Jane Adkins v. John Sogliuzzo , 696 F. App'x 62 ( 2017 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 16-2578
_____________
JANE E. ADKINS,
Appellant
v.
JOHN B. SOGLIUZZO; DEUTSCHE BANK ALEX. BROWN;
H. THOMPSON RODMAN; L. GAYE TORRANCE; TD BANK, N.A.;
HAVEN SAVINGS BANK
______________
On Appeal from the United States District Court
for the District of New Jersey
(District Court No. 2-09-cv-01123)
District Judge: The Honorable Susan D. Wigenton
______________
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
February 6, 2017
______________
Before: McKEE, COWEN, and FUENTES, Circuit Judges.
(Filed: June 14, 2017)
_______________________
OPINION*
_______________________
*
This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
McKEE, Circuit Judge.
Jane Adkins appeals the District Court’s order denying her request for damages in
her diversity action against her brother, John Sogliuzzo, for mismanagement of Mary
Grimley’s estate. Adkins argues she and the estate are entitled to $391,040.05 in damages
because Sogliuzzo is liable for undue influence, breach of fiduciary duty, negligence,
fraud, and misrepresentation for taking cash from Grimley’s home for himself and
redeeming Grimley’s bonds. For the reasons that follow, we reverse and remand to the
District Court for a determination of damages.
I
Jane Adkins is the current executor of the late Mary Grimley’s estate and also a
beneficiary under Grimley’s will. This appeal concerns only Adkins’s action against her
brother, John Sogliuzzo, for mismanaging the money of their mother’s elderly cousin,
Mary Grimley, during Grimley’s lifetime.1 Sogliuzzo is an attorney who acted as
Grimley’s power of attorney during her later years. Upon Grimley’s death in 2006,
Sogliuzzo acted as executor of Grimley’s estate until he gave up the position in favor of
Adkins. Once Adkins was appointed executor, she brought this diversity action in the
1
This action originally included Adkins’s claim against Sogliuzzo for mismanaging their
mother Jane Sogliuzzo’s estate. For that claim, the District Court held that Adkins was
not entitled to more than the $520,414 awarded to her in state court, a decision Adkins
does not appeal. Adkins v. Sogliuzzo (Adkins I), No. CIV.A. 09-1123 SDW, 2014 WL
1343065, at *5 (D.N.J. Apr. 4, 2014). Adkins also originally named as defendants John
Sogliuzzo’s wife, Gaye Torrance, and several financial institutions, including Deutsche
Bank Alex. Brown, TD Bank, N.A., and Haven Savings Bank. Adkins’s claims against
the financial institutions were dismissed prior to trial and the District Court held that
Torrance was not liable after a bench trial. Adkins I, 2014 WL 1343065, at *4. We
affirmed. Adkins v. Sogliuzzo (Adkins II), 625 F. App’x 565, 571 (3d Cir. 2015).
2
District of New Jersey against Sogliuzzo, alleging, among other things, that Sogliuzzo
was liable for undue influence, breach of fiduciary duty, negligence, fraud, and
misrepresentation under New Jersey law. Adkins’s claim is essentially that Sogluizzo
unlawfully mismanaged Grimley’s estate by (1) taking for himself $70,000 in cash found
in Grimley’s home in 2002, and (2) redeeming for himself $321,040.05 in bonds from
Grimley’s accounts between 2004 to 2006. Adkins also brought suit against Sogliuzzo in
state probate court, which stayed its action pending the outcome of the federal lawsuit.
After a five-day bench trial, the District Court held that Sogliuzzo was liable for
undue influence, breach of fiduciary duty, negligence, fraud, and misrepresentation for
his mismanagement of Grimley’s estate.2 Though the Court held that “Grimley’s Estate
was reduced and Jane Adkins suffered damages,” it declined to award damages, instead
deferring to the state court’s future determination of damages in the stayed probate
action.3 On appeal, this Court affirmed the District Court’s findings of liability but
remanded with instructions that the District Court “make explicit findings with respect to
damages in this action.”4
On remand, Adkins relied only on evidence of damages adduced in connection
with her undue influence claim to support her other claims. Without holding a hearing,
the District Court held that Adkins was not entitled to damages for undue influence,
concluding that Adkins could not show an improper inter vivos gift to Sogliuzzo because
2
Adkins I, 2014 WL 1343065, at *6–9.
3
Id. at *9.
4
Adkins II, 625 F. App’x at 574.
3
she failed to show either “that Sogliuzzo retained the [$70,000 in] cash for personal use
or misappropriated the funds” or that the “bonds were deposited or used by Sogliuzzo.”5
The Court did not address damages for Adkins’ claims of breach of fiduciary duty,
negligence, fraud, and misrepresentation. Adkins appeals.6
II7
Because this is a diversity action, our analysis rests on New Jersey law.8 Inasmuch
as the District Court denied Adkins’s request for damages on the basis of her undue
influence claim, we first turn to New Jersey law on undue influence.
In New Jersey, a finding of undue influence typically arises when an elderly or
infirm individual transfers money or goods to another person during their lifetime (inter
vivos) or by bequest in a will.9 The New Jersey Supreme Court has defined undue
influence as “a mental, moral, or physical exertion of a kind and quality that destroys the
free will of the testator [or donor] by preventing that person from following the dictates
of his or her own mind as it relates to the disposition of assets, generally by means of a
will or inter vivos transfer . . . .”10 In short, the undue influence inquiry is only relevant
5
Adkins v. Sogliuzzo (Adkins III), No. CV091123SDWLDW, 2016 WL 1643406, at *2
(D.N.J. Apr. 26, 2016).
