Amratlal C. Bhagat v. Bharat A. Bhagat (068312)

SYLLABUS
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized).
Amratlal C. Bhagat v. Bharat A. Bhagat (A-31-11) (068213)
Argued February 27, 2013 -- Decided January 30, 2014
CUFF, P.J.A.D. (temporarily assigned), writing for a unanimous Court.
In this appeal, in the context of cross-motions for summary judgment, the Court considers whether a father
adduced sufficient evidence to rebut the presumption that his transfer of stock to his son was a gift.
Amratlal C. Bhagat (A.C.) is the father of Bharat A. Bhagat (B.B.), Ranjana Bhagat, and Janaki Tailor, the
wife of Nagarki Tailor (the Tailors). In 1984, B.B., Ranjana, and the Tailors each designated a portion of their stock in
ABB Properties Corporation (ABB Properties) as being held “in trust” for A.C., making A.C. the “beneficial owner”
of the majority of ABB Properties shares. On June 26, 1989, A.C. signed “DECLARATION OF GIFT” and “STOCK
POWER” documents transferring certain shares of his ABB Properties stock to B.B. The documents do not indicate
that the transfer was temporary or conditional. On that date, B.B. also signed an “OPTION TO PURCHASE STOCK”
document giving A.C. the option to purchase any or all of the gifted shares at the price of $1 per share for five years.
Later that year, ABB Properties’ attorney referenced A.C’s transfer of stock to B.B. in a letter to A.C. and in a letter to
a real estate loan officer. In 1990, using the same set of forms as those used in the 1989 transaction, A.C. transferred
additional shares in ABB Properties to B.B. According to B.B., the purpose of this transaction was for A.C. to convey
to him, by gift, all of the remaining ABB Properties shares of which A.C. was the beneficial owner.
A.C. and B.B. sued the Tailors in 1994. The verified complaint filed by A.C. and B.B., and certified by B.B.,
stated that A.C. owned 104 shares of ABB Properties stock and discussed a series of corporate actions taken by A.C.
and B.B. against Nagarki Tailor. B.B. also reiterated the stock ownership distribution in the answer to the Tailors’
counterclaim, and in an affidavit. The Tailor litigation was resolved by settlement and consent order in November
1999. At some point during the Tailor litigation, A.C. hand-wrote a letter to the attorney representing A.C. and B.B. in
that litigation, stating: “It is my desire since 1989 to transfer my shares of ABB Properties Inc. to my son [B.B.]
Kindly do so at the earliest moment.” The record does not reveal whether any further action was taken.
On December 3, 2003, A.C. filed a complaint against B.B. asserting that he did not permanently transfer his
shares in ABB Properties to B.B. B.B. denied that A.C. owned any stock in ABB Properties. A.C. and B.B. filed
motions for summary judgment. B.B. certified that his representation of stock ownership in the Tailor litigation
accounted for the fact that the corporate books reflected A.C.’s name. B.B. insisted, however, he was the “beneficial
owner” of the stock gifted to him in 1989 and 1990 and enjoyed all of the rights of the owner of the stock. A.C.
claimed that the transfer to B.B. was designed to secure financing for a hotel venture and was not intended to be
permanent. The motion judge held that the position taken by B.B. in the earlier Tailor litigation did not preclude him
from asserting that A.C. had gifted him all of his ABB Properties stock. The judge examined the evidence advanced by
A.C. to rebut the presumption of a gift from father to son and to prove his intent concerning the stock transfers
“convincingly and without reasonable doubt.” The motion judge found that A.C. had failed to sustain his burden of
proof to rebut the presumption of a gift, granted B.B.’s motion for summary judgment, and denied A.C.’s motion for the
same relief. The Appellate Division affirmed. The panel found that judicial estoppel did not apply and concluded that
“no rational factfinder could find that A.C. overcame the presumption that a completed gift occurred by certain,
definite, reliable and convincing proof, that leaves no reasonable doubt as to the intention of the parties at the time of
the gifts.” The Court granted A.C.’s petition for certification. 208 N.J. 382 (2011).
HELD: A person seeking to rebut the presumption that a transfer of property from a parent to a child is a gift must
show clear and convincing evidence of a contrary intent. That person is limited to evidence antecedent to,
contemporaneous with, or immediately following the transfer, and may also adduce proof of statements by the parties
concerning the purpose and effect of the transfer. Applying those principles, the evidence adduced by A.C., including
1
statements made by B.B. in a prior litigation regarding the ownership of ABB Properties stock, raises sufficient factual
issues to defeat summary judgment in this case.
1. Pursuant to the doctrine of judicial estoppel, a party who advances a position in earlier litigation that is accepted and
permits the party to prevail in that litigation is barred from advocating a contrary position in subsequent litigation to
the prejudice of the adverse party. The doctrine, however, does not apply when the earlier litigation settles prior to
judgment because no court has accepted the position advanced in the earlier litigation. Because the Tailor litigation
settled, B.B.’s statements concerning the ownership of ABB Properties stock in that matter do not bar B.B. from
claiming that A.C. gifted all of his ABB Properties stock to him in this matter. (pp. 17-19)
2. An appellate court reviewing an order granting summary judgment must review the competent evidential materials
submitted by the parties to identify whether there are genuine issues of material fact and, if not, whether the moving
party is entitled to summary judgment as a matter of law. That evaluation requires a review of the motion record
against not only the elements of the cause of action, but also the evidential standard governing that cause of action.
There are three elements of a valid and irrevocable gift: (1) actual or constructive delivery, (2) donative intent, and (3)
acceptance. Although the burden of proving an inter vivos gift is on the party who asserts the claim, when the transfer
is from a parent to a child, there is a presumption that the transfer is a gift. That presumption is rebuttable by evidence
of a contrary intent. (pp. 19-25)
3. In Peer v. Peer, 11 N.J. Eq. 432 (Ch. 1857), the court described the quality of the evidence that would be admissible
to rebut the presumption of a gift as “convincing, and of such a character as to leave no reasonable doubt as to the
intention of the party.” Many courts thereafter adopted a “convincing and leave no reasonable doubt as to the intention
of the party” standard to rebut the presumption of a gift. In addition, the proofs advanced to rebut the presumption
must be of facts antecedent to, contemporaneous with, or immediately after the transfer. Herbert v. Alvord, 75 N.J.
