Opinion
J-A13040-16 No. 1124 WDA 2015
09-28-2016
IN RE: THE THOMAS G. GOODWIN REVOCABLE LIVING TRUST IN RE: MARIE GOODWIN a/k/a MARIE WILKINS
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order entered on June 22, 2015 in the Court of Common Pleas of Fayette County, Orphans' Court at No(s): 18-OC-2014 BEFORE: OLSON, STABILE and MUSMANNO, JJ. MEMORANDUM BY MUSMANNO, J.:
Marie Goodwin a/k/a Marie Wilkins ("Goodwin") appeals from the Order granting the Petition for Rule to Show Cause and Motion for Declaratory Judgment filed by Thomas Goodwin, Jr., Douglas Goodwin, and Peggy Goodwin (collectively "Petitioners"), which challenged Goodwin's oversight of the Thomas G. Goodwin ("Decedent") Revocable Living Trust ("Trust") and her management of the Trust and estate assets. We affirm.
The Orphans' Court set forth the relevant underlying factual history in its Opinion, which we adopt for the purpose of this appeal. See Orphans' Court Opinion, 9/9/15, at 3-6.
On May 1, 2014, Petitioners filed a Petition for Rule to Show Cause and Motion for Declaratory Judgment. On May 30, 2014, Goodwin filed an Answer and New Matter. Petitioners filed a Reply to the New Matter. On June 26, 2014, Petitioners sought to amend the Petition for Rule to Show Cause and Motion for Declaratory Judgment to clarify that Goodwin was named in her capacity as the Trust's representative and not in an individual capacity. The Orphans' Court granted Petitioners' request, after which Petitioners filed an Amended Petition for Rule to Show Cause and Motion for Declaratory Judgment. Goodwin filed an Answer and New Matter. Petitioners filed a Reply to the New Matter.
The Orphans' Court held hearings on the matter on October 16, 2014, and December 18, 2014. Thereafter, on June 22, 2015, the Orphans' Court entered Findings of Fact, Conclusions of Law, and an Order granting Petitioners' Petition and Motion, and entering judgment in their favor. Specifically, the Orphans' Court directed Goodwin to convey to Petitioners the property at 166 Chestnut Lane, Normalville, Pennsylvania ("the Normalville property"), satisfy any liens paid by Petitioners in connection to the Normalville property, and pay attorney's fees incurred by Petitioners.
In a Motion for Payment of Fees, Petitioners stated that they incurred $12,076.00 in attorney's fees and paid $881.29 in real estate taxes in connection with the Normalville property.
Goodwin filed a timely Notice of Appeal and a court-ordered Pennsylvania Rule of Appellate Procedure 1925(b) Concise Statement. The Orphans' Court issued an Opinion.
Goodwin also filed a Motion to Stay Pending Appeal, which the Orphans' Court denied.
On appeal, Goodwin raises the following questions for our review:
1. Whether the [Orphans' Court] committed an error of law and[/]or abused its discretion in determining that personal property of the estate must be used to pay expenses before expending trust assets[,] when Pennsylvania law and the language of [D]ecedent's will and [T]rust specifically provide that trust assets are to be used to pay expenses of both trust and estate administration?Brief for Appellant at 3-4.
2. Whether the [Orphans' Court] committed an error of law and/or abused its discretion in concluding that the [Normalville] property should be conveyed to Petitioners immediately when[,] under the Pennsylvania Probate, Estates and Fiduciaries Code, the [Normalville] property specifically devised to [] Petitioners would abate and be used to pay the expenses of the [T]rust and/or estate administration?
3. Whether the [Orphans' Court] committed an error of law and[/]or abused its discretion in determining that [Goodwin] violated her duty to administer the Trust, violated her duties of loyalty and impartiality to the other beneficiaries and/or committed a breach of trust?
4. Whether the [Orphans' Court] committed an error of law or abused its discretion in assessing a judgment of any liens and attorney fees against [Goodwin] in favor of [] Petitioners?
5. Whether the [Orphans' Court] committed an error of law and[/]or abused its discretion in concluding that [Goodwin] is not entitled to recover attorney's fees when the clear language of the Trust provides for payment of attorney's fees?
Our standard of review from a final order of the Orphans' Court is as follows:
[W]e accord the findings of the [O]rphans' [C]ourt, sitting without a jury, the same weight and effect as the verdict of a jury; we will not disturb those findings absent manifest error; as an appellate court we can modify an [O]rphan[s' C]ourt decree only if the findings upon which the decree rests are not supported by competent or adequate evidence or if there has
been an error of law, an abuse of discretion, or a capricious disbelief of competent evidence.In re Trust of Hirt , 832 A.2d 438, 447 (Pa. Super. 2003) (citations, quotation marks and some brackets omitted).
