                      NOT FOR PUBLICATION WITHOUT THE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-0929-16T1

IN THE MATTER OF THE
TRUST OF RAY D. POST.
_______________________

           Argued May 3, 2018 – Decided August 15, 2018

           Before    Judges    Haas,    Rothstadt     and   Gooden
           Brown.

           On appeal from Superior Court of New Jersey,
           Chancery Division, Probate Part, Morris
           County, Docket No. P-000817-2012.

           Michael A. Saffer argued the cause for
           appellant/cross-respondent Valley National
           Bank (Mandelbaum Salsburg, PC, attorneys;
           Michael A. Saffer, of counsel and on the
           briefs; Arla D. Cahill and Brian M. Block, on
           the briefs).

           Andrew J. Cevasco argued the cause for
           respondent/cross-appellant Sarah E. Post-
           Ashby (Archer & Greiner, PC, attorneys; Andrew
           J. Cevasco, of counsel and on the briefs;
           Andrew T. Fede, on the brief).

           Deborah   Post,   respondent/cross-appellant,
           argued the cause pro se.

PER CURIAM

     Valley National Bank (Valley), trustee for The Trust of Ray

D. Post, appeals from a judgment awarding damages to beneficiaries,
the   grantor/decedent's           granddaughters,        Deborah     Post    and   her

sister, Sarah Post-Ashby.                 The trial judge held that Valley

breached its fiduciary duty to the sisters when it diversified the

trust's corpus, a portfolio of stock, in contravention of a

retention provision in the trust agreement that directed the stocks

not to be sold. Although the judge awarded damages to the sisters,

he also awarded commissions and fees to Valley.

      On appeal, Valley asserts numerous arguments, the gist of

which is that the judge erred in finding that Valley's actions

were not authorized by the Prudent Investor Act (PIA), N.J.S.A.

3B:20-11.1 to -11.12, especially since the corpus of the trust

changed   in   nature       over    the    years    due    to   various      corporate

reorganizations.          Deborah and Sarah1 cross-appeal, claiming that

Valley was not entitled to certain fees and commissions the trial

judge credited to Valley, and that he failed to correctly calculate

damages and should have awarded counsel fees.                       For the reasons

that follow, we affirm.

      The facts developed at the bench trial in this matter are

summarized     as   follows.         Ray    owned   and    operated     a    fuel   oil

distribution      business     in    Newark.        He    and   his   business      were

customers    of     the    Peoples    National      Bank    &   Trust    Company      of


1
   We refer to the individuals by their first names to avoid any
confusion caused by their common surnames.

                                            2                                  A-0929-16T1
Belleville (Peoples) and he was a member of its board of directors

until the mid-1980s.        Ray created the subject irrevocable trust,

appointing Peoples as trustee, pursuant to a trust agreement dated

July 23, 1975.       The corpus of the trust consisted of 2550 shares

of common stock of AT&T, 304 shares of Exxon Corporation, and a

$4500 AT&T thirty-year bond due May 5, 2000.             The value of the

trust assets at that time was $156,550.25.

       The trust agreement contained a retention provision that

stated: "The Trustee shall retain, without liability for loss or

depreciation resulting from such retention, the property received

from the Grantor." It also provided that the trustee was "entitled

to    compensation    for   its   services . . .   in   accordance    with    a

separate agreement between it and [Ray], to be entered into on or

before the execution of this Agreement."           On September 24, 1975,

Ray and Peoples entered into a letter agreement that stated: "In

order to induce Peoples . . . to act as Trustee . . . I hereby

agree to pay a fee of 5% per annum on the total income collected."

       Pursuant to the trust agreement, the trust's income was paid

to Ray in monthly or other installments during his life and, upon

his death, the income was paid to Ray's wife, Enid Post, whom he

had married in 1974, until her death or remarriage.2                 Upon the


2
     Enid was not Deborah's or Sarah's grandmother.


                                       3                              A-0929-16T1
occurrence of either of those two events, the trustee was directed

to distribute the corpus to Deborah and Sarah.

     Ray died on May 5, 1989.    At the time of his death, the value

of the trust's assets was $483,172.      The trust corpus consisted

of 1169 shares of Bell South, 520 shares of NYNEX, 1040 shares of

Pacific Telesis, 780 shares of South Western Bell, 1040 shares of

U.S. West, 2432 shares of Exxon and 2200 shares of AT&T.3

     Deborah, who held a Masters of Business Administration from

Harvard Business School, was appointed executrix of the estate

and, in 1990, filed the first Form 706 Estate Tax Return. Deborah,

as   executrix,   also   participated   in   a   litigation   filed    in

approximately 1991 by Enid over Ray's estate in which the trust

and its assets were a topic of the dispute.       See In re Estate of

Post, 282 N.J. Super. 59, 64 (App. Div. 1995).

     In June 1993, Valley acquired Peoples and became the trustee.

The trust assets Valley received from Peoples, according to Valley,

totaled $157,436.86.     The stock included 2600 shares of AT&T, 2432

shares of Exxon, and approximately 7000 shares of seven companies


3
  To the extent the portfolio contained different stock than what
Ray had deposited, the difference was caused by the divestiture
of AT&T and the creation of its "spin offs" that were required by
the 1984 anti-trust action against AT&T. See Verizon N.J., Inc.
v. Hopewell Borough, 26 N.J. Tax 400, 408 (Tax Ct. 2012); In re
Estate of Strauss, 521 N.Y.S.2d 642, 644 (N.Y. Sur. Ct. 1987).



                                   4                            A-0929-16T1
that had also been created as part of AT&T's divestiture.                When

Valley   became    trustee,   it   began   to   take   statutory     corpus

commissions4 from the trust in addition to the five percent income

commissions provided for in the fee agreement, even though Peoples

had never done so while it was trustee.

      In May 2000, Valley's in-house counsel wrote a memo addressing

the bank's trust investment management committee's concern about

whether the trust was adequately diversified in light of the

enactment of the PIA in 1997.      In response, Valley obtained advice

from outside counsel in July 2000, who concluded that the trust's

retention provision did not relieve Valley of its duty to diversify

the portfolio.

