J-S11032-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

IN THE MATTER OF: E.A.I., et al., : IN THE SUPERIOR COURT OF

: PENNSYLVANIA

:

:

:

:

APPEAL OF: R.F., :

:

Appellant : No. 899 MDA 2014

Appeal from the Order entered on April 3, 2014

in the Court of Common Pleas of Clinton County,

Orphans' Court Division, No. 157-11 OC

BEFORE: PANELLA, OTT and MUSMANNO, JJ.

MEMORANDUM BY MUSMANNO, J.: FILED FEBRUARY 26, 2015

R.F. (“Former Trustee” or “R.F.”), original trustee of the inter vivos

trust (“Trust”) for the benefit of E.A.I., R.M.I., and Ry.M.I. (collectively “the 

beneficiaries”), appeals from the Order surcharging Former Trustee in the 

amount of $8,798.00. We affirm.

The Orphans’ Court has set forth the relevant underlying factual and 

procedural history in its Opinion, which we adopt for the purpose of this 

appeal.1 See Orphans’ Court Opinion, 4/3/14, at 1-4.

 

1

J.L.R., the substitute trustee, sought a limited surcharge period because 

Former Trustee had comingled the Trust funds with her personal funds, and 

it was not possible to verify the Trust funds prior to November 1, 2011. 

N.T., 2/25/14, at 15-16. With regard to the rents in question, J.L.R. stated 

that while some of the rents were collected, a total of $7,798.00 in rental 

income was not distributed to the Trust. Id. at 5-15. However, following 

Former Trustee’s removal, she turned over $1,654.56 in Trust assets to 

J.L.R. See 2013 Accounting, 1/15/14.
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Following a hearing, the Orphans’ Court entered an Order surcharging 

Former Trustee in the amount of $8,798.00. Former Trustee filed 

Exceptions, which the Orphans’ Court denied. Thereafter, Former Trustee 

filed a timely Notice of Appeal and a court-ordered Pennsylvania Rule of 

Appellate Procedure 1925(b) Concise Statement. 

On appeal, Former Trustee raises the following questions for our 

review:

A. Whether the [Orphans’ Court] committed an error of 

law/abuse of discretion in awarding a surcharge against 

[Former Trustee] when there was no actual loss suffered by 

the Trust?

B. Whether the [Orphans’ Court] committed an error of 

law/abuse of discretion in failing to credit [Former Trustee] 

for out-of-pocket expenditures made for the benefit of the 

Trust?

Brief for Appellant at 6.

Our standard of review of Orphans’ Court decisions is as follows:

The 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. This rule is particularly applicable to 

findings of fact which are predicated upon the credibility of the 

witnesses, whom the judge has had the opportunity to hear and 

observe, and upon the weight given to their testimony. In 

reviewing the Orphans’ Court’s findings, our task is to ensure 

that the record is free from legal error and to determine if the 

Orphans’ Court’s findings are supported by competent and 

adequate evidence and are not predicated upon capricious 

disbelief of competent and credible evidence. However, we are 

not limited when we review the legal conclusions that [the] 

Orphans’ Court has derived from those facts.
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In re Estate of Cherwinski, 856 A.2d 165, 167 (Pa. Super. 2004) (citation 

omitted).

We will address Former Trustee’s claims together. Former Trustee 

contends that the Orphans’ Court erred in granting the Petition for surcharge 

against her where there was no evidence that her actions caused the Trust 

an actual loss. Brief for Appellant at 11, 14. Former Trustee argues that 

while she failed to include the rents in question in the accounting of the 

Trust, such poor record keeping does not establish actual loss. Id. at 11-12. 

Former Trustee also claims that the evidence established that the 

beneficiaries’ mother had directed the renters of the property in question to 

send rent payments to her and not to Former Trustee. Id. at 13-14. 

Former Trustee asserts that to make up for losses by the Trust, she would 

provide her own money to the Trust. Id. at 12-13, 14; see also id. at 13 

(wherein Former Trustee argues that the Trust operates at a yearly loss and 

that the losses were covered by Former Trustee’s personal funds).

Former Trustee additionally contends that the trial court abused its 

discretion in failing to credit her with the out-of-pocket expenditures, 

totaling over $9,000, made for the benefit of Trust. Id. at 14-15. Former 

Trustee points out that she also paid $268.52 in property taxes on Trust 

property in 2013. Id. at 14.

