IN THE MATTER OF THE ESTATE OF BYUNG-TAE OH (P-000018-13, BERGEN 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NOT FOR PUBLICATION WITHOUT THE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-2760-18
IN THE MATTER OF THE
ESTATE OF BYUNG-TAE OH,
deceased.
___________________________
Argued February 23, 2021 – Decided March 23, 2021
Before Judges Fisher, Gilson, and Gummer.
On appeal from the Superior Court of New Jersey,
Chancery Division, Bergen County, Docket No. P-
000018-13.
William D. Grand argued the cause for defendant-
appellant/cross-respondent Hyung Kee Oh
(Greenbaum, Rowe, Smith & Davis, LLP, attorneys;
William D. Grand, of counsel and on the briefs; Olivier
Salvagno, on the briefs).
Solomon Rubin argued the cause for plaintiff-
respondent/cross-appellant Wonki Oh (Matthew Jeon,
on the briefs).
Alexander G. Benisatto argued the cause for respondent
Stuart Reiser, court-appointed administrator of the
Estate of Byung-Tae Oh (Shapiro, Croland, Reiser,
Apfel & Di Iorio, LLP, attorneys; Stuart Reiser and
Alexander G. Benisatto, on the brief).
PER CURIAM
In this probate matter, defendant Hyung Kee Oh appeals from a final
judgment awarding counsel fees to his brother, plaintiff Wonki Oh. He contends
that plaintiff was not entitled to a fee award because he did nothing to benefit
the estate of their father, Byung-Tae Oh. Plaintiff cross-appeals, arguing the
trial court erred both by approving the report of an administrator appointed to
marshal decedent's New Jersey assets and by awarding counsel fees to
defendant. We affirm in part and reverse in part, concluding that the judge
properly approved the administrator's report but that fees were erroneously
awarded to defendant and that plaintiff's fee request requires further analysis.
A brief history of the parties' disputes and how the matter finally wound
its way back to this court 1 will be helpful to the reader in understanding our
disposition of the appeal and cross-appeal.
Byung-Tae Oh (decedent), a resident of the Republic of Korea, died
intestate in Seoul on February 6, 2012. He was survived by his wife of over
thirty years, Hie Sung Lee, and three children from his first marriage: plaintiff;
defendant; and a daughter, Heinjoo Oh. Under Korean law, the three children
1
For part of the story, see In re Estate of Byung Tae-Oh, 445 N.J. Super. 402(App. Div. 2016).
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were entitled to equal shares of decedent's estate and his wife was entitled to
one and one-half times the share inherited by each child. At the time of death,
decedent's estate was valued at approximately $31,000,000.
Decedent's primary asset was Dong Nam Housing Industrial Co., Ltd.
(Dong Nam Housing), a successful Seoul-based real estate and construction
company in which decedent had been both majority shareholder and chief
executive officer. Defendant worked for several years at Dong Nam Housing as
a salaried employee. During his lifetime, decedent gifted defendant 20,000
shares of stock in Dong Nam Housing; plaintiff never worked at Dong Nam
Housing and was not given any company stock.
Nine days after decedent's death, the family met to discuss the distribution
of the estate. At this meeting, which plaintiff secretly recorded, plaintiff
demanded that his stepmother relinquish to him her entire inheritance, claiming
without proof that this was his father's dying wish. At length, plaintiff expressed
his belief that he, the eldest son, had been treated unfairly by decedent who had
denied him a position at Dong Nam Housing, choosing instead to further the
career of, and lavish gifts on, defendant. In making these claims, plaintiff
acknowledged he had not always been an obedient son and that his father had
A-2760-18
3
financially bailed him out on several occasions. The family meeting ended when
decedent's widow refused to agree to plaintiff's demands.
Flashing back a few decades, defendant and his wife Sung Hee Park came
to the United States in May 1992 with student visas to pursue doctoral degrees
at the University of Connecticut. Although defendant had a full tuition
scholarship and worked as a research assistant, decedent assisted them
financially. Defendant graduated in 1998.
After his student visa expired, defendant obtained an E-2 visa, which
required that he invest money and start a business in the United States. 2 He
secured a commercial loan and, in May 1999, established B&H Consulting and
Development LLC (B&H), a real estate development and construction company,
in New Jersey. In the years that followed, B&H became a member of three other
New Jersey entities: Tazz Mall, LLC, B&H Design and Construction Co. LLC
(B&H Design), and Palcon Development, LLC. By 2013, B&H had ceased its
construction activities and focused primarily on Tazz Mall.
According to defendant, none of the money used to start B&H came from
decedent or Dong Nam Housing. But, in fact, on December 8, 2001, decedent
wired $900,000 from his personal Korean bank account to B&H's corporate bank
2
Defendant is now a permanent resident of the United States.
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account. Although defendant claimed this money was a gift from his father, he:
(1) could not explain why the money had been sent to B&H's business account
as opposed to his personal account; (2) was unable to produce any
documentation confirming the money was a gift; and (3) acknowledged that
neither he nor decedent filed a gift tax return in either the United States or Korea
with respect to this fund.
