
unilaterally and without court authorization discarded
papers and property which Jonathan directed that he not
discard and or destroy.
He had the duty to properly
account for and evaluate all assets and obtain fair
market value of assets disposed of.
He failed to do
so.”
•
“He withheld documents, suppressed, destroyed and or
4
The Court notes that there were additional proceedings and
issues before the state court not addressed in this Opinion.
This Court recites only those proceedings, issues, and findings
it finds necessary for deciding this Opinion.
10
spoliated evidence needed by Jonathan to review the
accountings he submitted in a proper manner.”
•
“Years later, in or about March of 2015, Mr. McInerney
destroyed all of the documents that were in the
decedent’s law office, which documents he had been
ordered and or requested to maintain.
This was done
despite the fact that he knew that there were ongoing
concerns voiced by Mr. Ehrlich about missing documents.
This destruction of documents was also done in the face
of repeated directives of Mr. McInerney that no items
could be removed from the office.”
•
“Mr. McInerney in contravention of his fiduciary role
also severely undersold estate assets such as the
decedent’s home in Delanco, New Jersey. The home was
appraised at $350,000.00 but it was undersold by over
$100,000.00.”
•
“[H]e had listed for sale the decedent’s law office for
$300,000 but as of 2014 he suggested in open court before
Judge Jacobson that the property should be donated
because it had little value.”
•
“He also was placed on notice of an asset of the estate,
namely a condo in the Bahamas but he failed to undertake
any investigation whatsoever to locate it and have it
timely administered.”
•
“Mr. McInerney, in his role as a fiduciary, settled a
lawsuit that was filed against the decedent’s estate
without fully investigating the merits of the action and
without defending the case in a manner that was
consistent with his obligations to preserve the assets
of the estate.”
•
“Most if not all of the order[s] procured by Mr.
McInerney were procured through fraud deception and or
misrepresentation, including the two accounting orders,
the orders for the sale of the house contents, the orders
relative to the sale of the decedent’s personal and real
property and the settlement of the Farias litigation.”
II.
The Court first addresses its jurisdiction over this
11
matter.
This Court has diversity jurisdiction pursuant to 28
U.S.C. § 1332(d), as the parties are diverse and the amount in
controversy exceeds $75,000.
However, Defendant argues the
Rooker-Feldman doctrine precludes this Court from exercising
jurisdiction over this matter.
Accordingly, Defendant moves to
dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1).
For the reasons that follow, the Court finds the Rooker-Feldman
doctrine does not bar the Court’s jurisdiction over this matter.
A. Standard for Dismissal Pursuant to Federal Rule of Civil
Procedure 12(b)(1).
Federal Rule of Civil Procedure 12(b)(1) permits a court to
dismiss a case for lack of subject matter jurisdiction.
There
are two types of motions that fall under Rule 12(b)(1):
“12(b)(1) motions that attack the complaint on its face and
12(b)(1) motions that attack the existence of subject matter
jurisdiction in fact, quite apart from any pleadings.”
Mortensen v. First Fed. Sav. & Loan Ass’n, 549 F.2d 884, 891 (3d
Cir. 1977).
The procedure under these two types of motions is
“quite different.”
Id.
“The facial attack . . . offer[s]
similar safeguards to the plaintiff” as under Rule 12(b)(6) and
Rule 56.
Id.
Thus, under a facial attack, “the court must
consider the allegations of the complaint as true.”
Id.
“Because at issue in a factual 12(b)(1) motion is the trial
court’s jurisdiction – its very power to hear the case – there
12
is substantial authority that the trial court is free to weigh
the evidence and satisfy itself as to the existence of its power
to hear the case.”
Id.
This is a factual 12(b)(1) motion.
Thus, “no presumptive
truthfulness attaches to plaintiff’s allegations, and the
existence of disputed material facts will not preclude the trial
court from evaluating for itself the merits of jurisdictional
claims.”
Id.
“[T]he plaintiff [has] the burden of proof that
jurisdiction does in fact exist.”
Id.
“The Court may consider court records in considering its
subject-matter jurisdiction.”
Jaye v. Oak Knoll Village Condo.
Owners Ass’n, No. 15-83224, 2016 WL 7013468, at *10 (D.N.J. Nov.
30, 2016).
B. The Rooker-Feldman doctrine does not bar this Court from
exercising jurisdiction over this case.
Defendant argues “[t]he Rooker-Feldman Doctrine precludes
this Court from exercising jurisdiction over plaintiff’s claims
because the plaintiff is essentially bringing an appeal of the
Superior Court of New Jersey’s decisions,” which were recounted
in this Court’s review of the state court procedural history.
“Rooker and Feldman established the principle that federal
district courts lack jurisdiction over suits that are
essentially appeals from state-court judgments . . . .”
Great
W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 165
13
(3d Cir. 2010)
[T]here are four requirements that must be met for the
Rooker-Feldman doctrine to apply: (1) the federal
plaintiff lost in state court; (2) the plaintiff
“complain[s] of injuries caused by [the] state-court
judgments”; (3) those judgments were rendered before the
federal suit was filed; and (4) the plaintiff is inviting
the district court to review and reject the state
judgments.
Id. at 166 (alteration in original) (quoting Exxon Mobil Corp.
v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005)).
According to the Third Circuit, “the two keys for determining
whether a claim is barred by Rooker-Feldman are the second and
fourth requirements.”
