J-A32011-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37 IN RE: ESTATE OF HELEN E. BLUMBERGER, DECEASED, IN THE SUPERIOR COURT OF PENNSYLVANIA

APPEAL OF: JOAN OLDEN, Appellant No. 2070 WDA 2014

Appeal from the Order December 15, 2014 In the Court of Common Pleas of Allegheny County Orphans’ Court at No(s): 02-14-00386
BEFORE: SHOGAN, OTT, and STABILE, JJ. MEMORANDUM BY SHOGAN, J.: FILED DECEMBER 23, 2015 Joan Olden (hereinafter “Appellant” or “The Execut rix”), appeals from the order entered on December 15, 2014, that, inter alia , removed her as executrix of her mother’s estate (“the estate”). A fter careful review, we affirm in part, vacate in part, and remand with ins tructions. The orphans’ court set forth the relevant facts an d procedural history of this matter as follows: This matter came before the Court on a Petition fo r Removal of Executrix and a Motion to Dismiss Rule t o Show Cause Why Executrix should not be removed. A hearin g was held on the Petition and Motion on December 8, 2014. On December 15, 2014, the Court issued an Order granting the Pe tition for Removal and denying the Motion to Dismiss. The Exec utrix filed a Notice of Appeal and this appeal follows. Helen E. Blumberger [(“the Decedent”)] died testate on December 4, 2013. On January 30, 2014, the Decedent ’s WillJ-A32011-15

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dated August 23, 1973 was admitted to probate and L etters Testamentary were granted to [Appellant], who is on e of the Decedent’s three daughters. The Decedent’s other tw o daughters (Bette A. [Blumberger] Saltzman and Diane J. Blumbe rger), along with [Appellant], are the three residuary leg atees named in the Will. According to the evidence presented at the hearing, the primary asset in the estate is stock owned by the D ecedent in a closely-held corporation, known as Universal Builde rs Supply Company, Inc. (UBS). The Decedent owned 52% of the stock and the remaining 48% was owned by the three residu ary legatees, in equal shares. (N.T. 12/08/14, p. 5) Greg Palmieri, who has been the accountant for UBS since 2006 (although his firm has been involved with the business for many years), testified that the corporation is basi cally a holding company. The assets are securities, approximately t wenty developed lots, and cash. According to Exhibit 1, t he fair market value of the assets in the corporation as of the da te of death was approximately $8,800,000. (N.T. 12/08/14, pp. 11-17 ) Mr. Palmieri also testified that the Decedent and [Appe llant] took significant loans from the corporation. Specificall y, [Appellant] owed the corporation over $372,000 as of the date o f death, plus approximately $80,000 in interest. No loans we re made to Ms. Saltzman and Ms. Blumberger owed less than $400 . The Decedent executed a Promissory Note for the loans, but [Appellant] refused to do so. (12/08/14, pp. 19-32) Under the PEF Code [(Probate, Estates and Fiduciari es Code, 20 Pa.C.S.A., § 101 et seq.)], the Court has the exclusive power to remove a personal representative for state d reasons or “when, for any other reason, the interests of the e state are likely to be jeopardized by his continuance in office”. 20 Pa.C.S.A. §3182. In this case, [Appellant], the Executrix, li sts her residence as New York City, although it is believed that she actually resides most of the year in Switzerland. [ Appellant] did not appear at the hearing, so she could not be ques tioned about her residence. Her failure to appear was, apparentl y, on the advice of counsel, who did not seek court approval to excuse her appearance; but rather, counsel took it upon himsel f to decide that [Appellant] did not have to appear at a hearin g seeking her removal. This advice was erroneous, as it led the C ourt to believe that she was not interested in the proceedi ngs or she hasJ-A32011-15

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something to hide and did not want to be subjected to examination in open court. In addition, as indicated above, [Appellant] owes o ver $450,000 to the corporation for loans that were tak en between 1998 and 2004. [Appellant] has a fiduciary responsi bility to the estate; however, she is also a serious creditor of the estate. The Court believes that this demonstrates a conflict of interest, which could potentially jeopardize the assets of the esta te. Orphans’ Court Opinion, 2/2/15, at unnumbered 1-3. The orphans’ court removed Appellant as executrix of the estate, denied Appellant’s motion to dismiss, directed the Orphans’ Court Department of Court Records to appoint a successor administrator or administratrix, and scheduled a status conference. Appellant filed a timely appeal, and on appeal, Appellant raises five issues that are set forth verbatim as follows: I. Whether the lower court abused its discretion wh en it granted the Petition for Removal of Executrix and revoked t he Letters Testamentary issued by the Allegheny County Departm ent of Court Records in the absence of clear and convincin g evidence of any substantial reason for removal. II. Whether the lower court made an error of law an d abused its discretion by admitting classic hearsay as evidence for the reason that it was not being admitted to prove the truth of the matter asserted and then relying on said evidence t o conclude that the Appellant had a conflict of interest as a serious creditor (sic) of the Estate. III. Whether the lower court abused its discretion and made an error of law by revoking Appellant’s Letters Testam entary based on a finding of conflict of interest which could po tentially jeopardize the assets of the Estate when the record contains no competent evidence of any conflict between the Appe llant’s personal affairs and the affairs of the Estate. or the likelihood ofJ-A32011-15

