Court Opinion

ID: 4576595
Source: CourtListenerOpinion
Date Created: 2020-10-14 17:11:06.093519+00
Date Added: 2024-06-11T13:32:59.469587
License: Public Domain

J-A19036-20

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    ESTATE OF: NANCY STAPLER-ELIAS,        :   IN THE SUPERIOR COURT OF
    A INCAPACITATED PERSON                 :        PENNSYLVANIA
                                           :
                                           :
    APPEAL OF: NANCY STAPLER-ELIAS         :
                                           :
                                           :
                                           :
                                           :   No. 2345 EDA 2019

                    Appeal from the Order Dated July 18, 2019
     In the Court of Common Pleas of Montgomery County Orphans’ Court at
                             No(s): No. 2007-X0577

    ESTATE OF: NANCY STAPLER-ELIAS,        :   IN THE SUPERIOR COURT OF
    AN ALLEGED INCAPACITATED               :        PENNSYLVANIA
    PERSON                                 :
                                           :
                                           :
    APPEAL OF: NANCY STAPLER-ELIAS         :
                                           :
                                           :
                                           :   No. 2346 EDA 2019

                   Appeal from the Order Entered July 15, 2019
     In the Court of Common Pleas of Montgomery County Orphans’ Court at
                             No(s): No. 2007-X0577

BEFORE: PANELLA, P.J., McLAUGHLIN, J., and McCAFFERY, J.

MEMORANDUM BY McCAFFERY, J.:                      FILED OCTOBER 14, 2020

        In these consolidated appeals,1 Nancy Stapler-Elias (Appellant) appeals

from the July 15, 2019, order entered in Montgomery County Court of

Common Pleas, Orphans’ Court, ruling on objections she made to the First and

Final Account made by Naomi Fenlin (Appellee), the appointed guardian of

1   See Superior Court Order, 9/10/19 (sua sponte consolidating appeals).
J-A19036-20

Appellant’s estate during a period in which she was totally incapacitated.

Appellant also appeals from the trial court’s July 18, 2019, order denying her

petition for payment of fees and costs. We affirm. The trial court summarized

this matter’s procedural history as follows:

          The First and Final Account of [Appellee, sister and] former
      Guardian of [Appellant], an Incapacitated Person, was called for
      audit on August 7, 2017. Objections were filed on July 17, 2017
      by [Appellant], a formerly incapacitated person. This court heard
      evidence with regard to these objections during a two day hearing
      on June 26, 2018 and June 28, 2018 . . . .

                                  *    *       *

           The Account is filed in accordance with this court’s Order
      dated March 28, 2017 which directed the guardian to file an
      account of her administration. The guardianship terminated
      following this court’s Order dated April 9, 2015 which declared
      [Appellant] was no longer adjudicated an incapacitated person.

           The First and Final Account is stated from March 30, 2007 to
      April 9, 2015.        Therein, [Appellee] reports receipts of
      $2,584,960.78, since increased by a net gain of $353,986.50[,]
      since reduced by a net loss of $0 on principal conversions, since
      reduced by disbursements of $850,141.49, and by distributions
      for the benefit of [Appellant] or her creditors [of] $0.00, leaving a
      balance of $2,088,805.39, held as described on pages 8 and 44 of
      the First and Final Account. No assets remain in the guardian’s
      account as the assets have been returned to [Appellant] following
      the Court’s April 9, 2015 Order.

           All parties having or claiming any interest in the Guardianship
      Estate, of whom the Accountant has notice, are said to have
      received written notice of the audit, by letter dated June 26, 2017,
      in conformity with the Rules of Court.

      Background

          On March 30, 2007, the court determined [Appellant] to be
      an incapacitated person. Her sister, [Appellee,] was appointed

                                      -2-
J-A19036-20

     Plenary Permanent Guardian of [Appellant’s] estate and person
     and posted bond in the amount of $250,000.00.

