SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-3915-94T3
A-4130-94T3
IN THE MATTER OF THE SETTLEMENT
OF THE ACCOUNTS OF JOSEPH UNANUE
AND FRANK UNANUE, Trustees under
the Trust Agreement dated
November 16, 1970, as Amended,
by and among PRUDENCIO UNANUE,
as Grantor, and PRUDENCIO UNANUE,
JOSEPH UNANUE and ANTHONY UNANUE,
as Trustees of Sixteen Trusts
Thereunder.
_________________________________________________________________
Argued May 5, 1998 - Decided May 19, 1998
Before Judges Pressler, Wallace and Carchman.
On appeal from the Superior Court of New Jersey,
Chancery Division, Bergen County, whose opinion
is reported in part at
255 N.J. Super. 362 (Law
Division 1991).See footnote 1
Jan Alan Brody argued the cause for appellant
Charles Unanue in A-3915-94T3 (Carella, Byrne,
Bain, Gilfillan, Cecchi, Stewart & Olstein,
attorneys; Mr. Brody and James E. Cecchi, on
the brief).
Edward B. Deutsch argued the cause for appellant
Charles Unanue in A-4130-94T3 (McElroy, Deutsch &
Mulvaney, attorneys; Mr. Deutsch, of counsel;
Laura A. Sanom, on the brief).
Michael R. Griffinger and N. Patrick Quirk argued
the cause for respondents (Crummy, Del Deo, Dolan,
Griffinger & Vecchione, attorneys for respondents
Beneficiaries; Quirk & Gallagher, attorneys for
respondents Trustees Joseph A. Unanue and Frank
Unanue; Saiber, Schlesinger, Satz & Goldstein,
attorneys for respondent Goya Foods, Inc.;
Mr. Griffinger, Mr. Quirk and David M. Satz, Jr.,
on the joint brief).
PER CURIAM
By these appeals, which we consolidate for purposes of this
opinion, defendant Charles Unanue challenges orders of the Chancery
Division, Probate Part, approving the final accounting of the
trustees of a trust established by Prudencio Unanue on November 16,
1970; rejecting defendant's claim to any interest in the assets of
the trust or the assets of the estate of Prudencio Unanue, who died
in 1976; validating an agreement made in 1972 between defendant and
Goya Foods, Inc. and its affiliates and a 1974 amendment of that
agreement by which defendant waived his interest in those assets;
determining that defendant's breach of the 1974 agreement entitled
plaintiffs to compensatory damages including attorney fees; and
assessing damages against defendant in the amount of $6,890,820.07
together with a portion of the fee of the special master appointed
to address the damages issue.
We affirm all the orders appealed from substantially for the
reasons stated by Judge Kole and Judge Lesemann for reaching their
respective determinations. We add only the following observations.
Because of the detailed factual recitations and findings
contained in Judge Kole's exhaustive reported opinion, we need make
only brief reference to the salient facts. The decedent and trust
settlor, Prudencio Unanue, born in Spain, moved to Puerto Rico in
1904 to engage in various business ventures. He married his wife
Carolina in Puerto Rico in 1921. Following his marriage, he came
to the United States, where he had earlier studied, to earn his
livelihood. Carolina and their first-born son, defendant Charles,
joined him in Brooklyn, New York, shortly thereafter. Two more
sons were born to the Unanues while they lived in Brooklyn, Joseph
and Anthony. In 1929 the family moved to Ridgefield Park in New
Jersey where the fourth son, Frank, was born. Five years later,
the family moved to Bogota, New Jersey, and some years thereafter
bought the house Prudencio had originally rented. The family lived
in that house until 1962 when Prudencio and Carolina bought a new
house in Tenafly, New Jersey. By that time all the sons, who had
grown up and attended school in Bergen County and had completed
their military service, had married and established their own
homes. Prudencio was naturalized as an American citizen in 1946
and Carolina in 1956. It was not until 1949 or 1950 that either
Prudencio or Carolina left New Jersey to visit Puerto Rico, and in
the late 1950's, they had established the practice of spending the
winter months in Puerto Rico.
