IN THE MATTER OF B.M., AN INCAPACITATED PERSON (F-5-9849, MORRIS COUNTY AND STATEWIDE) (RECORD IMPOUNDED) ( 2020 )

RECORD IMPOUNDED
NOT FOR PUBLICATION WITHOUT THE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-1102-18T1
IN THE MATTER OF B.M.,
An Incapacitated Person.
_________________________
Submitted December 5, 2019 – Decided May 6, 2020
Before Judges Nugent, Suter and DeAlmeida.
On appeal from the Superior Court of New Jersey,
Chancery Division, Morris County, Docket No. F-5-
9849.
Theodore P. Sliwinski, attorney for appellant E.M.
Porro Law Group, LLC, attorneys for respondent L.M.
(Janet L. Porro, on the brief).
PER CURIAM
Defendant E.M.1 appeals from the October 22, 2018 judgment of the
Chancery Division finding he violated his fiduciary duties as guardian of his
incapacitated sister, B.M., directing him to disgorge $121,000 he withdrew from
1
The parties are identified by initials to protect the confidentiality of the court's
guardianship records. R. 1:38-3(e).
B.M.'s accounts for his personal use, and awarding B.M. $52,438.68 in
attorney's fees and costs. We affirm the October 22, 2018 judgment in all
respects except the award of attorney's fees and costs, which we vacate. We
remand for a new determination of B.M.'s application for attorney's fees and
costs.
I.
The following facts are derived from the record. B.M. has been
incapacitated since birth. E.M. and plaintiff L.M. are her siblings. B.M. has
lived with L.M., who provides for all aspects of B.M.'s care, for approximately
twenty-seven years.
After her mother's death, B.M. was declared mentally incompetent, and
guardians were appointed for her person and property. At that time,
guardianship accounts were established for B.M.'s benefit, including a checking
account, a money market savings account, and a certificate of deposit. She also
possessed a life insurance policy. B.M.'s income consists solely of payments
from her father's pension and periodic social security disability benefits, all of
which are deposited into her checking account. Also upon her mother's death,
B.M. inherited a one-half interest in the home in which she resides with L.M.
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As of June 1, 2005, L.M. was the appointed guardian of B.M.'s person,
and E.M. was the appointed guardian of B.M.'s property. The two guardians
established a practice through which L.M. would pay for B.M.'s daily expenses
and submit a monthly request to E.M. for reimbursement from B.M.'s accounts
by check. E.M. also paid some of B.M.'s recurring bills directly from her
accounts, including premiums on B.M.'s supplemental health insurance and a
one-half contribution towards the local property taxes on her residence.
While L.M. acknowledges she was reimbursed by E.M. for all of the
expenses she paid on behalf of B.M., a number of the reimbursement checks
initially were rejected for insufficient funds. In addition, L.M. was notified that
E.M. had not paid some of B.M.'s medical bills, including her health insurance
premiums, which caused her coverage to lapse. E.M. also never filed an
accounting during his guardianship.
As a result, L.M. filed a verified complaint and order to show cause in the
Chancery Division seeking the removal of E.M. as guardian of B.M.'s property.
After a plenary hearing, the court removed E.M. as the guardian of B.M.'s
property because he: (1) failed to file guardianship accountings; (2) mishandled
guardianship assets; and (3) was not a resident of New Jersey. On January 13,
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2017, the court entered an order removing E.M. and appointing L.M. as guardian
of B.M.'s property.
Having gained access to B.M.'s bank records, which had been withheld by
E.M. during the first proceeding, L.M. came to believe E.M. misappropriated
$99,815.47 from B.M.'s accounts during his guardianship. As a result, L.M.
filed a second verified complaint and order to show cause in the Chancery
Division alleging E.M.: (1) misappropriated B.M.'s funds; (2) allowed B.M.'s
secondary health insurance to lapse for failure to pay premiums; and (3) cashed
in B.M.'s life insurance policy for his personal use.
The court held a two-day proof hearing on the second verified complaint.
Both L.M. and E.M. testified. L.M. presented as evidence summaries she
created from the records of B.M.'s bank accounts for the period 2005 to 2017.
