IN THE MATTER OF MARILYN NIPPES (P-000448-16, MONMOUTH COUNTY AND STATEWIDE) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3835-18T2
IN THE MATTER OF MARILYN
NIPPES, an Incapacitated Person.
Argued telephonically May 7, 2020 –
Decided July 9, 2020
Before Judges Alvarez and Suter.
On appeal from the Superior Court of New Jersey,
Chancery Division, Monmouth County, Docket No. P-
000448-16.
Barbara A. Nippes, appellant, argued the cause pro se
(Lawrence Bluestone, on the briefs).
Michael J. Canning argued the cause for respondent
Scott Napolitano (Giordano, Halleran & Ciesla,
attorneys; Michael J. Canning, of counsel and on the
brief).
PER CURIAM
Appellant Barbara A. Nippes 1 appeals from a March 22, 2019 Probate Part
order approving a partial settlement and denying, on procedural grounds, her
cross-motion for the removal of a court-appointed guardian of the property of
Marilyn Nippes, Barbara's mother. A May 15, 2018 consent judgment declared
Marilyn an incapacitated person (Consent Judgment). Barbara also appeals the
Probate Part's May 3, 2019 order, approving the final aspect of the settlement
with a third defendant. For the reasons that follow, we affirm.
In 1980, Marilyn, along with her late husband Paul, founded Magnetic
Products & Services, Inc. (MPS). The company distributes a groundbreaking
portable lightweight machine created by Paul that controls, reduces, or
eliminates residual magnetism in certain materials.
In 2013, MPS sued former employees and consultants for
misappropriation of trade secrets (IP litigation). A parallel proceeding was
initiated in federal court but stayed pending the outcome of the state case. The
named plaintiff alleged defendants stole MPS's design, creating a competing
company to sell a similar product. MPS's expert report calculated the company
1
We refer to the parties by their first names in order to distinguish between
family members. No disrespect is intended by the usage.
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suffered nearly $2.5 million in damages from defendants' wrongful actions and
added $1.3 million as fees and costs to that figure.
Marilyn was MPS's chief financial officer and became the sole
stockholder in the company following Paul's death. In 2016, Marilyn's daughter
Pamela filed the complaint for guardianship, which resulted in the 2018 Consent
Judgment. Barbara was appointed Marilyn's guardian of the person, while Scott
Napolitano, MPS's accountant, was appointed guardian of her property. It was
Napolitano who sought approval of the settlement terms and who Barbara sought
to remove.
After the initiation of Marilyn's guardianship proceeding, the Probate Part
appointed Michael Canning, Esquire, as temporary guardian. In a report to the
court discussing the Nippes family's positions on the status of the IP litigation,
he indicated that Elizabeth and Pamela, Barbara's sisters, both identified Barbara
as the driving force behind the litigation. Elizabeth and Pamela were concerned
about litigation expenses, while Barbara, although cognizant of the legal fees,
strongly supported the litigation. Unsurprisingly, Marilyn, who is incapacitated,
was not aware of the amount of fees and was confused as to the litigation's status.
In 2013, years before Pamela initiated the guardianship proceeding, but
shortly after the IP litigation was filed, the family met to discuss a potential
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settlement. Because Barbara wanted the IP litigation to continue, and
represented that Marilyn did not want to settle, it proceeded for over three years
funded with money from the company and from Marilyn's accounts.
Canning, on the other hand, recommended that the matter be resolved by
way of settlement, if possible, within a certain budget. Settlement was a major
focus of the activities engaged in by the attorneys handling the litigation.
After his appointment, Napolitano also engaged in vigorous settlement
efforts. Eventually, the defendant company agreed to pay $300,000 in four
installments, redesign its own machine without use of MPS's trade secrets, pay
a fifteen percent royalty on products sold during the redesign period, and not
sell any infringing products in the future. An additional defendant agreed to pay
$60,000 and not to use MPS's trade secrets going forward. Napolitano sought
court approval of the settlement terms. In addition to opposing the settlement,
Barbara cross-moved seeking Napolitano's removal.
The relevant paragraphs of the Consent Judgment, which controlled the
trial judge's decision as well as our own, state:
[Paragraph seven]
Scott G. Napolitano shall serve as Guardian of the
property in connection with all aspects of the Estate of
Marilyn Nippes, with the exception of decisions
affecting Magnetic Products and Services, Inc.
