IN THE MATTER OF THE ESTATE OF ROSALIE JEAN RYAN (P-16-705, GLOUCESTER COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2806-19
IN THE MATTER OF THE
ESTATE OF ROSALIE JEAN
RYAN, Deceased.
Argued September 30, 2021 – Decided December 1, 2021
Before Judges Alvarez and Mitterhoff.
On appeal from the Superior Court of New Jersey,
Chancery Division, Gloucester County, Docket No. P-
16-705.
John H. Shindle argued the cause for appellants Patrick
Kirschling, Thomas Kirschling, William Kirschling,
John Kirschling, and Michael Kirschling (Ward,
Shindle & Hall, attorneys; Thomas H. Ward and John
H. Shindle, on the briefs).
Daniel L. Mellor argued the cause for respondent
Veronica A. Kirschling (Kulzer & DiPadova, PA,
attorneys; Daniel L. Mellor, on the brief).
PER CURIAM
Plaintiffs, the five Kirschling brothers—Patrick, Thomas, William, John,
and Michael1—appeal from a January 30, 2020 judgment awarding them
$15,0002 after a bench trial. The sum was to be paid by their sister, Veronica
(Bonnie) Kirschling. We affirm.
Plaintiffs' verified complaint sought an accounting of the estate of
decedent Rosalie Jeanne Ryan, the parties' aunt. The complaint alleged Bonnie
breached her fiduciary duty towards decedent, for whom she held a power of
attorney (POA), and further alleged causes of action arising from the alleged
breach. At the time of her death, Medicaid had a $232,619.57 lien against her
estate for unreimbursed nursing home and medical care accrued during the last
four years of decedent's life. She died on March 29, 2014.
Prior to this litigation, plaintiffs had sued Bonnie regarding their mother's
estate. Their mother, Vera Kirschling, died on November 4, 2010. The same
judge heard both matters. Plaintiffs in that litigation sued Bonnie for breaching
her fiduciary duty with regard to the mother's estate and for malicious
interference.
1
For clarity, the parties are referred to by their first names.
2
The judge directed the $15,000 be paid by Bonnie to decedent's estate, thereby,
as stated in the judgment, "subject[ing] it to the Medicaid lien."
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During discovery in that litigation, plaintiffs obtained records and
financial information regarding decedent. They deposed Bonnie regarding
decedent's direct deposit authorizations, annuity statements, the POAs she
signed in favor of Bonnie in 2003, and correspondence with the United States
Internal Revenue Service.
When plaintiffs settled the litigation in August 2013 regarding Vera's
estate, the agreement included a provision that made Patrick a signatory on all
accounts "maintained for the benefit of" decedent. It was further agreed that at
her death all such accounts would be distributed equally. The settlement
agreement resolved "all claims which were raised or which could have been
raised in the [l]itigation[.]" Further, plaintiffs agreed to release any claims
against Bonnie, "including but not limited to all claims which" could have been
brought at that time. In this case, the judge held that the settlement did not bar
claims regarding an account about which plaintiffs were unaware when the
agreement was reached. When she died, decedent's estate consisted of
$5,583.85, spent entirely on funeral expenses.
By the time this lawsuit was filed in 2016, the relevant financial
institutions had destroyed any records regarding decedent's accounts more than
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five years old. Additionally, Bonnie discarded many records herself in
accordance with common tax advice, and she lost some records to flooding.
In 2003, Bonnie moved decedent, then eighty-three, into the home she
shared with her mother. Patrick helped decedent relocate and informed the other
plaintiffs of decedent's change in residence. Everyone in the family had been
concerned for some time about decedent's diminishing capacity to care for
herself.
Soon after the move, Bonnie changed the locks on her home, and only
Michael had the code to enter through the garage. Vera and Bonnie used their
own funds to maintain decedent's empty apartment in Pittsburgh for the first
eighteen months she lived with them in Swedesboro. Decedent authorized the
direct deposit of her pension on April 28, 2004, directly into an "835" bank
account in Bonnie's name only.
When the settlement was reached, plaintiffs were unaware of the account's
existence. At one point, Vera and Bonnie deposited $90,000 into the 835
account from their own funds. Decedent contributed to household expenses
from that account. Decedent's move to a nursing home in January 2010 was not
subsidized by Medicaid for several months—during which time it was funded
by Vera and Bonnie.
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Pre-trial, plaintiffs could not secure records going back to 2004 because
they did not exist. In discovery, plaintiffs moved to compel Bonnie to author a
detailed financial certification covering the years 2003 to 2014. When they
moved for an order compelling Bonnie to complete the certification, the judge
refused because it would be impossible for anyone to provide such detailed
information from memory.
