IN THE MATTER OF THE ESTATE OF RICHARD EHRLICH (14-01137, MERCER COUNTY AND STATEWIDE) ( 2022 )

NOT FOR PUBLICATION WITHOUT THE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-4033-19
IN THE MATTER OF THE
ESTATE OF RICHARD EHRLICH,
deceased.
Argued January 6, 2022 – Decided March 11, 2022
Before Judges Alvarez and Mawla.
On appeal from the Superior Court of New Jersey,
Chancery Division, Mercer County, Docket No. 14-
01137.
Jonathan Ehrlich, appellant, argued the cause pro se.
John L. Slimm argued the cause for respondent Dennis
P. McInerney, Esquire (Marshall, Dennehey, Warner,
Coleman & Goggin, attorneys; John L. Slimm and
Jeremy J. Zacharias, on the brief).
PER CURIAM
To understand the reasons we affirm Judge Mary Jacobson's May 8, 2020
dismissal with prejudice of plaintiff Jonathan Ehrlich's complaint, and denial of
his order to show cause, a brief review of the matter's procedural history is
necessary. That history leads inescapably to the result.
The litigation began with the death of Richard Ehrlich, plaintiff's uncle,
on September 21, 2009. Ehrlich, an attorney, left an unsigned will admitted to
probate. See In re Est. of Ehrlich, 427 N.J. Super. 64, 78 (App. Div. 2012). The
will favored plaintiff over his brother and sister. Plaintiff and his siblings
reached a settlement after the Appellate Division's decision while an appeal was
pending in the Supreme Court.
By order dated December 22, 2009, Dennis P. McInerney, Esquire, was
appointed the temporary administrator of the estate. McInerney had previously
been appointed temporary attorney-trustee of Ehrlich's law practice. On July
15, 2011, Judge Michael J. Hogan approved "[t]he [t]emporary [a]dministrator's
[f]irst [i]ntermediate [a]ccount[,]" and allowed McInerney fees. No exceptions
were filed, and plaintiff's attorney stated for the record there were no objections
to the accounting.
A few months later, on December 28, 2011, plaintiff filed a motion to
remove McInerney, seeking the turnover of all estate documentation and
information, as well as a "complete audit and investigation." Judge Karen Suter,
then sitting in the Chancery Division, denied the motion as well as the
subsequent reconsideration application.
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A few weeks after that, plaintiff moved, pursuant to Rule 4:50-1, to vacate
the first order approving the accounting. Judge Suter denied that application,
and over plaintiff's opposition, directed McInerney to sell Ehrlich's reside nce.
Approval of the accounting was affirmed in an unpublished opinion, In re Estate
of Ehrlich, No. A-4714-11 (App. Div. June 11, 2013). The analysis was
anchored in N.J.S.A. 3B:17-8, that a judgment allowing an account operates as
res judicata—the abbreviated opinion cited the relevant statutory language.
Because of a conflict in the vicinage, the matter was transferred to Mercer
County. Thereafter, Judge Jacobson presided over the case. She issued a July
25, 2014 fifty-eight-page opinion finding, among other things, that none of
plaintiff's "exceptions" satisfied the requirements of Rule 4:87-8.
Judge Jacobson's decision allowed McInerney's legal fees, as plaintiff's
objections were unsupported. She further found plaintiff's objections to
McInerney's disposition of tangible personal property should have been raised,
and were not, as an exception to the first account. Because the first account
withstood review by the trial court and the Appellate Division, it was "the law
of the case." Res judicata barred not only exceptions to McInerney's
management of the personal property, but also challenges that could have been
made at the time of the first accounting.
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Plaintiff had filed an "exception" to McInerney's management of the sale
of Ehrlich's home—even though McInerney had earlier obtained a court order
approving it. Plaintiff raised several other "exceptions" to McInerney's conduct;
Judge Jacobson found they did not "constitute legitimate exceptions to the
accounting" and "therefore dismissed [them] pursuant to [Rule] 4:87-8 as
insufficient in law."
Plaintiff appealed that decision—but then withdrew the appeal. Either
contemporaneously with that filing or otherwise, he filed a motion for
reconsideration. On January 20, 2015, Judge Jacobson entered an order
memorializing her denial, including directions to McInerney regarding the sale
of a second parcel of real estate in Burlington.