In the summaries, she totaled checks E.M. wrote to himself and all cash
withdrawals, which she attributed to E.M. because B.M. is unable to make cash
withdrawals. To that figure, L.M. added bank fees assessed for insufficient
funds and overdrafts caused by E.M. In addition, L.M. testified she reviewed
records of deposits to B.M.'s checking account, and either could not determine
the source of the deposits or found that they were, in effect, transfers from B.M.'s
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other accounts. She concluded E.M. misappropriated $121,075.75 from B.M.
and depleted her money market account and certificate of deposit.
E.M. admitted that beginning in 2007, he removed money from B.M.'s
accounts for his personal use due to his addiction to opioids. He claimed,
however, to have replaced all of the money he misappropriated from B.M.'s
accounts through deposits from his own funds. E.M. admitted he cashed in
B.M.'s life insurance policy, but testified he deposited the proceeds into her
account. He claimed he ultimately overpaid B.M.'s accounts by approximately
$36,000 because he felt it was his moral obligation to contribute to the cost of
her care.
At the conclusion of the hearing, the trial court found L.M.'s testimony
was "entirely credible[,]" given that she "meticulously detailed every deposit
and withdrawal from the account" and "testified directly . . . without any
hesitation . . . [and] was absolutely candid." On the other hand, the court found
E.M. "took opportunities . . . to deflect from his own responsibility as much as
he possibly could" and was "entirely incredible as . . . a result of his demeanor,
[and] not just the fact that all the documentation disputes almost everything he
testified to."
The court found that
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[h]aving heard [L.M.'s] testimony and seeing the
documents she submitted[,] it does clearly show that
there were repeated withdrawals and checks written on
the ward's account that went directly to [E.M.]
Moreover, there were cash withdrawals with no
indication whatsoever where they went. There are clear
indications that there were constant and continuous
overdrafts on the account and that the account went into
negative territory, again, time after time after time,
incurring additional fees.
In addition, the court noted that
the vast majority of the deposits [E.M.] made, and I'm
not going to go . . . into each individual one. But the
vast majority . . . there was either a contemporaneous
withdrawal for the exact same amount of funds that he
supposedly deposited or . . . he actually cashed the
check. He would deposit the funds, write a check out
from the same account, and then cash the check so it
wasn't a deposit at all. At best[,] he was using the
account for laundering the money. At worst, it is more
likely, as [L.M.] indicates, that he was taking it from
one of the ward's other accounts, depositing into her
checking account and then withdrawing cash for
himself or writing a check for himself and cashing it on
the spot.
On October 22, 2018, the trial court entered a judgment finding E.M.
"committed acts of malfeasance and misfeasance during the course of his
[g]uardianship of the property of [B.M.]" and had caused a loss to B.M. of
$121,000 through misappropriation of her funds for his personal use. The court
ordered E.M. to repay that sum to B.M. through L.M.
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After the proof hearing and prior to entry of judgment, L.M. submitted a
request on behalf of B.M. for an award of $52,438.68 in attorney's fees and costs.
The court granted the application in its entirety, as reflected in the October 22,
2018 judgment. The record contains no indication the court made findings of
fact and conclusions of law with respect to the award of attorney's fees and costs.
This appeal followed. E.M. raises the following arguments for our
consideration:
POINT ONE
THE TRIAL COURT FAILED TO GIVE THE
DEFENDANT ADEQUATE CREDIT FOR ALL OF
HIS FUNDS THAT HE DEPOSITED INTO THE
GUARDIANSHIP ACCOUNT.
POINT TWO
THE TRIAL COURT COMMITTED SEVERAL
ERRORS IN THEIR [SIC] FACT-FINDING DUTIES.
POINT THREE
THE TRIAL COURT COMMITTED A REVERSIBLE
ERROR BY NOT GRANTING THE MOTION TO
VACATE THE DEFAULT.
POINT FOUR
THE TRIAL COURT COMMITTED A REVERSIBLE
ERROR BY GRANTING THE PLAINTIFF'S [SIC]
COUNSEL FEES.
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II.
Our scope of review of the judge's findings in this nonjury trial is limited.