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waste or mismanagement jeopardizing the assets of t he Estate or actual proof of a breach of fiduciary duty. IV. Whether the lower court abused its discretion a nd made an error of law by revoking Appellant’s Letters Testam entary because it believed she was a resident of Switzerla nd and was not interested in the proceedings when the record i s void of any evidence of either and paragraph 7.3 of the Deceden t’s Last Will and testament explicitly provides that no bond be r equired of any personal representative 20 Pa.C.S.A. § 3174 (b) (1)(ii). V. Whether the lower court abused its discretion an d made an error of law by directing the Department of Court R ecords Orphans’ Court, to appoint a successor Administrato r/ Administratrix within twenty (20) days in a Testate Estate. Appellant’s Brief at 3-5 (“ (sic) ” in original). In her first four issues, Appellant argues that th e orphans’ court erred in removing her as executrix. We note that “The re moval of an executrix is a matter vested in the sound discretion of the [orp hans’] court, and thus we will disturb such a determination only upon a findi ng of an abuse of that discretion.” In re Estate of Mumma , 41 A.3d 41, 49 (Pa. Super. 2012). The court has statutory authority to remove a perso nal representative when, inter alia , “the interests of the estate are likely to be jeopardized by his continuation in off ice.” 20 Pa.C.S.A. § 3182(5). Furthermore, the court may sum marily remove a personal representative when such action i s “necessary to protect the rights of creditors or pa rties in interest.” 20 Pa.C.S.A. § 3183. Our case law has re cognized that “removal of a fiduciary is a drastic action which s hould be taken only when the estate is endangered and intervention is necessary to protect the property of the estate.” In re Estate of Pitone , 489 Pa. 60, 68, 413 A.2d 1012, 1016 (1980) (quoti ng Scientific Living, Inc. v. Hohensee , 440 Pa. 280, 295, 270 A.2d 216, 224 (1970)). In re Estate of Westin , 874 A.2d 139, 142-143 (Pa. Super. 2005).J-A32011-15

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Appellant first claims that there was no clear and convincing evidence of any substantial reason for her removal. We disa gree. Sufficient reason for removal of a fiduciary has b een found when the fiduciary’s personal interest is in confli ct with that of the estate, such that the two interests cannot be s erved simultaneously. In re Estate of Dobson , 490 Pa. 476, 483 n. 6, 417 A.2d 138, 142 n.6 (1980); In re Estate of Lux , 480 Pa. 256, 269-71, 389 A.2d 1053, 1059-60 (1978); In re Estate of Rafferty , 377 Pa. 304, 305-06, 105 A.2d 147, 148 (1954). Th e reasons for removal of a fiduciary must be clearly proven. Lux , supra at 269, 389 A.2d at 1059; Scientific Living, supra at 295, 270 A.2d at 224. However, proof of a conflict of interest can be inferred from the circumstances. See In re Estate of Gadiparthi , 158 Pa.Cmwlth. 537, 632 A.2d 942, 946 (1993) (ordering removal of an administrator, based on con flict of interest, after he challenged decedent’s ownership of property titled in decedent’s name). When a conflict of inte rest is apparent from the circumstances, bad faith or fraud ulent intent on the part of the fiduciary need not be proven. Dobson, supra at 483 n. 6, 417 A.2d at 142 n. 6 (citing In re Estate of Banes , 452 Pa. 388, 395, 305 A.2d 723, 727 (1973); In re Estate of Noonan , 361 Pa. 26, 32-33, 63 A.2d 80, 84 (1949)). Westin , 874 A.2d at 143. As the orphans’ court pointed out, Appellant owed U BS, the primary asset in the estate, more than $372,000.00, plus ap proximately $80,000.00 in interest. Orphans’ Court Opinion, 2/2/15, at un numbered 2. The orphans’ court found that “[Appellant] has a fiduci ary responsibility to the estate; however, she is also a serious creditor of the estate. The Court believes that this demonstrates a conflict of inter est, which could potentially jeopardize the assets of the estate.” Orphans’ Cou rt Opinion, 2/2/15, at unnumbered 3. We agree. The unpaid debt to UBS un doubtedly places Appellant in the position of a creditor to the larg est asset of the estate. AsJ-A32011-15