      In his letter to Valley, counsel stated that he "believe[d]

that a court would conclude that the language of [the retention

provision]   did   not   deprive   [Valley]     of   power   to   sell   the

stock . . . ."     Counsel advised that if Valley determined that

"non-diversification [was] prudent," it could take no action and

"rely" on the retention provision, or it could "develop and

implement a plan to diversify the portfolio," if it "decide[d]

that that is the most reasonable and prudent course of action."

If Valley chose to diversify the portfolio,



4
    N.J.S.A. 3B:18-14.

                                    5                               A-0929-16T1
            it could choose to notify [Enid] and [Deborah
            and Sarah] of its plans and seek out their
            consent or other points of view. Finally, to
            fully protect itself for its course of action,
            [Valley]    could   file    an    action . . .
            judicially . . . and . . . seek authorization
            to deviate from the language of the trust and
            diversify the portfolio.

        Valley began diversifying the trust assets on September 12,

2000, selling 864 shares of ExxonMobil stock and purchasing other

stocks with the proceeds without either court approval or notice

to Enid or the sisters.5 In a follow-up letter from outside counsel

in November 2000, Valley was advised that it not unilaterally

deviate from the retention provision because it would then be

"acting at its own peril" in light of recent (unpublished) case

law.6    "Rather, to fulfill its investment responsibilities . . .,

[Valley] should apply to [the] Court for advice and restrictions

to   satisfy      its   obligation   to       protect   the   interests   of   the

beneficiaries."         By so doing, it would have an "insurance policy"

against future liability.         Despite that advice, and while Valley

understood that the trust language severely restricted its ability

to   sell    or    reinvest    the   trust       assets,      it   continued   the



5
   Exxon became ExxonMobile after an intervening merger in 1999.
See In re Exxon Mobil Corp. Sec. Litig., 387 F. Supp. 2d 407, 410
(D.N.J. 2005), aff'd, 500 F.3d 189 (3d Cir. 2007).
6
  In re Vivos Trust of Ackerson, No. A-159-99 (App. Div. Oct. 23,
2000).

                                          6                               A-0929-16T1
diversification until shortly before Enid's death in 2008, without

expressly notifying Enid or the sisters or seeking court approval.

     Although Valley did not seek Deborah's or Sarah's prior

approval for not retaining the trust's stocks, or provide either

of them with a copy of the trust agreement until Enid died, it did

send statements and other information about the trust's holdings

that reflected the sale of the original stocks.                       Deborah began

receiving information about the trust after she made a request in

March   1998    for    information.             She    started     receiving    annual

statements from Valley in 2002 and they continued until Enid died

in 2008 at which time Deborah began to receive monthly statements.

     In April 2004, Valley also sent Deborah and Sarah a letter

seeking   their       approval    for   a        "30%    fixed     income    and    the

balance . . . in equity/growth positions" asset allocation.                        They

both gave their approval to the allocation.                   At the time, neither

Deborah   nor   Sarah    had     seen   a       copy    of   the   trust    agreement.

According to Deborah, Ray never showed her a copy, she did not

recall seeing it in connection with her filing of estate tax

returns or during the estate litigation, and she only became aware

of the trust assets after Ray's death.

     According to Sarah, she did not read or view the trust

agreement until she received Valley's letter in April 2004 seeking

her approval of the trust's asset allocation.                    When Sarah approved

                                            7                                  A-0929-16T1
the April 2004 proposed assets allocation, she also requested that

she be provided the same information regarding the trust that

Deborah had been receiving. After that time, Sarah began receiving

annual statements.    However, according to Sarah, none of the

ensuing letters she received from Valley contained information

about the terms of the trust.

     Enid died on March 27, 2008, triggering Valley's obligation

to distribute the corpus to the sisters.      Valley wrote to Deborah

and Sarah on May 2, 2008, enclosing a copy of the trust agreement

and setting forth the trust assets.        According to an account

investment synopsis prepared by Valley, as of July 31, 2001, the

value of the trust was $1,431,869.06, as of April 30, 2006;

$1,084,988.51, as of August 2007, $1,286,678.88; and as of May 2,

2008, $1,218,556.    Valley informed the sisters that the process

of preparing a final accounting had begun and would take several

months to finalize, due to the extended term of the trust.

     The first time Deborah or Sarah saw the trust agreement was

when Valley sent it to them on May 2, 2008.    When they did, Deborah

"probably skimmed it," and Sarah "did a casual review" of the

document, but neither recalled reading the retention provision.

The granddaughters only became aware of the provision when, in

March 2012, Valley filed its complaint for approval of its final

accounting.

                                8                             A-0929-16T1
      In 2009 and 2010, Valley sent requests to Deborah and Sarah

asking them "what type of accounting you would like us to prepare

for your review and approval in order that we may conclude the

administration of the Trust."       According to Deborah, she did not

respond to these requests because Valley had been unresponsive to

her requests for information, such as any previous accountings and

financial statements prior to 2001.         Sarah too did not respond

because she did not understand the requests.           The fact they did

not respond, however, did not prevent Valley from preparing an

interim accounting for submission to the sisters.

      On October 6, 2010, Valley's attorney sent a letter to Deborah

and   Sarah   requesting   that   they   sign   a   waiver    of   a    formal

accounting, and provided them with an informal accounting. Deborah

did not sign the waiver because of Valley's failure to provide

information she previously requested about the trust for the period

from 1975 to 1992.     Sarah also did not respond to the attorney's

letter because she was not provided with sufficient information

and felt the formal accounting was "pressuring" her with more

fees.

      Deborah met with Valley's trust officer Steven Gudelski in

January   2011   and   complained   about   the     trust's   performance,

Valley's failure to provide information and an accounting, and

Valley taking what she considered to be excessive fees.                     The

                                    9                                  A-0929-16T1
retention   clause   and   diversification    of    the   stock   were   not

discussed, but Deborah asked for a copy of the fee agreement and

was told there was no written agreement.       A month later, however,

Gudelski provided Deborah with copies of annual statements from

between 2002 and 2010, and a copy of the trust fee agreement,

which Gudelski discovered after a further review of the file.              In

June 2011, Deborah wrote to Gudelski asking that he provide her

with   records   from   Peoples   and   Valley's    computer   records     in

connection with the trust from June 1993 until February 2001.

Valley eventually provided a final accounting during discovery

after it filed its complaint.