Eq. 428 (Ch. 1909). The Herbert court also excepted from the antecedent or contemporaneous requirement statements
or acts of the party to be charged with the gift. Id. at 429-30. Furthermore, this Court has found that subsequent
conduct of the parties also may be given in evidence to corroborate the inference drawn from prior and
contemporaneous circumstances. Weisberg v. Koprowski, 17 N.J. 362 (1955). (pp. 25-27)
4. The Court can identify no reason to depart from the standard used for more than 150 years to rebut the presumption
that a transfer of property from a parent to a child is a gift. Because that standard appears to contain elements of the
clear and convincing standard and the beyond a reasonable doubt standard, however, the Court discerns the need to
clarify. The Court’s examination of the cases suggests that the standard has been understood as, and should be, clear
and convincing. The Court views other language used in prior cases as an attempt to describe the quality of evidence
that will satisfy the clear and convincing standard of proof. There is no reason that a person seeking to rebut the gift
presumption should be required to meet a higher standard than clear and convincing evidence. In fact, in other
contexts, the clear and convincing standard is applied in circumstances affecting a person’s life, liberty, ability to
pursue a profession, or integrity. Therefore, a person who has transferred property to another, which raises a
presumption that the transferred property was a gift, must meet the clear and convincing evidence standard of proof to
rebut the presumption. The person seeking to rebut the presumption is limited to evidence antecedent to,
contemporaneous with, or immediately following the transfer. A party seeking to rebut the presumption may also
adduce proof of statements by the parties concerning the purpose and effect of the transfer. (pp. 27-33)
5. Applying these principles to the facts revealed in the summary judgment record, B.B.’s motion for summary
judgment should have been denied. The 1989 and 1990 transfers triggered the presumption that A.C. intended to gift
his ABB Properties shares to his son. Accordingly, A.C. was required to adduce evidence to defeat a summary
judgment motion that raised a genuine issue of material fact regarding one, some, or all of the elements of an inter
vivos gift, and those proofs had to rise to the quality required by the clear and convincing standard of proof. The
motion court and the appellate panel failed to consider various statements made by B.B. that contradict his position
that A.C. permanently transferred him all of his ABB Properties stock. In particular, although the prior inconsistent
statements made by B.B. in the Tailor litigation do not judicially estop B.B.’s current defense, those statements may be
considered admissions of a party and evidence that may impeach B.B.’s credibility. B.B. also filed certifications in
this matter in which he describes A.C. as the beneficial owner of the ABB Properties stock and explains his
understanding of that term. These statements create genuine issues of fact concerning whether A.C. and B.B.
contemplated a permanent transfer of stock. (pp. 33-36)
2
The judgment of the Appellate Division is REVERSED, and the matter is REMANDED to the trial court for
further proceedings consistent with this opinion.
CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA, ALBIN, and PATTERSON; and JUDGE
RODRÍGUEZ (temporarily assigned) join in JUDGE CUFF’s opinion.
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SUPREME COURT OF NEW JERSEY
A-31 September Term 2011
068213
AMRATLAL C. BHAGAT,
Individually and as
Shareholder of ABB PROPERTIES
CORPORATION, A New Jersey
Corporation and as a
Shareholder of EASTERNER
MOTOR INN, INC., a New Jersey
Corporation,
Plaintiff-Appellant,
v.
BHARAT A. BHAGAT and CRANBURY
HOTELS, LLC, a New Jersey
Limited Liability Company,
Defendants-Respondents.
Argued February 27, 2013 – Decided January 30, 2014
On certification to the Superior Court,
Appellate Division.
Joseph B. Fiorenzo argued the cause for
appellant (Sokol, Behot & Fiorenzo,
attorneys; Mr. Fiorenzo and Steven N.
Siegel, on the briefs).
Jonathan I. Epstein argued the cause for
respondents (Drinker Biddle & Reath,
attorneys; Mr. Epstein and Karen A. Denys,
on the brief).
JUDGE CUFF (temporarily assigned) delivered the opinion of
the Court.
This appeal arises from the purported transfer of stock in
a closely held corporation between a father and son. Both
1
parties concede that when a father transfers stock to a son, a
presumption of a gift arises. The issue is whether the father
adduced sufficient evidence to rebut that presumption in the
context of cross-motions for summary judgment. That issue
implicates the applicable standard of proof, the nature and
quality of the evidence that will satisfy that standard, and the
manner in which the standard of proof governs the summary
judgment analysis. We must also determine whether a position
taken by the son in earlier litigation against other family
members bars his current position that his father gifted to him
all of the stock in the family business.
Here, despite the urging of plaintiff and some reasoned
authority elsewhere, we decline to abandon a preponderance of
the evidence standard of proof in favor of the well-established
clear and convincing standard. We also reiterate that every
motion for summary judgment requires the court, trial or
appellate, to review the motion record against not only the
elements of the cause of action, but also the evidential
standard governing that cause of action.
Finally, we emphasize that the doctrine of judicial
estoppel may be invoked only when a position advanced in prior
litigation concerning the subject matter of the current
litigation has been accepted by a court and led to a judgment in
favor of that party. If the matter is resolved by settlement,
2
as in this case, the circumstances warranting application of the
bar do not exist. The prior inconsistent position, however, may
be utilized in the current litigation as an admission and for
impeachment purposes.
I.
On December 3, 2003, Amratlal C. Bhagat (A.C.),
individually and as a shareholder of ABB Properties Corporation
(ABB Properties) and as shareholder of Easterner Motor Inn, Inc.
(Easterner), filed a complaint against his son, Bharat A. Bhagat
(B.B.),1 Cranbury Hotels, L.L.C. (Cranbury), and various other
corporate entities (collectively defendants). This action was
prompted by B.B.’s creation of a new entity, Cranbury, and the
transfer of a hotel and property from Easterner to Cranbury.
A.C. alleged that B.B. breached a fiduciary duty owed to A.C.
and converted, as his own, stock intended for A.C. A.C. also
alleged B.B. fraudulently and deceitfully transferred the stock
to his ownership. A.C. sought immediate access to the books and
records of ABB Properties, an accounting, imposition of a
constructive trust on Cranbury, appointment of a temporary
receiver, and disgorgement or restitution of funds and property
acquired by B.B. In the answer, B.B. denied that A.C. owned any
stock in ABB Properties. In a counterclaim, defendants alleged
1
For ease of reference, we refer to plaintiff as A.C. and the
individual defendant as B.B.
3
that A.C. breached his obligations under power of attorney and
breached the fiduciary duty owed by A.C. to B.B.
A.C. and B.B. filed motions for summary judgment. The
facts, viewed in the light most favorable to A.C., are derived
from the certifications submitted by both parties in support of
and in opposition to cross-motions for summary judgment.
Since the early 1970s, the Bhagat family business has
centered on owning and operating hotels and motels. In 1974, a
corporation known as Easterner was formed to purchase and
operate a Quality Inn hotel in Bordentown. The majority
stockholders in Easterner were Nagarki K. Tailor and his wife
Janaki Tailor (the Tailors). Janaki is the daughter of A.C. and
the sister of B.B. Neither A.C. nor B.B. owned stock in
Easterner at that time. In 1981, Winter Park Motor Inn, Inc.
(Winter Park) was formed to purchase and operate a Quality Inn
in Winter Park, Florida.2 In 1982, Easterner purchased a Best
Western hotel in Bordentown.
ABB Properties was also formed in 1981. Winter Park and
Easterner became wholly owned and operated subsidiaries of ABB
Properties.3 As of 1984, the Tailors and B.B. each owned one
2
The record does not reflect the composition of the stockholders
in Winter Park.