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Appellant’s interests as a creditor are adverse to UBS and jeopardize the value of the estate, we discern no abuse of discret ion in the orphans’ court finding a conflict of interest and removing Appella nt as executrix. Westin , 874 A.2d at 142; 20 Pa.C.S. § 3182(5). In her second issue, Appellant argues that the orp hans’ court erred by admitting hearsay into evidence and relying on it t o conclude that Appellant had a conflict of interest. Specifically, Appellan t claims that witnesses Dorothy Kirsch and Greg Palmieri, of the accounting firm of R.D. Hoag &
Associates 1 who provided accounting services to UBS, testified based on documents prepared by other persons, and the orphan s’ court permitted this hearsay testimony and relied on it in making its de cision. Appellant’s Brief at 17-19. “When we review a trial court ruling on admission of evidence, we must acknowledge that decisions on admissibility ar e within the sound discretion of the trial court and will not be overt urned absent an abuse of discretion or misapplication of law.” Stumpf v. Nye , 950 A.2d 1032, 1035- 1036 (Pa. Super. 2007). “An abuse of discretion is not merely an error of judgment, but if in reaching a conclusion the law i s overridden or misapplied, or the judgment exercised is manifestly unreasonable, or the result of partiality, prejudice, bias or ill-will, as shown by the evidence or the

____________________________________________ 1 Mr. Palmieri testified that R.D. Hoag & Associates had performed accounting services for UBS since as early as 1999. N.T., 12/8/14, at 11-12.J-A32011-15

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record, discretion is abused.” Id

. (quoting Geise v. Nationwide Life and Annuity Co. of America , 939 A.2d 409, 417 (Pa. Super. 2007) (quotations omitted)). Hearsay is defined as an out-of-court statement of fered to prove the truth of the matter asserted. Pa.R.E. 801(c). Thi s rule, however, is not absolute, and there are exceptions. Records of a r egularly conducted activity is one such exception that is defined in P a.R.E. 803(6) as follows: Exceptions to the Rule Against Hearsay--Regardless of Whether the Declarant Is Available as a Witness * * * The following are not excluded by the rule against hearsay, regardless of whether the declarant is available as a witness: * * * (6) Records of a Regularly Conducted Activity. A re cord (which includes a memorandum, report, or data compilation in any form) of an act, event or condition if, (A) the record was made at or near the time by--or from information transmitted by--someone with knowledge; (B) the record was kept in the course of a regularl y conducted activity of a “business”, which term includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit; (C) making the record was a regular practice of tha t activity; (D) all these conditions are shown by the testimony of the custodian or another qualified witness, or b y aJ-A32011-15

- 8 - certification that complies with Rule 902(11) or (1 2) or with a statute permitting certification; and (E) neither the source of information nor other circumstances indicate a lack of trustworthiness. Pa.R.E. 803(6)(A)-(E). Here, Mr. Palmieri and Ms. Kirsch testified that i n providing accounting services to UBS, they relied on records kept in the regular course of business to determine the debt Appellant owed to UBS. N.T., 12/8/14, at 25. These records, which were admitted into evidence, consist ed of ledgers, bank statements, check registers, and other documents ke pt by R.D. Hoag & Associates in the file it maintained for UBS. N.T. , 12/8/14, at 28-33, 58-76. Under the business records exception provided in Pa .R.E. 803(6), UBS’s records of loans to Appellant were properly admitte d as an exception to hearsay. 2 Accordingly, there was no abuse of discretion or error of law in

____________________________________________ 2 We note that these records would also have been ad missible under 42 Pa.C.S. § 6108, which provides as follows: (a) Short title of section.-- This section shall be known and may be cited as the “Uniform Business Records as Ev idence Act.” (b) General rule.-- A record of an act, condition or event shall, insofar as relevant, be competent evidence if the c ustodian or other qualified witness testifies to its identity a nd the mode of its preparation, and if it was made in the regular cour se of business at or near the time of the act, condition or event, and if, in the opinion of the tribunal, the sources of information , method and time of preparation were such as to justify its adm ission. (Footnote Continued Next Page)J-A32011-15