          Prior to her period of incapacity, [Appellant] had obtained an
     undergraduate degree from Temple University in 1975. She then
     earned a law degree from Temple Law School in 1978 and became
     licensed to practice law in Pennsylvania. Her first job after
     finishing law school was in-house counsel with First Pennsylvania
     Bank where she worked until 1982. Thereafter she worked in the
     financial services industry until approximately 2005.

          [Appellee] testified that when she began her guardianship,
     her sister was in a catatonic state. She continued as guardian for
     her sister until 2015 when [Appellant] returned to being a
     functioning, talking, thinking, active person again. During this
     time period, the value of [Appellant’s] estate grew.

         Following a review hearing, as well as a hearing on
     [Appellee’s] petition to resign and several petitions for counsel
     fees, on April 9, 2015 the court determined that [Appellant] was
     no longer incapacitated. Accordingly, the March 30, 2007 order
     addressing the incapacity and related appointments was vacated.

         On February 22, [2017, Appellant] filed a Petition seeking an
     accounting of [Appellee’s] estate administration during
     [Appellee’s] tenure as Guardian of the Estate. The court granted
     the Petition on March 28, 2017. An accounting was filed with the
     court on June 27, 2017. Objections to the accounting were filed
     by [Appellant] on July 17, 2017.

         The court conducted a hearing over the course of two days,
     June 26 and June 28, 2018, to address objections to the
     accounting. At the start of trial, Counsel for [Appellant] withdrew
     18 of the 32 objections. Counsel then categorized the remaining
     objections into three categories:

     (1) Loss of investment income . . . the failure of [Appellee] to
     hire a financial advisor . . . and failure to report financial assets in
     principal balance of account . . . ;

     (2) Former incapacitated person’s personal property items
     destroyed or lost . . . ;

                                      -3-
J-A19036-20

      (3) [Appellee] imprudently spent estate funds in violation of her
      fiduciary duty . . . .

      [Appellant] maintains that due to [Appellee’s] mismanagement,
      the estate should not pay her counsel fees, nor her court and
      litigation costs . . . .

Trial Ct. Op., 7/16/19, at 1-3 (citations and footnotes omitted).         During

Appellee’s stewardship, Appellant’s estate grew to $2,088,805.29.2 Id. at 2.

      At the close of proceedings in the trial court, the court entered the two

orders under review, an order of July 15, 2019, disposing of Appellant’s

objections, and an order of July 18, 2019, denying Appellant’s petition for

payment of fees and costs.     The trial court granted Appellant’s objections

relating to funds kept in a checking account rather than invested (awarding

$2,000 in lost interest), handling of the sale of a used car ($5,000), and

disposal of a fur coat ($1,000). See Trial Ct. Op. at 6, 8, 10. The trial court

also granted an objection as to a $972 late enrollment insurance fee and

denied Appellee’s petition for payment of fees and costs.            Id. at 13.

Otherwise, the trial court overruled Appellant’s objections.     The trial court

concluded that Appellee, “as guardian of [Appellant’s] estate, on the whole

managed the formerly incapacitated person’s estate with due care.” Id. at 4.

This Court has stated:

      The findings of a judge of the orphans’ court 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

2 Appellee’s initial inventory listed the gross value of the estate as
$1,302,746.39. Petition of Guardian for Leave to Resign Guardianship,
12/11/14, at 2 n.1.

                                      -4-
J-A19036-20

     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.

     When the trial court has come to a conclusion through the exercise
     of its discretion, the party complaining on appeal has a heavy
     burden. It is not sufficient to persuade the appellate court that it
     might have reached a different conclusion if, in the first place,
     charged with the duty imposed on the court below; it is necessary
     to go further and show an abuse of the discretionary power. An
     abuse of discretion is not merely an error of judgment, but if in
     reaching a conclusion the law is 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 of
     record, discretion is abused. A conclusion or judgment constitutes
     an abuse of discretion if it is so lacking in support as to be clearly
     erroneous.