Defendant also knew that, starting in 2001, decedent had annually
reported (in Korea) that he had made a direct overseas investment of $900,000
in B&H, and owned 40.8% of the company. Defendant was aware that in August
2012, decedent's widow filed an estate tax return, which stated that decedent's
gross estate was approximately $31,000,000, including his $900,000 investment
in B&H. B&H business documents, however, did not reflect decedent's interest,
and decedent never received any income from B&H during his lifetime.
In 2003, defendant formed Dong Nam New Jersey LLC (Dong Nam NJ),
a subsidiary of Dong Nam Housing. Dong Nam Housing owned 98% of Dong
Nam NJ, while defendant and his wife owned one percent each; decedent had
no individual interest in Dong Nam NJ. Defendant served as the managing
member of both B&H and Dong Nam NJ, and the two companies shared a
business relationship.
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In January 2013, plaintiff filed a lawsuit in Korea to determine the value
of the estate and the inheritance to which each beneficiary was entitled. He
alleged that defendant's share had to be reduced because decedent had already
given defendant part of his inheritance through inter vivos bequests, known as
"special benefits" in Korea. Plaintiff alleged that defendant received special
benefits when decedent gave him: $1,000,000 for living expenses when he
moved to the United States; $1,304,000 as a gift to start B&H; and money to
build a home in Bergen County. Plaintiff also alleged that decedent had invested
$900,000 in B&H.
Around the same time, plaintiff also filed a verified complaint in the
Probate Part; he claimed that decedent had New Jersey assets, which gave New
Jersey ancillary jurisdiction over decedent's interests in B&H and Dong Nam
NJ, and he sought the appointment of an administrator under N.J.S.A. 3B:10-7
to marshal these New Jersey assets. Plaintiff claimed that decedent: made an
initial capital contribution to B&H of more than $2,200,000, which was
comprised of a gift to defendant of $1,304,000 and the $900,000 transfer; made
an initial capital contribution to Don Nam NJ of more than $5,000,000; and gave
defendant and his wife other gifts of several millions of dollars, which were
advances on defendant's inheritance. He asserted that defendant had refused to
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provide accurate and complete information concerning the extent of decedent's
interests in B&H, Dong Nam NJ, Tazz Mall and B&H Design, and defendant's
management of these companies. Decedent's widow and the parties' sister
disagreed with plaintiff's claims in the verified complaint. In his answer to the
complaint, defendant denied that decedent had any assets in New Jersey and
maintained that the $900,000 transferred to B&H in 2001 was a gift.
The discovery process proved difficult. On July 11, 2013, Judge Robert
P. Contillo ordered defendant to produce all documents pertaining to the
$900,000 transfer and any other transfers or gifts from decedent. In March 2014,
shortly before expiration of the discovery deadline, both parties moved for
summary judgment. Judge Contillo granted summary judgment in plaintiff's
favor, concluding that plaintiff had successfully demonstrated decedent's
$900,000 transfer constituted an investment in B&H and that the estate was
entitled to receive a 40.8% interest in that entity. The judge also determined
that he could not find that:
any interest in [Dong Nam NJ] necessitates the
appointment of an administrator. Neither party has
raised an allegation that the [d]ecedent personally
owned any percentage of this LLC. Instead, he
indirectly had an interest in this LLC through Dong
Nam Korea, a Korean corporation managed by the
[d]ecedent in which he was the majority shareholder.
The [c]ourt does not find that a Korean corporation
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having an interest in a New Jersey LLC is [d]ecedent's
"personal property in this State" that would warrant
relief under N.J.S.A. 3B:10-7.
Judge Contillo appointed an administrator – Stuart Reiser, Esq. – to determine
the extent of any estate assets in New Jersey and whether decedent made any
inter vivos gifts to defendant.
Defendant appealed the judge's determination about the $900,000
investment; plaintiff did not seek review of the court's finding that decedent had
no personal interest in Dong Nam NJ. While defendant's appeal was pending,
he unsuccessfully moved to limit the administrator's authority pending rulings
from the Korean court. On February 18, 2015, Judge Contillo granted
defendant's motion for entry of a confidentiality order. According to this order,
all documents that had been or would be provided by the administrator to
plaintiff or his counsel were not to be "disseminated or disclosed by the plaintiff
or his counsel, in whole or in part, to any person or entity not a party to this
action, nor to any other court, without leave of court."
Nearly a year later, the administrator filed a separate action against
defendant in General Equity,3 seeking to compel defendant's cooperation with
his discovery requests and facilitate the completion of his forensic investigation.
3
Reiser v. Oh, No. BER-C-10-16.
A-2760-18
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In his complaint, the administrator alleged that: defendant had not complied
with his request for production of documents in the probate action; defendant
had insisted that this separate action was necessary so that he would have a
forum for preserving his objections to discovery requests; and defendant
continued to operate B&H without regard to the estate's interest in the company.