By 1936, Prudencio, who had engaged in various business
ventures in New York, established a sole proprietorship which
ultimately became Goya Foods, Inc., and its various affiliates.
The company was headquartered in New York City until 1974, when the
business was moved to Secaucus, New Jersey. All the sons were
engaged in the Goya operations, and by 1969, when he was dismissed
from his positions following family business disputes, defendant
was the chief operating and chief executive officer of all the
companies.
In 1970 Prudencio completed his final estate plan by executing
both an inter vivos trust and a will. He conveyed to the trust,
whose beneficiaries were all his grandchildren, including the
children of defendant, his principal asset, namely, his shares in
Goya. His residuary estate "poured over" into the trust. In the
meantime, the family disputes between defendant and his brothers
and father, which had already been the subject of protracted
litigation, were finally settled by the execution of a settlement
agreement in 1972 and an amended agreement in 1974 between
defendant and the Goya companies for the stated benefit not only of
the businesses but also for the benefit of defendant's parents and
brothers and their respective heirs and assigns. By these
agreements, Charles, for a substantial consideration, sold his
interest in the Goya companies back to the companies, agreed to the
dismissal of all litigation, waived all his rights to the companies
and his father's estate, and, by the 1974 amendment, covenanted
... for the benefit of the Companies, the
Additional Companies, Charles' Brothers,
Prudencio Unanue and their estates, heirs,
beneficiaries, successors, legal
representatives and assigns, that he
irrevocably disclaims and renounces any and
all interests he may have or may hereafter
have in the assets or estate of Prudencio
Unanue, whether under any will, trust, by
intestacy, by virtue of relationship, by other
operation of law, or otherwise, and that
Charles will not at any time or in any way
contest, challenge, interfere with, hinder, or
seek to invalidate, set aside or impair, in
whole or in part, in any court, tribunal,
agency or any other governmental organ or
forum (of any jurisdiction) or otherwise, any
will, gift, trust, other testamentary or inter
vivos disposition by operation of law or any
other disposition of property of any kind of
or by Prudencio Unanue, or institute, bering,
prosecute or make any claim, suit, proceeding
(including, without limitation, any proceeding
to construe any testamentary or inter vivos
instrument), cause of action or objection
(including, without limitation, objection to
the jurisdiction of any court) relating to any
such will, gift, trust or other disposition or
devolution. Charles understands and
acknowledges that he is not a beneficiary or
recipient of any property or interest under
any present instrument relating to the
disposition of the assets or estate of
Prudencio Unanue and agrees to execute all
documents and take any and all actions in any
jurisdiction necessary or required effectively
to waive or renounce any rights or claim he
may have or may hereafter have with respect to
any of the matters referred to in this Section
6.03 under any of the foregoing.
The 1974 agreement further provided that in the event of a suit or
proceeding by a party to the agreement or by Prudencio, the losing
party was obligated to pay as liquidated damages twice the costs
and expenses of the litigation, including reasonable attorneys'
fees.
Prudencio died in Puerto Rico in 1976. His will was probated
in Bergen County. The trust continued, as theretofore, to be
administered in Bergen County. Interim accountings were rendered
in Bergen County. All went smoothly until 1987, when defendant
claimed entitlement to an inheritance from his father and an
interest in the Goya shares that had been placed in trust. This
litigation ensued by the trustees who sought a declaration that
defendant had no interest either in the trust or the estate.
The linchpin of defendant's claim is that Prudencio was a
domiciliary of Puerto Rico both in 1970, when he executed the trust
document, and in 1976, when he died. Defendant asserts that under
Puerto Rican law, which therefore governed Prudencio's estate, he
could not have been disinherited and hence that his waivers
contained in the 1972 and 1974 agreements were void. He also
argues that Puerto Rican law of conjugal partnership applied to the
disposition of Prudencio's shares of Goya and hence that at least
half of those shares remained vested in Carolina, through whose
estate he, defendant, would take.