(“MPS"). Any decisions affecting MPS, except for
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decisions related to day to day operations [sic], shall be
guided by an advisory panel consisting of Barbara
Nippes, Pamela Brittingham and Elizabeth Galano (the
“Sisters.") The Sisters shall confer on a monthly basis
to discuss and decide any such decisions affecting MPS
by a majority vote. Any decisions voted by the Sisters
shall be recommended to Scott G. Napolitano for
action, at which Scott G. Napolitano will be guided, but
not bound, by such recommendation. Any material
decisions affecting MPS shall require a unanimous vote
among the Sisters. In the event of a disagreement
among the Sisters regarding a decision requiring a
unanimous vote, the Sisters shall agree to resolve the
dispute by binding arbitration. If any of the Sisters
intends to begin an arbitration to resolve the lack of
unanimous vote, such Sister shall provide written
notice (the “Arbitration Request") to the other Sisters
of such intention and a statement of the dispute.
....
[Paragraph ten]
GUARDIAN LIMITATIONS: If applicable, the
authority of the guardian(s) is limited as follows, and
all limitations shall be stated in the Letters of
Guardianship. The Guardian(s) of the Property, Scott
G. Napolitano, may not alienate, mortgage, transfer or
otherwise encumber or dispose of real property and/or
shares of stock in MPS and may not terminate a
litigation pending in Union County entitled Magnetic
Products and Services, Inc. v. Demag Solutions, LLC,
et al., UNN-C-89-13 and the Federal Copyright Case,
without court approval.
Pamela and Elizabeth supported the terms of the proposed settlement. In
a certification, Pamela stated four different law firms had recommended that
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they settle the IP litigation. Napolitano's position is that the monetary damages
reflect the financial resources of the defendants, although obviously less than
the expert's estimate of damages. Settlement would stop the substantial
expenditure of legal fees and costs. Barbara asserts that Marilyn opposes
settlement, and that it is a waste of time and money to pursue it given the very
strong likelihood of success at trial. Barbara did not believe the settlement terms
were fair. She further objected to the fact that Napolitano did not seek to
ascertain Marilyn's view on the litigation, and did not go through the process
she alleged was necessary before a final settlement could be reached—binding
arbitration among the sisters pursuant to paragraph seven of the Consent
Judgment.
Having considered the moving papers and heard oral argument on the
motions, the judge, the same person who signed the Consent Judgment, applied
ordinary rules of construction to the interpretation of the two paragraphs. She
opined the language was plain and unambiguous, and that Barbara's suggested
enforcement of the arbitration language in paragraph seven would render the
language of paragraph ten superfluous. She characterized the inherent logic of
her decision as mirroring the logic of the agreement, including that paragraph
ten governed the issue of the termination of the IP litigation. The lengthy
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process of arbitration, complete with discovery and hearings, would require "a
mini trial" which would delay and make superfluous any court approval of a
settlement. The judge further observed that the IP litigation was difficult, highly
technical, and the settlement extracted a lifetime injunction from a defendant.
Although the damages were substantially less than just the legal fees already
paid, given defendants' financial resources, they were realistic. Thus, the judge
held that arbitration was not necessary before the court acted on Napolitano's
application. The second order merely approved the settlement agreement with
a different IP litigation defendant, and the judge did so for the same reasons as
stated when she approved the initial settlement. The court denied the cross-
motion for removal of Napolitano on the basis it was procedurally improper, and
should have been pursued under N.J.S.A. 3B:12-24 and Rule 4:86.
By way of appeal, Barbara raises the following points:
I. THE TRIAL COURT ERRED IN DENYING
BARBARA'S CROSS-MOTION FOR REMOVAL OF
THE GUARDIAN OF THE PROPERTY UNDER
RULE 4:86-7 ON PROCEDURAL GROUNDS.
II. THE TRIAL COURT'S APPROVAL OF THE
SETTLEMENT AGREEMENTS WAS
PROCEDURALLY AND SUBSTANTIVELY
FLAWED.
A. The Trial Court Misinterpreted the Consent
Judgment.
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B. The Approval of the Settlement Agreements Was
Substantively Flawed Because the Trial Court Ignored
Evidence Regarding the Guardian's Failure to Properly
Follow the Requirements of the Consent Judgment,
Including the Requirement to Consult with His Ward.
I.
The parties dispute the relevant standard of review. Barbara urges us to
apply a de novo standard, while Napolitano urges a deferential de novo standard.
Napolitano contends federal caselaw supports the position that a trial court's
interpretation of its own consent judgment is owed deference by a reviewing
court.