Plaintiff attempted to intervene in that action without success.
Later, the administrator moved to compel defendant's cooperation with his
discovery requests but withdrew the motion when defendant finally agreed to
provide some documents relating to Dong Nam NJ.
In May 2016, we affirmed the trial court's grant of summary judgment to
plaintiff. In re Estate of Byung Tae-Oh, 445 N.J. Super. 402 (App. Div. 2016).
Following that decision, defendant filed a brief in Korea withdrawing his
previous assertion that decedent did not have a 40.8% interest in B&H.
In the Fall of 2016, defendant learned that, in violation of the 2015
confidentiality order, plaintiff had used numerous confidential B&H financial
records produced by defendant in filing two criminal complaints alleging
embezzlement and other illegal activities against defendant with the Seoul
Northern District Prosecutor's Office. The first complaint contained forty-eight
counts and pertained to actions taken by defendant with respect to Dong Nam
A-2760-18
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NJ and B&H; the second addressed twenty-nine financial transfers between
Dong Nam NJ and B&H.
Police interviewed plaintiff, defendant, and the enrolled agent
representing Dong Nam Housing, and defendant also provided B&H's and Dong
Nam NJ's accounting books and records for review. Following the investigation,
the Korean prosecutor concluded in August 2017 that there was "no suspicion
of crime" and declined to indict defendant on either complaint. Plaintiff
appealed, without success, the non-indictment decision as to the first complaint.
In February 2017, on being advised of these events, Judge Contillo
ordered plaintiff to pay $23,434.40 of defendant's counsel fees. The judge also
modified the confidentiality order as follows:
a. From this date forward, neither counsel for
[p]laintiff nor the . . . [a]dministrator, shall disseminate,
disclose, or provide to [p]laintiff any of the information
or documents furnished to the . . . [a]dministrator by
[d]efendant or by third parties (including, but not
limited to, banking institutions, accounting firms, or
law firms) related to[:] (1) B&H . . . and its related
entities; (2) Don Nam [NJ] . . . ; (3) [d]efendant; or (4)
any of the defendants in the action entitled Reiser v.
Oh, et al., Docket No. BER-C-10-16.
b. From this date forward, the [l]ocal [a]dministrator,
in his discretion, may provide information furnished to
him by [d]efendant or by third parties (including, but
not limited to, banking institutions, accounting firms,
or law firms) to New Jersey counsel for [p]laintiff . . .
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except for information or documents related to Dong
Nam [NJ] . . . , which shall not be disclosed.
Later in February 2017, plaintiff and his attorney met with the
administrator, who advised the estimated value of B&H was $5,000,000 to
$7,000,000. The administrator expressed his concerns about filing a federal
estate tax return, which was required if the value of the estate exceeded
$5,120,000. Apparently misunderstanding or perhaps misrepresenting what the
administrator said, in August 2017, shortly after the Korean authorities decided
not to indict defendant, plaintiff's Korean counsel wrote to the Korean court
stating that the administrator had determined that defendant had "embezzled"
$5,000,000 from B&H and was obligated to repay that amount. The
administrator wrote to the Korean court to advise that plaintiff's embezzlement
allegation was false.
The following month, the Korean court entered a judgment finding that
decedent's estate held a 40.8% interest in B&H, which it valued at $900,000 ,
and ruling that plaintiff had not established decedent gave defendant inter vivos
bequests of: $1,000,000 towards his tuition and living expenses when he moved
to the United States; $1,304,000 to establish B&H; or money to build a home.
Plaintiff appealed to a higher Korean court.
A-2760-18
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In September 2017, the administrator voluntarily dismissed the General
Equity action he had commenced against defendant. In January 2018, the
administrator issued a report advising that he had hired a forensic accountant
and reviewed: B&H's state and federal tax returns from 2001 through 2016;
B&H's QuickBooks data records from 2006 through March 7, 2017; B&H's
checking account statements and canceled checks for the period 2008 through
2017; information concerning the Tazz Mall, Palcon, and other related entities;
project files for the approximately fifty separate real estate projects undertaken
by B&H from 2000 through 2017; deeds, leases, and HUD statements for the
various properties; miscellaneous pleadings and transcripts filed in the New
Jersey and Korean actions; documentation supplied by counsel detailing areas
of inquiry and other suggestions; entity formational documents and deeds; and
documents concerning the source of certain money inflows into B&H and the
repayment of loans. He concluded that decedent made no gifts to defendant, the
estate had no assets in New Jersey other than the 40.8% interest in B&H, and
the only tangible business assets owned by B&H were the Tazz Mall and
$101,304 in cash. He also determined that at decedent's date of death the Tazz
Mall had a fair market value of $2,810,000, and "as to the Estate's interest in
B&H, . . . the total owner equity in B&H as of December 31, 2016, was
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$1,224,321.93." The administrator further noted that defendant had agreed not
to challenge these findings if the report received court approval.