     We are not constrained to give the same level of deference to the
     orphans’ court’s resulting legal conclusions as we are to its
     credibility determinations. We will reverse any decree based on
     palpably wrong or clearly inapplicable rules of law. Moreover, we
     are not bound by the chancellor’s findings of fact if there has been
     an abuse of discretion, a capricious disregard of evidence, or a
     lack of evidentiary support on the record. If the lack of evidentiary
     support is apparent, reviewing tribunals have the power to draw
     their own inferences and make their own deductions from facts
     and conclusions of law. Nevertheless, we will not lightly find
     reversible error and will reverse an orphans’ court decree only if
     the orphans’ court applied an incorrect rule of law or reached its
     decision on the basis of factual conclusions unsupported by the
     record.

In re Jackson, 174 A.3d 14, 23–24 (Pa. Super. 2017) (citation omitted).

     In her brief, Appellant outlines the questions presented as follows:

                                     -5-
J-A19036-20

      1.     Did the Trial Court err by not surcharging [Appellee] who
      significantly damaged the Estate by failing to follow the explicit
      direction from the Orphans’ Court and develop a plan or
      implement an investment strategy for more than three years?

      2.     Did the Trial Court err by finding that [Appellee] fulfilled her
      fiduciary duty merely by giving a portion of her ward’s assets to a
      financial institution, when [Appellee] failed to provide adequate
      information and investment objectives to that institution and then
      failed to monitor the assets’ performance?

      3.    Did the Trial Court err by finding that withdrawal of one
      objection to an accounting, concerning student loans in
      [Appellant’s] name, resulted in the waiver of a different objection,
      concerning different loans in [Appellant’s] daughter’s name, which
      [Appellee] paid without court approval?

      4.    Did the Trial Court err by failing to shift the burden of proof
      to [Appellee], when [Appellee’s] breaches of duty were patent,
      and, as a matter of law, [Appellee] was required to present
      exculpatory evidence to avoid a surcharge?

      5.   Did the Trial Court err in finding that the $30,000
      [Appellant] entrusted to [Appellee] for her care shortly before the
      Guardianship began fell outside the Trial Court’s authority?

      6.      Did the Trial Court err in failing to award attorneys’ fees,
      litigation costs and interest on the amount surcharged?

Appellant’s Brief at 2-3.   Appellant argues that Appellee failed to marshal

Appellant’s assets, prepare a budget, and diversify investments, and Appellant

characterizes these alleged lapses as a violation of fiduciary duty. Appellant’s

Brief at 27. She claims Appellee’s conduct violated the Prudent Investor Rule,

20 Pa.C.S. § 7203, which requires that fiduciaries invest and manage trust

assets as a prudent investor would, taking into account trust features, goals,

and needs, with an investment strategy that reasonably suits the trust. Id.

She also reiterates a number of factual claims disposed of by the trial court,

                                       -6-
J-A19036-20

and asks this Court to award counsel fees and costs. Id. at 28. She seeks a

surcharge for Appellee’s alleged failures to implement an investment strategy,

and to engage sufficiently with a financial institution managing estate

investments. Id. at 2. She also argues that the trial court erred in finding

waiver of an objection relating to Appellant’s daughter’s college loans, in

failing to shift the burden of proof, in finding that moneys entrusted to

Appellee prior to the guardianship fell outside its authority under the estate,

and in denying fees and costs.         Id. at 2-3.     In total, she demands

$1,176,295.65 plus interest. Id.at 60.

      Appellee argues that although she took stewardship of her sister’s assets

during a historical economic crisis, she nevertheless exercised common

prudence, skill, and caution as required by In re Lentz’ Estate, 72 A.2d. 276

(Pa. 1950). Appellee’s Brief at 18, citing In re Lentz’ Estate, 72 A.2d at 278.

She asks that this Court not disturb the trial court’s well-reasoned disposition.

Id. at 41-42.

      A fiduciary must “take custody of the estate and . . . administer it so as

to preserve and protect the property for distribution to the proper persons

within a reasonable time . . . [and] will be required to exercise the same

degree of judgment, skill, care, and diligence that a reasonable or prudent

person would ordinarily exercise in the management of his or her own affairs.”