3
ABB Properties held all fifty shares of Class-A voting stock
and all 200 shares of Class-B non-voting stock of Easterner and
all 100 shares of Class-A voting stock and all 600 shares of
Class-B non-voting stock of Winter Park.
4
hundred shares of Class-A voting stock and 350 shares of Class-B
non-voting stock in ABB Properties. Ranjana Bhagat, sister of
Janaki Tailor and B.B., owned 100 shares of Class-B non-voting
stock in ABB Properties. A.C. owned no stock in ABB Properties
at that time.
In 1984, A.C.’s attorney, James P. MacLean, III, drafted
trust documents that B.B., the Tailors, and Ranjana each signed;
the documents designated a portion of each child’s shares in ABB
Properties as being held “in trust” for A.C. B.B. and the
Tailors each placed 52 shares of Class-A voting stock and 188
shares of Class-B non-voting stock in trust for A.C. Ranjana
placed all one hundred shares of her Class-B non-voting stock in
trust for A.C.
In a December 4, 1984 inter-office memorandum, MacLean
wrote that he had “dictated a very simple form of authorization
and direction in which each of the boys acknowledges that 52
shares of voting and 188 shares of non-voting [stock] are held
in trust for A.C. Bhagat as the beneficial owner and that on
Bhagat’s request I am authorized and directed to transfer those
shares to A.C. Bhagat.”
A.C. thus became the “beneficial owner” of 104 shares of
voting stock, constituting a majority interest in ABB
Properties. B.B., Ranjana, and the Tailors remained the owners
5
“on the books” because no change was made in the stock ledgers
or corporate books.
On June 26, 1989, A.C. signed a document entitled
“DECLARATION OF GIFT,” which conveyed his common stock in ABB
Properties to B.B. The document stated:
For love and affection, the undersigned
AMRATLAL C. BHAGAT, hereby transfers and
conveys the following common capital stock
of ABB PROPERTIES CORPORATION to and in
favor of his son, BHARAT A. BHAGAT, [at a
particular address in Winter Park, Florida]:
(a) 53 shares of the class A (voting)
common capital stock of ABB Properties
Corporation.
(b) 187 shares of the class B (non-voting
common) capital stock of ABB Properties
Corporation.
On the same date, A.C. signed a “STOCK POWER,” in which he
“s[old], assign[ed] and transfer[red]” to B.B. fifty-three
shares of Class-A voting stock, and also appointed his attorney
“to transfer the said stock on the books of the within named
company with full power of substitution in the premises.” That
same day A.C. signed a similar “STOCK POWER” for 187 shares of
Class-B non-voting stock. These documents do not indicate that
the transfer was temporary or conditional. Also on that date,
B.B. signed an “OPTION TO PURCHASE STOCK,” in which he granted
A.C. “the option, exercisable exclusively by him, to purchase
any or all” of the gifted shares at the price of $1 per share.
6
This instrument provided that the option “shall expire five
years from the date hereof or upon the death of [A.C.],
whichever shall first occur.”
Around the time of this transaction, A.C. lived with B.B.
in Florida. Purportedly, in accordance with traditions of
Indian culture, A.C. frequently spoke about the family business
and would tell B.B. “all of this is for you only.” B.B. asserts
that “in the Indian culture, it is customary for the father to
give everything to the eldest son.”
On August 24, 1989, an attorney for ABB Properties, William
A. Walker II, wrote two letters that referenced the gift.
Walker wrote one letter to A.C. referencing the documents
granting the gift and instructing A.C. to retain those documents
and the proper notation of the option on the stock certificates.
The second letter was to a real estate loan officer at Southeast
Bank in Florida, which stated in relevant part:
Based upon certification received by us
from Attorney James P. MacLean, III of
Haddonfield, New Jersey, we advise that
Bharat A. Bhagat held 48 shares of the
voting common stock and 162 shares of the
non-voting common stock, representing 24%
and 20.25% of the outstanding and authorized
shares, respectively.
In a recent transaction which occurred
in our office Mr. Bhagat became owner of
additional shares as follows:
53 shares of voting common stock
187 shares of non-voting common stock
7
The result of the above is that, based
upon the certification of Attorney James P.
MacLean III and the transaction which
occurred in our office, Mr. Bharat A. Bhagat
became the owner and holder of the following
shares of common capital stock in ABB
Properties, Inc., a New Jersey Corporation.
101 shares of Class A (voting) common
capital stock representing 50.5% of the
total outstanding. 349 shares of Class B
(non-voting) common capital stock
representing 43.6% of the total outstanding.
Under the terms of the stock
certificate, the shares are transferable on
the books and records of the corporation,
which we do not maintain, but execution of
the appropriate stock powers and delivery of
certificates representing the transfer of
ownership and control to Bharat A. Bhagat
have been completed, which two items
constitute all incidence of ownership
necessary to vest control in Bharat A.
Bhagat.
In 1990, using the same set of forms as those used in the
1989 transaction, A.C. transferred 50 shares of Class-A voting
stock and 288 shares of Class-B non-voting stock in ABB
Properties to B.B. The parties did not use an attorney for this
transaction but simply utilized the same forms that the
attorneys had prepared the prior year, modified with the new
dates and number of shares. According to B.B., the purpose of
this transaction was for A.C. to convey to him, by gift, all of
the remaining shares of which A.C. was the beneficial owner,
making B.B. the “owner of ABB [Properties] stock.”
8
Inadvertently, one share of ABB Properties remained in A.C.’s
name. According to A.C., the 1990 transaction was intended to
be a “re-do” of the 1989 transaction, which he contends had
never been effective.
In 1994, after A.C. purportedly transferred his entire
stock in ABB Properties to B.B., A.C. and B.B. sued the Tailors
to impose a constructive trust, to appoint a receiver, and for
damages and an accounting regarding the operation of the
Bordentown hotel and acquisition of a neighboring hotel by the
Tailors. A.C. and B.B. alleged that the Tailors mismanaged the
Best Western hotel and used Easterner’s funds to purchase a
neighboring hotel in the name of Bordentown Hotels, Inc., a
corporation wholly owned by the Tailors.
The verified complaint filed by A.C. and B.B., and
certified by B.B., stated that B.B. owned 48 shares of voting
stock, and A.C. owned 104 shares. The complaint also related a
series of corporate actions taken by A.C. and B.B. against
Nagarki Tailor, A.C.’s son-in-law and B.B.’s brother-in-law,
following their discovery of his application to obtain another
Best Western franchise. The actions undertaken by A.C. and B.B.
removed Nagarki Tailor as President and General Manager of
Easterner and installed A.C. as President and Treasurer of
Easterner and B.B. as Assistant Secretary. B.B. also reiterated
the stock ownership distribution in the answer to the Tailors’
9
counterclaim, and in an affidavit executed in December 1994 in
the Tailor litigation.
Although A.C. had been installed as an officer of
Easterner, since 1995, he spent most of his time living in his
native India. During that time, B.B. ran ABB Properties, and
A.C. received no salary or distributions from ABB Properties and
filed no tax returns in the United States.