The administrator acknowledged that defendant and his wife had operated
B&H without consideration for any other owners. But he also found no evidence
of malfeasance or that the relatively low profitability of B&H between 2000 and
2017 resulted from anything other than outside economic factors. The Quick
Books data records were consistent with the underlying banking and checking
records that were available, and there were no unreported deposits or
disbursements or overstated liabilities. Nonetheless, after "giving due
consideration to many years of records and thousands of transactions and journal
entries," the administrator determined that "in view of the [e]state's ownership
interest in B&H, it would be appropriate for [defendant] to make a capital
contribution of $1,200,000 to B&H to restore his deficit capital account ." The
administrator believed that this contribution, which defendant had agreed to
make, would "restore to B&H's balance sheet an amount close to the [e]state's
aggregate share of B&H's income from 2001 forward." The administrator
advised that the $1,200,000 contribution would be placed in escrow, with
$275,000 earmarked to pay approved administrative expenses and professional
A-2760-18
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fees, and $925,000 earmarked to pay any federal estate taxes, interest and
penalties that might be due from the estate.
In January 2018, the administrator moved for: approval of his report,
including the proposed $1,200,000 settlement; instructions regarding future
estate administration; and a third allowance of fees and costs. Plaintiff opposed
the motion and cross-moved for: the vacation of the amended confidentiality
order; production of all materials underlying the administrator's forensic report
and proposed settlement; and 150 days to review these materials with his
accountants.
Defendant opposed plaintiff's cross-motion. The administrator also
responded to plaintiff's cross-motion, asserting that: plaintiff had "maintained
a remarkably obstinate and impractical approach to the many efforts made by
[him] to reach a consensual and amicable resolution of the numerous . . . issues
which have been presented"; plaintiff never provided him with any hard
evidence of additional New Jersey assets belonging to the estate or other gifts
made by decedent to defendant; plaintiff could have inquired into these matters
himself before he moved for summary judgment in 2014; plaintiff was in
possession of the underlying financial data and documents that formed the basis
of the forensic report; plaintiff appeared to want to turn this ancillary proceeding
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into a never-ending "circular chase to prove a construct/thesis of his own
creation so that he can continue to strategically exert pressure on his family and
stepmother in the probate proceedings pending in the Republic of Korea"; and
plaintiff failed to take into consideration the substantial costs the estate would
incur if the investigation were to continue.
During this round of motions, Judge Contillo amended the confidentiality
order to permit plaintiff's counsel to provide plaintiff with all the materials
submitted in connection with the motion and cross-motion. After this exchange
of information, the parties and the administrator filed supplemental submissions.
Defendant asserted that: plaintiff's claim that decedent gave defendant inter
vivos bequests of $1,300,000 for B&H and $1,000,000 for living expenses had
been addressed by the Korean family court and rejected for lack of evidence to
support plaintiff's views; plaintiff's claims that defendant had embezzled from
B&H and Dong Nam NJ and engaged in illegal transactions had been raised in
his criminal complaints against defendant and investigated and rejected by the
Seoul Prosecutor's offices; the Korean court had relied on the estate's tax return,
which was twice examined by a tax officer, in determining that the estate's
interest in B&H was worth $900,000; B&H's books reflected no impropriety in
connection with the construction of defendant's home; and the Seoul District
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Tax Office had conducted a comprehensive audit of Dong Nam Housing,
including real estate projects undertaken by Dong Nam NJ, and had determined,
based upon records provided by defendant, that Dong Nam NJ had properly
reported its profits.
The motions were argued in April and June 2018. Prior to the second day
of argument, a Korean appellate court rejected plaintiff's appeal, and, in October
2018, the Korean Supreme Court affirmed that decision. As a result of the
Korean Supreme Court's ruling, decedent's 40.8% interest in B&H was split , so
that 20.15% went to his widow, 2.27% to defendant, 7.75% to plaintiff, and
10.60% to the parties' sister. Decedent's widow and daughter subsequently
assigned their shares to defendant, resulting in defendant and his wife together
owning 92.25% of B&H.
On July 30, 2018, Judge Contillo rendered a decision and entered an order,
which approved the administrator's report and settlement and allowed payment
of outstanding fees from the capital contribution. By separate order of the same
date, the judge denied plaintiff's cross-motion.
On August 31, 2018, plaintiff moved for counsel fees pursuant to Rule
4:42-9(a)(2), seeking an award of fees from the outset of this litigation through
July 30, 2018, alleged to amount to $1,441,139.96. The administrator filed a
A-2760-18
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certification expressing his general support for plaintiff's motion because
plaintiff had benefited the estate. Defendant opposed plaintiff's motion, arguing
plaintiff's motion was untimely and plaintiff was ineligible for a fee award;
defendant also cross-moved for an award of $1,440,557.90 in counsel fees, in
the event plaintiff's motion was successful. Plaintiff explained the motion was
filed eleven days after twenty days from the July 31, 2018 order, but explained
the delay was a result of his lead counsel's illness and death on September 15,
2018. The administrator generally supported defendant's motion for fees
because, after initially taking positions adverse to the estate, defendant had
ultimately cooperated with his investigation.
