In the Matter of the Estate of Byung-Tae Oh , 445 N.J. Super. 402 ( 2016 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4562-13T1
APPROVED FOR PUBLICATION
May 13, 2016
IN THE MATTER OF THE ESTATE OF
BYUNG-TAE OH, DECEASED. APPELLATE DIVISION
______________________________________________________
Argued April 26, 2016 – Decided May 13, 2016
Before Judges Fisher, Rothstadt and Currier.
On appeal from the Superior Court of New
Jersey, Chancery Division, Probate Part,
Bergen County, Docket No. P-018-13.
William D. Grand argued the cause for
appellant Hyung Kee Oh (Greenbaum, Rowe,
Smith & Davis LLP, attorneys; Mr. Grand, of
counsel; Mr. Grand and Olivier Salvagno, on
the brief).
Evelyn R. Storch argued the cause for
respondent Won Ki Oh (Harwood Lloyd, LLC,
attorneys; David M. Repetto, of counsel; Ms.
Storch and Minjung Suh, on the brief).
The opinion of the court was delivered by
FISHER, P.J.A.D.
In this appeal, we consider the propriety of a summary
judgment that determined whether a money transfer — made by a
now-deceased Korean citizen to a New Jersey limited liability
company — constituted an investment and, thus, an asset of the
decedent at the time of his death, or a gift to his son, the
general partner of the limited liability company. We also
consider whether the court had jurisdiction to make that
determination, even though this argument was not asserted in the
trial court.
The following facts are undisputed. Byung-Tae Oh, a citizen
and resident of the Republic of Korea, died in Seoul on February
6, 2012. Because he died intestate, it appears that, pursuant to
Korean law, his two sons and one daughter — Won Ki Oh, Hyung Kee
Oh, and Hyunjoo Oh — inherit equal shares of the estate and the
surviving spouse, Hyesung Lee, inherits one-and-one-half times
the share inherited by each child.1 It is also undisputed that,
in 2001, Byung-Tae Oh (hereafter "decedent") wire transferred
$900,000 from his personal bank account at Standard Chartered
Bank, Seoul Nonheyon Branch, into the New Jersey business
account of B&H Consulting and Development Company, LLC, a New
Jersey limited liability company formed by decedent's youngest
son, Hyung Kee Oh, and his son's wife, Sung Hee Park.
In a complaint filed in the Probate Part on January 18,
2013, plaintiff Won Ki Oh (hereafter "plaintiff"), decedent's
eldest son and a resident of the Republic of Korea, alleged that
1
General information about Korean intestacy laws was included in
a certification filed in the trial court by a Korean attorney.
The parties do not appear to dispute how Korean law requires the
division of decedent's estate.
2 A-4562-13T1
decedent owned at the time of his death various interests in
property in New Jersey, including a 40.8% interest in B&H. The
action sought the appointment of an administrator for the
purpose of marshaling decedent's New Jersey assets.2
Decedent's other son, Hyung Kee Oh (hereafter "defendant"),
a New Jersey resident and general partner of B&H, moved to
dismiss this action based on his contention, among others, that
decedent owned no assets in New Jersey at the time of his death.
Contrary to plaintiff's claims, defendant asserted that in 2001
decedent gave him $900,000, which he used "as part of the
start[-]up money for B&H," and that "[a]t no time did [decedent]
treat that payment as entitling him to a legal ownership
interest in B&H." The motion to dismiss was denied without
prejudice.
Thereafter, the parties pressed their positions as to how
the $900,000 transfer by decedent to B&H should be characterized
— defendant arguing it was a gift and plaintiff arguing it was
an investment in B&H and, therefore, part of the estate — by
cross-moving for summary judgment. Chancery Judge Robert P.
Contillo granted plaintiff's and denied defendant's motion.
Defendant appeals, arguing the judge erred in granting summary
2
Plaintiff alleged in his complaint that an estate tax return
filed by decedent's widow valued the gross estate at more than
33,000,000,000 South Korean Won (approximately $31,000,000).
3 A-4562-13T1
judgment because, in his view: (1) the court lacked jurisdiction
over the dispute; (2) the chancery judge mistakenly applied New
Jersey law instead of Korean law; (3) even if New Jersey law
applies, the chancery judge erred "by refusing to apply the
presumption that a transfer from a parent to child is a gift";
(4) the chancery judge should have conducted an evidentiary
hearing to develop and resolve the parties' factual dispute; and
(5) the chancery judge erroneously provided the administrator
with greater authority than necessary in the circumstances.