Hersh v. Citi Mortgage, Inc., 16 F. Supp.
3d 566, 571 (W.D. Pa. 2014) (citing Great W. Mining, 615 F.3d at
166).
Accordingly, this Court begins with the second prong.
“The second requirement – that a plaintiff must be
complaining of injuries caused by a state-court judgment – may
also be thought of as an inquiry into the source of the
plaintiff’s injury.”
Great W. Mining, 615 F.3d at 166.
“[W]hen
the source of the injury is the defendant’s actions (and not the
state court judgments), the federal suit is independent, even if
it asks the federal court to deny a legal conclusion reached by
the state court . . . .”
Id. at 167.
For the second element,
“[a] useful guidepost is the timing of the injury, that is,
whether the injury complained of in federal court existed prior
to the state-court proceedings and thus could not have been
14
‘caused by’ those proceedings.”
Id.
“The critical task is thus
to identify those federal suits that profess to complain of
injury by a third party, but actually complain of injury
‘produced by a state-court judgment and not simply ratified,
acquiesced in, or left unpunished by it.’”
Id. at 166.
The Court finds Plaintiff’s claim is not barred by the
Rooker-Feldman doctrine.
Plaintiff is bringing a breach of
fiduciary duty claim against Defendant.
He claims Defendant’s
actions “caused damages in the form of needless attorney’s fees,
protracted litigation, and financial damages to the estate.”
The Court finds the only source of Plaintiff’s alleged injury is
Defendant himself.
The Court acknowledges that the state court
considered many of the same issues before the Court today, such
as the alleged underselling of Decedent’s Delanco home and
Defendant’s alleged lack of investigation into a Bahamas
condominium owned by Decedent.
However, the state court’s decisions on these issues did
not cause Plaintiff’s injury.
Rather, the Court finds these
state court judgments can be considered, at most, to have
“simply ratified, acquiesced in, or left unpunished,” id., this
alleged breach of fiduciary duty.
Indeed, in considering
“whether the injury complained of in federal court existed prior
to the state-court proceedings and thus could not have been
‘caused by’ those proceedings,” id. at 167, the Court notes that
15
any breach of fiduciary duty would have occurred prior to the
state court’s decisions.
For instance, Defendant’s alleged
breach of fiduciary duty for failure to investigate the
condominium in the Bahamas would have to have occurred prior to
the state court’s October 30, 2015 decision eliminating any
liability of Defendant with regard to the property.
Similarly,
Defendant’s alleged breach of fiduciary duty for allegedly
underselling Decedent’s Delanco home would have to have occurred
prior to the state court’s July 25, 2014 decision denying
Plaintiff’s exception to the sale of the property based on the
alleged sale of the property for less than its value.
Even though Plaintiff is, in several instances, asking this
Court “to deny a legal conclusion reached by the state court,” 5
id., the legal conclusion reached by the state court was not the
cause of the alleged injury.
The Court finds the following
example from the Third Circuit, referenced in Great Western
5
For instance, Plaintiff’s complaint alleges Defendant
“severely undersold” Decedent’s Delanco residence. However, the
state court approved and authorized the sale and thereafter
found Defendant “properly applied to the probate court for
advice and direction.” Further, Plaintiff’s complaint alleges
Defendant “was placed on notice” of Decedent’s condominium in
the Bahamas but “failed to undertake any investigation
whatsoever to locate it and have it timely administered.”
However, the state court found Plaintiff was aware of the
Bahamas condominium prior to the first and second accountings
and thus “the judgments approving both accountings constitute[]
res adjudicata and eliminate any liability on the part of Mr.
McInerney with regard to the Bahamas property.” It also found
Defendant “was [not] ever informed about the Bahamas property.”
16
Mining, illustrative:
Suppose a plaintiff sues his employer in state court for
violating both state anti-discrimination law and Title
VII and loses. If the plaintiff then brings the same
suit in federal court, he will be seeking a decision
from the federal court that denies the state court’s
conclusion that the employer is not liable, but he will
not be alleging injury from the state judgment. Instead,
he will be alleging injury based on the employer’s
discrimination.
Id. (quoting Hoblock v. Albany Cty. Bd. of Elections, 422 F.3d
77, 87-88 (2d Cir. 2005)(emphasis in original)).
Like that example, while Plaintiff is addressing many of
the issues with Defendant’s actions discussed in the state court
decisions, he is still alleging injury based on Defendant’s
actions.
As Great Western Mining stated, “that the state court
chose not to remedy the injury does not transfer the subsequent
federal suit on the same matter into an appeal, forbidden by
Rooker-Feldman, of the state-court judgment.”
The Court also finds the case McCormick v. Braverman, 451
F.3d 382 (6th Cir. 2006), referenced in Great Western Mining,
particularly relevant.
In Braverman, the plaintiff broadly
alleged that she was the owner of certain real property and that
the defendants acted illegally in interfering with her
ownership.
Id. at 384.
In considering the Rooker-Feldman
doctrine, the court found several of the counts were not
precluded by the doctrine.
Id. at 392.
Particularly relevant
to this case, the plaintiff had alleged the defendants committed
17
fraud and misrepresentation in the state court proceedings.
Id.
The court found this injury was not caused by the state court
judgments.
Id.