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. 
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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.

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.

In re Estate of Warden, 2 A.3d 565, 573 (Pa. Super. 2010) (citations, 

quotation marks, and footnote omitted). 

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 
J-S11032-15

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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).

The Orphans’ Court found that Former Trustee failed to distribute to 

the Trust the rents in question between November 1, 2011, and December 

31, 2012, in the amount of $7,798.00, and did not include the rents in the 

November 16, 2012 accounting of the Trust. See Orphans’ Court Opinion, 

4/3/14, at 4-5. The Orphans’ Court’s finding is supported by the record. 

See N.T., 2/25/14, at 5-15 (wherein J.L.R., substitute trustee, detailed her 

reconstruction of the payments from November 1, 2011, through December 

31, 2012, and analyzed various bank accounts to determine that $7,798.00 

of anticipated rent payments were not collected and/or deposited with the 

Trust); id. at 27-31 (wherein Former Trustee states that she received all of 

the checks and payments between November 2011 and October 2012, but 

failed to account for the payments); id. at 38 (wherein Former Trustee 

admits that she collected rents between November 2011 and December 

2012, but was unsure of the exact amount collected). The Orphans’ Court 

further determined that, based upon the evidence presented, Former 

Trustee should have charged her son, T.E.S., $1,000 in rent for living in a 
J-S11032-15

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mobile home on trust property. See Orphans’ Court Opinion, 4/3/14, at 5; 

see also N.T., 2/25/14, at 18-19 (wherein J.L.R. detailed fair market rental 

value of the property where Former Trustee’s son lived); N.T., 12/4/12, at 7 

(wherein Former Trustee’s son, T.E.S., admitted that he did not pay rent on 

the rental property). 

Although the Orphans’ Court considered Former Trustee’s testimony 

that she used her personal funds to pay Trust expenses and that her 

payments should offset any surcharge, the Court found that Former 

Trustee’s testimony was not credible. See Orphans’ Court Opinion, 6/16/14, 

at 1-2; see also In re Estate of Cherwinski, 856 A.2d at 167 (stating that 

we will not disturb the findings of fact predicated on the credibility 

determinations of an Orphans’ Court judge absent an abuse of discretion or 

a lack of evidentiary support). The Orphans’ Court also pointed out that the 

purported property tax payment in 2013 by Former Trustee “occurred 

outside the period that the [substitute] [t]rustee was requesting a 

surcharge: i.e.[,] November 1, 2011[,] through December 31, 2012.” 

Orphans’ Court Opinion, 6/16/14, at 2.

Based upon the foregoing, we conclude that the Orphans’ Court’s 

finding that Former Trustee’s actions caused a loss of $8,798.00 is 

supported by competent evidence and the record is free of legal error. See 

In re Estate of Cherwinski, 856 A.2d at 167. Thus, the Orphans’ Court 

properly surcharged Former Trustee because she breached her fiduciary 
J-S11032-15

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duties in failing to collect the relevant rents from the Trust property, and in 

failing to adequately account for the rent in the 2013 Accounting. See In re 

Dentler Family Trust, 873 A.2d at 745; see also In re Scheidmantel, 

868 A.2d at 493.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 2/26/2015
Circulated 02/12/2015 10:00 AM

CRAIG P. MILLER 

PRESIDENT JUDGE 

COURT OF COMMON PLEAS 

25TH JUDICIAL DISTRICT 

OF PENNSYLVANIA 

COURTHOUSE 

.DCK HAVEN, PA 17745 

( ( 

\ 

J 51 ({)?2-/ S' 

IN THE COURT OF COMMON PLEAS OF CLINTON COUNTY, PENNSYLVANIA 

ORPHANS' COURT 

IN THE MATTER OF: 

THE INTER VIVOS TRUST flblo 

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•• 1' R". M.T. 

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) NO. 157 - 11 OC 

) 

) 

) 

) 

OPINION AND ORDER 

Procedural History 

This matter initially came before the Court when the settler of the trust, 

lIe.. J~ A .To J. T. 