Despite defendant's failure to present his first argument —
lack of jurisdiction — to the trial court,3 we consider and
reject it on its merits.4
Defendant's jurisdictional argument presents a classic
chicken-and-egg problem. Our probate courts may exert ancillary
jurisdiction over property within the State when possessed by an
intestate nonresident at the time of death. N.J.S.A. 3B:10-7.
In determining whether it has jurisdiction pursuant to this
statute, a court must necessarily determine whether the property
3
Defendant did not signal, as he should have, that this argument
was not asserted in the trial court as required by Rule 2:6-
2(a)(1).
4
A lack of subject matter jurisdiction may be asserted for the
first time on appeal. See Nieder v. Royal Indem. Ins. Co., 62
N.J. 229, 234 (1973); Macysyn v. Hensler, 329 N.J. Super. 476,
481 (App. Div. 2000).
4 A-4562-13T1
within the State was possessed by an intestate nonresident.
There being no dispute that decedent was a nonresident and
intestate, and that B&H is a New Jersey limited liability
company, the only question about the exercise of jurisdiction
over the property is whether it was owned by decedent at the
time of his death. That remaining question, however, constitutes
the primary dispute between the parties. Consequently, to
determine whether the court possessed ancillary jurisdiction
pursuant to N.J.S.A. 3B:10-7, the judge was required to resolve
the merits of the parties' dispute about the nature of the
$900,000 transfer.
As perplexing as this may initially sound, the situation is
not uncommon; our Supreme Court has recognized that a
jurisdictional question may often be intertwined with the
underlying dispute and, in that instance, "the jurisdictional
determination should await a determination of the relevant facts
on either a motion going to the merits or at trial." Blakey v.
Continental Airlines, 164 N.J. 38, 71 (2000) (quoting Augustine
v. United States, 704 F.2d 1074, 1077 (9th Cir. 1983)); see also
Plume v. Howard Sav. Inst., 46 N.J.L. 211, 228 (Sup. Ct. 1884)
(observing, in a similar setting, that an error in a
determination that the decedent was a resident of the state
might warrant reversal of the judgment "but it can have no
5 A-4562-13T1
bearing against the right of the court to adjudicate upon the
facts before it"); In re Russell's Estate, 64 N.J. Eq. 313, 317-
18 (Prerog. Ct. 1902) (recognizing the court's authority to
resolve a dispute about the decedent's residency before
determining whether the court possessed jurisdiction over a
nonresident decedent's New Jersey property). Had defendant
raised this jurisdictional issue when he either opposed or moved
for summary judgment,5 the chancery judge would have been in no
different position than he was when he ruled on the cross-
motions. That is, the judge would have recognized he would have
to first resolve the dispute about the nature of the $900,000
transfer before determining whether the court possessed
ancillary jurisdiction over the property. In correctly
ascertaining the monetary transfer constituted an investment and
not a gift, Chancery Judge Contillo implicitly and correctly
concluded the court possessed jurisdiction over the parties'
dispute.6
5
Defendant's argument that he asserted lack of jurisdiction as
an affirmative defense in his responsive pleading does not mean
that he raised the issue in the trial court. A litigant must do
more and cannot expect that a judge who has been asked to rule
on a dispositive motion will scour the pleadings for other
arguments or defenses a party might have once contemplated but
chose not to assert in the motion.