A consent judgment is both a judicial decree and a contract—"it is not
strictly a judicial decree, but rather in the nature of a contract entered into with
the solemn sanction of the court." Cmty. Realty Mgmt., Inc. for Wrightstown
Arms Apartments v. Harris, 155 N.J. 212, 226 (1998) (quoting Stonehurst at
Freehold v. Township Comm., 139 N.J. Super. 311, 313 (Law. Div. 1976)).
Defined differently, a consent judgment is "an agreement of the parties under
the sanction of the court as to what the decision shall be." Ibid.; see also DEG,
LLC v. Twp. of Fairfield, 198 N.J. 242, 261 (2009) ("Indeed, a consent judgment
'is an agreement that the parties desire and expect will be reflected in, and be
enforceable as, a judicial decree that is subject to the rules generally applicable
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to other judgments and decrees.'") (quoting Rufo v. Inmates of the Suffolk Cty.
Jail, 502 U.S. 367, 378 (1992)). Contract principles apply to a consent
judgment, and it is treated as a quasi-contract. See Harris, 155 N.J. at 226.
In Kaur v. Assured Lending Corp., 405 N.J. Super. 468, 474 (App. Div.
2009), we held that interpretation of a settlement agreement was subject to de
novo review. While not a consent judgment, the court there relied on the well -
known adage that "[a] trial court's interpretation of the law and the legal
consequences that flow from established facts are not entitled to any special
deference." Ibid. (quotations omitted). Given the similarity to a contract,
interpretation of a consent judgment should be reviewed de novo. Cf. Capparelli
v. Lopatin, 459 N.J. Super. 584, 605 (App. Div. 2019).
II.
We agree with the trial court that Barbara's interpretation of the Consent
Judgment—that the sisters must proceed to binding arbitration before seeking
court approval of the settlement—renders the terms of paragraph ten
superfluous. This is especially true given that Barbara's arguments revolve
around the terms of the settlement itself, not the decision to settle in the first
place. Her concern was that the compensation defendants would pay was
grossly inadequate in light of the harm done. She was also of the opinion that
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Marilyn's wishes should be consulted. Thus, our discussion is limited to
Barbara's challenge to the terms of the settlement agreement.
The terms of the settlement agreement, as described by Napolitano at the
time the trial judge issued her March decision, seem realistic given the nature of
the defendants. $360,000 is significantly less than the alleged damages, but
MPS's own law firm concluded that "none of the Defendants have any
significant assets which could be used to satisfy a large judgment against them."
Obviously, the collection of a judgment equivalent to the millions of dollars
alleged would only lead to further litigation costs, and a further drain on the
incapacitated ward's assets. That assumes that MPS prevailed at trial. A modest
settlement with defendants who each have limited resources, but who agree to
being enjoined from future use of the property at issue, is eminently reasonable.
Barbara contends that by failing to ascertain Marilyn's views, Napolitano
failed in his duty as guardian. The issue should be addressed if Barbara files a
new application to remove him. The argument goes to Barbara's concern
regarding his fulfillment of his role and is best left for resolution on another day.
III.
Rule 4:86-7(c) states that "an interested person on [an incapacitated
person's] behalf, may seek review of a guardian's conduct and/or review of a
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guardianship by filing a motion setting forth the basis for the relief requested."
A cross-motion, specifically, "may be filed and served by the responding party
. . . only if it relates to the subject matter of the original motion . . . ." R. 1:6-3(b).
Here, the trial court determined that Barbara's cross-motion to remove
Napolitano as the guardian of the property was procedurally deficient, in
violation of N.J.S.A. 3B:12-24 and Rule 4:86-1. However, it is clear that Rule
4:86-7(c) allowed Barbara to file the cross-motion; the issue is whether the
cross-motion to remove Napolitano relates to Napolitano's motion to approve
the settlement.
Barbara's cross-motion to remove Napolitano does not relate to the motion
to approve the settlements. Napolitano sought the court's approval on the exact
terms of the settlement agreements. At the March 22 hearing, Barbara's attorney
made vague allegations as to Napolitano's conduct that were not at all related to
the terms of the settlement agreements. He implied that Napolitano was not
providing access to "information" and claimed he was not "neutral." He also
implied that Napolitano had not ascertained Marilyn's wishes as to the IP
litigation, and failed to provide adequate notice or the "opportunity to go through
things before they're discarded." However, Barbara makes no attempt to
expound on these allegations, and the record does not support her allegations.
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Nonetheless, her complaints relate to the process leading to the settlements, not
the resolution of the litigation. Her cross-motion was not related to Napolitano's
motion. Therefore, the trial court was correct to deny it on procedural grounds.
Affirmed.
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