       On March 19, 2012, Valley filed a complaint to approve a

final trust accounting and to be discharged as trustee.           According

to Valley, it took four years to complete the final accounting

because it was "waiting to hear from the beneficiaries as to what

type of accounting they wanted."

       The accounting was ultimately completed between the summer

of 2011 and November 2011.        A vice-president and senior trust

officer at Valley prepared the accounting covering the period from

June 22, 1993 to November 30, 2011.        The final accounting stated

that the trust's value was $901,578.73.            Approximately $563,000

was in a cash management account for the period beginning June 22,

1993 through November 30, 2011; the balance was stocks and mutual

                                   10                               A-0929-16T1
funds.     Over the subject time period, $60,225.45 was added to

principal as a result of tax refunds.             Valley took a total of

$485,491.03    in   income   commissions    and    $96,450.51   in    corpus

commissions, constituting .5% on the first $400,000, and .3% on

the balance.    Valley stopped taking fees in November 2010.

     On April 12, 2012, Deborah filed an answer taking exceptions

to the accounting.     She objected to Valley taking commissions on

the trust's corpus, and claimed that Valley was only entitled to

a five percent commission on trust income rather than six percent.

     The matter was referred for mediation and on the night before

a scheduled session, Deborah read the trust document "word for

word with complete comprehension for probably the first time."

She was "astounded" because she "had no idea . . . that this

retention clause existed in this document." She "suddenly realized

[that] they weren't allowed to sell [her] grandfather's good

stocks."      As a result, Deborah amended her answer to add a

counterclaim for breach of fiduciary duty, negligence, conversion

and breach of the implied duty of good faith and fair dealing, all

arising from Valley's violation of the retention provision.               She

claimed an over $900,000 loss as a result of Valley's failure to

"abide by and honor Ray Post's wishes pursuant to their fiduciary

duty of care" to the beneficiaries.        Sarah filed a similar answer

and counterclaim.

                                  11                                 A-0929-16T1
      On April 15, 2015, a judge signed an order granting Valley's

motion for summary judgment as to all counts of the sisters'

counterclaims, except for breach of fiduciary duty and the implied

covenant of good faith and fair dealing, and granted in part the

sisters' motion to compel discovery and distribution of the trust

assets.

      Trial was held before a different judge, Stephen C. Hansbury

in   April   2016.   The   trial   initially   addressed   the   sisters'

counterclaims and Valley's liability.      At the trial, in addition

to Valley's representatives and the sisters, who testified about

the history of the trust as set forth above, the parties presented

testimony from experts.

      Richard Greenberg, a lawyer and certified public accountant,

testified for the sisters as an expert in trust administration.

He concluded that Valley breached its fiduciary duty as trustee

by violating the retention clause of the trust agreement.                He

cited the PIA, which grants the trust settlor the right to restrict

the general duty to diversify as long as the settlor expressly

provides for that restriction in the trust document.       As Greenberg

explained, if a trustee believes the restriction is not in the

best interests of the beneficiary, it should seek the consent of

the beneficiary or apply to the court for approval to diversify.



                                   12                             A-0929-16T1
       John Langbein, a trust and estates law professor, who has

trained bank trust officers and served on an advisory panel for

the drafting of the Restatement (Third) of Trusts, testified for

Valley as an expert in the standard of care applicable to a trustee

and trust assets.      He stated that the trust portfolio was under-

diversified because the stocks did not involve "a wide number of

different   industries"       and   confining    the    portfolio    to       two

securities was "capricious."         Valley had a "duty to diversify" in

order to avoid the risk of "catastrophic loss." Langbein concluded

that   Valley's   decision    to    diversify   was    "routine   good     trust

administration."     Failure to do so, he stated, would have put

Valley at risk of a breach of fiduciary duty by violating the duty

to diversify.      He did not believe that a trust beneficiary was

entitled to prior notice or to give its consent prior to the

trustee diversifying because management of the trust lies with the

trustee, and a beneficiary has "no voice in investment policy."

Nor did he believe that Valley was under an obligation to seek

court approval before diversifying because approval is for the

trustee's   benefit,    not   the    beneficiaries'.       Nonetheless,         he

believed it was highly likely that Valley would have received

judicial approval.      He added that Valley's decision to seek the

advice of outside counsel showed prudence, but that the advice

provided was not conclusive because, as a general matter, a trustee

                                      13                                 A-0929-16T1
could then "keep on shopping" until it found someone "willing to

. . . do anything [it] wanted."

      Even if the diversification constituted a breach of fiduciary

duty, Langbein believed that the breach was "innocuous" because

it was done for the beneficiaries' and not Valley's, benefit.            In

support, Langbein cited to the Restatement (Third) of Trusts § 95

cmt. d (Am. Law Inst. 2012) "innocuous breach rule," which he

explained was an "old principle of equity . . . that when the

trustee has acted in a way that was not driven by trustee self

interest [and] that was motivated by the effort to benefit the

beneficiaries, . . . the court has the discretion not to find them

liable. . . ."

      On April 28, 2016, Judge Hansbury issued an oral decision

finding in favor of the sisters as to Valley's liability.              The

judge first addressed the trust agreement and found that since its

inception, the sisters owned the corpus. He then rejected Valley's

contention that "because the Exxon stock and the AT&T stock

morphed, . . . that . . . was in itself . . . a diversification

which then permitted [Valley] to diversify as it chose. . . ."

According to the judge, there was "not a shred of evidence" that

the   stock   held   in   the   trust   after   the   various   corporate

restructurings was "not substantially equivalent" to what was



                                   14                             A-0929-16T1
originally held.      The judge stated while the stocks may have

changed, it did not "trigger the right to simply diversify."

     Judge    Hansbury   turned   to    the    PIA    and   rejected      Valley's

argument that the statute trumped the settlor's intent as expressed

in the retention provision.            Quoting from one of our earlier

unpublished decisions relied upon by Valley, Judge Hansbury found

the opinion persuasive as to its statement that               "diversification

of investments, N.J.S.A. 3B:2-11.4, . . . is a default rule that

may be expanded, restricted, eliminated or otherwise altered by

express provision of the trust agreement, N.J.S.A. 3B:20-11.2(b)."