6
It appears that to some extent defendant argues in this same
context that the Republic of Korea offers a more convenient or
(continued)
6 A-4562-13T1
Our rejection of defendant's conflict-of-law argument — by
which he claims the judge should have applied Korean rather than
New Jersey law — rests on different grounds. First, unlike the
jurisdictional issue, the conflict-of-law issue was not raised
in the trial court and, therefore, we need not consider
defendant's belated argument that the chancery judge should have
applied Korean law. See US Bank Nat'l Ass'n v. Guillaume, 209
N.J. 449, 483 (2012). Second, when posing a conflict-of-law
issue, a party is required to demonstrate a difference between
the competing bodies of law. DeMarco v. Stoddard, 223 N.J. 363,
383 (2015); Cornett v. Johnson & Johnson, 211 N.J. 362, 374
(2012); P.V. ex rel. T.V. v. Camp Jaycee, 197 N.J. 132, 143
(2008). Defendant did not argue to the chancery judge, and has
not argued to us, that Korean law compels a different result
than that reached through a proper application of New Jersey
(continued)
better forum for resolution of the issues presented; plaintiff,
in fact, commenced an action there a few weeks after the matter
at hand was commenced. We find insufficient merit in defendant's
argument in this regard to warrant discussion in a written
opinion. R. 2:11-3(e)(1)(E). We do not mean to be flippant in
suggesting that the best source of information for deciding this
issue would be the decedent, but he is not available regardless
of which forum adjudicates the issue. The point is this action
was filed first, and defendant has not demonstrated how Korea
provides a better forum for a fair and complete resolution of
the issues that might warrant a disregard of the presumption in
favor of the first-filed action. See Sensient Colors, Inc. v.
Allstate Ins. Co., 193 N.J. 373, 386 (2008).
7 A-4562-13T1
law; indeed, he has cited only New Jersey authorities in his
written submissions. Consequently, we find insufficient merit
in this argument to warrant further discussion. R. 2:11-
3(e)(1)(E).
In his third and fourth arguments, defendant contends the
chancery judge, in granting summary judgment in plaintiff's
favor, failed to apply the presumption described in Bhagat v.
Bhagat, 217 N.J. 22, 41-42 (2014), and mistakenly declined to
conduct an evidentiary hearing or otherwise recognize there were
disputed questions of material fact that required a denial of
summary judgment.
The judge's rejection of the presumption and his grant of
summary judgment are not entitled to deference. In reviewing the
summary judgment entered in plaintiff's favor, we apply the same
standard that bound the chancery judge, see, e.g., Townsend v.
Pierre, 221 N.J. 36, 59 (2015), and we are required to reverse
when "the competent evidential materials presented, . . . viewed
in the light most favorable to the non-moving party, are
sufficient to permit a rational factfinder to resolve the
alleged dispute in favor of the non-moving party," Brill v.
Guardian Life Ins. Co. of Am., 142 N.J. 520 (1995). The import
of this standard is that courts "should not hesitate to grant
summary judgment" — and appellate courts should not hesitate to
8 A-4562-13T1
affirm those summary judgments — "when the evidence 'is so one-
sided that one party must prevail as a matter of law.'" Ibid.
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106
S. Ct. 2505, 2512, 91 L. Ed. 2d 202, 214 (1986)).
We turn first to the burden of persuasion when determining
whether a transfer constitutes a gift. As the Supreme Court has
recognized, "[t]he burden of proving an inter vivos gift is on
the party who asserts the claim." Bhagat, supra, 217 N.J. at 41
(citing Sadofski v. Williams, 60 N.J. 385, 395 n.3 (1972)). As
a general matter, "the recipient [of the alleged gift] must show
by 'clear, cogent and persuasive' evidence that the donor
intended to make a gift." Ibid. (quoting Farris v. Farris Eng'g
Corp., 7 N.J. 487, 501 (1951)). The Supreme Court has also
described the degree of proof necessary as "clear and
convincing" where the claim of a gift is first asserted after
the alleged donor's death, as here. Sadofski, supra, 60 N.J. at
395 n.3.
The Court has held, however, that when "the transfer is
from a parent to a child, the initial burden of proof on the
party claiming a gift is slight." Bhagat, supra, 217 N.J. at 41
(citing Metropolitan Life Ins. Co. v. Woolf, 136 N.J. Eq. 588,
592 (Ch. 1945), aff’d, 138 N.J. Eq. 450 (E. & A. 1946)). In
essence, it is said that "a presumption arises that the transfer
9 A-4562-13T1
is a gift," ibid. (citing numerous cases, including, Peppler v.
Roffe, 122 N.J. Eq. 510, 515 (E. & A. 1937)), because "a child
is considered a natural object of the bounty of the donor," id.
at 42 (citing Weisberg v. Koprowski, 17 N.J. 362, 373 (1955)).
We agree with Chancery Judge Contillo that defendant was
not entitled to the presumption that might normally attach to a
transfer from a parent to a child because decedent did not
transfer $900,000 to defendant; he transferred those funds to
B&H.7 Without this presumption, defendant was obligated to show
by clear, cogent and persuasive evidence that decedent intended
that the transfer to B&H was a gift to him. We agree as well
with the judge that defendant's factual presentation fell
woefully short and its inadequacy justified the entry of summary
judgment.
