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Beneficiary Cannot Challenge Property Sale After Settlement of Estate

WEINER LAWInsightsFiduciary LitigationBeneficiary Cannot Challenge Property Sale After Settlement of Estate

Fiduciary Litigation Trusts & Estates Wednesday, April 5, 2023

The beneficiary of a trust who had participated in a settlement that allowed the sale of his mother’s house was blocked from later claiming that he still had an interest in the property.  His attempt was blocked by application of judicial estoppel, which prevents a party from taking inconsistent positions in the course of litigation.Settlement Agreement Enforceable in Estate Litigation Settlement

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In Short v. Bircsak, an unpublished opinion from the Appellate Division, the plaintiff, Oliver Short, was a beneificiary of a trust established by his deceased mother, Marie Semple, known as the Semple Qualified Personal Residence Trust. This trust was established by Semple during her lifetime, with herself as the settlor and her daughter (who is also the Plaintiff’s half-sister) as the trustee.

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Semple transferred into the trust, which had a duration of ten years.  It required the Trustee to hold the assets and then, upon her death, to distribute the assets among the four children, including Short and the trustee. Semple survived the initial term, but then died.  Short and another brother sued the trustee, claiming misconduct, and seeking a partition to sell the property and divide the proceeds..

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The settlement was the subject of a consent order that permitted the trustee to sell the property.  The trustee executed the deed and sold the property to defendants.  After the sale, the court issued judgments that allowed the Trustee to use the sale proceedings to cover the legal fees of the estate, along with other forms of distribution.  Short sought unsuccessfully to challenge the court’s judgments and filed unsuccessful applicationsd requesting an accounting, appointment of a successor trustee, and disputing legal fees, the plaintiff.

Beneficiary Sues to Determine Interest in Property

Short then filed a new action and an emergent application for temporary restraints concerning the judgments.  A trial judge refused to hear the applications and dismissed the new complaint, holding Short could dispute the judgments in a new lawsuit, but was required to appeal them instead.  Short then filed a new action alleging that he possessed a one-fourth stake in the property. The Plaintiff reasoned that the previous legal action taken against the estate did not resolve the division of the property and that he had a statutory right under N.J.S.A. 2A:35-1 to seek a determination of his interest in the property

Short claimed that the trust that held the property had already ended, rendering the trustee unauthorized to transfer the property. The defendants, who had acquired the property, responded by filing a motion to dismiss the plaintiff’s claim, claiming that Short was barred by the principle of judicial estoppel from challenging their ownership..

Judicial Estoppel Bars Trust Beneficiary Lawsuit

Plaintiff argued that his prior claims had never been adjudicated and that therefore the defense of of judicial estoppel failed.  One of the elements of judicial estoppel is that a party had successfully taken a position in litigation that contradicts the position the party is presently asserted.  The court agreed that settlements generally do not imply that one side has prevailed in a position.

The court, however, holding that a consent order such as the one previously entered reflects the parties’ agreement to a settlement, which is then embodied in a court order.  Allowing Short to reopen the matter was both unfair and would jeopardize an arms-length sale of the property  During the appeal process, the Plaintiff claimed that his assertions were never resolved and, as such, could not be subject to judicial estoppel.


Jay R. McDaniel