Judge Contillo retired and another judge considered these competing fee
applications. On the motions' return date, the judge heard argument, during
which the administrator offered to go through the time records produced by
counsel and calculate the fees associated with the period during which each party
had been cooperative and acted for the estate's benefit. The judge acceded to
this suggestion.
In November 2018, the administrator filed a certification in which he fixed
the time periods during which plaintiff and defendant had cooperated with him.
Without offering an opinion as to whether the fees were reasonable, the
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administrator provided spreadsheets detailing the fees charged during each of
the specified periods, totaling $1,049,589.14 for plaintiff and $978,157.99 for
defendant.
Plaintiff advised the judge that he accepted the administrator's
recommendations. Defendant argued that it was the court's responsibility to
initially determine whether there was a legal basis to award fees. He also
emphasized, among other things, that the administrator had simply selected a
firm date of January 5, 2017, and had not analyzed the specific billing entries.
Defendant further argued there was no basis for any award of fees to either party
and that he only filed his cross-motion for fees in case the court awarded fees to
plaintiff.
On January 14, 2019, 4 the judge entered an order awarding plaintiff
$1,049,589.14, in counsel fees (all the fees he had incurred through January 4,
2017, as identified by the administrator) and awarded defendant $978,157.99 in
counsel fees (all the fees he had incurred from January 31, 2016, forward, as
identified by the administrator).
4
While the order is dated November 2, 2018, it was entered and filed on January
14, 2019.
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Defendant appeals, seeking our review of the January 14, 2019 order,
while plaintiff cross-appeals, seeking our review of the January 14, 2019 order,
and parts of the orders entered on February 28, 2017, and July 30, 2018.
Specifically, defendant argues in his appeal:
I. THE TRIAL COURT'S AWARD OF LEGAL FEES
AND COSTS IN FAVOR OF PLAINTIFF SHOULD
BE REVERSED BECAUSE THE TRIAL COURT DID
NOT PERFORM THE ANALYSIS REQUIRED BY
RPC 1.5(a).
II. THE TRIAL COURT'S AWARD OF LEGAL FEES
AND COSTS IN FAVOR OF PLAINTIFF SHOULD
BE REVERSED BECAUSE PLAINTIFF'S
APPLICATION FOR SAME WAS FILED OUT OF
TIME.[5]
In plaintiff's cross-appeal, he argues:
I. THIS COURT SHOULD ONLY REVIEW A TRIAL
COURT'S AWARD OF LEGAL FEES FOR ABUSE
OF DISCRETION, WHICH DOES NOT EXIST AS TO
THE LEGAL FEES AWARDED TO PLAINTIFF.
II. THE LEGAL FEES AWARDED TO PLAINTIFF
WERE REASONABLE.
III. THE TIME FOR PLAINTIFF TO APPLY FOR
LEGAL FEES DID NOT START TO RUN UNTIL
THE COURT APPROVED THE ADMINISTRATOR'S
REPORT.
5
For brevity's sake, we have omitted the subparts to Point II.
A-2760-18
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IV. THE TRIAL COURT INCORRECTLY
AWARDED LEGAL FEES TO DEFENDANT.
V. THE TRIAL COURT SHOULD NOT HAVE
DEFERRED TO THE ADMINISTRATOR'S
DECISION TO SETTLE WITH DEFENDANT,
BECAUSE HE CONDITIONED SETTLEMENT ON
DEFENDANT NOT CONTESTING HIS FEES. AS
SUCH, THE ADMINISTRATOR WAS NOT AN
IMPARTIAL PARTY TO THE SETTLEMENT.
VI. BEFORE APPROVING THE ADMINISTRA-
TOR'S REPORT, THE TRIAL COURT SHOULD
HAVE GRANTED PLAINTIFF'S REQUEST FOR
THE DOCUMENTS THAT WERE THE BASIS OF
THE REPORT, SUBJECT TO A NEW
CONFIDENTIALITY ORDER THAT WOULD
ALLOW PLAINTIFF TO SHARE THE DOCUMENTS
WITH A FORENSIC ACCOUNTANT AND
APPRAISER.
VII. THE ADMINISTRATOR WAS NOT A
NEUTRAL PARTY REPRESENTING PLAINTIFF'S
INTERESTS.
VIII. THE TRIAL COURT INCORRECTLY
APPLIED THE DOCTRINE OF COLLATERAL
ESTOPPEL IN CLAIMING THAT THE COURT'S
SUMMARY JUDGMENT RULING BARRED
PLAINTIFF FROM ASSERTING THE ESTATE HAD
AN INTEREST IN DONG NAM NJ.