A.C.’s and B.B.’s stock ownership in ABB Properties was not
at issue in the Tailor litigation, which was eventually resolved
by settlement and consent order in November 1999. Through the
settlement the Tailors relinquished their shares of stock in ABB
Properties; afterwards those shares were cancelled. As a result
of the 1989 and 1990 transactions between A.C. and B.B. and the
settlement of the Tailor litigation, B.B. emerged as the sole
owner of all shares of stock in ABB Properties, except for one
share left in A.C.’s name.
In response to a motion for summary judgment in the current
litigation, B.B. later certified that his representation of the
stock in the Tailor litigation accounted for the fact that the
corporate books reflected A.C.’s name. B.B. insisted, however,
he was the “beneficial owner.” B.B. certified that “[t]his was
an approach we followed generally from 1981-1989 when title
remained in my name while beneficial ownership remained in my
father’s name.” B.B. further certified that A.C. requested that
10
B.B. not reveal the gift in the Tailor litigation. B.B.
explained in his certification that although the statements he
made
in the Tailor litigation may appear at odds
with the gifting that occurred in 1989 and
1990 . . . my father and I had the
understanding about distinguishing between
legal title and beneficial ownership . . .
[and that] I was the beneficial owner of the
stock that had been gifted to me in 1989 and
1990 and I enjoyed all of the rights of the
owner of the stock with my father’s full
knowledge and agreement.
At some point during the Tailor litigation, A.C. hand-wrote
a letter to William Hyland, Jr., the attorney representing A.C.
and B.B. in that litigation, stating: “It is my desire since
1989 to transfer my shares of ABB Properties Inc. to my son
Bharat Amratlal Bhagat. Kindly do so at the earliest moment.”
The record does not reveal whether there were any further
communications between A.C. and his attorney or whether any
further action was taken. The record suggests that this
transfer never occurred.
II.
In addressing the cross motions for summary judgment, the
motion judge held that the position taken by B.B. in the earlier
litigation with the Tailors did not bar him from asserting that
the stock in ABB Properties had been transferred to him by his
father as a gift. The motion judge observed that the matter had
11
settled, no testimony had been taken from any parties, and the
court had made no determination about any disputed issues in the
litigation, including who owned what shares and the
circumstances under which any party acquired any shares in any
corporation. Rather, a judge had simply signed and filed a
consent order.
As to the central issue in the litigation between father
and son, the motion judge found that the proofs concerning
intent and delivery of the stock were overwhelming. He cited
the declarations of gift, concurrent stock powers, and an
undated letter from counsel for ABB Properties confirming the
transfer of the gift documents.4 Additionally, the judge cited a
letter from A.C. to ABB Properties’ attorney “unequivocally
memorializing [A.C.’s] intent to transfer all his stock in ABB
[Properties] to his son.” The judge also found that B.B.
accepted the gift and B.B. retained the documents, thereby
rendering both issues, acceptance and dominion, undisputed.
Applying the presumption in favor of a gift, the judge
examined the evidence advanced by A.C. to rebut the presumption
and “prove convincingly and without reasonable doubt as to the
contemporaneous intent of [A.C.] to gift 100% of the shares of
ABB [Properties] to [B.B.].” Measured by this standard, the
4
As the motion judge noted, while the parties did not dispute
that the undated letter was not contemporaneous with the
proposed gift, it in no way undermined the gift.
12
motion judge found that A.C. had failed to sustain his burden of
proof, noting that “none of his proofs are antecedent or
contemporaneous with the execution of the gift documents.”
Further, the motion judge determined that B.B.’s understanding
or intent was immaterial to the gift analysis, and that A.C.’s
“sworn certification[s] made more than 20 years after the time
of the purported gift” were insufficient to rebut the
presumption. The motion judge, therefore, granted B.B.’s motion
for summary judgment and denied A.C.’s motion for the same
relief.
The Appellate Division affirmed. The appellate court
summarily rejected the preclusionary arguments advanced by A.C.,
including judicial estoppel, and adopted the reasoning of the
motion judge. As to the stock transactions, the Appellate
Division noted that in this state a transfer of stock by a
parent to a child is presumed to be a gift. To overcome the
presumption, the proof advanced must be “certain, definite,
reliable and convincing, and leave no reasonable doubt as to the
intention of the parties.” Moreover, the evidence advanced to
rebut the presumption must precede the transfer or be
contemporaneous to the transfer or originate immediately after
the transfer. After examining the evidence marshaled by A.C.,
the panel determined that A.C. offered no proof that was
antecedent or contemporaneous to the transaction. The Appellate
13
Division agreed with the motion judge, finding B.B.’s acceptance
of the stock undisputed.
The panel acknowledged A.C.’s contention that the transfer
to B.B. was designed solely to secure financing for another
hotel venture. Thus, according to A.C., the transfer was never
intended to be permanent and was also conditioned on securing
the financing for the hotel. In essence, A.C. contended the
shares reverted to him when B.B. failed to obtain the financing
to further the venture. The panel also acknowledged that these
contentions “could potentially establish a genuine issue of
material fact if not for the parental gift presumption” and the
heightened standard of proof as to the intention of the parties.
In the end, the Appellate Division determined that the evidence
overwhelmingly established A.C.’s donative intent and that “no
rational factfinder could find that A.C. overcame the
presumption that a completed gift occurred by certain, definite,
reliable and convincing proof, that leaves no reasonable doubt
as to the intention of the parties at the time of the gifts.”
The Court granted A.C.’s petition for certification. 208 N.J.
382 (2011).
III.
On appeal, A.C. argues that the Appellate Division departed
from the summary judgment standard set forth in Brill v.
Guardian Life Insurance Co. of America, 142 N.J. 520, 540
14
(1995), and imposed a higher standard of proof and quality of
proof to rebut donative intent in the context of intra-family
property transfers. A.C. contends that the appellate panel
erred in evaluating the summary judgment motion in accordance
with the heightened standard of “certain, definite, reliable and
convincing proof” and also declaring that acts or statements
made by the parties regarding donative intent are limited to
those that are antecedent, contemporaneous, or immediately
following the transfer. A.C. maintains that reliance on case
law that predated the modern summary judgment standard led to an
erroneous result. A.C. argues that the appellate ruling “turns
the summary judgment standard upside-down.”
Rather, A.C. contends that the motion judge and the
appellate panel should have limited their review of the motion
papers to consideration of the competent evidential materials
presented by the parties, identification of the existence of
disputed material facts, and determination whether, viewing the
motion record in the light most favorable to him as the non-
moving party, the competent evidential materials permit a
rational factfinder to resolve the disputed facts in his favor.
A.C. also argues that the Appellate Division ignored
detailed sworn statements submitted by him in support of his
motion for summary judgment--specifically, sworn statements made
by him based on personal knowledge concerning the events of 1989
15
and 1990--and in opposition to his son’s motion for summary
judgment. In addition, A.C. contends that the appellate panel
misinterpreted the case law requiring contemporaneous acts and
statements of intent.