Moreover, we will not reverse the [Orphans' C]ourt's credibility determinations absent an abuse of the court's discretion as fact-finder. On the other hand, we are not required to give the same deference to [the Orphans' C]ourt's legal conclusions. Where the rules of law on which the [Orphans' C]ourt relied are palpably wrong or clearly inapplicable, we will reverse the court's decree.
In her first claim, Goodwin contends that the Orphans' Court erred in determining that the personal property of the estate must be used in paying expenses of the Trust prior to utilizing the Trust's assets. Brief for Appellant at 11, 14-16. Goodwin argues that the clear language of the Will and the Trust documents demonstrates that all of Decedent's assets were to be placed within the Trust, and that the assets of the Trust were to be used to pay the taxes and expenses of the Trust. Id. at 12-13, 14, 15, 16; see also id. at 12 (wherein Goodwin points out that under the Trust, the terms "trust assets" and "trust estate" include "all assets of any trust created hereunder and income derived from such assets and all proceeds of any description derived from the sale, exchange, or other disposition of such assets."). Goodwin also argues that the Orphans' Court erroneously found that she failed to inventory or account for Decedent's personal property. Id. at 15-16. Goodwin asserts that "there is nothing to account for that would be of more than de minimis value and[,] for the most part[,] has been distributed to [] Petitioners." Id. at 16.
The Orphans' Court set forth the relevant law, addressed Goodwin's claims, and determined that they are without merit. See Orphans' Court Opinion, 9/9/15, at 6-9, 10-11; see also In re Estate of Cherwinski , 856 A.2d 165, 167 (Pa. Super. 2004) (stating that "[t]he findings of a judge of the [O]rphans' [C]ourt division, sitting without a jury, must be accorded the same weight and effect as the verdict of a jury, and will not be reversed by an appellate court in the absence of an abuse of discretion or a lack of evidentiary support."). We adopt the sound reasoning and conclusion of the Orphans' Court for the purpose of this appeal. See Orphans' Court Opinion, 9/9/15, at 6-9, 10-11.
In her second claim, Goodwin contends that the Orphans' Court erred in requiring that the Normalville property must immediately be conveyed to Petitioners. Brief for Appellant at 17, 21. Goodwin argues that there were insufficient trust assets to satisfy the expenses of the estate without the liquidation of assets, including the Normalville property. Id. at 17-19. Goodwin points out that she issued payments for a number of expenses totaling $14,796.82. Id. at 17-18. Goodwin asserts that both the Trust and the Will provide that all expenses from the estate must be paid by the assets in the Trust. Id. at 19. Goodwin claims that 20 Pa.C.S.A. § 3541 governs the order of abatement, where the trust assets are insufficient to pay expenses. Id. at 19-20. Goodwin argues that under section 3541, "property specifically devised or bequeathed for the benefit of the surviving spouse shall have priority in terms of distribution over property specifically devised or bequeathed to or for the benefit of [D]ecedent's issue." Id. Goodwin thus claims that the Normalville property could be used by the estate to pay expenses prior to the conveyance to Petitioners. Id. at 20.
The Trust Agreement states the following, in relevant part:
Section 1.01 - Trust Estate Defined
... The "Trust Estate" is defined as all property transferred or conveyed to and received by the Trustee held pursuant to the terms of this instrument. The Trustee is required to hold, administer, and distribute this property as provided in this Trust Agreement.
* * *
Section 3.02 - Payment of Death Expenses
On the death of the Settlor, the Trustee shall pay from the Trust Estate constituting [sic] the Settlor's last illness, funeral, burial and any inheritance, estate, or death taxes that may be due by reason of the Settlor's death, unless the Trustee in his or her absolute discretion determines that other adequate provisions have been made for the payment of such expenses and taxes.
* * *
Section 8.03 - Personal Property Distribution
Notwithstanding any provision of this Trust Agreement to the contrary, the Trustee must abide by any memorandum by the Settlor, particularly that contained in the section entitled "Special Directives" incorporated into this Trust Instrument....
* * *
SPECIAL DIRECTIVES (SECOND)
I direct that all estate and inheritance taxes payable as a result of my death, not limited to taxes assessed on property, shall be
paid out of the residue of my Estate, and shall not be deducted or collected from any Legaltee, Devisee, or Beneficiary hereunder.Trust Agreement, 1/25/06, at 1, 5, 14, 17; see also General Amendment to Trust Agreement, 1/5/08, at 2 (unnumbered) (wherein Decedent directed that Petitioners are to be "given the property located at 166 CHESTNUT LANE, NORMALVILLE, PA."); Will, 1/25/06, at 1 (wherein Decedent "provided for the payment of all my debts, expenses of administration of property wherever situated passing under this Will or otherwise, and estate, inheritance, transfer, and succession taxes ... that become due by reason of my death, under the [Trust].").