Rather, the court found this was an
“independent claim[] that those state court judgments were
procured by certain Defendants through fraud, misrepresentation,
or other improper means.”
Id.
In Braverman, “[e]ven though the injuries of which the
plaintiff complained helped to cause the adverse state
judgments, these claims were ‘independent’ because they stemmed
from ‘some other source of injury, such as a third party’s
actions.’”
Great W. Mining, 615 F.3d at 168 (quoting Braverman,
451 F.3d at 393).
As in Braverman, Plaintiff alleges several
breaches of fiduciary duty committed during the course of the
state court proceedings.
This is similarly an “independent
claim[]” “stemm[ing] from . . . ‘a third party’s actions.’”
Id.
(quoting Braverman, 451 F.3d at 393).
The Court reiterates that “Rooker-Feldman . . . is a narrow
doctrine, confined to ‘cases brought by state-court losers
complaining of injuries caused by state-court judgments rendered
before the district court proceedings commenced and inviting
district court review and rejection of those judgments.’”
Lance
v. Dennis, 546 U.S. 459, 464 (2006) (quoting Exxon Mobil Corp.,
544 U.S. at 284).
This is not such a case.
III.
18
Defendant also argues this matter should be dismissed
pursuant to Federal Rule of Civil Procedure 12(b)(6).
A. Standard for Dismissal Pursuant to Federal Rule of Civil
Procedure 12(b)(6).
When considering a motion to dismiss a complaint for
failure to state a claim upon which relief can be granted
pursuant to Federal Rule of Civil Procedure 12(b)(6), a court
must accept all well-pleaded allegations in the complaint as
true and view them in the light most favorable to the plaintiff.
Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005).
It is well
settled that a pleading is sufficient if it contains “a short
and plain statement of the claim showing that the pleader is
entitled to relief.”
Fed. R. Civ. P. 8(a)(2).
Under the liberal federal pleading rules, it is not
necessary to plead evidence, and it is not necessary to plead
all the facts that serve as a basis for the claim.
Bogosian v.
Gulf Oil Corp., 562 F.2d 434, 446 (3d Cir. 1977).
However, “the
Federal Rules of Civil Procedure . . . do require that the
pleadings ‘give the defendant fair notice of what the
plaintiff’s claim is and the grounds upon which it rests.’”
Baldwin Cty. Welcome Ctr. v. Brown, 466 U.S. 147, 149-50 n.3
(1984) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).
A district court, in weighing a motion to dismiss, asks
19
“not whether a plaintiff will ultimately prevail but whether the
claimant is entitled to offer evidence to support the claim.”
Bell Atl. v. Twombly, 550 U.S. 544, 563 n.8 (2007) (quoting
Scheuer v. Rhoades, 416 U.S. 232, 236 (1974)); see also Ashcroft
v. Iqbal, 556 U.S. 662, 684 (2009) (“Our decision in Twombly
expounded the pleading standard for ‘all civil
actions’ . . . .”); Fowler v. UPMC Shadyside, 578 F.3d 203, 210
(3d Cir. 2009) (“Iqbal . . . provides the final nail in the
coffin for the ‘no set of facts’ standard that applied to
federal complaints before Twombly.”).
B. New Jersey’s statutory law and the entire controversy
doctrine require dismissal of the claim against Defendant.
“[T]he Rooker-Feldman inquiry is distinct from the question
of whether claim preclusion (res judicata) or issue preclusion
(collateral estoppel) defeats the federal suit.”
Mining, 615 F.3d at 170.
Great W.
Thus, “[c]laims that survive Rooker-
Feldman may nevertheless be barred by res judicata doctrines
such as claim preclusion, issue preclusion, and the entire
controversy rule.”
Aliperio v. Bank of Am., N.A., No. 16-1008,
2016 WL 7229114, at *10 (D.N.J. Dec. 13, 2016).
The preclusive effect of a state court judgment in
a subsequent federal lawsuit generally is determined by
the full faith and credit statute, which provides that
state judicial proceedings “shall have the same full
faith and credit in every court within the United States
. . . as they have by law or usage in the courts of such
State . . . from which they are taken.”
20
Marrese v. Am. Academy of Orthopaedic Surgeons, 470 U.S. 373,
380 (1985) (alterations in original) (28 U.S.C. § 1738).
28
U.S.C. § 1738 “directs a federal court to refer to the
preclusion law of the State in which judgment was entered.”
Id.
Accordingly, this Court looks to New Jersey law for the
application of its preclusion doctrines. 6
The Court begins by
addressing New Jersey statutory law.
1. N.J.S.A. 3B:17-8
N.J.S.A. 3B:17-8 provides:
A judgment allowing an account, including a guardian’s
intermediate account, after due notice, shall be res
adjudicata as to all exceptions which could or might
have been taken to the account, and shall constitute an
approval of the correctness and propriety of the
account, the legality and propriety of the investments
and other assets, the legality and propriety of the
6
“In deciding motions to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6), courts generally consider only the
allegations in the complaint, exhibits attached to the
complaint, matters of public record, and documents that form the
basis of a claim.” Lum v. Bank of Am., 361 F.3d 217, 221 n.3
(3d Cir. 2004). The Third Circuit has held that “a prior
judicial opinion constitutes a public record of which a court
may take judicial notice.” M & M Store Co. v. Pennsylvania, 388
F. App’x 156, 162 (3d Cir. 2010); accord Gage v. Warren Twp.
Comm. & Planning Bd. Members, 463 F. App’x 68, 71 (3d Cir. 2012)
(“The District Court may take judicial notice of the record from
a previous court proceeding between the parties.”). The
district court, however, “may do so on a motion to dismiss only
to establish the existence of the opinion, and not for the truth
of the facts asserted in the opinion.” M & M Store, 388 F.
