The U.S. Court of Appeals for the Third Circuit has ruled that Maplewood attorney John Sogliuzzo is liable for damages for using undue influence to take $391,000 from an elderly relative.
The Third Circuit ordered the case sent back to District Court for imposition of damages against Sogliuzzo, reversing a ruling in which a district judge awarded no damages even after finding that Sogliuzzo used undue influence that prompted the woman to make a transfer of cash and bonds to him. The District Court said it would defer to a state probate court on damages because plaintiff Jane Adkins, Sogliuzzo’s sister, failed to offer sufficient evidence that a gift was made during the lifetime of Mary Grimley, a cousin of the plaintiff’s and defendant’s mother. But the finding of undue influence based on transfers made during the donor’s lifetime assumes that an inter vivos gift was made, Judges Theodore McKee, Robert Cowen and Julio Fuentes ruled Wednesday in Adkins v. Sogliuzzo.
The finding by U.S. District Judge Susan Wigenton that insufficient evidence was presented to show that Grimley made the gift conflicts with her finding that Sogliuzzo is liable for undue influence, McKee said, writing for the court. Acknowledging the conflict, Wigenton cited a prior Third Circuit decision in the present case, which said, “If, after a hearing, the District Court concludes that insufficient evidence has been presented to support damages, such a finding is not inconsistent with a finding of liability,” citing another Third Circuit case from 2006, Carpet Group International v. Oriental Rug Importers Association, which said it was possible to find liability but no damages when a plaintiff was not injured by the defendant’s actions.
But McKee wrote for the panel that Wigenton’s reliance on Carpet Group missed the mark because defendants in that case were liable for restraining trade but the plaintiffs were not injured because their business enterprise failed for reasons other than the defendant’s conduct. But in the present case, “the District Court’s denial of damages rests on the conclusion that the Plaintiff failed to sufficiently prove that an inter vivos gift or transfer occurred—a conclusion that contradicts an element already necessarily established in not one, but two previous opinions in this case,” McKee wrote.
Adkins, who lives in Virginia, sued her brother in federal court in 2009, claiming he misappropriated assets of their mother and of Grimley when each of them was in declining health. Adkins claimed Sogliuzzo wrote checks totaling $317,000 from their mother’s accounts for himself and his law firm, and had her sign papers shortly before her death to place $273,000 in investments in a new account, with him as sole beneficiary. Adkins also claimed that Sogliuzzo misappropriated $70,000 in cash that was found tucked away in Grimley’s old apartment and that he redeemed $321,000 in savings bonds belonging to Grimley and kept the proceeds.
After the deaths of Adkins and Jane Sogliuzzo, the mother of the plaintiff and defendant, their estates started actions against John Sogliuzzo in Hudson County Superior Court. A forensic accountant in that case testified that Sogliuzzo used the money misappropriated from his mother’s estate to pay his children’s tuition at The Pingry School and to support his law practice.
Any damages awarded in connection with the Grimley case would be added to the roughly $1 million that Sogliuzzo has been ordered to pay in connection with his mother’s state court case.
On May 30 of this year, Judge Marybeth Rogers entered a judgment of final accounting against Sogliuzzo for $756,657 in connection with his mother’s estate. That comes after a 2015 fee award of roughly $250,000 in the mother’s case. The state court suit involving Grimley’s estate is stayed pending resolution of the federal case.
The Office of Attorney Ethics charged Sogliuzzo in 2010 with knowing misappropriation of funds and conflict of interest in connection with the two estates. That case is still in the hearing stage.
Mark Miller, of Dubeck & Miller in Morristown, who represents Jane Adkins in the federal court case, said he was “satisfied that it has been remanded,” adding, “We’re hoping this time around the District Court sees fit to give us the damages that Jane suffered.”
Sogliuzzo, who is representing himself in the federal court case, did not respond to a phone call or an email message about the ruling.