The domiciliary issue was tried over the course of 170 trial
days by Judge Kole, whose detailed findings and conclusions are set
forth in his opinion reported as Matter of Unanue,
255 N.J. Super. 362 (Law. Div. 1991). The voluminous record amply supports his
findings on which he based his conclusion that Prudencio's domicile
prior to 1970, in 1970, and in 1976 remained in New Jersey. There
is no basis at all in this record for us to interfere with either
his findings or conclusions. See, e.g., Rova Farms Resort v.
Investors Ins. Co.,
65 N.J. 474, 483-484 (1974). We therefore
affirm Judge Kole's decision.
The inevitable consequence of the domiciliary decision, as
Judge Lesemann concluded in granting plaintiffs' summary judgment
motion, is that New Jersey law applies to all questions arising out
of the administration of Prudencio's trust and estate. It is well-settled that New Jersey law does not prohibit the disinheriting of
an adult child. See, e.g., In re Estate of Campbell, 71 N.J.
Super. 307, 310 (Cty. Ct. 1961).See footnote 2 There is, therefore, no legal
basis upon which defendant can successfully argue that he is
entitled to a share of Prudencio's estate or that the 1972 and 1974
agreements are invalid because his waiver of his inheritance rights
was contrary to Puerto Rican law.
Defendant, however, also challenges the trust on the ground
that under Puerto Rican law of conjugal partnership, Carolina had
an interest in the shares of Goya that Prudencio owned and hence
that Prudencio could not unilaterally dispose of them by
transferring them to the trust. We agree with Judge Lesemann's
disposition of this issue as well. Judge Kole's findings mandate
the conclusion that at the time of Prudencio's acquisition of his
shares of Goya Foods, Inc., as well as his ownership of its
predecessor entities, he was domiciled in New Jersey, which
recognizes neither community property nor conjugal partnerships.
Defendant nevertheless argues that the law of the place of the
marriage continues to control rights to spousal property ever
afterwards and hence that any personal property acquired by
Prudencio at any time and irrespective of domicile of the acquiring
spouse was subject to Puerto Rican law of conjugal partnership. We
disagree. As a matter of well-settled conflicts-of-law principles,
it is clear that the law of the place of the domicile of the
acquiring spouse at the time of the acquisition governs the
determination of whether the acquired property is separate or
community. See, e.g., United States v. ITT Consumer Financial
Corp.,
816 F.2d 487, 490-491 n.7 (9th Cir. 1987).
Defendant also challenges the enforceability in this action of
section 8.01 of the 1974 agreement which provided for payment by
the losing party of double the litigation expenses in the event of
"any suit, action or proceeding instituted by any signatory to this
Agreement or the Collateral Covenants at the foot hereof or by
Prudencio Unanue involving any other such signatory or Prudencio
Unanue concerning any matter...." Judge Lesemann considered each
ground of objection raised by defendant, and we concur with his
disposition for the reasons stated by him in his oral opinion of
March 28, 1994. In sum, Judge Lesemann concluded first that the
contractual provision for payment of attorneys' fees was valid both
under the law of New Jersey, the forum, and under the law of New
York, which was specified for choice-of-law purposes in the
agreement. That decision is unexceptionable. See, e.g.,
Instructional Systems v. CCC.,
130 N.J. 324, 341 (1992)
("[o]rdinarily, when parties to a contract have agreed to be
governed by the laws of a particular state, New Jersey courts will
uphold the contractual choice if it does not violate New Jersey's
public policy"); Satellite Gateway Com. v. Musi Dining Car Co.,
110 N.J. 280, 285-286 (1988) (holding that despite the constraints of
the so-called American rule, an allowance of counsel fees may be
made even if not authorized by rule or statute where the parties
themselves have so agreed in advance by contract).