App’x at 162. Accordingly, the Court will consider the relevant
state court decisions in addressing Defendant’s arguments and
the sufficiency of Plaintiff’s complaint. The Court considers
these solely for the purpose of determining whether New Jersey’s
preclusion doctrines apply and not for the truth of facts
asserted in those decisions.
21
changes in investments or other assets, and the legality
and propriety of other matters, and also shall exonerate
and discharge the fiduciary from all claims of all
interested parties and of those in privity with or
represented by interested parties except:
a.
For the investments and other assets in the
fiduciary’s hands at the close of the period
covered by the account, and assets which may
come into his hands after the close of the
account;
b.
Insofar as exceptions to the account shall be
taken and sustained; and
c.
As relief may be had from a judgment in any
civil action. 7
Pursuant to this statute, “[t]hose parties who actually raise
and litigate an issue in an accounting proceeding are bound by
the judgment entered thereon.”
In re Estate of Yablick, 526
A.2d 1134, 1138 (N.J. Super. Ct. App. Div. 1987).
Plaintiff “actually raise[d] and litigate[d],” id., issues
in the Estate’s accounting proceeding.
The state court judgment
approving the account thus is “res adjudicata as to all
exceptions which could or might have been taken to the account”
and “exonerate[d] and discharge[d Defendant] from all claims of
all interested parties,” N.J.S.A. 3B:17-8.
In addressing Plaintiff’s exceptions to the accounting, the
state court specifically considered Defendant’s search for
7
The Appellate Division’s June 11, 2013 decision referenced
this statute as well. In re Estate of Ehrlich, 2013 WL 2476490,
at *2.
22
Decedent’s will 8 and the alleged undersale of Decedent’s Delanco
property.
Further, as provided in the statute, the approval of
the account “discharge[d] the fiduciary from all claims.”
Thus,
pursuant to N.J.S.A. 3B:17-8, all claims of a breach of
fiduciary duty existing when Plaintiff objected to the
accounting are precluded here.
Accordingly, the Court finds all
of the actions Plaintiff alleges constituted a breach of
fiduciary duty are precluded, with the exception of the alleged
March 2015 destruction of documents, which occurred after
approval of the accounting. 9
2. The Entire Controversy Doctrine
The Court addresses the entire controversy doctrine next.
See Aliperio, 2016 WL 7229114, at *10 (“The entire controversy
doctrine, the broadest version of res judicata, is an apt
bellwether for the other, narrower doctrines.”); see also Sutton
v. Sutton, 71 F. Supp. 2d 383, 390 (D.N.J. 1999).
This doctrine
has been codified at N.J. Court Rule 4:30A, which provides:
“Non-joinder of claims required to be joined by the entire
8
Specifically, the state court addressed Defendant’s efforts
to search for Decedent’s will on his computer. Any additional
concerns regarding Defendant’s search for the will also should
have been brought at that time.
9
The Court notes N.J.S.A. 3B:17-8 has been infrequently
cited, with little interpretation, from New Jersey courts. The
Court looks to the direct language of the statute. To this
Court, the statement that Defendant is exonerated from “all
claims” includes claims for breach of fiduciary duty related to
Defendant’s acts as temporary administrator.
23
controversy doctrine shall result in the preclusion of the
omitted claims to the extent required by the entire controversy
doctrine.”
“The ‘entire controversy doctrine seeks to assure that all
aspects of a legal dispute occur in a single lawsuit.’”
Fornarotto v. Am. Waterworks Co., 144 F.3d 276, 278 (3d Cir.
1998) (quoting Olds v. Donnelly, 696 A.2d 633, 637 (N.J. 1997)).
“It extinguishes any subsequent federal-court claim that
permissibly could have been, but was not, joined in the prior
state action.”
Aliperio, 2016 WL 7229114, at *10.
“Although
res judicata principles and New Jersey’s entire controversy
doctrine are ‘blood relatives,’ the latter is New Jersey’s
‘specific, and idiosyncratic, application of traditional res
judicta principles,’” involving “traditional concepts of claims
joinder as well as party joinder.”
Id. (quoting Rycoline
Prods., Inc. v. C & W Unlimited, 109 F.3d 883, 886 (3d Cir.
1997)).
The Court begins by considering whether the doctrine can be
applied in this case, as the New Jersey Supreme Court has
previously indicated that applying the entire controversy
doctrine is inappropriate in certain probate proceedings.
As
recognized by the Appellate Division in Higgins v. Thurber, 992
A.2d 50 (N.J. Super. Ct. App. Div. 2010), aff’d, 14 A.3d 745
(N.J. 2011), “[t]he relationship between the entire controversy
24
doctrine and probate actions has not been widely considered by
[New Jersey] courts.”
Id. at 57.
This remains true in 2017.
This Court now addresses the relatively limited case law that
has emerged regarding the applicability of the entire
controversy doctrine to probate proceedings.
In Perry v. Tuzzio, 672 A.2d 213 (N.J. Super. Ct. App. Div.