Finally, A.C. insists that statements made by B.B. in prior
intra-family litigation are inconsistent with statements made in
this litigation. He contends that judicial estoppel bars B.B.
from adopting a different position about the ownership of the
stock in ABB Properties after making contrary statements in
litigation with the Tailors. A.C. argues that the disposition
of the prior litigation by settlement rather than by trial is
irrelevant.
B.B. responds that the Appellate Division applied the
correct summary judgment standard. He emphasizes that the
process of evaluation of the competent evidential materials
includes reference to the evidential standard governing the
claim. Only then can the court determine whether genuine issues
of material fact require resolution by the factfinder.
B.B. also argues that case law outlining the nature and
quality of the proofs needed to rebut the presumption of a gift
is neither outdated nor misapplied. Finally, B.B. contends that
none of his statements in the earlier intra-family litigation
invoke the doctrine of judicial estoppel because no factfinder,
16
judge or jury, ever resolved the issue of stock ownership in
that matter.
IV.
The threshold issue in this appeal is whether B.B. is
barred by the doctrine of judicial estoppel to argue that the
stock transferred by A.C. to him was a gift. If the doctrine
applies to statements made by B.B. about ownership of the ABB
Properties stock in prior intra-family litigation, he would be
barred from contending that A.C. gifted those shares to him and
summary judgment could not be granted in favor of B.B. as a
matter of law.
A party who advances a position in earlier litigation that
is accepted and permits the party to prevail in that litigation
is barred from advocating a contrary position in subsequent
litigation to the prejudice of the adverse party. Kimball
Int’l, Inc. v. Northfield Metal Prods., 334 N.J. Super. 596, 606
(App. Div. 2000), certif. denied, 167 N.J. 88 (2001); Chattin v.
Cape May Greene, Inc., 243 N.J. Super. 590, 620 (App. Div.
1990), aff’d o.b., 124 N.J. 520 (1991); see also Ali v. Rutgers,
166 N.J. 280, 287-88 (2000) (explaining that retraction of
waiver of issue not equivalent to litigating an issue
successfully or otherwise). At the heart of the doctrine is
protection of the integrity of the judicial process. Cummings
v. Bahr, 295 N.J. Super. 374, 387 (App. Div. 1996).
17
Judicial estoppel is an extraordinary remedy. Kimball,
supra, 334 N.J. Super. at 608. It should be invoked only to
prevent a miscarriage of justice. Ibid.; see also Ryan
Operations G.P. v. Santiam-MidWest Lumber Co., 81 F.3d 355, 365
(3d Cir. 1996). It is also a doctrine that has been harshly
criticized. Douglas W. Henkin, Comment, Judicial Estoppel—
Beating Shields Into Iron Swords and Back Again, 139 U. Pa. L.
Rev. 1711, 1729-43 (1991). However, we have not hesitated to
apply it when warranted. Thus, a casino employee facing
revocation of his license due to a criminal conviction was
barred from disavowing in the license revocation proceeding the
factual basis of his guilty plea. State, Dep’t of Law & Pub.
Safety v. Gonzalez, 142 N.J. 618, 632 (1995). Similarly, a
litigant who asserted a position and obtained summary judgment
and dismissal of a party’s claim for indemnification was barred
from taking a different position on appeal. Richardson v. Union
Carbide Indus. Gases Inc., 347 N.J. Super. 524, 530 (App. Div.
2002).
Thus, the doctrine is not invoked unless a court has
accepted the previously advanced inconsistent position and the
party advancing the inconsistent position prevails in the
earlier litigation. Stated differently, the doctrine does not
apply when the matter settles prior to judgment because no court
18
has accepted the position advanced in the earlier litigation.
Kimball, supra, 334 N.J. Super. at 607.
The facts presented in this appeal do not warrant
application of this remedy. Clearly, B.B. has taken
inconsistent positions regarding the ownership of the contested
stock in the prior intra-family litigation against the Tailors
and in this litigation with A.C. The prior litigation, however,
was settled by the parties, thereby obviating the need for a
judge to accept or reject the inconsistent position advanced by
B.B. Indeed, it does not appear that stock ownership was an
issue in the earlier litigation. On the other hand, as
discussed later in this opinion, B.B.’s statements in the Tailor
litigation are admissions that may be introduced as substantive
evidence by A.C. and used to impeach his credibility in the
current father-son litigation.
V.
An appellate court reviews an order granting summary
judgment in accordance with the same standard as the motion
judge. W.J.A. v. D.A., 210 N.J. 229, 237-38 (2012); Henry v.
N.J. Dep’t of Human Servs., 204 N.J. 320, 330 (2010).
Therefore, this Court must review the competent evidential
materials submitted by the parties to identify whether there are
genuine issues of material fact and, if not, whether the moving
party is entitled to summary judgment as a matter of law.
19
Brill, supra, 142 N.J. at 540; R. 4:46-2(c). In conducting this
review, the Court must keep in mind that “an issue of fact is
genuine only if, considering the burden of persuasion at trial,
the evidence submitted by the parties on the motion, together
with all legitimate inferences therefrom favoring the non-moving
party, would require submission of the issue to the trier of
fact.” R. 4:46-2(c). The practical effect of this rule is that
neither the motion court nor an appellate court can ignore the
elements of the cause of action or the evidential standard
governing the cause of action.
Brill v. Guardian Life Insurance Co. of America illustrates
this proposition. Brill, supra, involved a negligence claim
against a life insurance broker and his agency for failing to
advise a prospective insured of the availability of immediate,
temporary coverage upon completion of the application process.
142 N.J. at 523. The Court reviewed the common law recognizing
the duty owed by an insurance broker to an insured, sorted
through the relevant and irrelevant facts asserted by the
parties, and held that an expert opinion based on a false
assumption did not create a genuine issue of material fact. Id.
at 542-43. Only after identifying the elements of the cause of
action and the standard of proof governing that claim could the
Court then determine that no reasonable jury could conclude that
the broker’s failure to advise the plaintiff of the availability
20
of immediate coverage upon submission of the application caused
the lack of effective coverage at the time of the plaintiff’s
death. Id. at 542-45.
The need to identify the elements of the cause of action
and the standard of proof in evaluating a motion for summary
judgment is well-illustrated by defamation actions against a
media defendant. In Durando v. Nutley Sun, 209 N.J. 235 (2012),
the Securities and Exchange Commission filed a civil complaint
against two men charging them with assorted violations of
federal securities law. Id. at 240. A regional daily newspaper
reported that the complaint had been filed, identified the men,
and summarized the charges against them. Id. at 241. Nothing
in the article stated or suggested that either man had been
arrested. Ibid. A weekly local newspaper reprinted all but the
last three paragraphs of the original article and wrote a new
headline for the article, which stated that the men had been
charged in a stock scheme. Id. at 242. The local newspaper
also prepared a “teaser” for the front page of the weekly
publication that expressly stated that the local men had been
arrested. Ibid. The weekly publication retracted the front
page “teaser” three weeks later. Id. at 243.