,L filed a Petition for 

Citation to Show Cause Why the Trustee Should File an Account on September 26, 2011. A 

R. F. 

hearing on said Petition was held on November 8, 2011, at which the Court directed ••• 

E.A·-:L· 

••• a" Trustee of the Inter Vivos Trust created January 29,2004, for the benefit of 

r;.... f'J\ L. Q". I'v\. T , 

to file an account in twenty days. 

The account was to include all transactions from January 19,2004, through the date of filing the 

account. The Court in a separate Order also directed an escrow account to be established 

),'1, 

concerning three checks being held by _. The parties having not been able to resolve 

the matter, a further hearing was scheduled for December 4,2012. On November 16,2012, 

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Trustee ••••• filed her account of said trust. Following a hearing on December 4, 

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2012, then President Judge J. Michael Williamson removed ••• 

TL.K. 

as the trustee and 

appointed 

K.I-. 

as substitute trustee. A Petition for Surcharge against former trustee, 

'). L.R.. 

was filed on November 1,2013, by the substitute trustee, A 
Circulated 02/12/2015 10:00 AM

CRAIG P. MILLER 

PRESIDENT JUDGE 

::OURT OF COMMON PLEAS 

25TH JUDICIAL DISTRICT 

OF PENNSYLVANIA 

COURTHOUSE 

.OCK HAVEN. PA 17745 

(. 

'. (c 

hearing concerning that Petition for Surcharge was held before this Court on February 25,2014. -L '" '1 C 'J .. y... Ie.,., \ . 

Testifying at that hearing were and •••••• 

To understand the complicated nature of this trust, this Court will recite the facts as best it 

- - r' " -r- (2 _ II~, ---. .1. . . ) .. ./-. 'C ./4 .. -J- ., 1'\ 

can determine. is the mother of , and 

Q( /1/. or. 

•• IIi •••••• " who were all minors when the trust was initiated on January 19,2004. 

(;. Ii:r.. 'R_ M.T . •• Ii ..... was born May 13, 1995, ••••••• was born December 17, 

.M .. T. 

1996, and _._ 

was is the mother of and the maternal 

EA.J. R, Mo.'1=-_ ~'''' M. L. 

grandmother of....... , and On 

J·T. \,~.L. 

January 19,2004, •••• ,joined by her spouse and father of the minor children, _ 

_ , conveyed real estate to the trust which was described as follows: 

a. A certain tract ofland situated in West Keating Township, Clinton County, 

Pennsylvania, approximately 82.5 acres, as more particularly described in a Deed dated 

January 19, 2004, and recorded in Clinton County at Clinton County Instrument No. 2004-00325. 

b. A certain tract ofland situated in West Keating Township, Clinton County, 

Pennsylvania, approximately 106 acres, as more particularly described in a Deed dated 

January 19,2004, and recorded in Clinton County at Clinton County Instrument No. 2004-00326. 

c. Three parcels of land situated in Karthaus Township, Clearfield County, Pennsylvania, 

as more particularly described in that Deed dated January 19,2004, and recorded in Clearfield 

County at Clearfield County Instrument No. 2004-00967. 

d. A certain parcel of land situated in the Village of Karthaus, Karthaus Township, 

2 
Circulated 02/12/2015 10:00 AM

CRAIG P. MILLER 

PRESIDENT JUDGE 

COURT OF COMMON PLEAS 

25TH JUDICIAL DISTRICT 

OF PENNSYLVAN IA 

COURTHOUSE 

LOCK HAVEN, PA 17745 

( ( 

, 

Clearfield County, Pennsylvania, as more particularly described in a Deed dated January 19, 

2004, and recorded in Clearfield County at Clearfield County Instrument No. 2004-00968. 

The above described properties included numerous camp sites subject to leases for which 

ground rents were due and owing to the trust. It is the issue of these ground rents that were to be 

~.L 

collected by the original trustee, that are at issue and which caused then 

f2.J. 

President Judge J. Michael Williamson to remove said ••••••• as trustee and appoint 

'j.L .\~ . 

••• as substitute trustee on December 4,2012. Also at issue is property known as 

Lot No.1 in the 82.5 acre parcel located in West Keating Township, Clinton County, 

TE. s.. T- f.S. 

Pennsylvania. Said parcel had been occupied by •••• • ••• isthe - (>- J . .1.-. ,.... .. 1-. 

half-brother of and the son of He is the maternal uncle of the 

r'A ~ n I,A - M'T 

beneficiaries of the trust, ••• 1;:" •.• - .• .J.-.-•••••• K •.• v'.-.J._' _, and ' '-. 