1996), the Appellate Division considered the applicability of
the entire controversy doctrine to a professional negligence
action brought by an alternate executrix against the accountant
partnership that had employed the plaintiff’s predecessor
executor.
Id. at 214.
The plaintiff learned the partners had
made an imprudent loan, among other questionable conduct.
Id.
Accordingly, the plaintiff sought the partner’s removal as
executor.
Id.
The partner eventually agreed to his removal.
Id.
Thereafter, the partner filed a complaint to settle his
account, to which the plaintiff filed exceptions.
15.
Id. at 214-
While that action was pending in appellate court, the
plaintiff brought a professional negligence claim against the
defendant partnership that had employed the partner, seeking
recovery based on respondeat superior liability and negligent
supervision theories.
Id. at 215.
The court granted summary
judgment based in part on the entire controversy doctrine.
The Appellate Division found the trial court erred in
25
Id.
dismissing the action on entire controversy grounds.
Id.
The
Appellate Division stated:
Our difficulty here lies in the fact that the
original action was not a plenary action at law but
rather a piece of a probate action – a hearing on
exceptions to an executor’s account.
The question is
whether an exceptant to an accounting is obliged in that
summary proceeding to join all persons, uninvolved as
they may be in the probate proceeding, who have any
transactional relationship to the subject of the
exception – irrespective of the nature of that
relationship, irrespective of a right to a jury trial
and full discovery which any such person might have, and
irrespective of the burden such a requirement may impose
on the orderly procedure for the administration of
decedent’s estate.
We doubt that the entire controversy doctrine was
ever intended to go this far since its application in
that situation is so basically inconsistent with the
limited nature of an accounting proceeding.
As we
understand accounting proceedings, participation is
limited to parties in interest in the state –
beneficiaries,
heirs,
legal
representatives,
fiduciaries, sureties, and creditors. An exception to
an executor’s account is not a vehicle for adjudication
of claims that an estate may have against third persons
but rather a vehicle for determining the propriety of
the executor’s statement of assets and claims for
allowance. Consequently, it is only the conduct of the
executor, not the conduct of others, that is properly
before the court.
Id. at 215-16 (citations omitted).
The Appellate Division concluded that invocation of the
entire controversy doctrine would be inequitable.
Id. at 216.
First, application of the doctrine requires equality of
forum, that is, the first forum must have been able to
provide all parties with the same full and fair
opportunity to litigate the issues and with the same
remedial opportunities as the second forum. The limited
nature of the accounting procedure in general and the
hearing on exceptions in particular readily indicates
26
that that was neither the forum nor the procedure for
litigating a professional malpractice claim against
persons not in interest in the estate.
Moreover, there is nothing at all to suggest that
an exceptant would have been put on notice, even by the
developing body of case law, that persons not in interest
in the estate who had a liability to the estate related
to the subject of the exception would have to be joined
in order for the claim to be preserved. That simply is
not consistent with the general understanding of the bar
regarding the nature of probate proceedings.
Id. (citation omitted).
The Appellate Division concluded “that
application of the entire controversy doctrine in these
circumstances to preclude this action would constitute a trap
for the unwary rather than a shield for the judicial system and
its litigants against the unfair burden of multiple related
separate actions.”
Id. at 217.
Higgins v. Thurber involved a legal malpractice claim by
two of the decedent’s daughters, Laura and Robyn, against the
defendants, who were attorneys for the estate of the decedent.
992 A.2d at 52.
The decedent was survived by four children from
his first marriage: Laura, Michael, Sally, and Robyn.
53.
Id. at
He was also survived by his second wife, Donna, and a fifth
child between him and Donna, named Jenna.
Id.
Prior to the
decedent’s death, Donna, exercising a power of attorney,
transferred to herself four of six seats the decedent held on
the New York Mercantile Exchange (NYMEX).
Id.
Michael, as
executor, commenced an action alleging Donna improperly
transferred these seats to herself.
27
Id.
It was determined
Donna was entitled to two of the seats and the estate to four of
the seats.
Id.
Prior to that decision, Donna also commenced suit alleging
Michael engaged in misconduct as executor and that Robyn,
Jenna’s guardian ad litem, was not acting in Jenna’s best
interests.
Id.
She sought both Michael’s and Jenna’s removal
from their respective positions.
Id.
Donna’s complaint was
dismissed with prejudice for reasons not disclosed.
Id.
Thereafter, Donna commenced another action, again seeking
removal of Michael and Robyn from their positions, as well as a
formal accounting from Michael.
Id. at 53-54.
The court
rejected Donna’s efforts to remove Michael and Robyn, but
ordered Michael to file a formal accounting.
Id. at 54.
Michael thereafter filed a complaint seeking approval of
his formal accounting.
estate and by Jenna.
Id.
Id.
Exceptions were filed by Sally’s
While pending, Jenna filed suit
against Michael, Robyn, and the defendant-attorneys, alleging
breach of fiduciary duty and legal malpractice by the defendantattorneys.
Id.
Robyn filed a cross-claim against the
defendant-attorneys, denying any wrongdoing but seeking
contribution and indemnification.
Id.
The legal malpractice
action was thereafter dismissed on summary judgment.
Id. at 55.
While Jenna’s legal malpractice action remained pending,
Robyn and Laura filed exceptions in the formal accounting
28
action.
Id. at 54.