Plaintiffs deposed Bonnie over five days in this litigation and were able
to obtain from the bank the history for the 835 account. Plaintiffs identified
twelve "unexplained" transactions, both deposits and withdrawals. They
claimed the unexplained transactions totaled $254,433.70. The trial judge
flagged $250,849.70 in unexplained transactions. However, after appl ying
laches and the statute of limitations, the judge concluded she would only
consider unexplained transactions dating back to May 13, 2010. She entered
judgment for $15,000 because the unexplained transactions falling within this
five-year range totaled that amount. She specified that the funds were not
necessarily wrongfully taken, rather, they were merely unexplained as Bonnie
was unable to recall the reason for the withdrawals. The judge observed that
Bonnie took good care of decedent beginning in 2004 when she moved in.
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The judge spent an hour and a half rendering her decision in open court.
The first twenty-five pages of the transcript include her findings of fact.
Although the judge did not specifically state that Bonnie was credible, the
majority of her findings presumed her credibility, as there was no other basis for
the finding.
The trial judge barred an expert plaintiffs proposed to offer during the trial
regarding Bonnie's accounts. The judge considered it reasonable for the parties
to expect discovery to end within one year of the inception of the litigation ,
despite the lack of a formal discovery end date or order. This was particularly
true in this case since plaintiffs proposed their expert after they had already
moved for summary judgment.
Plaintiffs raise the following points on appeal:
POINT I
PRE-TRIAL DISCOVERY WAS IMPROPERLY
RESTRICTED, RESULTING IN A MISCARRIAGE
OF JUSTICE.
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POINT II
PLAINTIFFS’ EXPERT WAS IMPROPERLY
BARRED BEFORE A TRIAL DATE WAS SET.
POINT III
IT WAS ERROR TO APPLY THE STATUTE OF
LIMITATIONS, AS THE DISCOVERY RULE
TOLLED THE ACCRUAL OF PLAINTIFFS’ CAUSE
OF ACTION.
A. The legal standard for applying the discovery rule
supports a remand in favor of the [p]laintiffs.
B. The trial court relied on irrelevant factual
information which did not, and could not, provide
notice of the [d]efendant’s breaches of her fiduciary
duties.
C. The [p]laintiffs did not have knowledge of their
standing prior to the [d]ecedent’s death.
D. At a minimum a remand is necessary for a trial
on the issue of when the [p]laintiffs knew, or should
have known, that the [d]efendant first began the
breaches of her fiduciary duties.
POINT IV
THE DEFENSE OF LACHES IS NOT APPLICABLE
(1) WHERE PLAINTIFFS DID NOT DELAY IN
BRINGING SUIT AND (2) WHERE DEFENDANT
CONCEALED HER BREACHES OF FIDUCIARY
DUTY.
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A. The [d]efense of [l]aches [d]oes [n]ot [a]pply,
[a]s [a]ccrual [d]oes [n]ot [b]egin [u]ntil the [p]laintiffs
had [r]eason to [k]now of [t]heir [c]laim.
B. The [d]efense of [l]aches is [n]ot [l]egally
[a]vailable to a [d]efendant/[f]iduciary [w]ho
[e]ngaged in [f]raud.
D. New Jersey [c]ourts have consistently found
laches do not apply in the case of a breaching fiduciary.
POINT V
THE TRIAL COURT FAILED TO CONDUCT A
FACTUAL ANALYSIS TO ADDRESS TWELVE
INSTANCES OF “UNEXPLAINED”
TRANSACTIONS.
POINT VI
THE TRIAL COURT FAILED TO MAKE
CREDIBILITY DETERMINATIONS AS TO THE
DEFENDANT’S CONFLICTING TESTIMONY.
POINT VII
THE TRIAL COURT’S ORAL DECISION,
COMPLETED WITHOUT ANY PRE OR POST
TRIAL BRIEFING IS AMBIGUOUS AND SUBJECT
TO INTERPRETATION.
POINT VIII
THE TRIAL COURT DID NOT ADDRESS
DEFENDANT’S BURDEN TO PROVE THAT
THERE WAS NO BREACH IN HER FIDUCIARY
DUTY.
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POINT IX
THE RELEVANT POWER OF ATTORNEY
STATUTES, 20 PA. C.S.A. § 5601.3 AND N.J.S.A. §
46:2B-8.13(B), IMPOSE A NON-DELEGABLE
DUTY UPON THE POWER OF ATTORNEY TO
MAINTAIN HER OWN RECORDS INDEPENDENT
OF A BANK’S RECORDKEEPING PRACTICES.
I.
A judge's discovery decision is reviewed for abuse of discretion.
Pomerantz Paper Corp. v. New Cmty. Corp., 207 N.J. 344, 371 (2011). Such an
abuse of discretion occurs when a decision is "made without a rational
explanation, inexplicably departed from established policies, or rested on an
impermissible basis." Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002)
(quoting Achacoso-Sanchez v. I.N.S., 779 F.2d 1260, 1265 (7th Cir. 1985)). We
defer to a court's disposition of discovery matters absent such an abuse of
discretion or a misunderstanding of the law. Rivers v. LSC P'ship, 378 N.J.