     Next,    Judge   Hansbury    considered         Valley's       "standard     of

conduct" and concluded it breached its duty to the sisters by not

following the advice of its own attorneys to seek their approval

or the court's approval before diversifying, and its failure to

keep the sisters informed as to the status of the corpus.                       The

judge relied upon the experts' testimony and the provisos of

Restatement    (Third)   of   Trusts,     which      set    forth    a   trustee's

obligation to keep a beneficiary reasonably informed.                    The judge

found that "months, years went by and no information was provided"

to the sisters.

     Judge    Hansbury    also    found       that    contrary      to    Valley's

arguments, neither laches, equitable estoppel nor the sisters'

conduct provided Valley with legitimate defenses to the sisters'

                                    15                                     A-0929-16T1
counterclaims.     He stated that Valley unjustifiably delayed its

preparation of the accounting and seeking court approval for four

years following Enid's death.

     Judge Hansbury concluded that there was a breach of Valley's

fiduciary duty, but he did not find that Valley acted in bad faith.

The judge, therefore, found Valley liable to the sisters under

that cause of action, but dismissed their claim for a violation

of the covenant of good faith and fair dealing.

     The   judge   considered   counsels'    arguments   regarding   the

valuation date to be applied in his calculation of damages based

upon what the value of the portfolio should have been had the

retention provision been honored compared to its actual value.

The sisters contended the date was the day of the judge's decision.

Valley argued it should be when the sisters knew or should have

known about the retention provision.        It contended that the date

Deborah filed the first estate tax return, or the commencement

date of the estate litigation that Deborah participated in were

appropriate dates for valuation because Deborah should have known

about the retention clause at those times.       It also argued as an

alternative, October 6, 2010, when Valley sent the waiver and

release to Deborah and Sarah as the appropriate date.

     Judge Hansbury determined that the proper date for valuation

of the stocks' value was May 2, 2008, when Valley sent the trust

                                  16                            A-0929-16T1
agreement and portfolio value to the sisters.            He found that on

that date, Deborah and Sarah had the "the trust agreement, they

ha[d]    the    statements   that   they've   been   getting   for   several

years[,]" and they first learned that the retention provision was

not being followed.

     Trial on damages was held on June 13, 2016. After considering

an in limine motion filed by Valley, Judge Hansbury granted the

motion, barring the sisters from presenting any evidence regarding

Valley not investing trust money held in Valley's Cash Management

Fund.    The judge found that the sisters failed to present any

evidence at the liability trial about Valley's failure to invest.

     At the ensuing damages trial, Michael Gould, a certified

public accountant, testified for Valley and concluded that the

estimated value of the trust assets, assuming that Valley had not

diversified the portfolio, as of May 2, 2008 was $1,739,248, which

was $520,692 more than the actual value of $1,218,556.                 Gould

utilized the first quarter 2008 income taxes, $9606, actually paid

by the trust in determining the hypothetical portfolio's after tax

value.   He added:     "It's not necessarily related to any particular

sale of securities.       It was just an estimate . . . ."       He denied

that constituted double counting, adding for clarification:

               [W]hat   the  [$]9606   represents   are   the
               estimated income taxes for 2008 that were paid
               by the trustee in April of 2008. And we used

                                     17                              A-0929-16T1
          it as a reduction of the hypothetical
          portfolio on the basis that dividends . . .
          and interest would have been received by the
          trust and income taxes would have had to been
          paid   in   some     amount.      And    rather
          than . . . try    to    calculate   what    the
          hypothetical tax would have been, we just used
          the estimates that were paid. It was just an
          estimate. An imprecise estimate. . . .

     Joseph Matheson, a certified public accountant, testified on

behalf of the sisters and concluded that the estimated value of

the trust assets, assuming that Valley had not diversified the

portfolio, as of May 2, 2008 was $1,833,306, which was $616,467

more than the actual value of $1,216,839.     Matheson testified that

he determined the share amount for the stocks by averaging the

"daily high and the daily low on May 2nd" because the stocks

"probably would have sold . . . sometime . . . during the day."

Next, he stated that he "subtract[ed] the [capital gains] tax and

then . . . added   the   net   proceeds"   that   totaled   $1,833,306.

Matheson also admitted that Gould's report reflected $2600 of

"dividends between Enid's death and May 2nd" that was missing from

his calculations in his report, which increased the difference

between the value of the hypothetical portfolio and the actual

value by $619,897.

     On July 8, 2016, Judge Hansbury signed an order for judgment

approving the accounting submitted by Valley through 2011, and

entered judgment     against Valley    in favor of the sisters for

                                  18                            A-0929-16T1
$520,548 based upon Gould's calculations. Attached to the judgment

was a statement of reasons in which he identified September 2000

as the date when Valley breached its agreement by selling trust

assets.   He also concluded that consistent with Ray's intent as

expressed in his agreement with Peoples, Valley was entitled to

the income commissions expressed in the agreement as well as

statutory corpus commissions under N.J.S.A. 3B:18-2.   Relying upon

the court's holding in Babbitt v. Fidelity Trust Co., 72 N.J. Eq.

745 (1907), he also concluded Valley was entitled to commissions

even though it breached its fiduciary duty by diversifying because

it did not do "anything 'willfully wrong.'"

     On August 31, 2016, Judge Hansbury signed an order awarding

the sisters $57,423.08 in prejudgment interest from May 2, 2008,

to July 8, 2016, denying the parties' cross-motions for counsel

fees and Valley's application for corpus commissions from November

1, 2010, to July 27, 2016.7   In his attached statement of reasons,

the judge explained how he applied the Rules' provision for pre-

judgment interest, see R. 4:42-11, for the period during which the

sisters were deprived of their funds, which he identified as May


7
    On September 20, 2016, Judge Hansbury signed an amended
supplemental order of judgment reducing the amount of prejudgment
interest awarded to $48,654.13, pursuant to N.J.S.A. 4:42-11(b).
In support of the order, he issued a written decision, explaining
in detail the error he made in its original calculation and showing
how the corrected amount was calculated.

                                19                          A-0929-16T1
2, 2008 to July 8, 2016.    He turned to the parties' claims for

counsel fees and rejected them.    As to Valley, he concluded it was

not entitled to fees for defending itself, especially in light of

his finding that it breached its fiduciary duty.        He rejected

Valley's reliance upon the frivolous litigation statute, N.J.S.A.