We start by rejecting plaintiff's Points V, VI, and VII, all of which relate
to Judge Contillo's approval of the administrator's report, which incorporated
the settlement that required defendant's increase in his capital contribution to
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B&H; we find these arguments lack sufficient merit to warrant further
discussion in a written opinion. R. 2:11-3(e)(1)(E).
We add only that, as to plaintiff's Points V, VI, and VII that the
administrator was required to exercise his power "in good faith and [with]
reasonable discretion," N.J.S.A. 3B:14-23, that the record demonstrates the
administrator's adherence to this standard, and that, as once said by Judge Jayne,
when so acting an administrator "cannot be justifiably reproached," Sheridan v.
Riley, 133 N.J. Eq. 288, 291 (Ch. 1943). We also note that an administrator has
the statutory power "to compromise, contest or otherwise settle any claim in
favor of the estate . . . or in favor of third persons and against the estate . . .
including transfer, inheritance, estate, income and other taxes." N.J.S.A. 3B:14-
23(m); accord Sheridan, 133 N.J. Eq. at 291.
In his written opinion, Judge Contillo determined that the administrator
had undertaken "a broad and expansive investigation of the various issues
presented, and made a reasonable determination that further avenues of
investigation were unnecessary in light of the potential costs that would be borne
by the [e]state." He approved of the manner in which the remaining issues had
been resolved and refused to allow "plaintiff to now re-open all of the doors that
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the [a]dministrator has previously explored, let alone open new ones, on the
record before the court."6
With the exception of the parties' arguments about the fee awards, we find
insufficient merit to warrant discussion in this opinion of any other issues raised
by the parties. R. 2:11-3(e)(1)(E).
With that, we turn to the parties' arguments about the counsel fee awards,
and we conclude that (1) defendant's fee application should have been denied in
its entirety, and (2) plaintiff's request for fees was properly sustained, but (3)
the judge failed to conduct an appropriate Rendine7 analysis in fixing an award
in plaintiff's favor.
I
We start with the well-established tenet that our courts adhere to the
American rule that litigants bear their own fees unless otherwise provided by
court rule, statute, or contract. See In re Niles Trust, 176 N.J. 282, 294 (2003);
Henderson v. Camden Cty. Mun. Util. Auth., 176 N.J. 554, 564 (2003). The
6
Judge Contillo also correctly recognized that plaintiff was precluded by the
doctrine of collateral estoppel from arguing that the estate had an interest in
Dong Nam NJ because that issue was previously resolved by summary judgment
and that determination was not raised, as it should have been if it were to be
preserved, in the appeal decided by us in 2016.
7
Rendine v. Pantzer, 141 N.J. 292 (1995).
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only arguable basis for an award in this matter rests with Rule 4:42-9(a)(2),
which authorizes an award of fees to a litigant from a "fund in court."
Henderson, 176 N.J. at 564; Sarner v. Sarner, 38 N.J. 463, 468 (1962); Sunset
Beach Amusement Corp. v. Belk, 33 N.J. 162, 168 (1960). "Fund in court" is
a shorthand expression intended to embrace certain
situations in which equitable allowances should be
made and can be made consistently with the policy of
the rule that each litigant shall bear his own costs. The
difficulty with the term is that literally it may connote
a fund within the precincts of the court in a physical or
geographical sense whereas "in court" refers to the
jurisdictional authority of the court to deal with the
subject matter . . . . And for that matter, the existence
of power in the court to control the subject matter is not
itself enough to demonstrate the existence of a "fund in
court" within the purpose of the rule.
[Sunset Beach, 33 N.J. at 168.]
To obtain fees from a fund in court, a litigant must have aided directly in
creating, preserving, or protecting the fund. Sarner, 38 N.J. at 469; Shilowitz v.
Shilowitz, 115 N.J. Super. 165, 188 (Ch. Div. 1971). As amplified by the Court
in Henderson, it must be shown that the fee applicant's efforts "produce[d] a
tangible economic benefit for a class of persons that did not contribute to the
cost of the litigation." 176 N.J. at 564. And, as said in Sunset Beach, a court
must consider whether it would be unfair "to saddle the full cost of the litigation
upon the litigant for the reason that the litigant is . . . [not only] advancing his
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own interests" but is acting for the benefit of others as well. 33 N.J. at 168. In
short, a litigant is not entitled to a fee award if he has sued merely for his own
interest or benefit if it does not benefit others. Shilowitz, 115 N.J. Super at 188.
The granting of a fee award on this basis is a matter left to the trial court's
discretion and fee determinations should be disturbed only where there has been
a clear abuse of discretion, Giarusso v. Giarusso, 455 N.J. Super. 42, 51 (App.
Div. 2018), that is, when "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)).