Matter of Estate of Campbell, 692 A.2d 1098, 1101–02 (Pa. Super. 1997)

(citations omitted). Surcharges may be imposed to compensate beneficiaries

for losses incurred where a fiduciary deviates from the standard of ordinary

                                      -7-
J-A19036-20

care, but not for mere errors in judgment. In re Miller’s Estate, 26 A.2d

320, 321 (Pa. 1942). Therefore, a breach of duty that does not cause a loss

should not occasion a surcharge. In re Estate of Warden, 2 A.3d 565, 573

(Pa. Super. 2010).

        We analyze Appellant’s several claims of error seriatim.

1. Assets Uninvested During Recession

        Appellant claims that the trial court erred in concluding that Appellee’s

“action in wanting to preserve estate assets by leaving them ‘as is’ [was]

reasonable.” Appellant’s Brief at 34, citing Trial Ct. Op. at 6. Approximately

$900,000 was kept in a checking account from November of 2009 to May of

2010, after which the funds were managed by Morgan Stanley. Trial Ct. Op.

at 5.

        The trial court credited Appellee’s testimony that she was concerned

about the economy and wanted to “do what [she] thought was safe” during

that period. Trial Ct. Op. at 5. Experts for both parties testified that the

market was markedly bearish at the time. Id. Given the limited time during

which this money was left uninvested and the volatility of the market, we

cannot find an abuse of discretion here.

        Similarly, approximately $102,000 was kept in a checking account for

three and a half years. Trial Ct. Op. at 6. This was an operating account, and

the trial court granted Appellant’s objection and awarded $2,000, finding that

a certificate of deposit would have been an appropriate way to handle the

funds.    Id.   Nevertheless, Appellant argues that this is insufficient.    We

                                       -8-
J-A19036-20

disagree. Because it was an operating account, any reasonable investment

strategy would have been unlikely to yield significant income because that is

not the primary purpose of an operating account. Appellant was severely ill

during this period, and her medical needs and expenses could have escalated

at any point. We cannot in hindsight say that she should have known this

would not happen. There is no abuse of discretion here.

      Appellant also faults Appellee’s handling of Appellant’s own investments

in her 401(k) account, pension plan, and Bank of America stock. Appellant’s

Brief at 17. Appellant claims that the trial court did not take into account that

she had been ill for two years before the guardianship was created, “so that

the assets as initially received no longer represented a carefully considered

composition of assets by a financially capable person[.]” Id. at 34. However,

Appellant does not cite any allegedly unsound decisions Appellant herself

made during those two years. The trial court was in the best position to gauge

how the financial crisis impacted the early period of Appellee’s financial

stewardship, and we can find no abuse of discretion in its conclusions here.

2. Morgan Stanley Investments

      Appellant argues that Appellee’s employment of Morgan Stanley to

handle the $900,000 was also inappropriate, and its handling of that money

and her IRA damaged the estate “in an amount ranging from $224,097 to

$493,826.” Appellant’s Brief at 18. Appellant claims that Appellee selected

inappropriate investment goals and failed to monitor Morgan Stanley’s

handling of the assets. Id. The gravamen of her complaint seems to be that

                                      -9-
J-A19036-20

Appellee told Morgan Stanley that income should be a primary objective, but

ultimately, during the guardianship, Appellant’s income exceeded her

expenses and thus she did not need income. Id. at 37 (“What [Appellant] did

need (and still needs now) was principal growth to provide a nest egg[.]”).

Although the assets placed with Morgan Stanley appreciated in value,

Appellant believes they should have appreciated at a greater rate. Id. at 40.

      This argument strikes the Court as a classic case of hindsight. Investing

is always risky and imprecise, and Appellant’s medical situation similarly held

the potential for serious volatility.   Thus, income-generation was not an

unreasonable or imprudent goal. The trial court did not abuse its discretion

in denying Appellant’s objections as to these investments.

3. College Loans – Waiver

      Appellant claims that the trial court erred in finding that Appellant’s

withdrawal of an objection waived another objection pertaining to bonds that

Appellee cashed in to pay off student loans in Appellant’s daughter’s name.

