Amratlal C. Bhagat v. Bharat A. Bhagat (068312)
217 N.J. 22
| N.J. | 2014Background
- In 1984, ABB Properties stock for A.C.’s children was designated as held in trust, making A.C. the beneficial owner of a majority of ABB Properties shares on paper.
- On June 26, 1989, A.C. signed a DECLARATION OF GIFT and STOCK POWERS transferring 53 Class-A and 187 Class-B shares to B.B., with an option for A.C. to repurchase at $1 per share for five years.
- In 1990, A.C. transferred additional ABB Properties shares to B.B. using the same forms, allegedly to convey remaining shares to B.B.
- In 1994, A.C. and B.B. sued Nagarki Tailor and others over control and mismanagement; Tailors settled the Tailor litigation in 1999 with stock-related disputes unresolved.
- In December 2003, A.C. filed suit against B.B. seeking to establish ownership of ABB Properties stock and rescind any permanent gift; cross-motions for summary judgment were filed and the lower courts granted summary judgment for B.B., which was affirmed on appeal.
- The New Jersey Supreme Court reversed, clarified the standard of proof to rebut a parent-to-child gift (clear and convincing), and remanded for trial to resolve factual issues about donative intent and delivery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What standard of proof is required to rebut the parent–to–child gift presumption? | Bhagat argues the standard remains clear and convincing; no higher burden. | Bhagat contends the appellate court applied an overly strict standard. | The Court holds the standard is clear and convincing. |
| What evidence can rebut the presumption and when must it be offered? | Bhagat asserts evidence ante/ contemporaneous/ immediately after transfer, plus statements about purpose, are admissible. | BB argues only contemporaneous or near-transfer evidence should count; post-transfer statements are unreliable. | Evidence must be antecedent to, contemporaneous with, or immediately following the transfer, with permissible corroboration from statements about purpose. |
| Is judicial estoppel applicable to BB’s prior Tailor-litigation statements? | Settlement in Tailor litigation should bar later contradictory positions. | Settlement means no court accepted BB’s Tailor position; estoppel does not apply, though statements may be used for impeachment. | Judicial estoppel does not apply due to settlement; prior inconsistent statements may be used as admissions for impeachment. |
| Did BB’s inconsistent statements in prior litigation defeat summary judgment here? | Statements contradicting permanent transfer create genuine issues of material fact. | Prior statements do not automatically defeat a summary judgment motion. | Yes—certain inconsistent statements and credibility issues raise genuine disputes precluding summary judgment. |
| Should the appellate standard for reviewing summary judgment be Brill v. Guardian Life, with proper attention to evidentiary standard? | Appellate review must assess evidence under the governing evidentiary standard while evaluating issues of fact. | Standard of review was correctly applied; evidence was insufficient to rebut the presumption. | The appellate approach aligned with Brill; proper consideration of evidentiary standard is required. |
Key Cases Cited
- Peer v. Peer, 11 N.J. Eq. 432 (Ch. 1857) (describes quality of evidence to rebut presumption of gift as convincing and leave no reasonable doubt)
- Herbert v. Alvord, 75 N.J. Eq. 428 (Ch. 1909) (proofs must be convincing and leave no reasonable doubt; contemplates antecedent/contemporaneous acts)
- Prisco v. Prisco, 90 N.J. Eq. 289 (E. & A. 1919) (established required evidentiary burden for rebutting gift presumption)
- Read v. Huff, 40 N.J. Eq. 229 (E. & A. 1885) (treatment of contemporaneous evidence in rebutting the presumption)
- Weisberg v. Koprowski, 17 N.J. 362 (1955) (admissibility of subsequent conduct to corroborate prior circumstances; credibility considerations)
- Turro v. Turro, 38 N.J. Super. 535 (App. Div. 1956) (recognizes hybrid language around standard but supports clear-and-convincing interpretation)
- Brill v. Guardian Life Insurance Co. of America, 142 N.J. 520 (1995) (defined summary judgment approach and need to apply evidential standard to elements)
- Pascale v. Pascale, 113 N.J. 20 (1988) (delivery concepts in gift analysis)
- In re Dodge, 50 N.J. 192 (1967) (donor must relinquish dominion over gifted property)