In a case that can be seen as a warning to potential plaintiffs in probate actions, the Appellate Division in In the Matter of the Estate of Lillian Schmidt, affirmed a Probate Part order denying counsel fees to the unsuccessful contestant in a probate litigation.

In Schmidt, the defendant, John Teagno, who was the decedent Lillian Schmidt’s nephew, held a power of attorney for the parties’ aunt. After the aunt’s death, plaintiff Loel Welch, the decedent’s niece, filed a complaint seeking to compel an accounting of the nephew’s actions as agent under the POA.

After the nephew provided an informal accounting, the niece filed a motion to enforce litigant’s rights relating to the accounting. Following a hearing, the Probate Part judge approved the POA accounting in substantial part, and the plaintiff/niece filed a motion seeking $48,345 in counsel fees, $5,740.13 in costs, and $12,146.36 in private investigator services. That motion for fees was denied, and an appeal followed.

Although the defendant/nephew was the sole residuary beneficiary of the estate, and he had maintained that there were sufficient funds in the estate to satisfy the plaintiff’s $20,000 specific bequest, plaintiff was permitted to proceed with her complaint on the theory that, by establishing wrongdoing on the agent’s part, she would be entitled to recoup her legal  fees.

The probate judge had found that, although the nephew was an “amateurish” and poor record-keeper, and made various checks payable to cash, his actions had been for the benefit of the decedent, with the exception of a loan that he had failed to repay his aunt in full, in the amount of $8,036. Accordingly, the court approved the nephew/agent’s accounting, subject to the $8,036 adjustment.

The court determined that the nephew’s actions worked no loss to the estate, with the exception of the $8,036 which it found to be “fairly de minimis.” On the other hand, it found that the plaintiff/niece had attempted to capitalize on his poor record-keeping, but had failed to establish her claims at the hearing.

The probate court thus concluded that “the estate was not at all enhanced by the years’ long unsuccessful litigation effort.”

On appeal, the court rejected the plaintiff’s claim that she was entitled to fees and costs based upon In re Estate of Lash, 169 N.J. 20 (2001), because, in the instant case, there had been no finding that the defendant had misappropriated estate assets. The court also rejected plaintiff’s alternate claim that she was entitled to fees and costs from a fund in court, pursuant to R. 4:42.9(a)(2). It explained that, “[g]enerally, a fund in court is utilized if it would be unfair to impose the sole financial responsibility on an individual who, as a result of litigation, creates a benefit to others.” It reasoned that, “[h]ere, the only potential beneficiary of the litigation, if any benefit can even be said to have resulted, was [the plaintiff] herself.”

A copy of the July 11, 2012 opinion can be found here: In the Matter of the Estate of Lillian Schmidt.