Super. 68, 80 (App. Div. 2005).
The judge did not abuse her discretion by denying plaintiffs' motion to
compel Bonnie to certify her financial information. The requested information
included:
a balance sheet with supporting schedules and income
statements; cash and bank money market funds; [any]
life insurance carried, including group insurance;
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readily marketable securities and mutual funds;
nonmarketable securities; real estate for personal use;
real estate investments; income statements, including
salary, bonuses, commissions, rental income, interest
and dividends, capital gains, and other; annual
expenditures, including property taxes, income taxes,
mortgage payments, other loan payments, insurance
payments, rental payments, alimony, child support
maintenance paid or received, tuition, living and
medical expenses and other expenses and that’s for a
per annum for the years from 2003 to 2014.
First, it is self-evident that certified financial statements do not fall within
the discovery rules. Furthermore, as the judge observed, no one could be
expected to recreate eleven years of detailed financial information without any
access to records. Additionally, plaintiffs did depose Bonnie, providing another
avenue through which to obtain whatever information was available to her .
Thus, it was not an abuse of discretion to deny plaintiffs' application both
because the records were unavailable and alternate means of obtaining the
information were available through interrogatories or deposition.
Nor was it an abuse of discretion for the judge to have barred the financial
expert, a decision also subject to abuse of discretion review. See Townsend v.
Pierre, 221 N.J. 36, 52 (2015); Brenman v. Demello, 191 N.J. 18, 31 (2007).
Civil discovery deadlines range from 150 to 450 days. R. 4:24-1(a).
Plaintiffs' aim of forensically reconstructing Bonnie's financial history was
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raised hundreds of days after the rule timeframe. Plaintiffs were over 600 days
late under even the most generous deadline available for a Track IV case, which
is 450 days. See ibid. As the judge said, plaintiffs had already filed for summary
judgment, and it is customary for discovery to be completed before a motion for
summary judgment is filed. In this case, the judge did not abuse her discretion
by denying the admission of an expert report or any of her other rulings
regarding discovery.
II.
The meaning of "accrued" and the applicability of the discovery rule are
matters of law, which we review de novo. The Palisades at Fort Lee Condo.
Ass'n, Inc. v. 100 Old Palisade, LLC, 230 N.J. 427, 442 (2017).
A cause of action accrues when the right to file arises. Johnson v. Roselle
EZ Quick LLC, 226 N.J. 370, 394 (2016). The purpose of statutes of limitation
is to enable parties to defend themselves with reliable recollection before
evidence is lost to the passage of time. Lopez v. Swyer, 62 N.J. 267, 274 (1973).
Although the discovery rule is an equitable rule intended to avoid harsh
consequences from a mechanical application of a statute of limitation, it is not
applicable when a reasonable person exercising ordinary diligence knew or
should have known of the injury at issue. Szczuvelek v. Harborside Healthcare
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Woods Edge, 182 N.J. 275, 281, 283 (2005). The party invoking the discovery
rule bears the burden of proof. Caravaggio v. D'Agostini, 166 N.J. 237, 246
(2001); see also Ben Elazar v. Macrietta Cleaners, Inc., 230 N.J. 123, 134-35
(2017).
In determining whether the discovery rule applies, judges turn to factors
such as:
the nature of the alleged injury, the availability of
witnesses and written evidence, the length of time that
has elapsed since the alleged wrongdoing, whether the
delay has been to any extent deliberate or intentional,
[and] whether the delay may be said to have peculiarly
or unusually prejudiced the defendant.
[Lopez, 62 N.J at 276.]
We are unconvinced that plaintiffs should avoid application of the statute of
limitations through the discovery rule.
The judge found that the family knew of decedent's cognitive issues and
inability to care for herself independently as early as 2003. Thus, the judge
rationally applied the six-year statute of limitations beginning in 2004 when
Bonnie first commingled funds in the 835 account. Thus, plaintiffs' claim was
long expired by the time they filed their complaint on May 13, 2016. The judge
rationally found that, had plaintiffs been diligent, they would have learned of
their potential claims years earlier. They knew decedent was unable to manage
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her affairs, and they had the opportunity to address the issue when she moved in
with Bonnie. They could have anticipated these potential claims when they
litigated their mother's estate and settled under terms that included decedent's
estate. At that juncture, plaintiffs did not know decedent's will made everyone
a beneficiary, but they obviously suspected Bonnie's management of their aunt's
funds—otherwise, the settlement agreement would have been silent as to their
aunt's finances.
III.
Plaintiffs claim the trial judge's application of the doctrine of laches was
error. Laches is an equitable affirmative defense barring recovery where
unexplainable and inexcusable delay in bringing suit prejudiced another party.