Next, while Judge Lesemann agreed with defendant that the
double payment constituted an unenforceable penalty, he was
satisfied that that proviso was severable from the provision that
damages would include reasonable attorneys fees. We agree both
with his penalty decision and with his severability decision. It
is plain that the protection against the incurring of litigation
expenses by the successful litigant was at the heart of section
8.01, and it is also plain that the provision of that protection by
agreement is perfectly lawful and enforceable. We also agree, for
the reasons stated by Judge Lesemann, that the benefit of the
attorney fees provision was intended to include all third-party
beneficiaries of the agreement in addition to its signatories and
Prudencio himself. And those third-party beneficiaries were, as
repeatedly stipulated throughout the agreement, the signatories'
and Prudencio's heirs and assigns.
Finally, defendant challenges Judge Lesemann's reference to a
special master for the determination of the amount of counsel fees
incurred by plaintiff. We are satisfied that the reference was in
full accord with R. 4:41-1. It was approved by the Assignment
Judge, initially consented to by all parties although defendant
later attempted to withdraw his consent, and the circumstances were
extraordinary in that the years of litigation instigated by
defendant in a plethora of courts and jurisdictions resulted in
massive documentation and explanation of the substantial fees
incurred by plaintiffs. The sheer volume of the material rendered
the issue particularly suitable to review and recommendation by a
master. In any event, the master's report was duly submitted, and
we affirm its acceptance by Judge Lesemann for the reasons stated
by him on February 23, 1995.
All of the issues to which we have referred herein were raised
by defendant in his appeal under Docket Number A-3915-94T3. We
find without merit the remainder of his challenges raised in that
appeal. R. 2:11-3(e)(1)(A) and (E).
We address now the single issue raised by defendant, through
other counsel, in his appeal under Docket Number A-4130-94T3,
namely, that the trial court erred in entering judgment against
defendant individually and thereby deprived him of his right to
procedural due process. At the outset, we doubt the procedural
viability of this separate appeal. There is no reason why the
issue could not and should not have been raised in the main appeal
which was filed by defendant individually on his own behalf alone.
A party is required to raise in a single appeal all of his
challenges to the judgment appealed from. The appellate court has
no greater tolerance for piecemeal litigation than do the trial
courts, and the filing of separate appeals by the same party from
the same final judgment is an obvious, untenable, and intolerable
violation of the overriding policy of judicial administration that
litigation be conducted expeditiously, economically, and
efficiently. We have nevertheless considered the substance of the
issue raised by this separate appeal, and we are persuaded that it
is entirely without merit. Defendant's argument is based on the
fact that during the course of the litigation, he was substituted
for by the trustee in bankruptcy in his then pending bankruptcy
action, of which he apparently had filed several. There was no
formal order re-substituting defendant when that action was
dismissed and the assets of the estate in bankruptcy revested in
him. Nevertheless, defendant, as a pro se litigant, actively
engaged in the defense of the action, seeking relief by way of
cross-motions, and otherwise conducting himself as a full-fledged
and knowledgeable litigant. He thereby submitted himself for all
purposes to the jurisdiction of the court, sought its relief, and
fully participated in all proceedings. His present claim that he
was denied procedural due process by the trial court rests not on
any substance but on the technical oversight of the failure of
entry of an order resubstituting defendant for the trustee in
bankruptcy. The fact remains that the conduct of the litigation
proceeded from the mutual assumption of all parties and the court
that that resubstitution was, in actuality, the case, as indeed it
was. We think it plain that under these circumstances, defendant
must be deemed to have waived the necessity of the formal order and
that he must be estopped from seeking to obtain any litigation
advantage from its omission.
The final judgment and all interlocutory orders appealed from
in both appeals are affirmed.
Footnote: 1Although this action was initiated in the Law Division, Probate Part in 1987, thereafter the Probate Part was assigned to the Chancery Division. See R. 4:3-1(a)(2) effective September 4, 1990. In keeping with the original filing of the complaint, the Probate Part's published opinion was captioned in the Law Division, Probate Part, but thereafter the matter was recaptioned in the Chancery Division, Probate Part. Footnote: 2We note that N.J.S.A. 3B:5-16 made no substantive change in former N.J.S.A. 3A:3-10 and -11, on which the Campbell court relied and which was the statute in effect at the time of Prudencio's death.