2A:15-59.1, and Rule 1:4-8 because the sisters prevailed on their

claim and "frivolous litigation theories were not appropriate to

examine . . . the basis of each claim to determine whether a

particular claim was continued in good faith and not to harass a

party in light of defendants' success."     Addressing the sisters'

claim, Judge Hansbury relied upon his and the summary judgment

motion judge's finding that Valley did not act in bad faith, and

therefore the sisters did not "fit one of the exceptions" to the

"American Rule which requires each party to pay its own counsel

fees."

     The judge turned to Valley's entitlement to income and corpus

commissions for the period from November 1, 2010 to July 26, 2016

and rejected the claim.    The judge observed that "no management

of the trust took place after Enid's death," citing to N.J.S.A.

3B:17-3's requirement for the timely completion of an accounting,

the inexplicable delay in Valley completing it by November 1,

2010, and N.J.S.A. 3B:31-71 and N.J.S.A. 3B:31-84 for authority

to reduce compensation due to a trustee "as a remedy for breach

                                  20                         A-0929-16T1
of trust." Finally, the judge addressed claims arising from Valley

not investing the trust corpus after November 30, 2011 and noted,

as he had in response to Valley's motion in limine, that there was

"[in]sufficient evidence" presented about the claim as it had not

been "prosecuted."

     Deborah     filed   a   motion   for   reconsideration    that     Judge

Hansbury denied on October 21, 2016.        In his written decision, the

judge considered the applicable law, explained errors in Deborah's

arguments regarding the effect of the summary judgment motion

judge's order and his own order regarding commissions, and contrary

to Deborah's arguments, that he had properly accounted for tax

consequences in his calculation of damages.          On the same date, the

judge signed an order discharging Valley as trustee and approved

the final accounting.        This appeal followed.

     Our review of a trial court's fact-finding in a non-jury case

is limited.     Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150,

169 (2011).     "The general rule is that findings by the trial court

are binding on appeal when supported by adequate, substantial,

credible evidence.       Deference is especially appropriate when the

evidence   is    largely     testimonial    and   involves   questions       of

credibility."     Ibid. (quoting Cesare v. Cesare, 154 N.J. 394, 411-

12 (1998)).     The trial court enjoys the benefit, which we do not,

of observing the parties' conduct and demeanor in the courtroom

                                      21                              A-0929-16T1
and in testifying.       Ibid.      Through this process, trial judges

develop a feel of the case and are in the best position to make

credibility assessments. Ibid. We will defer to those credibility

assessments unless they are manifestly unsupported by the record.

Leimgruber v. Claridge Assoc., 73 N.J. 450, 456 (1977) (citing

Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App.

Div. 1963)).      However, we owe no deference to a trial court's

interpretation of the law, and review issues of law de novo.

Mountain Hill, LLC v. Twp. Comm. of Middletown, 403 N.J. Super.

146, 193 (App. Div. 2008).

     On appeal, Valley first argues that Judge Hansbury did not

satisfy    his   obligation   "to    find   the   facts   and   state     [his]

conclusions of law" under Rule 1:7-4 because his decision was not

based on facts in the record and his conclusions of law were

inadequate.      Although couched in terms of the Rule, Valley's

argument is in actuality that the judge "ignored salient facts in

his finding of facts and issued patently erroneous conclusions of

law."     We disagree.   As discussed infra, we conclude that Judge

Hansbury's decision clearly set forth his reasons, was supported

by substantial evidence in the record, and was legally correct.

     We turn to Valley's contention that Judge Hansbury misapplied

the PIA by holding that the retention provision of the trust

agreement took precedence over the PIA's mandate for a trustee to

                                     22                                 A-0929-16T1
diversify.     We reject that contention and conclude the judge

correctly applied the statute.

      The PIA mandates the diversification of investments.                   It

states that "[a] fiduciary shall diversify the investments of the

trust unless the fiduciary reasonably determines that, because of

special circumstances, the purposes of the trust are better served

without diversifying."      N.J.S.A. 3B:20-11.4.      Even outside of the

PIA, "[d]iversification is a uniformally recognized characteristic

of prudent investment and, in the absence of specific authorization

to   do   otherwise,   a   trustee's    lack   of   diversification     would

constitute a breach of its fiduciary obligations."           Robertson v.

Cent. Jersey Bank & Trust Co., 47 F.3d 1268, 1274 n.4. (3rd Cir.

1995).

      However, the PIA recognizes that despite the mandate, the

grantor's intent controls and, if there is any doubt as to that

intent, application should be made to the court.           It states:

            The prudent investor rule is a default rule
            that may be expanded, restricted, eliminated,
            or otherwise altered by express provisions of
            the trust instrument.     A fiduciary is not
            liable to a beneficiary to the extent that the
            fiduciary acted in reasonable reliance on
            those express provisions.      Nothing herein
            shall affect the jurisdiction of the Superior
            Court to order or authorize a fiduciary to
            deviate from the express terms or provisions
            of a trust instrument for the causes, in the
            manner, and to the extent otherwise provided
            by law.

                                   23                                 A-0929-16T1
          [N.J.S.A. 3B:20-11.2(b).]

     Applying to Ray's trust agreement the PIA and well settled

requirements for ascertaining a trust's settlor's intent, see In

re Trust of Duke, 305 N.J. Super. 408, 418 (Ch. Div. 1995), aff'd,

305 N.J. Super. 407 (App. Div. 1997),   it is beyond cavil that he

directed Peoples, as trustee, to retain the stock he deposited and

specifically insulated his trustee from liability against any

claim being raised if it failed to diversify.    The provision did

not make retention optional.   Compare Robertson, 47 F.3d at 1271

(where the trust instrument authorized but did not require the

trustee to "retain, temporarily or permanently, any or all of the

stock"); Americans for the Arts v. Ruth Lilly Charitable Remainder

Annuity Trust #1, 855 N.E.2d 592, 595 (Ind. Ct. of App. 2006)

(where the trust instrument stated "any investment made or retained

by the trustee in good faith shall be proper despite any resulting

risk or lack of diversification").

     Moreover, to the extent Valley believed that despite the

retention provision, it would be better to diversify, it was

obligated to seek authorization from the court before selling the

trust's corpus.   N.J.S.A. 3B:20-11.2(b); Matter of Wold, 310 N.J.