On January 15, 2016, plaintiff filed a notice of appeal regarding the tax
refund aspect of a December 1, 2015 order. He also sought to appeal the July
25, 2014 and January 20, 2015 orders. We concluded only the appeal of the
December 1, 2015 order was timely, albeit filed four days out of time. In re
Ehrlich, No. A-2147-15 (App. Div. May 3, 2018) (slip op. at 2). The order was
affirmed. Ibid.The opinion notes that one of plaintiff's "major complaints about
McInerney" related to a condominium unit in the Bahamas. Id. at 8. He had not
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earlier pressed the issue because he did not want to expose the additional asset
until he settled with his siblings. Ibid.
We affirmed the trial judge's application of the res judicata principles
found in N.J.S.A. 3B:17-8, and thus limited our decision to the distribution of
the unpaid balance of the refund. Id. at 8-9. We concluded that plaintiff's
"[c]omplaints regarding McInerney's performance were long before rejected
with finality." Id. at 9.
While his appeal of the state court order was pending, plaintiff filed a
complaint in federal court alleging McInerney breached his fiduciary duty as an
administrator and violated the Rules of Professional Conduct as an attorney. On
December 13, 2017, the District Court dismissed the breach of fiduciary claims,
relying on N.J.S.A. 3B:17-8 and the entire controversy doctrine. Ehrlich v.
McInerney, No. 1:17-cv-879, 2017 U.S. Dist. LEXIS 204876, at *21-*44
(D.N.J. Dec. 13, 2017). The claims arose from facts related to or the same as in
plaintiff's state court actions.
During the federal court proceedings, McInerney was deposed. The
information gleaned from discovery led plaintiff to file a motion to vacate the
December 13, 2017 order, alleging new evidence had been uncovered. On
September 30, 2019, the judge entered an order denying plaintiff's motion and
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granting summary judgment to certain defendants. The judge issued an
unpublished opinion accompanying the September order. Ehrlich v. McInerney,
No. 1:17-cv-879, 2019 U.S. Dist. LEXIS 168382 (D.N.J. Sept. 30, 2019).
Essentially, plaintiff had claimed that the newly discovered information
established that McInerney was advised to list the Burlington property for a
lower price, and that if he had done so, the property would have sold sooner for
a more favorable sum. Id. at *12-*14. Plaintiff contended this created a new
cause of action for breach of fiduciary duty. Id. at *13-*14. Additionally,
plaintiff stated that a document produced by McInerney, dated May 2015,
referenced a tax sale certificate and an offer to redeem the certificate. Id. at *13.
Plaintiff alleged this too was newly discovered evidence. Id. at *14. Plaintiff
further claimed he had performed a tax sale certificate search that revealed fifty-
seven properties with unresolved tax lien certificates held by decedent, which
McInerney failed to investigate. Id. at *14.
The District Court found the evidence was not new, as the state court had
previously addressed the issues. Id. at *17. With regard to the failure to
investigate decedent's tax sale certificates, the judge also noted that the state
court "directly addressed [p]laintiff's exceptions to McInerney's accounting, and
after the surrogate audited it without exception, it approved his final
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accounting." Ibid. It was "the province of the state court to determine whether
McInerney's accounting was incomplete" pursuant to N.J.S.A. 3B:7-8. Ibid.
Any challenge to the accounting had to be in that forum. Id. at *18.
Thus, we are led to this "new" complaint. On February 5, 2020, plaintiff
filed in the Chancery Division, seeking to vacate all prior orders regarding the
accountings and providing for attorney's fees for McInerney. He based the
complaint on the allegedly newly discovered evidence regarding the marketing
of the West Broad Street property and the tax sale certificates. Plaintiff now
lists over fifty tax sale certificates he claimed Ehrlich owned at the time of his
death, which McInerney failed to investigate. On February 24, 2020, the trial
court entered an order to show cause, and McInerney responded by motion to
dismiss the complaint for failure to state a claim pursuant to Rule 4:6-2(e).
In rendering her decision, Judge Jacobson initially reviewed the lengthy
litigation history. The judge specifically noted the action was "at least the third
motion brought by" plaintiff to vacate probate court orders, and the fourth
proceeding, if the federal court action was included in the count.
The judge said the specific allegations in the complaint were previously
addressed and were thus barred by res judicata. The dispute regarding real
estate, both the Burlington property that plaintiff sold in 2015 for less than the
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appraised value and the property in the Bahamas, had been included in prior
rulings. Plaintiff had actually emailed counsel regarding the Bahamas property
because he considered it advantageous in reaching the settlement with his
siblings if they were unaware of the asset.
With regard to the tax sale certificates, the judge observed that the burden
of showing they should have been included in the final accounting was on
plaintiff and required action in 2014 prior to the approval of the final accounting.
