Trial Court Lacked Discretion to Dictate the Order of Attorney Fees Payment From a Fund in Court
Mooney v. Convery, Nos. A-1576-22, A-1577-22 (N.J. Super. App. Div. Nov. 13, 2024)
This case came before the Appellate Division after the trial court awarded attorney fees but directed payment only after the defendant fully satisfied the judgment, rather than from a fund in court under Rule 4:42-9(a)(2).
John J. Mooney passed away on June 16, 2020, survived by his wife, Claire, and their five children. His will named two daughters, Elizabeth Convery and Mary Stachowiak, as co-executors and co-trustees of a testamentary trust for Claire’s benefit.
Mary accused Elizabeth of improperly withdrawing funds belonging to Claire and the estate and filed separate probate and chancery actions. The same judge presided over both cases. The court appointed guardian ad litem for Claire and another family member, revoked fiduciary powers held by Elizabeth and Mary, and appointed a temporary administrator and trustee.
At trial, an accounting expert testified that Elizabeth improperly used $684,578.02 of her parents’ funds.
The court found undue influence, entered judgment against Elizabeth, and ordered her to repay the misappropriated amount. The court declined to reinstate Mary as executor or trustee.
Mary sought reimbursement for $227,484.25 in legal fees, $15,384.27 in litigation costs, and $46,479.50 for expert accounting services. She sought an additional $4,441.87 for photocopying and mailing expenses incurred in November 2020, when the Bergen County Surrogate’s Office required her to serve complaints, orders to show cause, and responsive pleadings – totaling 6,353 pages each – on 50 interested parties. Due to staff shortages related to the extended Thanksgiving holiday, Mary engaged an outside company to handle the extensive photocopying and mailing, at her expense.
Rule 4:42-9(a)(2) permits the court, in its discretion, to award attorney fees in probate actions from a fund in court, rather than requiring each party to pay their own fees. When an executor or trustee commits undue influence, the prevailing party may be awarded reasonable fees and costs against that executor or trustee. In re Niles Trust, 176 N.J. 282, 296-300 (2003).
The trial court acknowledged that Mary’s litigation created a fund in court because her action benefitted Claire and other beneficiaries of the estate, not just herself. At the same time, however, the court declined to award fees from such fund, citing concerns about depleting resources needed for Claire’s future care. Instead, the court ruled that Mary’s fees must be paid by Elizabeth, and paid only after Elizabeth satisfied the judgments to Claire and the estate.
Mary appealed, arguing the court erred in its interpretation of Rule 4:42-9(a)(2) by declining to direct her fees be paid from the fund in court and in deciding she could not be awarded payment until after Elizabeth satisfied the judgments for the estate and Claire.
The Appellate Division found the trial court abused its discretion. It noted insufficient evidence to support the court’s concern about depleting resources for Claire’s future care, including a lack of information on annual costs or the trust’s current assets. The appellate court held that once a fund in court was established, the trial court lacked discretion to dictate the order of payments when Mary had prevailed in the litigation. It reversed the ruling and remanded for further proceedings on the factual gaps.
Additionally, the Appellate Division upheld the trial court’s reduction of attorney fees due to duplicative and excessive billing. However, it remanded for a review of a five-hour deposition omitted from the fee accounting. It also reversed the trial court’s denial of reimbursement for Mary’s pretrial mailing costs, noting the extraordinary volume and timing challenges (since the Thanksgiving holiday created the necessity for the costs).