Super. 382, 387 (Ch. Div. 1998); see also Restatement (Second) of

Trusts § 167(1) (1959) (stating that a court will deviate from the


                                24                          A-0929-16T1
express terms of the trust instrument "if owing to circumstances

not known to the settlor and not anticipated by him compliance

would defeat or substantially impair" the purpose of the trust).

Notably, Valley's counsel explained these options to his client,

but Valley chose to act at its own peril despite counsel's advice.

Under these circumstances, we have no reason to question Judge

Hansbury's legal conclusion regarding the impact of the PIA and

Valley's obligation to retain the stock in Ray's trust.

       We    similarly      agree     with       Judge   Hansbury's    rejection     of

Valley's related argument that the sisters' claims were barred by

the     doctrine       of        laches,     equitable      estoppel,     avoidable

consequences, or ratification because they had obtained sufficient

knowledge by January 2001 when the 2000 statement reflecting its

diversification was sent to Enid, and did not object to it for

over    a    decade.        We   conclude     Valley's     arguments    are   without

sufficient merit to warrant discussion in a written opinion.                         R.

2:11-3(e)(1)(E).         We only observe that Judge Hansbury found that

the sisters should have known about the retention provision in May

2008 and his finding was based on credible evidence presented at

the trial.        Moreover, his decision to reject defenses asserted by

Valley were legally correct as they are "not regarded with favor

where       the   parties    stand     in    a    confidential   relation[ship,]"

Weisberg v. Koprowki, 17 N.J. 362, 378 (1955), and where a party's

                                             25                               A-0929-16T1
actions have contributed to or caused the delay, its equitable

claims will not be sustained.    See Rolnick v. Rolnick, 262 N.J.

Super. 343, 364 (App. Div. 1993).

     Valley also contends that the passive changes to the trust's

stocks that occurred as a result of the AT&T "spin offs" and the

merger of Exxon and Mobile voided the retention provision.         We

disagree and again conclude that Valley's contentions on appeal

are without merit.    We agree with Judge Hansbury's finding that

there was absolutely no evidence that the stocks that resulted

from the spinoffs or the merger were substantially different than

the original stocks deposited by Ray into the trust.   "[N]ew stock

[issued] as a result of a merger, reorganization or other cause"

is treated as the same stock as the old "if the new stock is the

equivalent or substantially the equivalent of the old."   Fidelity

Union Trust Co. v. Cory, 9 N.J. Super. 308, 312 (Ch. Div. 1950);

see also Restatement (Second) of Trusts § 231 cmt. f (1959).     The

new shares are considered substantially equivalent to the original

shares in companies if the resulting companies are conducting

business that is of the same nature as the original companies.

See Fidelity, 9 N.J. Super. at 313; In re Estate of Riker, 124

N.J. Eq. 228, 231-32 (Prerog. Ct. 1938), aff'd o.b., 125 N.J. Eq.

349 (E. & A. 1939).    There was no evidence that the Bell stocks



                                26                          A-0929-16T1
or ExxonMobile represented any substantial change in the nature

of the portfolio.

     Contrary to Valley's contention that Judge Hansbury should

have taken judicial notice under N.J.R.E. 201 of the fact that the

"[n]ew [c]ompanies were wholly unrelated" to their predecessors,

that fact, even if judicially noticeable, did not satisfy Valley's

burden to demonstrate a substantial change in the stocks subject

to the retention clause.   That evidence, as Valley points out in

its discussion of Mertz v. Guaranty Trust Co. of N.Y., 247 N.Y.

137, 139-4 (N.Y. 1928), must establish that the "identity and

substance" of the original shares were "destroyed."      Here, there

was no such evidence.

     Next, we address Valley's contention that even if it breached

its fiduciary duty to the sisters, it did so in good faith and

should, therefore, be excused from paying any damages under the

"innocuous breach" doctrine.   The doctrine is an exception to the

general rule that a trustee shall be held liable for a loss it

causes by failing to adhere to the trust instrument without

judicial sanction, even if it acts in good faith.     See Conover v.

Guarantee Trust Co., 88 N.J. Eq. 450, 458 (Ch. 1917), aff'd o.b.,

89 N.J. Eq. 584 (E. & A. 1918).      A court can invoke the doctrine

"[i]f [it] concludes that . . . it would be unfair or unduly harsh

to require the trustee to pay, or pay in full . . . ." Restatement

                                27                           A-0929-16T1
(Third) of Trusts § 95 cmt. d (Am. Law Inst. 2012).                     "Ordinarily,

such relief would be based on a finding that the trustee had made

a conscientious effort to understand and comply with applicable

fiduciary standards and the duties of the trusteeship."                           Ibid.

When determining whether to relieve the trustee of liability, a

court    must   consider   "whether         the    trustee     was   aware      of   the

availability      (in      an        appropriate          situation)       of     court

instruction . . .       and,    if    so,   the    reasons     for   the    trustee's

decision not to seek instruction."                Ibid.

       Applying these guiding principles here, we conclude there was

ample evidence in the record to establish that Valley was aware

from    its   counsel's    advice      about      the     wisdom   of   seeking      the

beneficiaries' or the court's approval before deviating from the

retention provision.        Yet, there was no evidence explaining why

Valley chose to ignore that advice.                 Under these circumstances,

we see no reason for the application of the doctrine either to

relieve Valley from liability for damages, or, as Valley also

argued, for pre-judgment interest.

       We also disagree with Valley's contention that Judge Hansbury

improperly denied it additional corpus commissions for the period

from November 2010 through July 2016.               In support of its argument,

Valley relies upon In re Armour's Will, 61 N.J. Super. 50, 57

(App. Div.), rev'd on other grounds, 33 N.J. 517 (1960), a case

                                         28                                     A-0929-16T1
that addressed commissions on income, not corpus commissions.                 We

find its reliance inapposite.           There, in reversing our decision

to approve an executor/trustee receiving double income commissions

based on its dual capacity, the Supreme Court stated that in

determining entitlement to commissions, a court should look to the

service performed.       It stated that commissions should be paid when

a   trustee   "h[e]ld,    manage[d]     and   invest[ed] . . . assets       and

pa[id] over the income thereon as well as the principal to the

specified beneficiary."        In re Armour's Will, 33 N.J. 517, 524

(1960).    In denying commissions here, Judge Hansbury did just that

when he determined Valley was not entitled to such commissions

because it was "clear that no management of the trust took place

after Enid's death."        Moreover, N.J.S.A. 3B:31-71(b)(8) permitted

the judge to deny compensation to Valley for its "breach of trust."