“The exceptions were highly critical of the
services rendered by defendant-attorneys . . . .”
Id. at 54-55.
The defendant-attorneys were permitted to intervene in the
formal accounting action with respect to issues relating to
their legal representation.
Id. at 55.
Laura and Robyn’s
claims against the defendant-attorneys were then voluntarily
dismissed.
Id.
Laura and Robyn then filed suit against the defendantattorneys alleging legal malpractice, among other claims for
relief.
Id. at 56.
The trial court found the claim was barred
by the entire controversy doctrine.
Id.
The Appellate Division stated:
It is not uncommon for an estate to be the subject
of numerous independent lawsuits.
For example, a
conflict between beneficiaries may arise as to whether
a Will offered for probate was the product of undue
influence. In such an instance, a complaint containing
such allegations may ultimately result in a full blown
action in the Probate Part before a final judgment is
rendered as to whether the Will should be probated, or
whether an earlier Will should be probated, or whether
the decedent be deemed intestate.
Following that, a
second action might be filed regarding the conduct of an
estate’s representative, which may ultimately be tried
and disposed of by entry of a final judgment.
In
addition, at various subsequent times, the estate’s
representative or other fiduciary may seek by way of a
new lawsuit a declaration of the manner in which a Will
or other instrument should be construed, R. 4:834(c)(2), or file a complaint for “directions by the court
as to the fiduciary’s authority or duties,” R. 4:834(c)(3).
And, ultimately, an estate may become the
subject of another suit in which its representative
seeks the court’s approval of an accounting. R. 4:834(c)(1); R. 4:87-1.
29
Id. at 57.
The Appellate Division concluded that “the argument that
subsequent actions brought in the Probate Part may be barred by,
for example, the complete adjudication of a dispute about the
probating of a particular Will, is foreign to probate practice
and inconsistent with the goals of the entire controversy
doctrine.”
Id.
Thus, the Appellate Division determined that
“the principles underlying the entire controversy doctrine were
not offended when Laura and Robyn failed to pursue to a
conclusion their legal malpractice claim in the NYMEX suit” or
in the two proceedings initiated by Donna.
Id.
It stated:
“Their malpractice claim, during any of those proceedings, was
arguably either unknown or unaccrued.
Moreover, even if known
and accrued, at some point during the life of those suits, its
assertion on those earlier occasions would have been
inconsistent with the nature of those particular proceedings.”
Id.
In considering whether the legal malpractice claim should
have been pursued in the formal accounting action, the Appellate
Division concluded:
For essentially the same reasons expressed by Judge
Pressler in Perry, we reject the application of the
entire controversy doctrine to bar the legal malpractice
action asserted here. We cannot gather from the record
on appeal that Laura and Robyn were truly given a full
and fair opportunity to prosecute that claim within the
context of the formal accounting action.
The orders
entered in that case reveal: intervention of defendant30
attorneys was permitted on March 20, 2006; a subsequent
order called for the service of expert reports by April
27, 2006; depositions of experts were ordered to occur
within the week after service of the reports; and the
trial date for the entire action remained set for May
30, 2006.
Although the judge in that action had
unmistakably expanded the scope of the proceedings
beyond what might normally be expected in an accounting
action in the Probate Part, the opportunity for a full
and fair hearing on those new issues was illusory. That
is, the judge gave Laura and Robyn a right to pursue
whatever claims against defendant-attorneys that may
have been encompassed by their exceptions, but did not
provide the concomitant right to a full and fair
exploration or development of those issues prior to a
trial date that loomed a mere two months after expansion
of the accounting action’s scope.
Accordingly giving
full expression to the equitable nature of the entire
controversy doctrine, we conclude it would be unfair and
unjust to bar the legal malpractice claim in these
circumstances.
Id. at 61 (footnote omitted).
In affirming, the New Jersey Supreme Court added the
following:
An action to settle an account on an estate trust
is a formalistic proceeding, unique to probate.
Its
stylized format involves a line-by-line review on the
exceptions to an accounting. In the context of this and
like proceedings in probate, the entire controversy
doctrine is out of place. The Appellate Division in the
present case rightly detected that it would be anomalous
to assume that Thurber’s intervention in the specialized
probate proceeding that focused on the executor somehow
converted the proceeding into an action binding as to
any and all other potential actions in respect of other
parties. As Judge Pressler observed fifteen year ago in
Perry, . . . an action for an accounting on an estate
provides a means for addressing “the conduct of the
executor, not the conduct of others.” While it certainly
may be permissible for a chancery court to expand a
probate proceeding to encompass a claim of legal
malpractice, that was not done here.
31
Higgins v. Thurber, 14 A.3d 745, 746 (N.J. 2011) (citations
omitted) (quoting Perry, 672 A.2d 213).
It concluded “that the
belated intervention by [the defendant-attorneys] raised
equitable reasons for not applying the entire controversy
doctrine in this matter.”
Id. at 746.
The Court expressed a
“view the entire controversy doctrine as generally having no
place in probate proceedings, for the reasons expressed by Judge
Pressler in Perry.”
Id. at 746-47.
Estate of McMullin v. McMullin, No. 1813-11, 2013 WL 627059
(N.J. Super. Ct. App. Div. 2013) distinguished these cases.
background facts are as follows.
The
Husband and wife Davis Sr. and
Elaine had five children: Lisa, Brian, Davis Jr., Stacey, and
Kevin.