We must defer to the judge's factual determinations, so long as they are
supported by substantial credible evidence in the record. Rova Farms Resort,
Inc. v. Inv'rs Ins. Co., 65 N.J. 474, 483-84 (1974). "Appellate review does not
consist of weighing evidence anew and making independent factual findings;
rather, [this court's] function is to determine whether there is adequate evidence
to support the judgment rendered at trial." Cannuscio v. Claridge Hotel &
Casino, 319 N.J. Super. 342, 347 (App. Div. 1999). "Deference to a trial court's
fact-findings is especially appropriate when the evidence is largely testimonial
and involves questions of credibility." In re Return of Weapons to J.W.D., 149
N.J. 108, 117 (1997). Since the trial court "'hears the case, sees and observes
the witnesses, [and] hears them testify,' it has a better perspective than a
reviewing court in evaluating the veracity of witnesses." Pascale v. Pascale, 113
N.J. 20, 33 (1988) (alteration in original) (quoting Gallo v. Gallo, 66 N.J. Super.
1, 5 (App. Div. 1961)). However, "[a] trial court's interpretation of the law and
the legal consequences that flow from established facts are not entitled to any
special deference." Manalapan Realty, L.P. v. Twp. Comm., 140 N.J. 366, 378
(1995).
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After carefully reviewing E.M.'s arguments in light of the record and
applicable legal principles, we conclude the record contains substantial, credible
evidence supporting the trial court's findings of fact. L.M., who the trial court
found to be credible, provided a detailed account of the withdrawals E.M. made
from B.M.'s accounts, as well as the various bank fees incurred as a result of his
mismanagement of those accounts. E.M. admitted he violated his fiduciary
duties by repeatedly withdrawing B.M.'s funds to finance his addiction.
Although E.M. testified that he reimbursed B.M.'s accounts for the full amount
he withdrew, the trial court found his testimony, which was unsupported by bank
records, to lack credibility. The trial court's finding that E.M. misappropriated
$121,000 is well supported.
We also find no error in the trial court's conclusion E.M. violated his
fiduciary duties to B.M. The role of a guardian of an incapacitated person's
estate is largely statutory. In re Guardianship of A.D.L., 208 N.J. Super. 618,
623 (App. Div. 1986). A guardian is authorized to "expend or distribute so much
or all of the income or principle of his ward for the support, maintenance,
education, general use and benefit of the ward . . . ." N.J.S.A. 3B:12-43
(emphasis added). A guardian must exercise reasonable care, skill, and caution
when handling the assets of his ward. In re Keri, 181 N.J. 50, 57 (2004).
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As the guardian of B.M.'s property, E.M. had a duty not to withdraw her
funds for his own use. It is self-evident that E.M.'s repeated misappropriation
of B.M.'s funds to support his addiction was a violation of his duty to protect his
ward's finances and preserve the funds needed for her care and support.
In addition, E.M.'s argument the trial court erred by not vacating default
entered against him is meritless. As the court noted after E.M. moved to vacate
default, "[t]here really is not default. The fact of the matter is [E.M.] just did
not comply with the court orders to provide the necessary discovery and the
accounting." The court did not limit in a meaningful way E.M.'s ability to
present evidence at the proof hearing. To the contrary, the court admitted a large
number of documents offered as evidence by E.M., who was permitted to testify,
cross-examine L.M., and offer a defense to her allegations.
Nor do we find the trial court erred when it denied E.M.'s request, made
on the first day of the proof hearing, to adjourn the proceedings and extend
discovery to permit him to retain an expert to create a forensic analysis of B.M.'s
bank records. We review the trial court's decision with respect to an extension
of discovery for an abuse of discretion. Huszar v. Greate Bay Hotel & Casino,
Inc., 375 N.J. Super. 463, 471-72 (App. Div. 2005). The trial court acted well
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within its discretion in denying E.M.'s request, given its lateness and his
persistent failure to produce B.M.'s bank records during discovery.
Finally, the decision to award attorney's fees rests "within the sound
discretion of the trial court." Maudsley v. State, 357 N.J. Super. 560, 590 (App.