The Orphans' Court set forth the relevant law, addressed Goodwin's claims, and determined that they are without merit. See Orphans' Court Opinion, 9/9/15, at 9-10 (addressing Goodwin's abatement argument); 11-12 (stating that Decedent made a specific devise of the Normalville property to Petitioners); see also Findings of Fact and Conclusions of Law, 6/23/15, at 4-5 (noting that Goodwin, in her capacity as Trustee, distributed Decedent's personal items that were made part of the trust, and transferred approximately $22,000 from Decedent's savings account to joint checking account held by Goodwin and Decedent); N.T., 12/18/14, at 61, 63, 67 (wherein Goodwin admitted that she moved over $22,000 from Decedent's savings account to a checking account, and never put any of the money into an account for the Trust or estate); In re Estate of Blumenthal , 812 A.2d 1279, 1290 (Pa. Super. 2002) (stating that "[t]he will must control the distribution of the estate, and when [its] language is clear and explicit, [its] intention thus plainly expressed must be obeyed regardless of any apparent or real inequalities produced among the legatees.") (citation omitted). We adopt the sound reasoning of the Orphans' Court for the purpose of this appeal. See Orphans' Court Opinion, 9/9/15, at 9-10.
In her third claim, Goodwin contends that the Orphans' Court abused its discretion in determining that she violated her duty to administer the Trust, violated her duties of loyalty and impartiality, and committed a breach of trust. Brief for Appellant at 21. Goodwin argues that in her role as Trustee under the Trust, she had total discretion in interpreting all questions of construction and interpretation of the Trust, and her interpretations were binding upon the beneficiaries. Id. at 22. Goodwin asserts that her interpretation of the language of the Trust "has been taken in good faith and would control over any purported violation of her duty to administer the [T]rust, her duty of loyalty or duty of impartiality." Id. at 23. Goodwin claims that she distributed items to Petitioners, including jewelry, guns, and golf clubs. Id. Goodwin also argues that the deed to the Normalville property was defective and thus she retained an interest in the property. Id. at 24. Goodwin points out that she took action to minimize taxes, as only half of the Normalville property was taxable. Id. Goodwin further claims that she failed to pay the property taxes on the Normalville property because the Trust assets had been exhausted. Id. at 25.
The Orphans' Court addressed Goodwin's claims and determined that they are without merit. See Orphans' Court Opinion, 9/9/15, at 11-14 (addressing the specific devise of the Normalville property and whether the deed was defective), 14-15 (addressing Goodwin's breach of trust, her violation of her duty to administer the Trust, and violation of duties of loyalty and impartiality). Upon our review of the Trust Agreement and Will, we agree with the reasoning of the Orphans' Court and affirm on this basis. See id.
In her fourth claim, Goodwin contends that the Orphans' Court abused its discretion in "assessing a judgment of any liens and attorney fees against [Goodwin] and in favor of [] Petitioners." Brief for Appellant at 26. Goodwin argues that the Orphans' Court erroneously indicated in its Rule 1925(a) Opinion that it was imposing a surcharge upon Goodwin. Id. at 26, 27. Goodwin asserts that the court improperly failed to provide her the required opportunity to be heard before imposing a surcharge. Id. at 26. Goodwin additionally claims that she did not breach her duty under the Trust, which prevented the imposition of the surcharge. Id. at 27.
The primary duty of a trustee is the preservation of the assets of the trust and the safety of the trust principal. The standard of care imposed upon a trustee is that which a man of ordinary prudence would practice in the care of his own estate. Surcharge is the remedy when a trustee fails to exercise
common prudence, skill and caution in the performance of its fiduciary duty, resulting in a want of due care.In re Estate of Warden , 2 A.3d 565, 573 (Pa. Super. 2010) (citations, quotation marks, and footnote omitted).
The court must find the following before ordering a surcharge: (1) that the trustee breached a fiduciary duty and (2) that the trustee's breach caused a loss to the trust. Where there is no breach of fiduciary duty, there is no basis for a surcharge. Even if there is a breach of duty, however, where there is no loss, there is no basis for a surcharge.
"Before the court can impose a surcharge, it must give the executor an opportunity to be heard." In re Estate of Westin , 874 A.2d 139, 145 (Pa. Super. 2005).