Appellant withdrew an objection pertaining to loans for her daughter’s

education that were taken in Appellant’s own name, as it appears they will be

discharged.   Appellant’s Brief at 41; Trial Ct. Op. at 6-7.   Appellant seeks

$43,008 plus interest for three bonds that Appellee used to pay Appellant’s

daughter’s college loans. Appellant’s Brief at 42. The bonds were co-owned

by Appellant’s daughter, as they had been issued in both Appellant’s name

and her daughter’s name. Appellee’s Brief at 30.

                                    - 10 -
J-A19036-20

      The trial court was in the best position, as factfinder, to weigh whether

Appellant’s withdrawal of objections waived this claim. Appellant’s brief does

not establish an abuse of discretion sufficient to set aside the trial court’s

finding.

4. Burden-Shifting

      Appellant claims the trial court erred in failing to shift the burden of

proof to Appellee.    Appellant argues that she has established significant

discrepancy and patent error. In re Maurice’s Estate, 249 A.2d 334 (Pa.

1969), establishes that “those who seek to surcharge a fiduciary for breach of

trust must bear the burden of proving the particulars of his wrongful conduct.”

Id. at 336. However, where a “glaring error in overpayment of tax [was]

shown, it was the burden of the Executor to come forward with evidence to

prove that . . . it used common skill, prudence and due care under the

circumstances.” Id. Appellant claims she has established “numerous, glaring,

facially-apparent breaches of fiduciary duty” and therefore the trial court erred

in failing to shift the burden to Appellee to defend her performance.

Appellant’s Brief at 43.

      Appellant’s complaints in this regard fall in two categories: personal

property, and medical insurance. Appellant’s Brief at 44-53. Appellant claims

                                     - 11 -
J-A19036-20

that “instead of safeguarding [Appellant’s] belongings, she destroyed them.”3

Id. at 44. She claims losses of $191,627.14. Id. at 47.

      The trial court surcharged Appellee $5,000 for a Honda vehicle that was

sold because Appellant’s daughter did not want it; had she not sold it, it would

have lay fallow as it inevitably depreciated in value. Appellee admitted that

she did not account for the $5,000 properly, and says she learned to be more

detailed because of the error. Trial Ct. Op. at 8. The trial court also imposed

a surcharge of $1,000 for a fur coat that Appellee discarded. Id. at 10.

      Based on its credibility determinations and testimony that significant

amounts of the personal property Appellant claims are gone are actually in

her daughter’s possession, and on the paucity of evidence Appellant

presented, the trial court denied the remaining objections as to personal

property. Trial Ct. Op. at 9-10. The trial court’s findings, which are inevitably

heavily influenced by the credibility and consistency of testimony at trial, do

not appear to this Court to be an abuse of discretion. We have no doubt that,

if Appellee had preserved Appellant’s apartment in an “as is” condition, paying

rent for an uninhabited home while also paying for Appellant’s residence in a

care facility, Appellant would find that to be a deviation from the standard of

prudent care to which fiduciaries must be held.        Contrary to Appellant’s

somewhat hyperbolic assertions that “everything she had earned [has been]

3 Appellant claims that she “is like the victim of a flood with everything that
she had earned, been gifted, collected and treasured, forever washed away.”
Appellant’s Brief at 44.

                                     - 12 -
J-A19036-20

forever washed away,” see Appellant’s Brief at 44, it appears that the more

apparently high-value property was kept for her, whereas larger, less valuable

pieces of property were either given to Appellant’s daughter or discarded. See

Trial Ct. Op. at 9-10. We will not disturb the trial court’s findings.

      Appellant argues that Appellee’s failure to enroll Appellant in Medicare

Part D and payment for insurance through Blue Cross (which she characterizes

as “unnecessarily duplicative”), combined with other insurance decisions, cost

the estate $53,291 plus interest. Appellant’s Brief at 51, 53.       The    trial

court noted its disapproval of Appellee’s failure to purchase Medicare

supplemental insurance for Appellant from November 2010 to April 2015.