In reviewing an Appellate Division opinion affirming
summary judgment in favor of the media defendant, the Court
identified the elements a plaintiff must establish in a
21
defamation action against a media defendant that publishes an
article touching on a matter of public interest. Id. at 248.
The Court also identified the elements of the cause of action of
false light, id. at 249, and examined the actual malice
standard, id. at 249-52. It did so because the Court recognized
that, to defeat the media defendant’s motion for summary
judgment, the plaintiffs had to establish that a reasonable jury
could conclude by clear and convincing evidence that the media
defendants acted with actual malice. Justice Albin wrote:
To defeat defendants’ motion for
summary judgment in this case, plaintiffs
must establish that a reasonable jury could
conclude by “clear and convincing evidence”
that [the publisher of the weekly] published
the erroneous teaser with actual malice.
“Although courts construe the evidence in
the light most favorable to the non-moving
party in a summary judgment motion, the
‘clear and convincing’ standard in [a]
defamation action adds an additional weight
to the plaintiffs’ usual ‘preponderance of
the evidence’ burden.”
[Id. at 253 (citations omitted).]
In short, the evaluation of every motion for summary
judgment requires the court, trial or appellate, to review the
motion record against not only the elements of the cause of
action but also the evidential standard governing that cause of
action. We, therefore, turn to an examination of the elements
of a valid inter vivos gift and the nature and measure of the
proof required to rebut the presumption of such a gift.
22
VI.
There are three elements of a valid and irrevocable gift.
First, there must be actual or constructive delivery; that is,
“the donor must perform some act constituting the actual or
symbolic delivery of the subject matter of the gift.” Pascale
v. Pascale, 113 N.J. 20, 29 (1988). Second, there must be
donative intent; that is, “the donor must possess the intent to
give.” Ibid. Third, there must be acceptance. Ibid. We have
also recognized that the donor must absolutely and irrevocably
relinquish “ownership and dominion over the subject matter of
the gift, at least to the extent practicable or possible,
considering the nature of the articles to be given.” In re
Dodge, 50 N.J. 192, 216 (1967); accord Sipko v. Koger, Inc., 214
N.J. 364, 376 (2013); Farris v. Farris Eng’g Corp., 7 N.J. 487,
500-01 (1951).
Actual delivery of the gifted property is necessary except
where “‘there can be no actual delivery’ or where ‘the situation
is incompatible with the performance of such ceremony.’” Foster
v. Reiss, 18 N.J. 41, 50 (1955) (quoting Cook v. Lum, 55 N.J.L.
373, 374 (Sup. Ct. 1893)). A gift of stock is such a situation
because the ownership of stock is now often recorded simply in
book form by the issuer or a broker. See N.J.S.A. 12A:8-301b.
Therefore, “[i]n the absence of express provisions to the
contrary, stock may be transferred by delivery of a separate
23
written transfer, without delivery of any certificate where it
is not in possession of the transferee.” Hill v. Warner, Berman
& Spitz, P.A., 197 N.J. Super. 152, 162 (App. Div. 1984). In
other words, the delivery of the stock certificate may be
constructive, and the failure to record the transfer on the
corporate books does not defeat the gift so long as the transfer
is accompanied by words that express donative intent and the
donor has divested himself completely of the property. Id. at
162-63.
The burden of proving an inter vivos gift is on the party
who asserts the claim. Sadofski v. Williams, 60 N.J. 385, 395
n.3 (1972). Generally, the recipient must show by “clear,
cogent and persuasive” evidence that the donor intended to make
a gift. Farris, supra, 7 N.J. at 501. When, however, the
transfer is from a parent to a child, the initial burden of
proof on the party claiming a gift is slight. Metro. Life Ins.
Co. v. Woolf, 136 N.J. Eq. 588, 592 (Ch. 1945), aff’d, 138 N.J.
Eq. 450 (E. & A. 1946). In such cases a presumption arises that
the transfer is a gift. Peppler v. Roffe, 122 N.J. Eq. 510, 515
(E. & A. 1937); First Nat’l Bank v. Keller, 122 N.J. Eq. 481,
483 (E. & A. 1937); Bankers Trust Co. v. Bank of Rockville Ctr.
Trust Co., 114 N.J. Eq. 391 (E. & A. 1933); Prisco v. Prisco, 90
N.J. Eq. 289, 289 (E. & A. 1919); Herbert v. Alvord, 75 N.J. Eq.
428, 429 (Ch. 1909); Betts v. Francis, 30 N.J.L. 152, 155 (Sup.
24
Ct. 1862). The presumption does not apply if the parent is a
dependent of the child. Peppler, supra, 122 N.J. Eq. at 515.
See also Weisberg v. Koprowski, 17 N.J. 362, 372-73 (1955). The
rationale for the presumption is that a child is considered a
natural object of the bounty of the donor. Weisberg, supra, 17
N.J. at 373. See Restatement (Third) of Trusts § 9(2) (2001)
(noting that resulting trust does not arise when transfer of
property is made by one person but payment is made by another
when recipient is spouse, dependent, or other natural object of
person making payment).
This presumption, however, is rebuttable by evidence of a
contrary intent. The earliest reported case that we have
identified that addresses the nature of the proofs and the
standard of proof to rebut the presumption is Peer v. Peer, 11
N.J. Eq. 432, 439 (Ch. 1857). In that case, the court held that
a gift will be presumed when a parent advances funds to purchase
real estate for a son and instructs that title shall be in the
name of a child. Id. at 438-40. The presumption may be
rebutted by evidence of “the same kind . . . deemed sufficient
to create the presumption.” Id. at 439. The court described
the quality of the evidence that would be admissible to rebut
the presumption as “convincing, and of such a character as to
leave no reasonable doubt as to the intention of the party.”
Ibid.; accord Read v. Huff, 40 N.J. Eq. 229, 234 (E. & A. 1885).
25
In 1909, a court reiterated the Peer standard stating that
the proofs required to rebut the presumption are “convincing and
leave no reasonable doubt as to the intention of the party.”
Herbert, supra, 75 N.J. Eq. at 430. Ten years later, in Prisco,
supra, a case in which a father purchased real property and took
title in the name of his sixteen year old son, the Court of
Errors and Appeals adopted the rule applied by the trial judge
regarding the evidentiary burden of a party seeking to rebut the
presumption of a gift. 90 N.J. Eq. at 289. The trial judge
stated “the evidence must be convincing and leave no reasonable
doubt.” Ibid.; see also McGee v. McGee, 81 N.J. Eq. 190, 194
(E. & A. 1913) (instructing that proof offered to rebut
presumption of gift “must be certain, definite, reliable and
convincing, leaving no reasonable doubt of the intention of the
parties”).
In addition, the proofs advanced to rebut the presumption
of a gift “must be of facts antecedent to or contemporaneous
with the purchase, or so immediately afterwards as to form a
part of the res gestae.” Herbert, supra, 75 N.J. Eq. at 429-30;
accord Prisco, supra, 90 N.J. Eq. at 289; Read, supra, 40 N.J.