There was no error in denying the commissions.

      We   next   address    Valley's      challenge   to   Judge   Hansbury's

finding that May 2, 2008 was the proper date for valuation of the

trust for the purpose of calculating damages.                 We review the

determinations for an abuse of discretion, see Musto v. Vidas, 333

N.J. Super. 52, 64 (App. Div. 2000), and find none.

      Here, Judge Hansbury rejected Valley's contention that the

proper date should have been as early as 2000, when Valley began

to diversify and its actions were disclosed in statements sent to

                                      29                               A-0929-16T1
Enid and later to Deborah.   In his oral decision, Judge Hansbury

explained why the earlier date was not appropriate and why he

relied upon the May 2008 date. The judge's findings were supported

by the record and his determination of the date was consistent

with principles of fairness and justice.    Graziano v. Grant, 326

N.J. Super. 328, 342 (App. Div. 1999).

     In sum, as to Valley's contentions, we conclude neither the

PIA nor any of the sisters' actions, as argued by Valley, warrant

our interference with the outcome in this matter as to Valley's

liability or the damages assessed against it by the judge.    To the

extent we have not specifically addressed any of Valley's remaining

arguments, we find them to be without sufficient merit to warrant

discussion in a written opinion. R. 2:11-3(e)(1)(E).

     Turning to the cross-appeals filed by the sisters, we begin

by rejecting their argument that the stock portfolio's valuation

date should have been the date of the judge's final "decree" for

the same reason we rejected Valley's contention about an earlier

date being used.   We find the sisters' reliance on the opinion in

the New York case of In the Estate of Rothko, 401 N.Y.S.2d 449,

455-56 (N.Y. 1977), to be inapposite.      In that case, the court

held an executor, who ignored a testamentary direction that certain

paintings be retained, liable for the value of paintings he sold

as of the date of judgment to account for "appreciation damages"

                                30                           A-0929-16T1
between the date of sale and the date of judgment.                      Here, as to

the stock portfolio, the judge's use of the May 2008 date and his

award of pre-judgment interest fully compensated Deborah and Sarah

for their loss, including any rise in the portfolio's value had

the stocks been retained.           We are satisfied the court's award

properly compensated them for loss of money that rightfully should

have been turned over to them upon Enid's death, after taking into

consideration their failure to take action for a period of four

years after they learned of Valley's breach.                     Penpac, Inc. v.

Passaic Cty. Util. Auth., 367 N.J. Super. 487, 504 (App. Div.

2004).    Their contentions to the contrary are without any merit.

       We turn next to Sarah's argument that all or part of the

commissions Judge Hansbury and the summary judgment motion judge

awarded to Valley should be reversed because Valley violated the

retention    provision   and    performed     in   a   materially         deficient

manner.     Sarah claims that Valley was not entitled to corpus

commissions under N.J.S.A. 3B:18-14 based upon Ray's fee agreement

with   Peoples,   as   well    as   Peoples   choosing      to    not    take    such

commissions.

       In granting summary judgment to Valley on the question of

corpus    commissions,   the    motion     judge   stated    that       Valley   was

"entitled to its corpus commissions, because in the absence of any

expressed commission, N.J.S.A. 3B:18-2 clearly provides that those

                                      31                                    A-0929-16T1
commissions be allowed."      With respect to income commissions, he

held that Valley was bound by the five percent commission set

forth in the fee agreement.     Later, in response to Valley's motion

in limine to exclude evidence regarding the corpus commissions,

Judge Hansbury granted the motion relying upon the motion judge's

determination with which Judge Hansbury independently agreed.

Ultimately, Judge Hansbury awarded Valley corpus commissions from

August 13, 1993 to May 2, 2008, totaling $80,181, after concluding

that Valley did not do anything "willfully wrong."           We agree with

both judges.

     "The   allowance   of   corpus   commissions   is   a   discretionary

determination which will not be disturbed unless there has been

an abuse of discretion[,]" or "the court did not utilize 'the

proper legal approach[.]'"      In re Estate of Summerlyn, 327 N.J.

Super. 269, 272 (App. Div. 2000).

     N.J.S.A. 3B:18-2 provides:

            On the settlement of the account of a
            nontestamentary    trustee,   as    defined   in
            N.J.S.A. 3B:17-9, the court shall allow him
            the compensation as may have been agreed upon
            by the instrument creating the trust; and in
            the   absence   of    any   express    provision
            concerning compensation, shall allow him
            commissions in accordance with this chapter.

            [(Emphasis added).]




                                  32                               A-0929-16T1
     Here, it was undisputed that the fee agreement between Ray

and Peoples was silent about the trustee's entitlement to a corpus

commission and there was no agreement with Valley.     Both judges

properly applied the statute and permitted Valley to recover those

commissions.   Valley's entitlement to a corpus commission was not

altered by Peoples' earlier decision to forgo payment of those

commissions because Valley as successor trustee was not bound by

Peoples' decision.   See, e.g., In re Loree's Trust Estate, 24 N.J.

Super. 604, 607 (Ch. Div. 1953) (noting that a court must allow

compensation to a successor trustee where there are no express

terms regarding compensation, entitling successor trustee to the

commissions set forth by statute).

     Finally, the sisters argue that even if Valley was entitled

to claim a commission, its request should have been denied or at

least reduced, due to its "materially deficient performance,"

N.J.S.A. 3B:18-14,8 including violation of the retention clause,


8
    The statute states in relevant part:

          Such commissions may be reduced by the court
          having jurisdiction over the estate only upon
          application    by   a   beneficiary   adversely
          affected upon an affirmative showing that the
          services rendered were materially deficient or
          that the actual pains, trouble and risk of the
          fiduciary   in    settling   the  estate   were
          substantially less than generally required for
          estates of comparable size.


                                33                          A-0929-16T1
filing improper capital gains tax returns, and holding money un-

invested in a bank account.     We find this contention to be without

sufficient   merit   to   warrant    further   discussion   in   a   written

opinion. R. 2:11-3(e)(1)(E).         We only observe that there was no

finding that while Valley acted as trustee it performed in a

materially deficient manner.        Cf. In re Will of Landsman, 319 N.J.