It is abundantly clear that defendant is not entitled to a fee award. It seems
even defendant understood this, acknowledging he filed his fee application only
as a response to plaintiff's application. He did not take any action that benefited
or assisted in the creation of the fund in court. To the contrary, he resisted
plaintiff's claim – ultimately borne out and adjudicated by way of summary
judgment, which we readily affirmed – that the $900,000 sent by the decedent
to B&H constituted an investment in B&H and not, as defendant claimed, a gift.
Estate of Byung-Tae Oh, 445 N.J. Super. at 409-12. In the proceedings leading
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up to our prior opinion in 2016, see n.1, above, defendant appears to have done
all in his power to avoid the creation of this fund in court.
Moreover, the award was based on an assertion that defendant – once the
dispute about the $900,000 was finally resolved – was cooperative with the
administrator's efforts to search for other estate assets that might be found in
New Jersey. Even if that is so, we reject the contention that a litigant who
cooperates with an administrator is entitled to a fee based on Rule 4:42-9(a)(2)
when his cooperation does not lead to creating, enhancing or preserving a fund .
Litigants are supposed to cooperate; the fund shouldn't have to pay for that
cooperation.
Because the judge should have denied defendant's fee request, we reverse
the order that imposed on the estate the obligation to pay defendant $978,157.99
in fees from the estate.
II
Consideration of defendant's appeal of the fee award granted to plaintiff
requires that we examine: (a) the timeliness of the fee motion, and (b) the legal
ground for the award.
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A
Plaintiff filed his motion for fees thirty-one days after entry of the order
approving the administrator's report. Defendant contends it was untimely,
viewing the fee-motion as the equivalent of – or otherwise subsumed by – Rule
4:49-2, which fixes – and does not permit relaxation of – the time to file a motion
"for rehearing or reconsideration seeking to alter or amend a judgment or order"
at twenty days from service of the judgment on the movant. Defendant's entire
approach to this question is misguided.
To repeat, plaintiff's complaint alleged that estate assets were present in
this State and sought, among other things, the appointment of an administrator
to marshal those assets. The complaint specifically invoked the fund-in-court
rule as a basis for a fee claim. The July 31, 2018 order that approved the
administrator's report brought the matter nearly to a close but there remained
plaintiff's inchoate demand for fees that could not be appreciated or assessed
until the judge decided the issues by way of the July 31, 2018 order. So, rather
than looking at the July 31, 2018 order as a final order – which defendant does
in urging application of Rule 4:49-2's time-bar8 – we must instead look at it as
8
The right to alter, amend or reconsider under Rule 4:49-2 presupposes a final
judgment or order. Rusak v. Ryan Auto., LLC, 418 N.J. Super. 107, 117 n.5
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an interlocutory order that resolved everything except plaintiff's application for
fees. In that instance, there would be no rigid time-bar to be applied, although
plaintiff would have been expected to move for fees in this circumstance within
a reasonable time after service of the July 31, 2018 order. Considering the
illness and untimely death of the attorney who had been handling the case on
plaintiff's behalf, it was hardly unreasonable for plaintiff to file the fee motion
thirty-one days after the July 31, 2018 order. 9
Even if the July 31, 2018 order could be viewed as a final order, the judge
had the discretion – which he expressly applied – to invoke Rule 4:50 principles
in relieving plaintiff, due to the excusable circumstance presented, of the
consequences of failing to move more quickly for counsel fees. Certain ly, the
(App. Div. 2011). The July 31, 2018 order was not a final order because one of
the claims pleaded in plaintiff's complaint had not been adjudicated. See
Petersen v. Falzarano, 6 N.J. 447, 453 (1951); see also Silviera-Francisco v. Bd.
of Educ. of City of Elizabeth, 224 N.J. 126, 136 (2016). Without finality, a
motion to alter, amend, or reconsider an interlocutory order is governed by Rule
4:42-2, which has no fixed time-bar.
9
Interestingly, while motions for fees in our appellate courts must be filed
within ten days after determination of the appeal, R. 2:11-4, the rules applicable
in the trial courts do not erect a time-bar for fee applications following the
adjudication of the merits of a claim. In fact, fee awards must be incorporated
in a trial court's final judgment, see R. 4:42-9(d) (declaring that "[a]n allowance
of fees made on the determination of a matter shall be included in the judgment
or order stating the determination"), further demonstrating that the July 31, 2018
order was not a final order.
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illness and death of plaintiff's attorney would excuse a filing that was – even if
we assume the motion was due within twenty days – a mere eleven days late.
While favoring the efficient adjudication of cases, the goal of our court rules is
also tempered by a strong interest in producing "just determination[s]." R. 1:1-
2; see Tucci v. Tropicana Casino & Resort, Inc., 364 N.J. Super. 48, 53 (App.
Div. 2003).
For these reasons, we reject the argument that plaintiff's motion for fees
was filed out of time.
B
Defendant additionally argues that plaintiff's fee award must be reversed
because, in commencing and pursuing this litigation, plaintiff acted only for
himself. Not so. That may have been plaintiff's primary motivation, but his
action also benefited the estate and, indirectly, the other estate beneficiaries.