Eq. at 234; Peer, supra, 11 N.J. Eq. at 439.
In Herbert, supra, the court excepted from the antecedent
or contemporaneous requirement statements or acts of the party
to be charged with the gift. 75 N.J. Eq. at 429-30.
26
Furthermore, in Weisberg, supra, this Court followed the rule
announced in Killeen v. Killeen, 141 N.J. Eq. 312, 315 (E. & A.
1948) and Yetman v. Hedgeman, 82 N.J. Eq. 221, 223 (Ch. 1913)
that “the subsequent conduct of the parties may be given in
evidence to corroborate the inference drawn from prior and
contemporaneous circumstances.” 17 N.J. at 374; see also
Bertolino v. Damario, 107 N.J. Eq. 201, 202 (E. & A. 1930)
(explaining that gift presumption may be rebutted by later
admissions of parties). Notably, in Weisberg, supra, this Court
did not preclude evidence of conduct subsequent to the son’s
purchase of the house in which his mother lived to rebut the
presumption of a gift. 17 N.J. at 374-76.
Commentary has criticized the gift presumption between
parent and child contending the presumption is founded on an
undue emphasis on certain relationships. 5 New Jersey Practice,
Wills and Administration § 4 n.1 (Alfred C. Clapp and Dorothy G.
Black) (3d ed. 1984). In Weisberg, supra, this Court
acknowledged the criticism of the rule presuming a gift based
“on considerations of the closeness of the relationship or the
extent of natural affection, []or by reason of any legal
obligation to furnish support.” 17 N.J. at 372. The Court
noted that the relationship between the son, who had purchased
the house in which his mother lived, and his mother “was such
that, but for other evidence overcoming the inference, the
27
probability might well be inferred that [the son] did intend a
gift of the properties to [his mother].” Id. at 373. Yet, the
son marshaled substantial proofs not only antecedent to and
contemporaneous with the purchase but also conduct subsequent to
the purchase until the son’s death to defeat any presumption of
a gift. Id. at 374-76.
Other commentators criticize use of any standard of proof
other than the preponderance of the evidence. 3 Austin Wakeman
Scott, The Law of Trusts, § 458 (1939). In his treatise,
Professor Scott opines that
[n]o good reason, however, has ever been
suggested as to why the preponderance of the
evidence should not be sufficient to
establish a trust, as it is sufficient to
establish other facts in civil cases. There
is perhaps, sufficient reason for requiring
more than a preponderance of evidence to
establish an express oral trust of land in
states in which the Statute of Frauds is not
in force. There is no reason for making
such a requirement generally in the case of
. . . resulting trusts or constructive
trusts.
[Ibid.]
The Restatement also calls for use of the preponderance of
the evidence standard of proof. Restatement, supra, § 9, cmt.
f(1). The Reporter notes, however, that case law on this issue
is both conflicting and unclear. The Reporter relates that the
rationale for a clear and convincing standard of proof in order
to question beneficial ownership is the view “that there should
28
be a strong presumption in favor of one whose title is indicated
without qualification in a written instrument . . . and that
there is a danger of inviting perjured testimony in cases of
this type.” Id. at Reporter’s Notes § 9, cmt. f.
As stated in numerous decisions dating to the mid-
nineteenth century, the standard of proof seems to create a
standard containing elements of the clear and convincing
standard and the beyond a reasonable doubt standard. Responding
to an argument that this Court in Weisberg also modified the
standard of proof to rebut a presumption of a gift from no
reasonable doubt to clear and convincing, the Appellate Division
in Turro v. Turro, 38 N.J. Super. 535, 543 (App. Div. 1956)
observed that Weisberg never addressed the standard of proof at
all. Nevertheless, the appellate panel referred to seventeen
cases from 1885 to 1951 that had described the burden of proof
as requiring clear, reliable, and convincing proof leaving no
reasonable doubt of the intention of the parties. Turro, supra,
38 N.J. Super. at 542. The panel recognized, however, that this
description seemed to contain elements of the clear and
convincing and beyond a reasonable doubt standards of proof and
that some commentators had urged elimination of this hybrid
standard because such a standard has the effect of giving undue
weight to the presumption. Id. at 542-43. The panel noted that
it was not its function to “overrule[] a proposition so
29
obviously approved by the highest court of the State.” Id. at
544.
Notwithstanding the criticism of the presumption itself and
the use of an enhanced standard of proof to rebut the
presumption that a transfer of property, including stock in a
family business, from a parent to a child is a gift, we can
identify no reason to depart from our use of an enhanced
standard of proof which has served well for more than 150 years.
We discern, however, the need to clarify that standard and the
proofs that may be admitted to meet it.
Although some of the earliest cases describe the standard
of proof as “convincing and leav[ing] no reasonable doubt,”
Prisco, supra, 90 N.J. Eq. at 289; Herbert, supra, 75 N.J. Eq.
at 430, later cases added additional adjectives, such as
“certain,” “definite,” “reliable,” and “convincing.” McGee,
supra, 81 N.J. Eq. at 194. As noted in Turro, supra, this
description has elements of both the clear and convincing and
beyond a reasonable doubt standards. 38 N.J. Super. at 542-43.
Such a hybrid standard is an anomaly and given the criticism,
not only of the very existence of the gift presumption in
circumstances as presented in this case but also the use of any
standard of proof other than preponderance of the evidence in
these circumstances, we can identify no purpose in recognizing
either a hybrid clear and convincing/no reasonable doubt
30
standard or a no reasonable doubt standard. Rather, our
examination of the cases suggests that the standard has been
understood as, and should be, clear and convincing. We view the
other language used in the cases as simply an attempt to
describe the quality of evidence, e.g., clear, cogent, certain,
and definite, that will satisfy the clear and convincing
standard of proof.
This interpretation is reflected in a leading treatise on
equity jurisprudence. As of 1941, this treatise stated, “[I]t
is said that the presumption of a gift or advancement can be
rebutted only by proof that is clear, convincing and
satisfactory.” 4 John Norton Pomeroy, Equity Jurisprudence §
1041 (5th ed. 1941). Numerous cases are cited to support this
proposition, including several cases from New Jersey which
employ the “reasonable doubt” language. See id. at 86-87 n.10.
Indeed, the Model Jury Charge on the clear and convincing
evidence standard uses similar verbiage to describe the quality
of the evidence that will meet this standard. Model Jury Charge
1.19 provides in relevant part:
Clear and convincing evidence is evidence
that produces in your minds a firm belief or
conviction that the allegations sought to be
proved by the evidence are true. It is
evidence so clear, direct, weighty in terms
of quality, and convincing as to cause you
to come to a clear conviction of the truth
of the precise facts in issue.
31
The clear and convincing standard of
proof requires that the result shall not be
reached by a mere balancing of doubts or
probabilities, but rather by clear evidence
which causes you to be convinced that the
allegations sought to be proved are true.
