Beim v. Hulfish

• Decision Date: 28 January 2014
• Citation: 83 A.3d 31,216 N.J. 484
• Parties: Robert B. BEIM and Franklyn Z. Aronson, as Co–Executors of the Estate of John G. Kellogg and Barbara Kellogg, Franklyn Z. Aronson as Trustee of the Anne D. Kellogg Marital Trust and Judith Medina and Prudence Krause, Plaintiffs–Respondents, v. Trevor R. HULFISH and Teresa Cupples, Defendants–Appellants, and Russell Marks, Jr., and Patricia H. Marks, Defendants, and Chubb Insurance Company of New Jersey, Defendant/Intervenor–Appellant.
• Court: New Jersey Supreme Court

216 N.J. 484

83 A.3d 31

Robert B. BEIM and Franklyn Z. Aronson, as Co–Executors of the Estate of John G. Kellogg and Barbara Kellogg, Franklyn Z. Aronson as Trustee of the Anne D. Kellogg Marital Trust and Judith Medina and Prudence Krause, Plaintiffs–Respondents,

v. Trevor R. HULFISH and Teresa Cupples, Defendants–Appellants,andRussell Marks, Jr., and Patricia H. Marks, Defendants,andChubb Insurance Company of New Jersey, Defendant/Intervenor–Appellant.

Supreme Court of New Jersey.

Argued Sept. 24, 2013.

Decided Jan. 28, 2014.

Richard J. Mirra, New Brunswick, argued the cause for appellants Trevor R. Hulfish and Teresa Cupples (Hoagland, Longo, Moran, Dunst & Doukas, attorneys).

John M. Bashwiner, Cedar Grove, argued the cause for appellant Chubb Insurance Company of New Jersey (Bashwiner and Deer, attorneys; Mr. Bashwiner and Joseph A. Deer, on the briefs).

Jerrold Kamensky, Trenton, argued the cause for respondents (Kamensky Cohen & Riechelson, attorneys; Mr. Kamensky and Kristin J. Teufel, Cherry Hill, on the brief).

Justice PATTERSON delivered the opinion of the Court.

Under the Wrongful Death Act (the Act), N.J.S.A. 2A:31–1 to –6, the heirs of a person who has died by virtue of “a wrongful act, neglect or default” may assert a claim for their “pecuniary injuries.” N.J.S.A. 2A:31–1, –5. The Court considers, for the first time, whether the Act authorizes claims for damages in the form of estate taxes paid by the decedent's estate.

John Kellogg, ninety-seven years of age, died in 2008 following a motor vehicle accident allegedly caused by the negligence of two of the defendants. His death occurred on the eve of significant changes in federal tax law. Plaintiffs—Kellogg's daughters, the executors of his estate and the trustee of a marital trust—allege that had Kellogg survived until 2009, his estate would have paid substantially less in taxes than it did under the tax laws governing in 2008. They further assert that if Kellogg died in any of the three years that followed, his estate would have paid no federal tax at all. Plaintiffs contend that defendants should be held liable for the estate tax paid by Kellogg's estate under the federal tax laws that governed in 2008.

The trial court rejected this claim and granted defendants' motion to dismiss and motion for summary judgment. An Appellate Division panel reversed the trial court's determination and reinstated plaintiffs' claim, holding that the estate taxes constitute pecuniary injuries under the Act.

We reverse. We hold that the Act does not authorize plaintiffs' estate tax damages claim. The Legislature defined the statutory cause of action as one that “would, if death had not ensued, have entitled the person injured to maintain an action for damages resulting from the injury.” N.J.S.A. 2A:31–1. Although several categories of economic and non-economic losses sustained by a decedent's heirs may constitute “pecuniary injuries resulting from [the decedent's] death” under N.J.S.A. 2A:31–5, plaintiffs' proposed estate tax claim would expand the Act beyond its intended parameters. Damages premised upon the distinctions between the estate tax laws that governed in succeeding years are unrelated to any contributions that decedent would have made to his heirs had he remained alive. Such damages do not advance the Legislature's objective to leave a decedent's heirs “in no worse position economically than if [their] relative had lived.” Aronberg v. Tolbert, 207 N.J. 587, 603, 25 A.3d 1121 (2011). Accordingly, the trial court properly dismissed plaintiffs' claims.

I.

Kellogg and his first wife, Anne D. Kellogg, were the parents of two daughters, plaintiffs Judith Medina and Prudence Krause. At the time of Anne D. Kellogg's death, the Anne D. Kellogg Marital Trust (Marital Trust) was formed. Under the terms of the trust documents, the Marital Trust would provide income to Kellogg during his lifetime. Following his death, the Marital Trust would be divided into two sub-trusts, one for each daughter. Each sub-trust would provide lifetime income for the daughter, and upon the death of the daughter the principal of her sub-trust would be paid to her children. Plaintiff Franklyn Z. Aronson is trustee of the Marital Trust, and he and plaintiff Robert B. Beim are co-executors of Kellogg's estate.