In general, one who seeks to surcharge a trustee bears the burden of proving that the trustee breached an applicable fiduciary duty. However, when a beneficiary has succeeded in proving that the trustee has committed a breach of duty and that a related loss has occurred, ... the burden of persuasion ought to shift to the trustee to prove, as a matter of defense, that the loss would have occurred in the absence of a breach of duty. ...[A]s between innocent beneficiaries and a defaulting fiduciary, the latter should bear the risk of uncertainty as to the consequences of its breach of duty.In re Dentler Family Trust , 873 A.2d 738, 745 (Pa. Super. 2005) (citation omitted).
[W]hen determining the proper surcharge to be imposed, we are guided by the Restatement (Second) of Trusts. ...
Restatement § 204 provides that a trustee is not liable for a loss in value of the trust property or for a failure to make a profit that does not result from a breach of trust. Conversely, Restatement § 205 provides, "If the trustee commits a breach of trust, he is chargeable with (a) any loss or depreciation in value of the trust estate resulting from the breach of trust; or (b) any
profit made by him through the breach of trust; or (c) any profit which would have accrued to the trust estate if there had been no breach of trust." Comment (a) explains that in choosing among these three remedies, the beneficiary has the option of pursuing the remedy that will place him in the position in which he would have been if the trustee had not committed the breach.In re Scheidmantel , 868 A.2d 464, 493 (Pa. Super. 2005) (citation omitted). Furthermore, "[e]valuating the reasonableness of the amount of a surcharge is within the province of a trial court. Absent an abuse of discretion, we will not disturb a trial court's finding." In re Estate of Brown , 30 A.3d 1200, 1206 (Pa. Super. 2011) (citation omitted).
Initially, contrary to Goodwin's claim, the Orphans' Court held hearings on the matter, wherein Goodwin presented evidence and testimony. See , e.g., Findings of Fact and Conclusions of Law, 6/23/15, at 1-5 (setting forth the relevant evidence presented by the parties at the hearings). Further, the Orphans' Court found that Goodwin breached her fiduciary duty; the breach caused a loss to the Trust; and Petitioners are entitled to a surcharge of liens and attorney's fees. See Orphans' Court Opinion, 9/9/15, at 14-15, 17; see also Findings of Fact and Conclusions of Law, 6/23/15, at 8, 9-10. Based upon the foregoing, we conclude that the Orphans' Court's finding that Goodwin's actions caused a loss to the Trust is supported by competent evidence and the record is free of legal error. See In re Trust of Hirt , 832 A.2d at 447. Thus, the Orphans' Court properly surcharged Goodwin because she breached her fiduciary duties. See Orphans' Court Opinion, 9/9/15, at 14-15, 17; see also In re Dentler Family Trust , 873 A.2d at 745; In re Scheidmantel , 868 A.2d at 493.
Goodwin also claims that the Orphans' Court abused its discretion by imposing the attorney's fees against her in her individual capacity. Brief for Appellant at 26 n.5. However, aside from a single bald statement, Goodwin has not provided any analysis or citation to authority to support her claim. See Pa.R.A.P. 2119(a) (stating that an argument must contain "such discussion and citation of authorities as are deemed pertinent."). Thus, we conclude that this claim is waived. See In re Estate of Whitley , 50 A.3d 203, 209 (Pa. Super. 2012) (stating that "[f]ailure to cite relevant legal authority constitutes waiver of the claim on appeal.").
In her final claim, Goodwin contends that the Orphans' Court abused its discretion by finding that she is not entitled to recover attorney's fees from the Trust. Brief for Appellant at 28. Goodwin argues that the Orphans' Court erroneously denied her claim for attorney's fees based upon her administration of the Trust. Id. Goodwin also asserts that Article Four, Section 4.03 of the Trust Agreement permits the Trustee to employ counsel to defend any claim or controversy against the Trust. Id. at 28-29; see also id. at 29 (wherein Goodwin claims that the Probate, Estates and Fiduciaries Code supports her claim for attorney's fees).
The Orphans' Court set forth the relevant standard of review, addressed Goodwin's claims, and determined that they are without merit. See Orphans' Court Opinion, 9/9/15, at 16-17. We agree with the Orphans' Court's sound reasoning, and conclude that the court did not abuse its discretion in denying Goodwin's claim for payment of attorney's fees from the Estate. See id.
Order affirmed.
Judge Stabile joins the memorandum.
Judge Olson concurs in the result. Judgment Entered. /s/_________
Joseph D. Seletyn, Esq.
Prothonotary Date: 9/28/2016
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