Div. 2003). "[F]ee determinations by trial courts will be disturbed only on the
rarest of occasions, and then only because of a clear abuse of discretion."
Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001) (quoting Rendine
v. Pantzer, 141 N.J. 292, 317 (1995)). 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 Cty.
Prosecutor, 171 N.J. 561, 571 (2002) (quoting Achacoso-Sanchez v.
Immigration and Naturalization Serv., 779 F.2d 1260, 1265 (7th Cir. 1985)).
Although New Jersey generally disfavors the shifting of attorney's fees, a
prevailing party may recover attorney's fees if expressly provided by statute,
court rule, or contract. Collier, 167 N.J. at 440 (citing North Bergen Rex
Transp., Inc. v. Trailer Leasing Co., 158 N.J. 561, 569 (1999) and Dep't of Envtl.
Prot. v. Ventron Corp., 94 N.J. 473, 504 (1983)). Rule 4:42-9(a)(8) permits the
award of attorney's fees "[i]n all cases where attorney's fees are permitted by
statute."
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In calculating the amount of reasonable attorney's fees, "an affidavit of
services addressing the factors enumerated by RPC 1.5(a)" is required. R. 4:42-
9(b); Twp. of W. Orange v. 769 Assocs., LLC, 198 N.J. 529, 542 (2009). RPC
1.5(a) sets forth the factors to be considered:
(a) A lawyer's fee shall be reasonable. The factors
to be considered in determining the reasonableness of a
fee include the following:
(1) the time and labor required, the novelty and
difficulty of the questions involved, and the skill
requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the
acceptance of the particular employment will preclude
other employment by the lawyer;
(3) the fee customarily charged in the locality for
similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by
the circumstances;
(6) the nature and length of the professional
relationship with the client;
(7) the experience, reputation, and ability of the
lawyer or lawyers performing the services;
(8) whether the fee is fixed or contingent.
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Courts determine the "lodestar," defined as the "number of hours
reasonably expended" by the attorney, "multiplied by a reasonable hourly rate."
Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 386 (2009) (citing Furst v.
Einstein Moomjy, Inc., 182 N.J. 1, 21 (2004)). "The court must not include
excessive and unnecessary hours spent on the case in calculating the lodestar."
Furst, 182 N.J. at 22 (citing Rendine, 141 N.J. at 335-36).
"The amount of attorney fees usually rests within the discretion of the trial
judge, but the reasons for the exercising of that discretion should be clearly
stated." Khoudary v. Salem Cty. Bd. of Soc. Servs., 281 N.J. Super. 571, 578
(App. Div. 1995) (citations omitted); see also R. 1:7-4(a) (requiring a court to
"find the facts and state its conclusions of law thereon in all actions tried without
a jury, on every motion decided by a written order that is appealable as of right,
and also as required by R. 3:29"). "[T]he court must specifically review
counsel's affidavit of services under R. 4:42-9, and make specific findings
regarding the reasonableness of the legal services performed . . . ." F.S. v. L.D.,
362 N.J. Super. 161, 170 (App. Div. 2003). "Without such findings it is
impossible for an appellate court to perform its function of deciding whether the
determination below is supported by substantial credible proof on the whole
record." Monte v. Monte, 212 N.J. Super. 557, 565 (App. Div. 1986). "The trial
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judge may satisfy the court rules by relying on the facts or reasons advanced by
a party; however, the court is obligated to make the fact of such reliance
'explicit.'" Allstate Ins. Co. v. Fisher, 408 N.J. Super. 289, 301 (App. Div. 2009)
(quoting Pressler, Current N.J. Court Rules, cmt. 1 on R. 1:7-4 (2009)).
The record contains no findings of fact or conclusions of law supporting
the trial court's award of attorney's fees and costs to B.M. As a result, we cannot
meaningfully review the trial court's decision. We are, therefore, constrained to
vacate the award of attorney's fees and costs to B.M. and remand for a new
determination of her application.
The October 22, 2018 judgment is affirmed in all respects except the
award of attorney's fees and costs to B.M., which we vacate. We remand for a
new determination of B.M.'s application for attorney's fees and costs. We do
not retain jurisdiction.
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