In re Nelson

• Decision Date: 28 March 2018
• Docket Number: DOCKET NO. A–4004–15T1
• Citation: 184 A.3d 526,454 N.J.Super. 151
• Parties: In the MATTER OF the TRUST OF Violet NELSON, Deceased.
• Court: New Jersey Superior Court — Appellate Division

454 N.J.Super. 151

184 A.3d 526

In the MATTER OF the TRUST OF Violet NELSON, Deceased.

DOCKET NO. A–4004–15T1

Superior Court of New Jersey, Appellate Division.

Submitted November 6, 2017

Decided March 28, 2018

Chiesa Shahinian & Giantomasi PC, West Orange, attorneys for appellants/cross-respondents Jacob Nelson and Ayelet Nelson, Ariel Nelson and Alexandra Nelson–Tal (A. Ross Pearlson, Daniel D. Barnes and Brigitte M. Gladis, on the briefs).

Lorraine Teleky–Petrella, Hackensack, attorney for respondent/cross-appellant Jared M. Lina.

Before Judges Sabatino, Ostrer and Whipple.

The opinion of the court was delivered by

OSTRER, J.A.D.

The principal issue in this appeal is whether a trial court may look beyond the apparently plain language of a trust that benefitted the settlor's "grandchildren," to determine whether the settlor intended to benefit only some of her grandchildren. We conclude a court may. As the trial court here confined itself to the words found within the four corners of the trust, we reverse the grant of partial summary judgment to a claimed beneficiary, and remand for trial.

I.

The late Violet Nelson left trust property to her "grandchildren" per capita after the death of her husband, an income beneficiary. The trust stated that "the then principal and all accrued or undistributed net income of the trust shall be distributed in equal shares per capita and not per stirpes to Settlor's grandchildren who survive Settlor ...." On its face, the trust apparently benefited all six children of Violet's three children—sons Jacob (known as "Jack") and Robert, and daughter Jacoba.¹

Jack, the trustee, sought a declaratory judgment that Jacoba's two sons were not included among Violet's "grandchildren." He maintains that Violet did not consider Jacoba's sons to be her "grandchildren," because Jacoba married outside their Orthodox Jewish faith. Jack contends that after Jacoba's marriage in 1970, Violet mourned her as if she were dead and cut off contact with her.

That fact and other extrinsic evidence allegedly illuminate the restrictive meaning of "grandchildren" that Jack propounds. The attorney who drafted the trust stated that he understood that Violet did not count Jacoba's children among her grandchildren, nor even acknowledge their existence. He used the word "grandchildren" to include only Jack's and Robert's children. Although Jack and Violet's husband directed the attorney to draft the trust, the attorney said that he reviewed the trust with Violet, explained that only Jack's and Robert's children would benefit, and she understood.

Jack acknowledges that after years of silence between Violet and Jacoba, the two attempted reconciliation in 1986. But he contends relations were cut off again after Violet learned that Jacoba's children had been baptized. Jack points to an unprobated will Violet signed in 1988. It identified Jacoba as her daughter, but omitted Jacoba's sons among the listed grandchildren, and expressly left nothing to Jacoba or her "surviving issue." A 2001 codicil also referred only to her "four grandchildren."

One of Jacoba's sons, Jared Lina, opposed Jack's declaratory judgment action. Jared and his brother first learned the trust existed when its scrivener sent him a letter, asking him to renounce and waive any claim. Jared refused. He contended the trust was clear on its face. He also marshaled competing extrinsic evidence to show that Violet intended to bestow her property on her grandchildren without exception. He presented evidence of the reconciliation between his mother and Violet in 1986. He included letters in which Violet expressed her love for Jacoba and alluded to the role her husband played in the schism between them. Jared also described gatherings involving his branch of the family and Jack's family, to belie the claim that his mother's side was "dead" to the rest of the family. He noted that his mother visited Violet during her final illness.

Jared filed a counterclaim, alleging that Jack breached his fiduciary duty by wrongfully retaining income from the trust after his father died, rather than promptly terminating the trust and distributing the principal and income to the grandchildren. Jared also sought an accounting and appointment of a successor trustee.

After a period of discovery, Jared and Jack filed cross-motions for summary judgment on the trust's interpretation.² The trial judge determined that Jared and his brother were trust beneficiaries. The court relied solely on the plain meaning of "grandchildren." The judge concluded that In re Estate of Gabrellian, 372 N.J. Super. 432, 443, 859 A.2d 700 (App. Div. 2004), which we discuss below, barred the court from considering extrinsic materials. The judge acknowledged that had he looked beyond the trust's four corners, the evidence would have created a genuine issue of material fact, which would have precluded summary judgment for either side.