As she said, the available information was no different than it was at the present
time. In fact, an earlier decision referred to emails from plaintiff to his then-
counsel suggesting that he could not produce the certificates without access to
McInerney's records, and that McInerney "would lose them if he knows that I'm
looking for them."
In any event, these new claims, which were related to the tax sale
certificates and the Burlington property should have been made under Rule
4:50-1(b) and brought within one year of the judgment. They were not, and
were therefore time-barred.
Even if the court analyzed the contentions under Rule 4:50-1(f), that
provision requires extraordinary circumstances—"and that the enforcement of
the earlier judgments would be oppressive or inequitable . . . ." Neither
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condition was met here. Even under subsection (f), plaintiff's continuation of
the litigation regarding the sale of the Burlington property and McInerney's
purported failure to locate tax sale certificates should have been raised within a
reasonable amount of time. The complaint was not filed within a reasonable
amount of time post-accountings. The final accounting was approved in 2014,
and reconsideration denied in 2015, and therefore "both on the merits and on the
timeliness, the [c]ourt finds that plaintiff is not entitled to . . . vacate the
accountings and the fees under Rule 4:50-1 and 4:50-2." The claims were barred
by N.J.S.A. 3B:17-8, and plaintiff failed to establish grounds for the orders to
be vacated under Rule 4:50-1 and -2.
Now on appeal, plaintiff raises the following points:
POINT I
THE COURT BELOW ERRED AS A MATTER OF
LAW IN DISMISSING THE COMPLAINT UNDER
ANY PRECLUSIVE DOCTRINE, AS NONE OF THE
CLAIMS ASSERTED HAD ACCRUED UNTIL 2018.
POINT II
THE COURT BELOW ERRED AS A MATTER OF
FACT IN FINDING THE ISSUE OF THE
BURLINGTON PROPERTY HAD ALREADY BEEN
RULED ON.
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POINT III
THE COURT BELOW ERRED IN RULING IT WAS
PLAINTIFF'S DUTY, AND NOT DEFENDANT'S, TO
FULLY INVESTIGATE THE TAX SALE
CERTIFICATES AND OTHER ASSETS.
POINT IV
THE COURT BELOW ERRED IN CONCLUDING
THE TAX LIENS MAY HAVE BEEN SATISFIED OR
NULLIFIED.
POINT V
THE COURT ERRED IN NOT CONSIDERING
MCINERNEY'S MISCONDUCT AND ITS IMPACT
ON LITIGATION.
POINT VI
THE COURT BELOW ABUSED ITS DISCRETION
IN RULING WITHOUT A PLENARY HEARING
AND BY ENGAGING IN FACT FINDING ADVERSE
TO [PLAINTIFF].
POINT VII
THE COURT BELOW ERRED IN FAILING TO
RULE ON ALL CLAIMS PLED AGAINST . . .
MCINERNEY WHICH WERE CLEARLY NOT
BARRED BY RES JUDICATA, COLLATERAL
ESTOPPEL OR THE ENTIRE CONTROVERSY
DOCTRINE.
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POINT VIII
THE COURT BELOW ERRED AS A MATTER OF
LAW IN RULING PLAINTIFF WAIVED HIS
RIGHTS TO FILE EXCEPTIONS.
POINT IX
THE COURT ABUSED ITS DISCRETION IN
TAKING A FAR TOO RESTRICTIVE READING OF
[RULE] 4:50-1(F).
I.
We first address plaintiff's challenge to the court's resolution of his Rule
4:50-1 motion to vacate the accounting orders. Rule 4:50-1 authorizes a court
to relieve a party from a final judgment or order when the movant establishes
"(b) newly discovered evidence which would probably alter the judgment or
order and which by due diligence could not have been discovered in time to
move for a new trial under [Rule] 4:49; . . . or (f) any other reason justifying
relief from the operation of the judgment or order." Rule 4:50-2 requires
motions under subsection (f) be made "within a reasonable time," or if a motion
is brought under subsection (b), it must be made "not more than one year after
the judgment, order or proceeding was entered or taken."
"Although courts are empowered to confer absolution from judgments,
'[r]elief [under Rule 4:50] is granted sparingly.'" DEG, LLC v. Twp. of
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Fairfield, 198 N.J. 242, 261 (2009) (first alteration in original) (quoting F.B. v.
A.L.G., 176 N.J. 201, 207 (2003)). "The trial court's determination under the
rule warrants substantial deference, and should not be reversed unless it results
in a clear abuse of discretion." U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J.