This Court has addressed occupation of the camp site known as Camp Site No.1 

in an action for ejectment to No. 336-2013. This Court took judicial notice of that proceeding 

and all evidence and testimony received during that proceeding. This Court issued an Opinion 

_f:.\_ 

and Order on December 30, 2013, ejecting from the property known as Camp 

Site No.1 which has a specific address of 5810 Keating Mountain Road, Pottersdale, 

Pennsylvania. This Court further found that a mobile home that was located on said site was the 

property of the trust. 

In the present proceeding concerning the Petition for Surcharge against former trustee, o~ ~ 

f.-.I, J-L.e. , filed November 1, 2013, by the substitute trustee, there are 

two areas in which substitute trustee desires the former trustee to be surcharged. The substitute 

3 
Circulated 02/12/2015 10:00 AM

CRAIG P. MILLER 

PRESIDENT JUDGE 

COURT OF COMMON PLEAS 

25TH JUDICIAL DISTRICT 

OF PENNSYLVANIA 

COURTHOUSE 

LOCK HAVEN, PA 17745 

( ( 

trustee desires the former trustee to be surcharged due to the loss of the rent that should have 

been collected or was collected by the former trustee from November 1,2011, through 

December 31,2012, which amounts to $7,798.00. The second issue is the failure to collect rent 

'f.G', ~, 

from the said ... - •••••• for a period from November 1,2011, through 

December 31, 2012, which would be $1,000.00 for the camp lot per year and $2,500.00 for the 

mobile home. It should be noted that the substitute trustee specifically limited her request for 

surcharge from the date ofN ovember 1, 2011, through December 31, 2012. Therefore, the Court 

will not expand that date. 

Discussion 

Section 7771 of the PEF Code directs that a trustee shall administer the trust in good faith 

and in accordance with its provisions and purposes and the interest of the beneficiaries and also 

in accordance with applicable law. 

Section 7772 directs that a trustee owes a duty of loyalty by administering the trust solely 

in the interest of the beneficiaries. Further, Section 7774 requires that a trustee administer the 

trust as a prudent person would by considering the purposes, provisions, distributional 

requirements, and other circumstances of the trust by exercising reasonable care, skill, and 

caution. 

As noted, Judge Williamson removed the original trustee, ._, by Order of 

.J.L. ((. 

December 4,2012, and appointed ••••••. It is clear that the trustee did not collect all 

the rents during the time period of November 1,2011, through December 31, 2012, which are not 

accounted for in the accounting filed by the original trustee on November 16, 2012. This Court 

4 
Circulated 02/12/2015 10:00 AM

CRAIG P. MILLER 

PRESIDENT JUDGE 

COURT OF COMMON PLEAS 

25TH JUDICIAL DISTRICT 

OF PENNSYLVANIA 

COURTHOUSE 

LOCK HAYEN, PA 17745 

finds that there existed $5,600.00 in rent due from November 1, 2011, through December 31, 

2012, that the original trustee did not collect or did not list in the accounting. Additionally, the 

original trustee received $500.00 in a check known as the "Rippey check," along with $1,698.00 

Cr.:. 

in checks and payments that original trustee, admitted that the original trustee 

received which were not listed in the accounting. This totals $7,798.00 of rent received the 

period of November 1,2011, through December 31, 2012, that was not accounted for by the 

original trustee. 

Substitute trustee, as indicated above, also seeks to surcharge the original trustee a rental 

1_~,S. 

amount that the substitute trustee believes is appropriate for ..... 

occupancy of Camp Site Lot No. 1 located in the 82.5 acre parcel, along with the occupancy of 

the mobile home which is located there. The substitute trustee claims the yearly rental amount 

that should be paid is $1,000.00 for the lot and $2,500.00 for the mobile home. This Court, in its 

T.E. S. 

ejectment proceedings involving this property and ••••••••• to No. 336-2013, 

reviewed the substantial evidence regarding both the lot and the mobile home. Although the 

Court will accept the $1,000.00 per year for the annual rent of the camp site, this Court deems the 

mobile home to be absolutely worthless and will not surcharge the original trustee for this 

amount. This Court will issue an appropriate Order. 

5