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the orphans’ court admission of these documents int o evidence or in its reliance on them in reaching its decision. Next, Appellant avers that the orphans’ court abus ed its discretion and made an error of law in finding a conflict of inter est because the record contains no competent evidence of any conflict betw een Appellant’s personal affairs and the affairs of the estate. Appellant’s Brief at 19. We disagree. As noted above, the testimony of Mr. Palmieri and M s. Kirsch was properly admitted. Their testimony revealed unpaid debt of more than $400,000.00 from Appellant to UBS, which was the la rgest asset in the estate. Because we have concluded that the aforeme ntioned testimony was properly admitted, we discern no error in the orpha ns’ court relying on said testimony in reaching its decision. We reiterate, because Appellant’s interests as a creditor are adverse to UBS and jeop ardize the value of the estate, there was no abuse of discretion in the orp hans’ court finding a conflict of interest and removing Appellant as exec utrix. Westin , 874 A.2d at 142; 20 Pa.C.S. § 3182(5). 3

(Footnote Continued) _______________________ (c) Definition.-- As used in this section “business” includes every kind of business, profession, occupation, cal ling, or operation of institutions whether carried on for pr ofit or not. 42 Pa.C.S. § 6108.

3 Appellant’s argument on this issue, wherein she cl aims that there was no demand made for repayment of the loans and no damag e to the estate, Appellant’s Brief at 23, are contradicted by the re cord. The record reveals (Footnote Continued Next Page)J-A32011-15

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In her fourth issue on appeal, Appellant argues tha t the orphans’ court abused its discretion and made an error of law by r emoving her as executrix because it believed she was a resident of Switzerla nd and was not interested in the proceedings. 4 We conclude that Appellant’s argument is misplace d. Appellant cites no authority for the proposition th at the orphans’ court abused its discretion in concluding that Appellant’ s failure to attend the proceedings was indicative of Appellant’s lack of i nterest in the proceedings or that she sought to avoid examination in open cou rt. Orphans’ Court Opinion, 2/2/15, at unnumbered 3. Moreover, the or phans’ court’s consideration of Appellant’s failure to attend the hearing was not the basis for its decision; it was merely a factor, as Appell ant’s outstanding debt to UBS was the focus of the orphans’ court decision. See id . at unnumbered 1- 3 (“[Appellant] is also a serious creditor of the estate. The Court believes
(Footnote Continued) _______________________ Mr. Palmieri testified that the funds paid to Appel lant were loans. N.T., 12/8/14, at 19. He stated that if the funds were c onsidered otherwise, they would be subject to tax, IRS scrutiny as to whether there was a second class of stock, and exposure to the IRS revoking S corpor ation status and placing UBS in C corporation status with significantly grea ter tax liability. Id . at 20. Mr. Palmieri also testified that Appellant was aske d to sign a promissory note memorializing the debt, and she refused. Id . at 22. Accordingly, Appellant’s argument is specious; Appellant refused to acknowledge the debt, the necessity to repay it, and exposed the co rporation to significant detrimental tax ramifications.

4 Appellant states that no bond was required pursuan t to her mother’s will and 20 Pa.C.S. § 3174 (b)(1)(ii). We point out tha t the orphans’ court did not require Appellant to post a bond; thus, no furt her discussion of 20 Pa.C.S. § 3174 is necessary.J-A32011-15

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that this demonstrates a conflict of interest, whic h potentially could jeopardize the assets of the estate.”). As discuss ed above, the orphans’ court may remove an executrix for a conflict of int erest under 20 Pa.C.S. § 3182(5), and that decision is left to the discretio n of the orphans’ court.
Mumma , 41 A.3d at 49; Westin , 874 A.2d 139 at 143. We discern no abuse of discretion and conclude that Appellant is entitled to no relief on this
issue. Finally, Appellant argues that the orphans’ court a bused its discretion and made an error of law by directing the departmen t of court records to appoint a successor Administrator/Administratrix. Appellant’s Brief at 25. Appellant avers that this was improper because it i s a testate estate. Id