449, 467 (2012). An abuse of discretion occurs when the trial court's decision
is "without a rational explanation, inexplicably departed from established
policies, or rested on an impermissible basis." Ibid. (quoting Iliadis v. Wal-Mart
Stores, Inc., 191 N.J. 88, 123 (2007)).
Even if these claims had been brought timely, within one year of the
judgment, they would nonetheless "fail because [plaintiff] had the obligation to
do due diligence[,]" and did not fulfill that responsibility. Plaintiff could have
made precisely the same search prior to the final accounting. The court's
January 2015 decision referenced plaintiff's suspicion with regard to the
existence of tax sale certificates. Obviously, plaintiff could have taken the same
steps then as he did now. The burden of proof rested upon him, and he simply
failed to meet it. Plaintiff has known about possible tax sale certificates since
before his uncle's death as he discussed them with him, McInerney early on said
he found no record of certificates, and it was plaintiff's burden to establish
McInerney erred.
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With regard to the property listing, and the alleged newly discovered
evidence with regard to valuation, plaintiff's claim was "totally speculative as to
what would have happened if" the price had been lowered. It was plaintiff's duty
to establish that the purported newly discovered evidence would probably have
changed the outcome, was unobtainable by the exercise of due diligence, and
was not merely cumulative. DEG, 198 N.J. at 264. The new evidence must
meet all three of these requirements and "does not include an attempt to remedy
a belated realization of the inaccuracy of an adversary's proofs." Ibid. In this
instance, plaintiff could have—but did not—engage in the same due diligence
years prior.
With regard to plaintiff's claims related to subsection (f), the rule "permits
relief from orders or judgments for reasons not provided in the rule's other
subsections . . . ." Ridge at Back Brook, LLC v. Klenert, 437 N.J. Super. 90, 98
(App. Div. 2014). Due to the importance that is attached "to the finality of
judgments, relief under Rule 4:50-1(f) is available only when 'truly exceptional
circumstances are present.'" Guillaume, 209 N.J. at 484 (quoting Hous. Auth.
of Morristown v. Little, 135 N.J. 274, 286 (1994)). Application of the rule is
"limited to 'situations in which, were it not applied, a grave injustice would
occur.'" Ibid. (quoting Little, 135 N.J. at 289). Accordingly, relief under this
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subsection should be granted "sparingly, in exceptional situations." Nowosleska
v. Steele, 400 N.J. Super. 297, 304 (App. Div. 2008) (quoting Cmty. Realty
Mgmt., Inc. v. Harris, 155 N.J. 212, 237 (1998)). "Further, the policy in favor
of the finality of judgments plays a larger role in applications brough t under
subsection (f) than the other subsections." Ibid. The importance of finality
"must be 'weighed in the balance with the equally salutary principle that justice
should be done in every case.'" Ibid. (quoting Hodgson v. Applegate, 31 N.J.
29, 43 (1959)).
In arguing that the trial court was too restrictive in its application of
subsection (f), plaintiff asserts that McInerney's conduct in withholding and
suppressing the discovery of the tax sale liens is the "type of misconduct" that
the rule is "designed to remedy." The record does not support the claim.
Plaintiff has not established the extraordinary circumstances called for by the
rule or shown enforcement would be oppressive or inequitable. Plaintiff did not
object to the intermediate accounting, and when he objected to the final
accounting, those objections were non-conforming, did not comply with rule and
statutory requirements, and lacked specificity. Even then, he was the only
individual who had personal knowledge of decedent's investments. The court
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did not abuse its discretion by concluding that allowing plaintiff relief under
subsection (f) was inappropriate.
II.
Next, the probate statute, N.J.S.A. 3B:17-8, states that a judgment
allowing accounting shall be considered res judicata as to all exceptions that
might have been taken. The final judgment was entered here on July 25, 2014.
The probate statute makes it res judicata. Plaintiff argues that an exception to
the statute arises because of previously unknown information—namely, the
alleged newly discovered evidence as to the disputed value of the Burlington
property and the existence of tax sale certificates.
Res judicata "contemplates that when a controversy between parties is
once fairly litigated and determined[,] it is no longer open to relitigation."
