The defendant, who was the agent under his aunt’s power of attorney and executor of her estate, was sued by beneficiaries of the decedent’s estate for breach of fiduciary duty as her agent and executor. The power of attorney and will were executed in 1998. The plaintiffs alleged that, beginning in 2001, the defendant wrongfully transferred the decedent’s assets, including her home, to himself, using the power of attorney.
The decedent died in 2002. Following her death, the defendant applied to be appointed as her executor, but failed to notify the will beneficiaries that the will existed or had been probated. In 2006 and 2008, the defendant took out a mortgage and home equity line of credit on the home he had transferred to himself, thereby encumbering the home in the amount of $285,000.
In late 2011, the will beneficiaries became aware of the existence of the decedent’s will. In 2012, they sued the defendant for breach of fiduciary duty, conversion, theft of estate assets, tortious interference with expected inheritance, and unjust enrichment.
Prior to trial, the defendant filed a summary judgment motion, seeking to dismiss the claims against him based on the statute of limitations and the doctrine of laches. The motion was denied.
Following a trial, the court found that the defendant might have been a caring and loving nephew, but that he “totally abandoned his obligations to her as a fiduciary under the power of attorney and as executor of her estate.” The judge found that the defendant had intentionally hidden the terms of the decedent’s will from the beneficiaries, and that the statute of limitations would be equitably tolled. The defendant was ordered to reconvey the home to the decedent’s estate, to repay the estate for the balance of the mortgage as well as other transfer he made from her funds, and to pay the plaintiffs’ counsel fees.
On appeal, the defendant argued that the judge had erred in denying his summary judgment motion, and that the statute of limitations and the doctrine of laches should have barred the plaintiffs’ claims. The Appellate Division disagreed.
With regard to the statute of limitations, the appeals court recognized that, pursuant to N.J.S.A. 2A:14-1, the action should have been commenced within 6 years from the date it accrued. The defendant had argued that, because the decedent died in 2002, the action should have been filed within 6 years of that date, and that the plaintiffs had sufficient opportunity to inquire as to the status of the estate in the years following her death. The appellate court agreed with the trial judge: the motion was properly denied because there were sufficient factual issues as to when plaintiffs knew or should have known of the wrongdoing. At the trial, the judge heard testimony from the witnesses, determined that the defendant had made efforts to conceal the will from the beneficiaries, and that plaintiffs were entitled to have the statute of limitations tolled on their claims.
The Appellate Division also rejected the defendant’s claim that the doctrine of laches should have barred the claims. The doctrine of laches is an equitable defense that may be asserted in the absence of the statute of limitations, when a party who has a known right “engages in inexcusable and unexplained delay in exercising that right to the prejudice of the other party.” Here, the plaintiffs’ delay was excusable, given that the defendant failed to notify them of the will. As the trial court had concluded, “to allow the defendant in this matter to avail himself of these defenses flies in the face of everything that a court of equity is supposed to stand for.”
A copy of In the Matter of the Estate of McFadden can be found here – In the Matter of the Estate of McFadden
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