Fox v. Millman, 210 N.J. 401, 417 (2012). The trial court has discretion to apply
laches based on the particular circumstances of the case. Mancini v. Twp. of
Teaneck, 179 N.J. 425, 436 (2004). The factors that control the decision include
the length of delay, reasons for the delay, and changes in the parties' conditions
attributable to the delay. Cnty. of Morris v. Fauver, 153 N.J. 80, 105 (1998);
see also Knorr v. Smeal, 178 N.J. 169, 181 (2003) ("The core equitable concern
in applying laches is whether a party has been harmed by the delay."). Decisions
regarding application of the doctrine are reviewed for abuse of discretion. See
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United States v. Scurry, 193 N.J. 492, 503-04 (2008) (holding "the application
of the doctrine of laches . . . constituted an abuse of discretion . . . ."). Laches
may apply if a party has both knowledge and opportunity to assert his rights in
the proper forum. Fauver, 153 N.J. at 105.
There is no doubt that plaintiffs knew of decedent's failing state of mind
and inability to care for herself. Had plaintiffs initiated legal action in 2003, the
financial records would have been available, and Bonnie's recollection would
have been fresh. Yet, over the years, as the judge observed, "there was never
any action taken to check to see what decedent's status was, what Vera's status
was, or to bring an action so they could get access to these two elderly women
who were becoming increasingly frail."
During the litigation regarding Vera's estate, Patrick demanded in
discovery and photographed documents relating to decedent's financial status,
including her Form 1099, annuity statements, and the POA. The discovery in
that litigation alerted Patrick to at least some of the same issues regarding
Bonnie's control of decedent's accounts. He even accused Bonnie of isolating
the two women from plaintiffs. Plaintiffs had the same concerns then as now;
they should have filed then. Instead, they did nothing for years. The judge's
application of laches to bar their claims is thus proper.
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There is no discernible reason why plaintiffs delayed litigation about
decedent's estate when they were suspicious of Bonnie's management of
decedent's funds as early as 2011. Their failure to sue earlier left Bonnie without
the records necessary to defend herself, essentially without recourse.
Bonnie's argument that laches is unavailable to persons who commit fraud
is inapposite. The judge found no fraud. Additionally, given that the three
women lived together for years, and shared expenses before decedent went to
the nursing home, innocent commingling of funds was to be expected. Although
the judge did find that Bonnie breached her fiduciary duty by commingling, the
judge also concluded the breach did not damage plaintiffs. Bonnie did not
actively or maliciously engage in conduct hidden from plaintiffs. Hence, the
judge was justified in applying laches because plaintiffs' unexplained and
inexcusable delay prejudiced Bonnie. See Millman, 210 N.J. at 412.
IV.
As required by Rule 1:7-4, the judge made the required factual findings
and thoroughly explained her legal conclusions. Because trial judges have
opportunities to view demeanor, and decide matters that are largely testimonial
and involve questions of credibility, we review their decisions in that arena
deferentially. Slutsky v. Slutsky, 451 N.J. Super. 332, 344 (App. Div. 2017).
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We disturb such factual findings, and even legal conclusions, only when
convinced they are "so manifestly unsupported by or inconsistent with the
competent, relevant, and reasonably credible evidence as to offend the interests
of justice." In re Forfeiture of Pers. Weapons and Firearms Identification Card
belonging to F.M., 225 N.J. 487, 506 (2016) (quoting Rova Farms Resort v.
Invs. Ins. Co., 65 N.J. 474, 484 (1974)). The judge's findings do not fit that
category.
Applying the statute of limitations and laches, the judge only found
Bonnie failed to account for an October 7, 2013, withdrawal of $15,000. This
was the basis for her award to the estate. Despite the judge's conclusion that
there were other unexplained transactions, she barred recovery for those
transactions because they fell within the timeframe covered by the statute of
limitations and laches.
By designating certain transactions as "unexplained," the judge did not
characterize them as a wrongful taking of decedent's assets. This was reasonable
in terms of the payments that Bonnie made towards the care of both her elderly
relatives and of "unexplained" deposits. For example, the judge found no
reimbursement for credit card expenses—yet Bonnie testified that she was
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reimbursed from the 835 account for credit card expenses incurred on decedent's
behalf.
Plaintiffs assert the unexplained withdrawals total $254,433.70. This sum
is less than the Medicaid lien. As it stands, the award of $15,000 payable by
Bonnie passes through the estate in satisfaction of the Medicaid lien. We see no
error in any of the judge's findings of fact or conclusions of law, and we are
frankly unclear as to how plaintiffs could recover any damages given the amount
of the Medicaid lien.
V.
Plaintiffs' other alleged points of error are so lacking in merit as to not
warrant discussion in a written opinion. See R. 2:11-3(e)(1)(E).
Affirmed.
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