Where a party in an estate litigation matter has engaged in undue influence, the Court may award punitive damages, although such circumstances are limited.

In the Matter of the Estate of Madeline Stockdale, A-121-06, the Appellate Division considered the circumstances in which it is appropriate to award punitive damages against a party in a probate matter involving a claim of undue influence.

By way of background, the decedent was predeceased by her husband and had no children.  She was reclusive and suspect of others, believing that they were only interested in her wealth.  She had two nephews – George and Peter – with whom she had little contact.  She intended to leave her entire estate to charity.

In 1998, the decedent executed a Will which left a substantial number of specific bequests and named the Spring Lake First Aid Squad as residuary beneficiary.

In 2000, the decedent executed a second Will which made a neighbor, Sollitto, the residuary beneficiary.

The Squad successfully challenged the 2000 Will and successfully attacked an inter vivos transfer of the decedent’s real property to Sollitto on exceptionally favorable terms.  Both the 2000 Will and the inter vivos transfer were found to be the produce of undue influence.

The trial court awarded legal fees to the Squad as a substitute for punitive damages.  The Squad appealed.

The Appellate Division affirmed all but the award of attorneys’ fees, remanding for consideration of punitive damages, and found that the trial court was mistaken that an award of attorneys’ fees is a substitute for punitive damages.

The Supreme Court granted certification solely on the issue of punitive damages and held that:

Probate actions arising from allegations of undue influence are most often resolved through equitable remedies. In some circumstances, an award of punitive damages is permitted, but limited.

On remand the trial judge held that no basis for an award of compensatory damages existed and, therefore, no basis for punitive damages.  The trial judge also ordered the executors to pay the Squad and its attorneys $1,782,296.44 for their reasonable fees and expenses.  The court rejected the Squad’s claim for delay damages in the sale of the property.

The decision discusses the purpose of compensatory damages which is to make a plaintiff whole.  Correa v. Maggiore, 196 N.J.Super. 273, 285 (App.Div.1984).  Damages which exceed what is necessary to make plaintiff whole must be rejected.  Since the Squad failed to demonstrate that the delay caused a loss, the trial judge correctly denied its claim for compensatory damage.  To succeed on a damages claim, a plaintiff must demonstrate that its loss was the natural and necessary consequence of the defendant’s wrongdoing.  Remote, uncertain and contingent consequences do not afford a basis for recovery.  Flowers v. Viking Yacht Co., 366 N.J.Super. 49, 58 (Law Div.2003).

The decision also discussed the difference between the recovery of attorney fees and the recovery of costs.  R. 4:42-8(a) generally entitles prevailing parties to recover costs as of course except as provided by law, rules or court order.  R. 4:42-9(a) generally bars inclusion of attorney’s fees within taxed costs, except as provided.  The award of costs is discretionary.  Hirsch v. Tushill Ltd., 110 N.J. 644, 646 (1988).  In particular, the court should not routinely grant the taxation of expenses of depositions.  However, when fraud or other reprehensible conduct on the part of the losing party is involved or other extraordinary circumstances exist, the court may allow deposition costs by court order.

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