Id. at *1.
wills.
Id.
In 1990, the couple executed sweetheart
In 2007, new wills were executed by the couple
incorporating testamentary trusts, a marital deduction trust,
and a credit shelter trust.
Id.
The most significant asset in
David Sr.’s estate was a fifty percent interest in Monmouth
Truck Rental Realty Partnership (“Monmouth Truck”).
son David Jr. was the other fifty percent owner.
Davis Sr. died on September 26, 2007.
Id.
Id.
His
Id.
Elaine filed a
caveat against the probate of Davis Sr.’s 2007 will, asserting
it was the product of undue influence and that David Sr. lacked
testamentary capacity.
Id.
Elaine was thereafter appointed as
temporary administratrix of David Sr.’s estate.
32
Id.
The order
of appointment restrained her from alienating his interest in
Monmouth Truck.
Id.
Elaine initiated an action to probate
Davis Sr.’s 1990 will.
Id. at *2.
David Jr. then decided to sell Monmouth Truck to a thirdparty for $5,000,000, which Elaine, as temporary administratrix,
consented to.
Id.
On February 24, 2009, the court ordered the
probate of David Sr.’s 2007 will.
Id.
In 2008, Elaine executed
a new will, leaving her entire estate to David Jr.
died on October 1, 2009.
probate of the 2008 will.
Id.
Id.
Elaine
Id.
Lisa filed a caveat against the
Lisa and Brian, as co-executors
of David Sr.’s estate, also asserted a claim of $750,000 against
Elaine’s estate, claiming she wrongfully authorized the sale of
Monmouth Truck and also failed to realize the estate’s full
interest in the total sale proceeds.
Id. at *2-3.
The claim
was in part based on a believed payment to David Jr. for a
covenant not to compete.
Id.
David Jr. then initiated an action against Lisa and Brian
as co-executors and co-trustees of David Sr.’s estate, charging
them with failing to distribute estate assets and failing to
provide a formal accounting.
settled prior to trial.
Id. at *3.
This matter was
Id.
Brian and Lisa then, as co-executors and co-trustees of
David Sr.’s estate, filed an action against David Jr. and
Elaine’s estate claiming David Jr. intentionally failed to
33
disclose the restrictive covenant.
Id.
They further alleged
Elaine failed to assert David Sr.’s estate’s interest in the
asset while she served as temporary administrative, or she
alternatively failed to investigate the existence of the
covenant.
Id. at *4.
David Jr. challenged this, in part, as
precluded by the entire controversy doctrine.
Id.
The Appellate Division rejected the plaintiff’s argument
that the entire controversy doctrine is inapplicable to probate
proceedings.
Id. at *6.
The court read Thurber as
“express[ing] the conclusion that under the factual
circumstances presented, application of the entire controversy
doctrine was improper.”
Id. at *7.
The court found
“application of the entire controversy doctrine may be
appropriate when probate proceedings are expanded beyond a
summary review of an executor’s accounting following the
administration of an estate.”
Id.
We also find ludicrous plaintiff’s suggestion the
claims could not have been litigated in the summary
probate proceedings. Admitting the causes of action now
alleged in the Law Division complaint were “against
parties in the underlying probate actions,” plaintiff
contends the estate administrations “related to the
limited purpose of said probate actions, being a will
contest and a fiduciary’s accounting.” On the contrary,
the record reflects every aspect of the probate
proceedings regarding the administration of David Sr.
and Elaine’s estate involved contentious litigation.
The parties battled over the fiduciaries, the propriety
of the testamentary instruments, the actions of the
temporary fiduciaries, and the determination of claims
and the distribution of the residuary assets. Moreover,
34
a creditor’s claim for payment, as well as a claim of
breach of fiduciary responsibility, would appropriately
have been presented in the probate cases.
Id. (footnote omitted).
The Appellate Division concluded
“[b]oth the claims against David Jr. and Elaine should have been
raised in the course of this proceeding.”
The Court will follow McMullin here.
Id. at *8.
The Court finds Perry
v. Tuzzio’s decision to not apply the entire controversy
doctrine inapplicable under the starkly different facts found in
this case.
First, the court in Perry commented on the “limited
nature of [the] accounting proceeding.”
672 A.2d at 216.
This
is not such a case where the accounting proceeding was so
limited that it could not encompass these breach of fiduciary
duty claims.
Rather, Plaintiff’s exceptions were vast, and many
sounded in breach of fiduciary duty.
Indeed, in his exceptions,
he specifically demanded “damages for the Temporary
Administrator’s breach of duty.” 10
Further, the Perry court grappled with the fact that the
second matter involved a third party to the original matter,
stating that “[a]n exception to an executor’s account is not a
vehicle for adjudication of claims that an estate may have
against third persons but rather a vehicle for determining the
10
The Court notes Judge Jacobson found Plaintiff’s exceptions
insufficient. The Court appears to have construed the various
complaints against Defendant in Plaintiff’s certification as
exceptions. This Court does the same.
35
propriety of the executor’s statement of assets and claims for
allowance.”
Id.
This case does not involve a third party to
the underlying matter.
Rather, both parties were intimately
involved in the probate litigation from the very beginning.