Trial Ct. Op. at 12. The trial court also imposed a surcharge of $972 for a late

enrollment fee the estate sustained. Id. at 13. However, Appellant did not

provide credible evidence as to supposed losses due to prescription drug

coverage. Id.

      Again, because the trial court was in the best position as factfinder to

weigh these considerations, we apply the abuse of discretion standard;

although Appellant claims “[Appellee’s] breaches of such basic obligations

shock the conscience[,]”we disagree. See Appellant’s Brief at 53. Appellee’s

handling of certain aspects of Appellant’s insurance regime was less than ideal,

but it is readily apparent that, for the most part, she sought reliable insurance

and good care for Appellant. Medical insurance is complex, and we will not

reach behind the trial court’s able handling of the facts here.

                                     - 13 -
J-A19036-20

5. Pre-Guardianship Funds

      Appellant’s claim as to the $30,000 that passed from Appellant to

Appellee prior to the creation of the estate, a claim which is unsupported by

any legal authority, fails for the reason the trial court identified: Appellant

herself acknowledged that prior to her loss of capacity, she gave the money

to Appellee. See Trial Ct. Op. at 7. Thus, it falls outside the Estate and is not

part of its accounting, nor the court system’s supervision thereof. Appellee

correctly points out that “[t]o hold otherwise would expand the accounting

period to an indefinite and indefinable term.” Appellee’s Brief at 36. This

claim fails.

6. Fees, Costs, and Interest

      Appellant faults the trial court for denying her request for $166,293.51

for counsels’ fees and costs.    Appellant’s Brief at 55-60.    She also seeks

interest on the surcharges imposed by the trial court. Id. at 60.

      Appellant cites In re Kline’s Estate, 124 A. 280 (Pa. 1924), which held

that “[t]he audit was necessary because of the fault of the trustee: hence the

latter and not the estate must bear the cost thereof.”         See id. at 283.

Appellant also cites a Common Pleas opinion for the proposition that “the

orphans’ court, as a court of equity, has always had the power to surcharge a

party for counsel fees when it is apparent that the conduct of a party has been

the cause of additional legal expenses.” Appellant’s Brief at 57, citing In re

Rosenfeld Found. Tr., Phila. O.C. 1664 IV 2002, 2006 WL 3040020, at *40

(Pa. Com. Pl. July 31, 2006) (citation omitted).      In that case, “it was the

                                     - 14 -
J-A19036-20

obdurate refusal of the [trustees] to perform their duties . . . that necessitated

the prolonged litigation.” Id.

      The trial court denied fees and costs to both parties. Trial Ct. Op. at 13;

Order, 7/18/19 (denying Appellant’s petition for counsel fees and costs).

Appellee points out that, despite Appellant’s several objections, the trial court

ultimately awarded Appellant an amount constituting less than one percent of

what she sought. Appellee’s Brief at 40-41. Given this award, and given the

apparent sweeping scope of Appellant’s objections and her appellate litigation

strategy, we cannot upset the trial court’s inherent recognition that it was not

Appellee who “necessitated the prolonged litigation” as in Rosenfeld. See

Rosenfeld, 2006 WL 3040020 at *40.

      Finally, Appellant argues that the trial court erred in failing to award

interest. “A personal representative who has committed a breach of duty with

respect to estate assets shall, in the discretion of the court, be liable for

interest, not exceeding the legal rate on such assets.” 4 20 Pa.C.S. § 3544.

This standard affords discretion to the trial court. Appellant’s argument is that

because Appellee committed “blatant and repeated breaches of her fiduciary

duties over eight years” while acting as guardian, she should be surcharged

interest. Appellant’s Brief at 60. However, Appellant has not established an

abuse of discretion, and as such this argument fails.

4This section is applicable to incapacitated persons’ estates via 20 Pa.C.S. §
5533.

                                      - 15 -
J-A19036-20

      The trial court’s opinion, dated July 15, 2019 and docketed the following

day, thoroughly and ably disposes of Appellant’s claims. Therefore, we affirm

on the basis of its reasoning. See Trial Ct. Op. at 1-14. The filing party shall

attach a copy of the trial court’s opinion to any future filing of the instant

memorandum.

