In In re Stockdale, the New Jersey Supreme Court addressed the availability of punitive damages in estate disputes involving undue influence claims. 196 N.J. 275 (2008).
The Stockdale case concerned the propriety of a punitive damage award entered against two individuals who pressured an elderly woman to sell her residence on inequitable terms and convinced her to create a new will naming one of them as the sole beneficiary of her estate. These individuals offered the new will for probate following her death, but a beneficiary under the woman’s prior will argued it was invalid because they had procured it through undue influence. Agreeing with the beneficiary, the trial court judge refused to probate the new will and ordered the individuals to pay the attorneys’ fees incurred by the beneficiary as a form of punitive damages.
On appeal, the Supreme Court noted that punitive damages are typically inappropriate when an estate dispute involves family members and a claim that one member employed undue influence to gain a greater share of an estate’s assets. Under those circumstances, the Court indicated that the correct remedy generally involves reducing the inheritance or statutory commissions the family member otherwise would have received from the estate by any amount obtained through undue influence. In contrast, the Court noted that a punitive damage award remains a viable possibility when those accused of undue influence do not possess any lawful inheritance or commission rights to reduce, such as third parties who are essentially strangers to the decedent. In those situations, the estate may sue to recover both compensatory and punitive damages.
The Court ultimately concluded that the individuals who had unduly influenced the elderly woman could be held liable for punitive damages because they were unrelated to her and did not possess any lawful inheritance or commission rights to abate. Nevertheless, the Court rejected the method the trial court judge used to calculate the award and instructed the judge to reconsider the matter in light of the evidence and general standards for awarding punitive damages. Both the trial court and Appellate Division recently concluded that the beneficiary had failed to establish the requirements for a punitive damage award. See In re Stockdale, No. 4037-10 (App. Div. Jan. 29, 2013, unpublished opinion).
In sum, the Court’s decision has the practical effect of eliminating punitive damage awards in most estate disputes where a decedent’s family member is accused of undue influence, while at the same time confirming that wrongdoers outside the decedent’s family face the specter of punitive damages when they obtain an estate’s property through undue influence.