Culver v. Ins. Co. of N. Am., 115 N.J. 451, 460 (1989) (quoting Lubliner v. Bd.
of Alcoholic Beverage Control, 33 N.J. 428, 435 (1960)). "Th[is] rule precludes
parties from relitigating substantially the same cause of action." Ibid. (quoting
Kram v. Kram, 94 N.J. Super. 539, 551 (Ch. Div.), rev'd on other grounds, 98
N.J. Super. 274 (App. Div. 1967), aff'd, 52 N.J. 545 (1968)). Application of this
doctrine "requires substantially similar or identical causes of action and issues,
parties, and relief sought." Ibid.A-4033-19
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"[F]or res judicata to apply, there must be (1) a final judgment by a court
of competent jurisdiction, (2) identity of issues, (3) identity of parties, and
(4) identity of the cause of action." Brookshire Equities, LLC v. Montaquiza,
346 N.J. Super. 310, 318 (App. Div. 2002). "For the purposes of res judicata,
causes of action are deemed part of a single 'claim' if they arise out of the same
transaction or occurrence." Watkins v. Resorts Int'l Hotel & Casino, Inc., 124
N.J. 398, 413 (1991). If "a litigant seeks to remedy a single wrong, then that
litigant should present all theories in the first action." Ibid."The application of res judicata is a question of law" and is reviewed de
novo. Walker v. Choudhary, 425 N.J. Super. 135, 151 (App. Div. 2012) (quoting
Selective Ins. Co. v. McAllister, 327 N.J. Super. 168, 173 (App. Div. 2000)).
Plaintiff's claims are barred by res judicata as they arise from the same set
of facts, between the same parties, and out of the same transaction or
occurrence—the accounting and handling of the estate—that have previously
repeatedly been decided in state court and in federal court. The answer to this
question of law is clear.
Whatever information existed regarding the sale of the Burlington
property existed in 2014 when the final accounting was approved. Had plaintiff
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looked, it would have been found. The same is true—perhaps more so—for the
tax sale certificates. The statute's res judicata effect is dispositive.
III.
With regard to the motion to dismiss, plaintiff asserts it should not have
been granted without discovery, testimony, or a plenary hearing. Plaintiff
further contends that the judge should have viewed the facts set forth in his
certification as true in reaching her decision.
"The standard a trial court must apply when considering a Rule 4:6-2(e)
motion to dismiss a complaint for failure to state a claim upon which relief can
be granted is 'whether a cause of action is "suggested" by the facts.'" Teamsters
Loc. 97 v. State, 434 N.J. Super. 393, 412 (App. Div. 2014) (quoting Printing
Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989)). A trial court
considers the "allegations in the complaint, exhibits attached to the complaint,
matters of public record, and documents that form the basis of a claim." Banco
Popular N. Am. v. Gandi, 184 N.J. 161, 183 (2005) (quoting Lum v. Bank of
Am., 361 F.3d 217, 222 n.3 (3d Cir. 2004)). In making that decision, the court
must "search the complaint 'in depth and with liberality to ascertain whether the
fundament of a cause of action may be gleaned even from an obscure statement
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of claim, opportunity being given to amend if necessary.'" Id. at 165 (quoting
Printing Mart, 116 N.J. at 746).
The facts in the pleading "must be taken to be true for the purposes of the
motion, and the court's 'inquiry is limited to examining the legal sufficiency of
the facts alleged on the face of the complaint.'" Darakjian v. Hanna, 366 N.J.
Super. 238, 248 (App. Div. 2004) (quoting Printing Mart, 116 N.J. at 746). The
trial court "is not concerned with the ability of plaintiffs to prove the allegation
contained in the complaint[,]" and "plaintiffs are entitled to every reasonable
inference of fact." Printing Mart, 116 N.J. at 746.
The trial court should grant a motion to dismiss for failure to state a claim
"in only the rarest of instances." Id. at 772. It should examine the complaint's
allegations of fact "with a generous and hospitable approach." Id. at 746. We
apply the same standard and our review is de novo. Teamsters Loc. 97, 434 N.J.
Super. at 413.
A motion to dismiss may be granted when a litigant has not raised legally
sufficient claims. That is precisely what occurred here. There was no newly
discovered evidence. Relief was barred by legal preclusion doctrines. No viable
cause of action could be gleaned from the proceedings, and the dismissal was
proper.
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IV.
Finally, although not entirely clear, plaintiff seems to be claiming that he
cannot be found to have waived exceptions to the final accounting because it
was his attorney's actions that prevented him from doing so. The trial court did
not rule on this argument because it was not raised there.
Simply stated, plaintiff does not now, if he ever did, have the legal right
to distinguish between exceptions he raised through counsel and exceptions he
now claims he would have raised based on alleged newly discovered evidence.
Plaintiff employed counsel, counsel raised exceptions on behalf of his client,
and that ends the matter.
Affirmed.
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