On January 25, 2008, Kellogg and his second wife, Barbara Kellogg, were passengers in a vehicle owned by Patricia Marks and driven by Russell Marks. The Marks' vehicle collided with a car owned by defendant Teresa Cupples and driven by defendant Trevor Hulfish. Kellogg sustained serious injuries. He was hospitalized for a week, and then discharged to a rehabilitation center. On February 6, 2008, Kellogg was readmitted to the hospital, where he died the following day.

On September 23, 2008, plaintiffs Beim and Aronson, as co-executors of Kellogg's estate, filed a federal “Estate (and Generation–Skipping Transfer) Tax Return” on the estate's behalf. Under the tax laws applicable to the estates of decedents who died in 2008, the Kellogg estate paid $1,196,083.57 in federal estate taxes.

Plaintiffs filed this action in the Law Division in November 2009.¹ In an amended complaint, plaintiffs asserted claims for negligence, survivorship and per quod damages against defendants. In one count of the amended complaint, the Kellogg estate's executors asserted a wrongful death claim, seeking damages under the Act. In another, the Marital Trust's trustee sought damages based upon “economic losses in the nature of Federal and State Estate Taxes and other related tax consequences that would not have been suffered but for [Kellogg's] death.” ² In other claims, Kellogg's daughters alleged economic losses resulting from the diminution in the value of the Marital Trust, allegedly due to defendants' negligence. Chubb Insurance Company of New Jersey (Chubb), which had provided underinsured motorist coverage to Kellogg, moved to intervene in the action, and the trial court granted its motion.

Defendants Hulfish and Cupples, joined by the other defendants, moved under Rule 4:6–2 to dismiss the claims asserting economic losses allegedly suffered by the Marital Trust, or, in the alternative, for summary judgment pursuant to Rule 4:46–2. Plaintiffs stipulated that the Marital Trust's estate tax-based claims should be dismissed. They contended, however, that estate taxes were an element of damages available to Kellogg's heirs under their wrongful death claim. At trial, plaintiffs took the position that had Kellogg not sustained injuries in the 2008 accident, he would have lived until 2009 or 2010, but that he would not have lived until 2011. They argued that they should be permitted to present expert evidence that the estate would have paid significantly less in taxes had Kellogg survived until 2009 than it did following his death in 2008.

On December 8, 2010, the trial court granted defendants' motion to dismiss. The court held that estate taxes did not constitute recoverable damages under the Act. It reasoned that the potential federal tax liability of the Kellogg estate, had Kellogg lived for an additional period after the accident, was too speculative to calculate, since tax rates for the estates of decedents who died in 2011 and beyond were yet to be determined by Congress.³

Shortly after the trial court's decision, and in the wake of Congress's extension of the estate tax exemption for estates up to $5,000,000 in value through the end of 2012, plaintiffs moved for reconsideration. They argued that with the estate tax laws governing 2011 and 2012 estates now settled, a jury could accurately calculate estate tax losses, assuming that Kellogg would have died in one of those years. The trial court was unpersuaded that its concern about speculation had been resolved by Congress's passage of tax laws governing estates of decedents who died in 2011 or 2012. It reasoned that the 2011 and 2012 tax laws had yet to be determined when Kellogg died, and that estate taxes are, in any event, not recoverable under the Act. The court denied reconsideration of its order dismissing the three counts in which the Marital Trust asserted claims. Because no loss other than the payment of estate taxes had been alleged, the court granted summary judgment dismissing plaintiffs' remaining claims.

Plaintiffs appealed, and the Appellate Division reversed. Beim v. Hulfish, 427 N.J.Super. 560, 564, 50 A.3d 42 (App.Div.2012). Noting that the estate tax damages question was a novel issue under New Jersey law, and distinguishing decisions by courts in other jurisdictions rejecting similar claims, the panel concluded that the estate tax losses alleged by plaintiffs would not compel the factfinder to engage in speculation. Id. at 563, 568–75, 50 A.3d 42. It held that by the time the trial court ruled on the motion for reconsideration, the estate tax laws for 2011 and 2012 had been established, and a jury guided by expert testimony would have been in a position to calculate damages. Id. at 573–74, 50 A.3d 42. The panel accordingly reinstated plaintiffs' claims for estate tax losses as the measure of damages asserted as an element of their wrongful death claim. Id. at 563–64, 50 A.3d 42. It did not reach defendants' challenge to plaintiffs' standing to assert their claims. Id. at 576 n. 11, 50 A.3d 42.

We granted certification. 212 N.J. 462, 56 A.3d 689 (2012).

II.

Defendants Hulfish and Cupples argue that estate taxes cannot be recovered in a wrongful death action. They note that the Act permits an action only when the person injured would have been entitled to maintain an action for damages resulting from the injury “if death had not ensued.” N.J.S.A. 2A:31–1. Defendants assert that this language constrains the Court from awarding estate tax damages, which would not be available to the survivor of an accident such as Kellogg's.

Defendants contest plaintiffs' construction of the term “pecuniary injuries” in N.J.S.A. 2A:31...