The
court’s statement that a “hearing on exceptions . . . readily
indicates that that was neither the forum nor the procedure for
litigating a professional malpractice claim against persons not
in interest in the estate,” id. (emphasis added), must be read
to apply only where the professional malpractice claim, which is
akin to a breach of fiduciary duty claim, is asserted against
such a third party.
The Court similarly finds Higgins v. Thurber
distinguishable.
The Appellate Division in Higgins focused on
its finding that “the opportunity for a full and fair hearing”
on the issues of legal malpractice “was illusory” and that the
defendant-attorneys were late intervenors in the accounting
action and that a trial date was set for two months after the
intervention.
992 A.3d at 61.
The Supreme Court in Higgins
similarly refused “to assume that [the partner]’s intervention
in the specialized probate proceeding that focused on the
executor somehow converted the proceeding into an action binding
as to any and all other potential actions in respect of other
parties.”
14 A.3d at 746.
This is not a case where the
defendant was a belated intervenor due to a tangential issue to
36
a formal accounting.
As stated, both parties were litigating in
the probate action since the beginning of this litigation.
The Court finds McMullin most analogous to this case.
The
Court agrees with the McMullin court that Thurber does not stand
for the proposition that the entire controversy doctrine is
wholly inapplicable to probate proceedings; rather, Thurber held
that the doctrine was inapplicable “under the factual
circumstances presented” in that case.
2013 WL 627059, at *7.
This Court agrees “the entire controversy doctrine may be
appropriate when probate proceedings are expanded beyond summary
review of an executor’s accounting,” id., as they were here.
Similar to McMullin, where “every aspect of the probate
proceedings . . . involved contentious litigation,” id., the
probate proceedings regarding the administration of Decedent’s
estate involved contentious litigation and went well beyond a
mere summary review of the account.
Plaintiff not only made
various exceptions, but Plaintiff asked for damages based on
Defendant’s alleged breach of fiduciary duty, and for the
removal of Defendant as temporary administrator, among other
requests for relief throughout the probate proceedings.
Having determined that the entire controversy doctrine can
be applied in this case, the Court finds this doctrine bars
Plaintiff’s claim of breach of fiduciary duty against Defendant.
In determining whether successive claims constitute
37
one controversy for purposes of the doctrine, the
central consideration is whether the claims against the
different parties arise from related facts or the same
transaction or series of transactions. It is the core
set of facts that provides the link between distinct
claims against the same or different parties and
triggers the requirement that they be determined in one
proceeding. One measure of whether distinct claims are
part of an entire controversy is whether parties have a
significant interest in the disposition of a particular
claim, one that may materially affect or be materially
affected by the disposition of that claim. The test for
whether claims are ‘related’ such that they must be
brought in a single action under New Jersey entire
controversy doctrine was expressed in O’Shea v. Amoco
Oil Co., 886 F.2d 584 (3d Cir. 1989), as follows: if
parties or persons will, after final judgment is
entered, be likely to have to engage in additional
litigation to conclusively dispose of their respective
bundles of rights and liabilities that derive from a
single transaction or related series of transactions,
the omitted components of the dispute or controversy
must be regarded as constituting an element of one
mandatory unit of litigation.
Ditrolio v. Antiles, 662 A.2d 494, 502 (N.J. 1995) (citations
omitted).
“The entire controversy doctrine does not require
commonality of legal issues.
Rather, the determinative
consideration is whether distinct claims are aspects of a single
larger controversy because they arise from interrelated facts.”
Id. at 504.
While “the same set of facts can give rise to
discrete causes of action and different kinds of relief[,] . . .
[a] plaintiff bringing an action based on two distinct legal
theories is required to bring those claims together in one
proceeding.”
Id.
38
“[B]ecause the entire controversy doctrine is an equitable
principle, its applicability is left to judicial discretion
based on the particular circumstances inherent in a given case.”
Mystic Isle Dev. Corp. v. Perskie & Nehmad, 662 A.2d 523, 529-30
(N.J. 1995).
The Court finds the entire controversy doctrine bars
Plaintiff’s breach of fiduciary duty claim against Defendant.
All of Plaintiff’s bases for asserting a breach of fiduciary
duty claim against Defendant “arise from related facts” and the
same “series of transactions.”
Ditrolio, 622 A.2d at 502.
Defendant’s conduct as temporary administrator was Plaintiff’s
focal point throughout nearly the entirety of the state court
litigation.
Not only did Plaintiff specifically allege a breach
of duty in his exceptions, but the specific allegations of
conduct contributing to his breach of duty claim were all
actually litigated in state court or should have been at that
time.
Even Plaintiff’s claims of conduct occurring in March
2015 could have been addressed in October 2015 before Judge
Jacobson.
While “[t]he entire controversy doctrine does not
apply to unknown or unaccrued claims,” id. at 505, the Court
does not find any of Plaintiff’s claims were unknown or
unaccrued at that time.
Accordingly, the entire controversy
doctrine bars Plaintiff’s claim against Defendant in its
entirety.
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As the Court finds N.J.S.A. 3B:17-8 and the entire
controversy doctrine require dismissal of Plaintiff’s breach of
fiduciary duty claim against Plaintiff, the Court will not
address the applicability of claim preclusion, issue preclusion,
or the other arguments propounded in Defendant’s briefing to
this Court.
Plaintiff’s breach of fiduciary duty claim against
Defendant will be dismissed.
An appropriate Order will be entered.
Date: December 13, 2017
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
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