Super. 252, 275 (App. Div. 1999) (undue influence banned executor

from receiving commissions).        To the extent it failed to honor the

retention clause, Judge Hansbury adjusted Valley's compensation

and awarded damages against it for its breach.

     Contrary's to Deborah's next argument, we also discern no

abuse of the judge's discretion, see Magnet Res., Inc. v. Summit

MRI, Inc., 318 N.J. Super. 275, 297 (App. Div. 1998), in not

permitting the sisters to present evidence at the damages trial

related to Valley's failure to invest the money it held in its

Cash Management Fund.      "The evidence [they sought to introduce]

obviously was not newly discovered" and "had been in the hands of

the" sisters prior to the liability trial, but they did not present

it when given the opportunity.       Henry Clay v. City of Jersey City,

84 N.J. Super. 9, 18 (App. Div. 1964).         Under these circumstances,

Judge Hansbury properly ruled it was too late.



          [N.J.S.A 3B:18-14].

                                     34                              A-0929-16T1
     Deborah also challenges the summary judgment motion judge's

determination that the sisters' claim about Valley negligently

utilizing a cost basis, rather than stepped-up basis, in its

capital gains tax filings was not cognizable in the probate

litigation.    We conclude that while Deborah correctly states the

claim   was   cognizable    because   it   related   to   a   breach   of   the

fiduciary's duty, see In re Estate of Lash, 169 N.J. 20, 27 (2001);

F.G. v. MacDonell, 150 N.J. 550, 564 (1997), the motion judge's

error was harmless.        R. 2: 10-2.     We are satisfied that9 because

the sisters were able to cross examine Grudelski during the

liability trial about Valley's choice of basis as part of their

breach of fiduciary duty claim, they suffered no prejudice as a



9
     In granting Valley summary judgment on the negligence
counterclaim, the summary judgment motion judge stated that
"compensatory damage-type award[s]," such as negligence, are
usually not permitted in a Probate Part proceeding. Rather, such
claims are encompassed in breach of fiduciary duty claims.
Valley's "liability, if any, will be based on a breach of fiduciary
duty and/or implied covenant of good faith and fair dealing, not
on a theory of negligence or conversion." As noted earlier, breach
of fiduciary duty is a tort theory. Lash, 169 N.J. at 27. As a
result, a fiduciary may be held liable for harm resulting from a
breach of the duties imposed by the fiduciary relationship, and
damages may be awarded as a result of that breach. Ibid.; F.G.,
150 N.J. at 564.    Therefore, the summary judgment judge was in
error by concluding that a negligence claim and a breach of
fiduciary claim were unrelated theories of recovery, and by
dismissing defendants' negligence claim, in which they sought to
recover for the payment of unnecessary capital gains tax, on
summary judgment on that basis.


                                      35                               A-0929-16T1
result of the judge's error, especially in light of the sisters'

success on that claim.

      Deborah      also   maintains     that   Judge   Hansbury      erred    by

accepting Gould's use of the trust's actual 2008 tax payments in

determining the estimated taxes for that year in the hypothetical

describing the result had the stock been retained.                  She claims

that the damages award should be increased by $8024 to account for

Gould's error.     We disagree.

     Gould included $9606 in his hypothetical as the estimated

taxes that the trustee paid in April 2008.                  He used it as an

estimate of income tax that would have been due on interest and

dividends received by the trust had the stocks been retained.10

Judge Hansbury, as the factfinder, was free to accept or reject

Gould's   expert    testimony,    in   whole   or   part.     See   Torres    v.

Schripps, Inc., 342 N.J. Super. 419, 430-31 (App. Div. 2001); City

of Long Branch v. Liu, 203 N.J. 464, 491 (2010).                Moreover, we

discern no error, as argued by Deborah, in Gould's accounting for

the 2008 taxes actually paid on the sale of stock in his estimate.




10
   The fact that the amount coincided with the capital gains tax
on the early 2008 sale of Comcast and Exxon shares did not
constitute double counting since Gould was using the figure as an
estimate of taxes due on the interest and dividends received by
the trust in the hypothetical scenario where the stock had been
retained in the trust.

                                       36                              A-0929-16T1
     Finally,    Deborah    contends     that    Valley    should   reimburse

Sarah's counsel fees, an argument not raised by Sarah in her cross-

appeal.   She    argues    that   Valley's      failure   to   adhere   to   the

retention provision and its failure to follow its attorney's advice

established the bad faith that Judge Hansbury refused to find when

he denied the sisters' fee application.           We disagree.

     The decision whether to award counsel fees rests within the

sound discretion of the trial court.         Maudsley v. State, 357 N.J.

Super. 560, 590 (App. Div. 2003). When exercising that discretion,

courts must be cognizant of New Jersey's strong public policy

against the shifting of counsel fees and our adherence to the

"American Rule," which prohibits recovery of counsel fees by the

prevailing party against the losing party,           In re Niles Trust, 176

N.J. 282, 293-94 (2003), unless authorized by statute or rule.

See Rule 4:42-9; In re Estate of Vayda, 184 N.J. 115, 120 (2005).

"[L]imited exceptions" have been created in the interest of equity

in those instances involving claims against an attorney, or when

an executor or trustee have acted in bad faith such as by acting

in self-interest or committing "the pernicious tort of undue

influence."     Id. at 122-23; Niles, 176 N.J. at 298; see also In

re Estate of Stockdale, 196 N.J. 275, 308 (2008) (the tort of

undue influence is available where breach of fiduciary would be

inadequate).

                                    37                                  A-0929-16T1
     Judge Hansbury properly determined that Valley did nothing

to promote its self-interest by diversifying, and acted in what

it believed was the beneficiaries' best interests.                    We conclude

therefore that he properly denied the sisters' fee application and

we reject Deborah's arguments to the contrary.

     In sum, despite the sisters' arguments to the contrary, we

conclude   that     all   of   Judge    Hansbury's        determinations       were

supported by credible evidence and legally correct.               To the extent

that the summary motion judge erred, we find no harmful error.

Finally, to the extent we have not specifically addressed any of

their   remaining    arguments,   we        find   them   to   also   be   without

sufficient merit to warrant discussion in a written opinion. R.

2:11-3(e)(1)(E).

     Affirmed.




                                       38                                  A-0929-16T1