     Orders affirmed.
Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 10/14/2020

                                     - 16 -
                                                                                                          Circulated 09/16/2020 03:44 PM
        "O
                                                                                                   2007-X0577.46.3.1.7 Adjudication, Page 1
� l5c:
(I)
8�
<:( 692 A.2d 1098, 1101-02 (Pa.

Super. 1997). A surcharge is the penalty imposed by the court for the failure of a fiduciary to

meet his duty of care owed his estate. As noted in Miller's Estate, 26 A.2d 320, 321 (1942),

"Surcharge is the penalty for failure to exercise common prudence, common skill and common

caution in the performance of the fiduciary's duty and is imposed to compensate beneficiaries for

loss caused by the fiduciary's want of due care." Estate of Stephenson, 364 A.2d 1301, 1306 (Pa.

1976).

         A surcharge will not be imposed for mere errors of'judgment, It is imposed to

compensate beneficiaries for loss caused by the fiduciary's want of due care. In re Miller's

Estate, 26 A.2d 320, (Pa. 1942).

         However, even if there is a breach of duty, 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).

         A guardian of an incapacitated person's estate shall administer the estate subject to the

prudent investor rule. 20 Pa. C.S. §§ 5521(b); 5145; 7201, et seq.

         After review of all credible evidence, this court concludes that Respondent, as guardian

of Petitioner's estate, on the whole managed the formerly incapacitated person's estate with due

care. However, there were instances during the period of her administration where this court

determined a surcharge was necessary. The court's findings follow.

                                                   4
                                                                          2007-X0577.46.3.1.7 Adjudication, Page 5

        1) LOSS OF INCOME

                Financial Advisor

        At the March 30, 2007 hearing where Judge Ott determined the incapacity of Petitioner,

the Respondent under oath admitted that she lacked the capacity to manage Petitioner's assets

but noted her intent to hire a financial advisor to assist her fund management. (EXH P-1, N. T.

3/30/07, pg. 20) While Respondent testified at trial, "I was stepping into this role totally blind"

(N.T. 6/26/18, pg. 47), she also had sufficient notice of her duty "to place idle assets into

productive form" and she had numerous opportunities to implement this duty. N.T. 6/26/18, pgs.

10-11 and N.T. 6/28/18, pg. 37.

        Petitioner attributes Respondent's failure to hire a financial advisor as the cause for

several estate account deficits. Specifically, at trial Petitioner notes the foregone interest on

funds in two separate checking accounts: (1) $900,000 in Susquehanna Bank from November 5,

2009 through May 20, 20 JO and (2) $102,000 in Citizens Bank from October 2011 through April

2015. Petitioner also claims the Estate 401(k) account and shares of Bank of America stock all

declined in value due to the absence of a financial planner.

       After discussions during April 2010, Respondent hired financial advisor, Morgan Stanley

firm, on May 21, 2010- three years after her appointment. N.T. 6/26/18, pgs. 8-9, 73.

Respondent was reluctant to make financial decisions during a period of financial upheaval: "I

wanted to do what l thought was safe ... reasonable, and ... would safeguard her money." N.T.

6/26/18, pgs. 12, 90. Expert witness for both parties credibly testified that "the market tanked in

2008 and 2009."N.T. 6/28/18, pgs. 33-34, 116-119.

                                                  5
                                                                           2007-X0577.46.3.1.7 Adjudication, Page 6

        Given the unstable condition of the financial market, particularly at the beginning of the

Respondent's administration period, this court concludes that Respondent's action in wanting to

preserve estate assets by leaving them "as is" is reasonable. Upon retaining a financial advisor,

the accounts were reallocated in a timely manner and Petitioner's assets grew. Therefore, the

request that Respondent reimburse the estate for unrealized interest income for the 401(k)

account, Bank of America stock shares and the Susquehanna Bank checking account is DENIED

and Objections #5 and #9 are OVERRULED.

