In an estate dispute between the biological son and second wife of the deceased party, an appellate court in New Jersey affirms the award of approximately $250,000 in late charges and attorneys’ fees for failure to make the distributions required by a settlement agreement. The court rejects the argument that a four-year delay in seeking recourse and economic issues resulting from Superstorm Sandy are an excuse for failing to make payments.
Will Contest Between Son and Step-Mother Settles with Installment Payments
The decedent in this case, Thomas Clarkin, died in 2009. He owned a gas station and repair shop and the land on which it was located. He was remarried in 2006. In 2007, Clarkin’s new wife, Geraldine, acting under a power of attorney, transferred the businesses to a living trust in Clarkin’s own name. When Clarkin died, the assets in the trust passed to Geraldine.
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A will contest followed with Clarkin’s son, Joseph, seeking to probate a 2006 will and invalidate the trust. That dispute settled in 2012. The will was admitted to probate, but amended to include a provision that provide for the sale of the businesses and, pending the sale, payment of monthly distributions of $2.000 to Geraldine. Other than the monthly payment, the son was entitled to keep all of the profits of the business.
The provision for late charges provided that:
In the event that the monthly payment of $2,000[] due [to respondent] is not paid within ten [] days of its due date, [respondent] shall be entitled to receive in addition to the $2,000[] due for that month, a late payment penalty of $50[] per day retroactive to the [first] day of the month for which the payment was due and which late payment penalty shall continue to accrue until the monthly payment and all daily late penalties for that month have been paid. In the event that payment of any monthly payment of $2,000[] is late by more than forty-five [] days, [respondent] may, notwithstanding the provisions of [p]aragraph 18 below, bring an action at law against [appellant], Star Service Center, Inc. or both for recovery of any outstanding payments and late payment penalties and [appellant] expressly agrees that he shall be liable for all costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by [respondent] in connection with any such action.
Failure to Make Required Distributions from Business
Joseph missed payments in January and February 2014 and beginning the following month reduced the payments to 1,000. He blamed the effect of Sandy on the business and his inability to find a buyer for the businesses. The parties attempted to arbitrate the dispute, which according to the appellate division opinion, failed to resolve the dispute. In June 2018 Geraldine sued Joseph.
Joseph sought to defend the case by arguing laches, an unreasonable delay by Geraldine in pursuing her rights. The trial judge awarded $90,000 in damages for missed payments and late penalties of $135,100.
The Appellate Division of Superior Court affirms the lower court award, nothing that the doctrine of laches will bar a claim if the plaintiff has “inexplicably, inexcusably and unreasonably” delayed bringing a claim to the prejudice of a party. The core issue is whether a party was harmed by the delay. The defense is available as a matter of equity, or inherent justice, in the court’s discretion.
The appellate court affirmed the trial court’s decision that Joseph had satisfied the standards for a laches defense, It also noted that the settlement agreement provided for a suit for missed payments in the Law Division for money damages and was subject to the standard six-year statute of limitations for breach of contract. Laches is available as a defense for money damages only in “the rarest of circumstances and only where there are overwhelming equitable concerns” that justify shortening the statute of limitations.