The fund-in-court rule emanates from principles established long ago, see,
e.g., In re Estate of Fisher, 115 N.J. Eq. 329, 333 (E. & A. 1933), and cases cited
therein, that recognized probate courts possess the power to compel a
reimbursement of a litigant who "undertakes a judicial proceeding in the
interests of a fund – that is, to protect it, recover it, increase it or adjust rights in
it" – because it is "but fair" that the persons benefiting, even if the litigant is a
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beneficiary, should "share of the expense of that proceeding." 7A New Jersey
Practice, Wills and Administration §1545, at 86 (Alfred C. Clapp & Dorothy G.
Black) (rev. 3d ed. 1984). There is no question that plaintiff's pursuit of his
claim benefited the estate, as the judge correctly recognized, by demonstrating
that decedent's $900,000 transfer of funds to B&H constituted an investment in
that entity, not a gift to defendant. 10 Plaintiff also sought and obtained in this
action the appointment of an administrator, whose work resulted in defendant
agreeing to make a $1,200,000 capital contribution to B&H, which also
benefited the estate.
We thus reject defendant's argument that plaintiff was not entitled to a fee
award under Rule 4:42-9(a)(2). While we accept the argument that plaintiff was
also out for himself in bringing this litigation – as is often the case in similar
matters – the fact remains that plaintiff succeeded – in part – in identifying,
securing, and enhancing valuable estate assets through this litigation.
10
Defendant's argument that the suit was unnecessary because a Korean court
had already determined the estate owned 40.8% of B&H is frivolous. Indeed,
the proof of the frivolity of this position is in the pudding. If the issue had
already been adjudicated, why did defendant resist plaintiff's claim, oppose
summary judgment, and appeal that decision to this court? Defendant put
plaintiff to the pain of proving that the decedent had made an investment – not
a gift – and, having established that fact in the jurisdiction where that asset could
be found, plaintiff did a service for the estate and its beneficiaries.
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III
We lastly consider whether the trial judge properly fixed the amount of
fees he awarded to plaintiff.
It is axiomatic that in quantifying a fee award, a court must first calculate
the "lodestar," i.e., "the number of hours reasonably expended multiplied by a
reasonable hourly rate." Rendine, 141 N.J. at 334-35. The Supreme Court has
cautioned that "trial courts should not accept passively the submissions of
counsel to support the lodestar amount" but should instead inquire as to what a
reasonable amount of time expended should have been, as opposed to the hours
actually expended by counsel, id. at 335; Giarusso, 455 N.J. Super. at 51,
through consideration of the various factors outlined in RPC 1.5(a). When the
fee application is based on the fund-in-court rule, a court should also consider:
(1) the amount of the estate and the amount in dispute; (2) the skill, diligence,
ability and judgment shown by the attorney; (3) the results obtained; and (4) the
benefits or advantages resulting to the estate, and their importance. In re
Bloomer, 37 N.J. Super. 85, 94 (App. Div. 1955).
The judge fixed plaintiff's fee by adopting a date suggested by the
administrator as the moment when plaintiff ceased providing a benefit to the
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estate11 and then adopting a dollar amount in the most conclusory of fashions by
rigidly utilizing that date as the cut-off without analyzing the reasonableness of
the various services occurring within that time frame. Rendine requires a more
searching analysis than that.
We recognize the difficulties facing the judge to whom this question
befell. Judge Contillo, who presided over this matter from the outset, had retired
before these issues reached the court, leaving the matter to be addressed by
another judge unfamiliar with what had previously transpired. But those
difficulties are not insurmountable. Because the rule does not permit an award
of fees for services that did not benefit the estate, 7A Clapp & Black, § 1547, at
97, the judge should focus on those steps taken by plaintiff that actually
benefited the estate and fix a reasonable fee for those steps based on the
principles outlined in Rendine, RPC 1.5(a), and Bloomer. The judge should
analyze the fees plaintiff seeks with a particular appreciation for the size of the
recovery as compared to the fees sought; that is, no one would quarrel with the
notion that it is unreasonable to spend $100,000 in fees to recover $50,000. The
reasonableness of plaintiff's fee should be fixed through application of all the
11
The administrator suggested January 31, 2016 – the date he filed the General
Equity action – as representative of when plaintiff ceased benefitting the estate.
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standards we have alluded to and, ultimately, by comparing the services to the
results obtained.
***
To summarize, we affirm the July 31, 2018 order that, among other things,
approved the administrator's report. We reverse that part of the January 14, 2019
order that awarded defendant $978,157.99 in fees because defendant was not
entitled to an award of counsel fees from estate assets. We vacate that part of
the January 14, 2019 order that awarded plaintiff $1,049.589.14 in fees and
remand for further proceedings regarding plaintiff's motion for counsel fees,
under Rule 4:42-9(a)(2), in conformity with this opinion.
Affirmed in part, reversed in part, and vacated and remanded in part. We
do not retain jurisdiction.
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