The court later denied Jack's subsequent motion to reconsider. Jack contended the court should have applied the New Jersey version of the Uniform Trust Code (NJUTC), L. 2015, c. 276, codified at N.J.S.A. 3B:31–1 to –84, which was enacted while the cross-motions were pending. Jack invoked two sections of the new law that allow a court to construe or reform a trust to conform to a settlor's probable intent. N.J.S.A. 3B:31–31 (Section 31) states, "The court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor's probable intent if it is proved by clear and convincing evidence that there was a mistake of fact or law, whether in expression or inducement." The following section states, "Nothing in this act shall prevent the court from construing the terms of a trust, even if unambiguous, to conform to the settlor's probable intent." N.J.S.A. 3B:31–32 (Section 32).

The court held that the NJUTC did not apply because its effective date occurred after the decisions on the cross-motions and the motion to reconsider. See L. 2015, c. 276, § 4 (stating the act shall take effect on the 180th day after enactment). The court was unconvinced that Sections 31 and 32 of the NJUTC applied pursuant to N.J.S.A. 3B:31–84(a)(3). That section states that, except as otherwise provided, the new law "applies to judicial proceedings concerning trusts commenced before its effective date unless the court finds that application of a particular provision ... would substantially interfere with the effective conduct of the judicial proceedings or prejudice the rights of the parties ...." Ibid.

The court had earlier denied Jared's motion to dismiss Jack's complaint for lack of standing and to appoint a substitute trustee. In the order denying Jack's motion for reconsideration, the court granted Jared's request for an accounting—the court having determined that Jared, as a recognized beneficiary, had standing to request one. The court also awarded Jared fees.

Jack thereafter appealed from the court's order that found Jared and his brother to be beneficiaries. Jared cross-appealed from the order denying his motion to dismiss and to appoint a substitute trustee.

II.

In considering Jack's appeal from the grant of summary judgment, we review the trial court's order de novo, and employ the same standard as the motion judge under Rule 4:46–2(c). Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 329–30, 9 A.3d 882 (2010). We do not quarrel with the trial court's assessment that the evidential materials on file create a genuine issue of fact as to the intended meaning of the term "grandchildren." But the trial judge concluded the fact issue was not material, as he believed he was bound to apply the plain meaning of the term. As to that legal conclusion, we disagree.

The court's primary goal in interpreting a trust agreement is to fulfill the settlor's intent. "[T]he goal always is the ascertainment of the testator's intent and it is not to be thwarted by unduly stressing ‘the literal meaning’ of his words." Fidelity Union Trust Co. v. Robert, 36 N.J. 561, 565, 178 A.2d 185 (1962) (quoting Bank of New York v. Black, 26 N.J. 276, 284, 139 A.2d 393 (1958) ). The court may even read a trust or will "contrary to its primary signification" if necessary "to prevent the intention of the testator from being defeated by a mistaken use of language." Id. at 566, 178 A.2d 185 (citation omitted); see also In re Estate of Branigan, 129 N.J. 324, 331–32, 609 A.2d 431 (1992) (noting that under the doctrine of probable intent the courts have "construed the language of a will in a fashion contrary to its literal, technical, or settled meaning"); Bottomley v. Bottomley, 134 N.J. Eq. 279, 291, 35 A.2d 475 (Ch. 1944) (recognizing judicial power "to effectuate the manifest intent of a testator by inserting omitted words, by altering the collocation of sentences, or even by reading his will directly contrary to its primary signification is well established").

The Court has acknowledged that in ascertaining intent, its focus really is probable intent. "[W]hen we say we are determining the testator's intent, we mean his probable intent." Fidelity Union, 36 N.J. at 564, 178 A.2d 185 ; see also In re Estate of Payne, 186 N.J. 324, 335, 895 A.2d 428 (2006). The Court speaks of "probable intent" because "it is impossible to determine with absolute certainty [the testator's] actual subjective intent." Morristown Trust Co. v. McCann, 19 N.J. 568, 572, 118 A.2d 16 (1955).

The Court "continue[s] to adhere to the view of the doctrine of probable intent expressed in Fidelity Union." Payne, 186 N.J. at 335, 895 A.2d 428. The doctrine does not permit a court to "conjure up an interpretation or derive a missing testamentary provision out of whole cloth." Engle v. Siegel, 74 N.J. 287, 291, 377 A.2d 892 (1977) (quoting In re Estate of Burke, 48 N.J. 50, 64, 222 A.2d 273 (1966) ). However, a court "may, on the basis of the entire will, competent extrinsic evidence and common human impulses strive reasonably to ascertain and carry out...