. After careful consideration, we agree, and we vacat e and remand with
instructions. Procedure for and effect of removal The court on its own motion may, and on the petitio n of any party in interest alleging adequate grounds for removal shall, order the personal representative to appear and show cause why he should not be removed, or, when necess ary to protect the rights of creditors or parties in inter est, may summarily remove him. Upon removal, the court may direct the grant of new letters testamentary or of adminis tration by the register to the person entitled and may, by summary attachment of the person or other appropriate order s, provide for the security and delivery of the assets of the estate, together with all books, accounts and papers relating theret o. Any personal representative summarily removed under the provisions of this section may apply, by petition, to have the decree of removal vacated and to be reinstated, and, if the c ourt shall vacate the decree of removal and reinstate him, it shallJ-A32011-15

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thereupon make any orders which may be appropriate to accomplish the reinstatement. 20 Pa.C.S. § 3183 (emphasis added).
In In re Estate of Andrews , 92 A.3d 1226 (Pa. Super. 2014), a panel of this Court addressed a similar scenario wh ere the decedent died testate, but the orphans’ court, after removing an executrix, directed the appointment of an administratrix. This Court held that was error. Id . at 1234. The Andrews Court explained: It is fundamental estate law that letters testament ary are issued when the decedent leaves a will while letters of ad ministration are issued when the decedent dies intestate. An exe cutor(rix) is the person named in the will to act as personal rep resentative while an administrator(rix) is the personal represe ntative when the decedent died intestate. Section 3183 pertains to the removal of a personal representative in general and , accordingly, to the removal of either an executor(trix) or admin istrator(rix). Thus, the language in that section necessarily prov ides that, upon removal, the court is authorized to direct the grant of letters testamentary or of administration, as the c ase may be. This verbiage, however, does not provide authority for the orphans’ court to disregard the strictures regardin g who is entitled to serve as the personal representative of an estate. Under section 3155 of the Probate, Estates, and Fid uciaries Code, the following persons are delineated as eligi ble to be granted letters: (a) Letters testamentary.— Letters testamentary shall be granted by the register to the executor designated in the will , whether or not he has declined a trust under the will. (b) Letters of administration.— Letters of administration shall be granted by the register, in such form as the case shall require, to one or moreJ-A32011-15

- 13 - of those hereinafter mentioned and, except for good cause, in the following order: (1) Those entitled to the residuary estate under the will. (2) The surviving spouse. (3) Those entitled under the intestate law as the register, in his discretion, shall judge will best administer the estate, giving preference, however, according to the sizes of the shares of those in this class. (4) The principal creditors of the decedent at the time of his death. (5) Other fit persons. 20 Pa.C.S. § 3155. Andrews , 92 A.3d at 1234 (emphasis added). Thus, because the Decedent died testate, letters te stamentary must issue. Andrews , 92 A.3d at 1234. In this regard, the Decedent’s will provided for an executor and potential substitute e xecutrices as follows: ARTICLE VII
Executor Section 7.1 Appointment. I appoint my husband, B EN A. BLUMBERGER, Executor of this my Will. In the event of the inability or unwillingness of my husband to serve o r to continue to serve as my Executor, I appoint as successor Exe cutrix my daughter, [Appellant], if she is willing and able t o serve; if she is not, I appoint my daughter, DIANE JULIA BLUMBERGER, if she is willing and able to serve; if she is not, I appoint my daughter, BETTE A. BLUMBERGER.J-A32011-15

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The Decedent’s Will, 8/23/73, at 9, Article VII, Se ction 7.1 (Certified Record at 2). “Thus, the people who can serve as personal represe ntatives are limited to those who are designated in the will .” Andrews , 92 A.3d at 1234 (emphasis added). As noted above, the will st ates that if Appellant cannot serve as executrix, the Decedent’s daughter Diane shall serve in this capacity, and if Diane is unwilling or unable, then the Decedent’s daughter Bette shall serve. Accordingly, because the list o f potential executrices has not been exhausted, it was error for the orphans’ c ourt to direct the appointment of an administrator because viable subs titute executrices remain in the Decedent’s will. For the reasons set forth above, we affirm the orph ans’ court’s removal of Appellant as executrix of the Decedent’s estate. However, we vacate that part of the order which directed the ap pointment of an administrator or administratrix. We remand this ma tter to the orphans’ court for a determination as to whether Diane Blumb erger is willing and able to serve as executrix, and if she is not, the orpha ns’ court shall then determine if Bette A. Blumberger Saltzman is willin g and able to serve as executrix. If neither Diane Julia Blumberger nor B ette A. Blumberger Saltzman can serve as executrix, the orphans’ court shall then direct the appointment of an administrator or administratrix a s provided in 20 Pa.C.S. § 3155.J-A32011-15

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Order affirmed in part and vacated in part. Case r emanded with instructions. Jurisdiction is relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

DATE: 12/23/2015