6
On appeal from a non-jury trial, we review the District Court’s findings of fact for clear
error and exercise de novo review of conclusions of law. VICI Racing, LLC v. T-Mobile
USA, Inc., 763 F.3d 273, 282–83 (3d Cir. 2014).
7
The District Court had jurisdiction under 28 U.S.C. § 1332. This Court has jurisdiction
pursuant to 28 U.S.C. § 1291.
8
Erie R. Co. v. Thompkins, 304 U.S. 64, 78 (1938).
9
5 Alfred C. Clapp & Dorothy G. Black, New Jersey Practice Series, Wills And
Administration § 62 (Rev. 3d ed. 2016).
10
In re Estate of Stockdale, 953 A.2d 454, 470 (N.J. 2008).
4
insofar as it tells us whether a gift or testamentary bequest is valid. Thus, in cases where
the disputed transfer occurred during the donor’s lifetime, an inter vivos gift must have
occurred for the donee to be liable for undue influence.11 If a gift or transfer is not shown,
it follows that the wrongdoer did not succeed in nefariously influencing the donor.
Here, the District Court found that Sogliuzzo was liable for undue influence for
losses to Grimley’s estate that occurred during Grimley’s lifetime, including the $70,000
in cash, and $321,040.05 in redeemed bonds.12 We affirmed this finding of liability.13 As
discussed above, when liability for undue influence is found based on transfers made
during the donor’s lifetime, this finding is predicated on the assumption that an inter
vivos gift was made. Yet, on remand, the District Court held that it could not award
damages because there was “insufficient evidence” that a gift was made, stating that
“Plaintiff’s failure to prove a gift or transfer of the cash or bonds at issue to Defendant
prevents this Court from awarding her damages.”14 This holding conflicts with the
previous finding of liability. To be sure, the record shows that Adkins presented little to
no evidence that Grimley delivered the bonds or cash to Sogliuzzo with donative intent as
is required to meet the definition of a gift under New Jersey law.15 However, as a result
11
In re Estate of Folcher, 135 A.3d 128, 137 (N.J. 2016) (“A challenger can set aside a
decedent’s will or inter vivos transfer on the basis of undue influence.”).
12
Adkins I, 2014 WL 1343065, at *7.
13
Adkins II, 625 F. App’x at 574 (“[W]e will affirm the District Court’s judgment with
respect to liability . . . .”).
14
Adkins III, 2016 WL 1643406, at *2.
15
Pascale v. Pascale, 549 A.2d 782 786 (N.J. 1988) (“In general, a valid gift has three
elements. First, the donor must perform some act constituting the actual or symbolic
delivery of the subject matter of the gift. Second, the donor must possess the intent to
5
of the previous District Court and Third Circuit decisions, Sogliuzzo is liable for undue
influence, and that liability is predicated on a finding of an inter vivos gift.
The District Court recognized this conflict and attempted to address it by saying:
“[T]his Court’s conclusion that Plaintiff presented insufficient evidence to support
damages is not inconsistent with its finding of liability.”16 For this proposition, the
District Court cited this Court’s previous decision in this case, in which we wrote: “If
after a hearing, the District Court concludes that insufficient evidence has been presented
to support damages, such a finding is not inconsistent with a finding of liability.”17 We
cited Carpet Group International v. Oriental Rug Importers Association,18 noting that it
was possible for the District Court to find liability but no damages such as when, as in
Carpet Group, the plaintiff was not injured as a result of the defendant’s actions.19
But relying on Carpet Group to support the District Court’s reasoning here misses
the mark. In Carpet Group, the jury specifically found that the defendants were liable
because they had conspired to restrain trade and persuaded others not to deal with the
plaintiffs.20 However, the jury also determined that the conspiracy did not cause injury to
the plaintiffs because the “plaintiffs’ business endeavors were unsuccessful for reasons
give. Third, the donee must accept the gift. Our cases also recognize an additional
element, the relinquishment by the donor of ownership and dominion over the subject
matter of the gift.” (internal citation and quotation marks omitted)).
16
Adkins III, 2016 WL 1643406, at *2.
17
Adkins II, 625 F. App’x at 574 n.11.
18
173 F. App’x. 178 (3d Cir. 2006).
19
Id. at 180.
20
Id.
6
unrelated to the defendants’ conduct.”21 Here, however, the District Court’s denial of
damages rests on the conclusion that the Plaintiff failed to sufficiently prove that an inter
vivos gift or transfer occurred—a conclusion that contradicts an element already
necessarily established in not one, but two previous opinions in this case. Accordingly,
we must vacate the District Court’s order and again remand for a determination of
damages.22
We additionally note that insofar as the Plaintiff is not entitled to damages for her
undue influence claim, the District Court is instructed to consider Plaintiff’s claims of
breach of fiduciary duty, negligence, fraud, and misrepresentation, for which the Court
also previously found the Defendant liable.
III
For the reasons set forth above, we vacate the District Court’s order and remand
for a determination of damages.
21
Id.
22
We note that it is possible for the District Court to find, consistent with Carpet Group,
that despite finding liability, the plaintiff suffered no damages. For example, neither
Grimley’s estate nor Adkins suffered damages if Sogliuzzo used the cash and redeemed
bonds for Grimley’s benefit. But the Court may not now revoke its previous finding that
inter vivos transfers were made in order to deny damages.
7