NJ Supreme Court holds that punitive damages are not ordinarily permitted in an estate litigation or will contest even when the proponent of the will has engaged in egregious behavior resulting in undue influence

In the Matter of the Estate of Madeleine Stockdale, the New Jersey Supreme Court considered the circumstances in which it is appropriate to award punitive damages against a party in a court proceeding who has engaged in undue influence in the creation of a will or testamentary trust, or in improperly securing an gift of property from the decedent during his/her life.

Madeleine Stockdale was a wealthy, frail and elderly woman. When she died, her will, executed just months before her death, left the bulk of her estate to a non-relative neighbor. The proponent of the will, the neighbor, and his attorney, who also prepared the decedent’s will, were found by the trial court to have engaged in egregious behavior resulting in undue influence. The neighbor was also the recipient of gifts made by Mrs. Stockdale during her life that the trial court found were improvidently or improperly made as they were also the result of undue influence. Consequently, the court set aside the will and declared the gifts to be void.

The trial court also awarded the attorneys’ fees incurred by the party who had objected to the will and the gifts as a form of punitive damages against the neighbor and his attorney. The court reasoned that “undue influence” is a form of intentional tort that provides the basis for awarding punitive damages. Further, the trial court found that “[t]he measure of [punitive] damages is the legal fees of the beneficiaries of the estate so that the estate is made whole.”

On appeal, the Appellate Division affirmed the decision of the trial court, holding that the will and gifts were the result of undue influence. However, the Appellate Division reversed the trial court’s decision to award attorneys’ fees. Instead, the court remanded the case to the trial court for consideration of an award of punitive damages. In doing so, the Appellate Division noted that the trial court was mistaken in its view that an award of attorneys’ fees is, or may be, a substitute for punitive damages.

The proponent of the will and his attorney appealed. On appeal, the Supreme Court affirmed the prior judgments of undue influence as to the will and gifts. However, the Court modified the Appellate Division’s decision as to punitive damages. In that regard, the Supreme Court held that a punitive damage award in probate cases is governed by NJ’s Punitive Damages, Act, N.J.S.A. 2A:15-5.9 to -5.17. Therefore, any punitive damages awarded had to meet the requirements in that law, which are: (1) that the relief be specifically sought in the complaint, (2) that there be an award of compensatory damages, and (3) that the party seeking the award demonstrate, by clear and convincing evidence, that the acts or omissions of the actor causing the harm must have been “actuated by actual malice or accompanied by a wanton and willful disregard of persons who foreseeably might be harmed by those acts or omissions”. Additionally, the Supreme Court also established a fourth requirement in estate litigation / will contest cases: (4) only in the circumstances in which the actor is not entitled to take from the estate by inheritance or through commissions, and thus in which an accounting and the surcharge remedy will be inadequate to restore the estate to its proper balance, will there even potentially be a basis for a punitive damage award. “[T]he possibility of [punitive damages] only exists because … a stranger to the testator’s natural bounty has gained access to his or her confidence and, potentially, to his or her assets … .” The Court noted that, because of the additional requirements it established in estate litigation / will contest cases, “the remedy will only be available infrequently in Probate Part proceedings.”

The Supreme Court affirmed the judgment of the Appellate Division as modified and the matter was remanded to the trial court for further proceedings.

An article about the case can be found here: New Jersey Lawyer Online – News

Another article about the case which appeared in the Coast Star, a local weekly newspaper containing news of several northern coastal communites in New Jersey, among them the town of Spring Lake, NJ, the community in which Madeleine Stockdale lived, can be found here: The Coast Star.