Lawyer Must Pay Legal Fees in Undue Influence Case

A lawyer who was found to have exerted undue influence over his mother must reimburse her estate for legal fees and costs, along with paying prejudgment interest from the date the estate monies were wrongfully taken, an appeals court ruled. Matter of the Estate of Sogliuzzo, Docket No. A-0882-14T2 (App. Div., December 17, 2015)

Jane P. Sogliuzzo died in 2008 leaving a son, John Sogliuzzo (John), and a daughter, Jane Adkins (Jane).  Jane was appointed executor of the Estate of Jane Sogliuzzo (Estate). Jane filed a verified complaint alleging that John exercised undue influence over their mother and took money from the estate while their mother was alive. A forensic accountant retained by the estate found that John used his mother’s funds to make payments to his law practice and to pay his children’s private school tuition.

John answered the complaint, but refused to answer interrogatories or deposition questions, or produce documents. As a result, default judgment was entered against John, awarding $520,414 in damages to the Estate. Also, the court held that John exerted undue influence over his mother.

John appealed the rulings made by the trial court. On appeal, the award of damages was affirmed. The appeals court then remanded the case back to the trial judge to determine responsibility for counsel fees and expenses, and whether prejudgment interest should run from the date the complaint was filed or the date when John wrongfully took estate monies.

On remand, the trial judge ordered John to pay counsel fees, finding that such award was justified because (1) he committed the tort of undue influence, and (2) the counsel fee award was necessary to make the Estate whole.  The trial court also found that the Estate was entitled to prejudgment interest running from the date the estate monies were wrongful taken by John. John filed another appeal.

The appeals court again affirmed the trial court’s rulings.   Although recognizing that New Jersey law generally prohibits the recovery of counsel fees by a prevailing party against a losing party in a lawsuit, the appeals court held that an exception exists when an executor or trustee commits the tort of undue influence. In that event, the law permits an estate to be made whole by assessing reasonable counsel fees against the fiduciary:

[John’s] exertion of undue influence over his mother to obtain significant financial benefit for himself met the rationale for counsel fees set by the state Supreme Court…

On that basis, the appeals court awarded counsel fees to the Estate.

The appeals court also ruled that the Estate was entitled to prejudgment interest running from the date the estate monies were wrongful taken by John:

The dates of misappropriation mark the point at which John benefitted from his wrongdoing as well as the point at which the Estate was injured. Equity compels calculating prejudgment interest from the date of defalcation …

The case is annexed here – Matter of the Estate of Sogliuzzo

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