Moreover, we can discern no good reason why a father
seeking to rebut a presumption of a gift of stock to an adult
son should be required to meet an enhanced clear and convincing
standard that requires no reasonable doubt, particularly when
the no reasonable doubt standard applies in no other civil
setting in this state. Furthermore, the State is required only
to meet the clear and convincing standard to terminate parental
rights, Santosky v. Kramer, 455 U.S. 745, 102 S. Ct. 1388, 71 L.
Ed. 2d 599 (1982); N.J. Div. of Youth & Family Servs. v. A.W.,
103 N.J. 591, 611-12 (1986); to involuntarily commit a person to
a psychiatric facility, Addinton v. Texas, 441 U.S. 418, 99 S.
Ct. 1804, 60 L. Ed. 2d 323 (1979); or to commit a person
pursuant to the Sexually Violent Predator Act, In re Commitment
of W.Z., 173 N.J. 109 (2002). The clear and convincing standard
of proof also governs an action to withhold life sustaining
treatment from a person in a persistent vegetative state, Cruzan
v. Dir., Mo. Dep’t of Health, 497 U.S. 261, 284, 110 S. Ct.
2841, 2854, 111 L. Ed. 2d 224, 245-46 (1990); or from an
incompetent nursing home patient, In re Conroy, 98 N.J. 321, 382
(1985); in disciplinary proceedings against an attorney or a
32
doctor, In re Racmiel, 90 N.J. 646, 661 (1982); In re Polk
License Revocation, 90 N.J. 550, 563 (1982); and to prove fraud,
Fox v. Mercedes-Benz Credit Corp., 281 N.J. Super. 476, 484
(App. Div. 1995). This list is hardly exhaustive but
illustrates the anomaly of applying a higher standard than clear
and convincing evidence to rebut a presumption of a gift where a
higher standard is not applied in circumstances affecting a
person’s life, liberty, ability to pursue a profession, or
integrity.
We, therefore, hold that a person who has transferred
property to another, which raises a presumption that the
transferred property was a gift, must meet the clear and
convincing evidence standard of proof to rebut the presumption.
We also hold that the person seeking to rebut the presumption is
limited to evidence antecedent to, contemporaneous with, or
immediately following the transfer. In addition, a party
seeking to rebut the presumption may also adduce proof of
statements by the parties concerning the purpose and effect of
the transfer.
VII.
Applying these principles to the facts revealed in the
summary judgment record, and all reasonable inferences from
those facts drawn in favor of A.C., we conclude that B.B.’s
motion for summary judgment should have been denied. To be
33
sure, the 1989 and 1990 transfers triggered the presumption that
A.C. intended to gift his stock in the family business to his
son. Accordingly, A.C. was required to adduce evidence to
defeat a summary judgment motion that raised a genuine issue of
material fact regarding one, some, or all of the elements of an
inter vivos gift and those proofs had to rise to the quality
required by the clear and convincing standard of proof.
The motion court and the appellate panel properly refused
to consider some of the evidence offered by A.C. His proffer of
statements by him years after the 1989 and 1990 transfers that
B.B. was simply holding the shares to facilitate the conduct of
affairs of the business while he was in India, or to facilitate
financing of a business venture, was inadmissible. Those
statements are neither antecedent to, contemporaneous with, or
immediately following the transaction and thus fail to provide
reliable evidence of the intent of the stock transfers.
On the other hand, the motion court and the appellate panel
declined to consider various statements made by B.B. in the
course of the conduct of the family business that contradict the
position that A.C. transferred the entirety of his ABB
Properties stock to his son. For example, in 1994, B.B.
certified the facts contained in the Verified Complaint filed
against his sister and brother-in-law. He certified that A.C.
owned approximately 50% of the voting stock in the business. In
34
an affidavit submitted in the same matter, he made a similar
statement. The complaint in the prior litigation also relates a
series of corporate actions taken by A.C. and B.B. in their
capacity as stockholders and corporate officers of ABB
Properties that removed B.B.’s brother-in-law from his corporate
positions and management responsibilities at Easterner and
installed themselves as officers of that corporation. B.B.
certified that these facts were true. These prior inconsistent
statements made in the prior intra-family litigation do not
judicially estop his current defense to A.C.’s complaint that
A.C. transferred the stock to him and that the transfer was
intended as a gift from father to son, but these statements may
be considered admissions of a party and evidence that may
impeach B.B.’s credibility.
In addition, B.B. also filed two certifications in this
matter in which he describes A.C. as the beneficial owner of the
ABB Properties stock and his understanding of that term.
Drawing all inferences in favor of B.B. created by this
discourse, a question of fact arises whether A.C. and B.B.
contemplated an unconditional transfer of the stock or simply a
temporary transfer to facilitate other business ventures or to
ease the ability to conduct the day-to-day affairs of the
business while A.C. was in India. B.B. also relies on cultural
traditions to support his position that the transfer of stock
35
was a natural and ordinary event in the culture of this family.
While his statement may be true, the record is barren of any
independent support for this proposition that would permit a
court to take judicial notice of this fact. N.J.R.E. 201(b).
The standard of proof to rebut the presumption of a gift in
this case is exacting. When that standard governs the
evaluation of evidence produced by both parties in support of
and in opposition to cross-motions for summary judgment, we can
expect many such motions to be granted. Here, however, several
statements by B.B. raise genuine issues of fact about whether
the 1989-90 stock transfers were an unqualified gift from father
to son or a mere matter of convenience to further a family
business. The inconsistent statements in the prior intra-family
litigation also require an assessment of B.B.’s credibility
beyond that accomplished by simply examining affidavits,
letters, notes, and other documents.
This is a close case. Nevertheless, B.B.’s statements
regarding the ownership of ABB Properties stock raises
sufficient factual issues to preclude summary judgment and to
require a trial.
VIII.
The judgment of the Appellate Division is reversed and the
matter is remanded for further proceedings consistent with this
opinion.
36
CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA, ALBIN, PATTERSON;
and JUDGE RODRÍGUEZ (temporarily assigned) join in JUDGE CUFF’s
opinion.
37
SUPREME COURT OF NEW JERSEY
NO. A-31 SEPTEMBER TERM 2011
ON CERTIFICATION TO Appellate Division, Superior Court
AMRATLAL C. BHAGAT,
Individually and as
Shareholder of ABB PROPERTIES
CORPORATION, A New Jersey
Corporation and as a
Shareholder of EASTERNER
MOTOR INN, INC., a New Jersey
Corporation,
Plaintiff-Appellant,
v.
BHARAT A. BHAGAT and CRANBURY
HOTELS, LLC, a New Jersey
Limited Liability Company,
Defendants-Respondents.
DECIDED January 30, 2014
Chief Justice Rabner PRESIDING
OPINION BY Judge Cuff
CONCURRING/DISSENTING OPINIONS BY
DISSENTING OPINION BY
REVERSE AND
CHECKLIST
REMAND
CHIEF JUSTICE RABNER X
JUSTICE LaVECCHIA X
JUSTICE ALBIN X
JUSTICE PATTERSON X
JUDGE RODRÍGUEZ (t/a) X
JUDGE CUFF (t/a) X
TOTALS 6
1