Defendant offered no documentation that would suggest
decedent intended to make a gift; instead he largely alluded to
the absence of documentation, pointing out that plaintiff was
unable to produce either a certificate of decedent's membership
in B&H or a loan agreement between B&H and decedent. That is
all true, but plaintiff did provide documentation that showed
decedent annually confirmed the existence of this investment in
7
It is noteworthy that defendant and his wife maintained a
personal bank account in New Jersey into which any monetary gift
could have been conveyed had that been decedent's intention.
10 A-4562-13T1
B&H by submitting — every year from 2001 until his death —
investment status sheets to the Export-Import Bank of Korea, a
quasi-governmental entity, reflecting that he made a direct
overseas investment of $900,000 in B&H and that he held a 40.8%
interest in B&H. Even if any substance could be found in the
only direct evidence provided by defendant — his self-serving
accounts of discussions with the decedent8 — it was incapable of
sustaining defendant's burden of proving a gift and paled in
comparison to the contrary, written representations made by
decedent to the Export-Import Bank of Korea. We agree with the
chancery judge that, as a matter of law, if the matter went to
trial, defendant would have been unable to sustain his burden of
showing by clear and convincing evidence that decedent intended
the $900,000 he wired to B&H to be a gift to defendant; the
proofs were so one-sided that plaintiff was entitled to summary
judgment.
In his last argument, defendant contends that the judge's
grant of authority to the administrator exceeded what was
8
See Metropolitan Life Ins. Co., supra, 136 N.J. Eq. at 592
(recognizing that "uncorroborated testimony of the donee
claiming a gift must be carefully scrutinized"). We are
cognizant that decedent's widow testified at her deposition that
decedent said the $900,000 transfer was a gift, but we are also
mindful that she filed an estate tax return that represented
decedent owned, at the time of his death, a 40.8% interest in
B&H.
11 A-4562-13T1
necessary under the circumstances. The judge's May 8, 2014
order specifically authorized the administrator:
to perform all acts of estate administra-
tion, including but not limited to: marshal-
ing the assets located in New Jersey;
obtaining from [defendant] an accounting of
the Estate's New Jersey assets and his
management of B&H and its related entities;
obtaining from [defendant and his wife] an
accounting of all gifts they received from
[d]ecedent; obtaining information from
[defendant] concerning the nature and extent
of the Estate's interest in Tazz Mall, LLC,
B&H Design and Construction Co., LLC[,] and
any other entities; filing a lawsuit, if
necessary . . . to compel such accountings
and related discovery and filing all
necessary tax returns as required by law and
arrange for payment of any gift taxes, New
Jersey and federal estate taxes that may be
due with respect to the Estate's New Jersey
assets or any gifts or loans made by
[d]ecedent.
The scope of the authority granted the administrator was
not raised until defendant moved for a stay pending appeal. The
issue was discussed, but the judge chose not to make any
alteration in the earlier order. In denying the motion for a
stay, however, the judge did not preclude a future application
from defendant to modify the order. This invitation was not
accepted; defendant instead presses the point here.
Because the chancery judge was not given the opportunity to
reconsider the scope of the authority granted the administrator,
we choose not to consider the issue in the first instance. See
12 A-4562-13T1
State v. Robinson, 200 N.J. 1, 19 (2009) (observing that "[t]he
jurisdiction of appellate courts rightly is bounded by the
proofs and objections critically explored on the record before
the trial court by the parties themselves"). In declining to
consider the issue, we do not mean to suggest defendant may not
seek or, for that matter, may not be entitled to relief from the
chancery judge following our disposition of this appeal; we hold
only that our consideration of the scope of the May 8, 2014
order is premature.9
Affirmed.
9
We also denied defendant's motion for a stay except that we
restrained the administrator from "disseminat[ing] any
information" obtained from the parties pending further order.
Despite this appeal's disposition, which would ordinarily
terminate the partial stay, we nevertheless will permit the
limitations we placed on the administrator to remain in effect
for thirty days from today's date, after which it shall
automatically expire unless extended by the chancery judge. We
do this solely to allow for a prompt but unhurried motion
regarding the scope of the May 8, 2014 order that defendant may
now choose to file in the trial court.
13 A-4562-13T1