               Citizens Bank Checking Account

        All parties described the Citizens Bank account as an "operating account." However,

Respondent failed to create a budget, which would have guided her fiscal management of estate

operational funds. N .T. 6/26/18, pg. 18. As a result, the operating account maintained a balance

of approximately $102,000 for 3.5 years. If Respondent had created a budget so that she was

aware of estate expenses, the account balance - considering Respondent's trepidation about the

failing financial market- could have conservatively been placed into a bank-sponsored,

federal1y- insured certificate of deposit where it would have earned at least a total of $2,000

during the 3.5 year time period. Accordingly, Objection #12 is SUSTAINED and Respondent is

SURCHARGED $2,000.

               Savings Bonds

       Petitioner maintains that she gave Respondent U.S. savings bonds that Respondent failed

to include in her accounting (Objection #14). At trial, Petitioner alleged that she gave

Respondent six U.S. savings bonds worth $10,000 each. The objection faults Respondent for

using the proceeds from three of the bonds (redeemed value: $31,752) to pay outstanding student

                                                 6
                                                                            2007-X0577.46.3.1.7 Adjudication, Page 7

loans of Petitioner's daughter, as well as Respondent's failure to note the transaction in her

accounting. NT, 6/26/18, pgs. 119-120. On the second day of trial, counsel for Petitioner

advised the court that claims related to the student loans would not be pursued. N. T. 6/28/18 pg.

4. The court finds that the allegations in Objection #14 related to the student loan debt are

similar to the objections waived on Objection #30. Accordingly, the request to surcharge

Respondent for the value of savings bonds used to pay for student loans is OVERRULED.

        Pre-Guardianship Transfer of Funds

        Objection #14 also faults Respondent's failure to include in the accounting $30,000 that

Petitioner gave Respondent prior to her illness. Although Respondent was unable to specifically

recall at trial when this transaction occurred (N.T. 6/26/18, pgs. 93-95), Petitioner testified that

she gave Respondent $30,000 "for my needs ... "prior to her hospitalization in September 2006.

Because Respondent's duties as guardian did not exist until the Guardianship was created on

3/30/07, this transaction falls outside the court's authority over the accounting. The request for

surcharge to replace $30,000 is DENIED.

        Objection 7, which is an objection to the principal balance on hand for failure to include

Discover Bank CD Account and Countrywide CD Account, is DISMISSED for failure to

present evidence in support of the claim ..

       2) PERSONAL PROPERTY

       Objection #4 states that the $5,000 proceeds from the sale of the estate vehicle ("Honda")

were not included in the accounting.

       Judge Ott, in his July 2, 2007 letter (R-2), authorized Respondent to "gift" the Honda to
                                                                                                                       •   ••
Petitioner's daughter, reasoning that Petitioner could no longer use the Honda due to her

                                                  7
                                                                            2007-X0577.46.3.1.7 Adjudication, Page 8

incapacity. However, Petitioner's daughter did not want the Honda. As a result, Respondent

sold the car to a family friend for $5,000. ("proceeds")

        Because Respondent does not recall where she deposited the proceeds, she included the

funds in the accounting category of "Miscellaneous Unknown Deposits." This accounting

category was created to reflect the surplus of unaccounted-for estate funds. Specifically,

Respondent noted at trial that the proceeds are included in the accounting as part of a deposit that

occurred on December 19, 2007. However, no evidence was introduced substantiating this

assertion.

        Respondent admittedly incorrectly listed the Honda in the accounting as a gift to

Petitioner's daughter. N.T. 6/26/18, pg. 66. In fact, the Honda value is listed as zero in the

accounting. The parties stipulated that the proceeds are not listed as a separate asset in the

accounting. In her defense, Respondent contends she didn't know what was required at the time

and claims that she learned to be more detailed as a result of her error.

       The court finds that Respondent's explanation regarding the proceeds lacks credibility.

Respondent's role as a business owner is inconsistent with the absent documentation and the

erroneous characterization of the car transfer as a gift. Respondent's handling of the Honda

transaction is a breach of her fiduciary duty. Accordingly, Objection #4 is SUSTAINED and

Respondent is SURCHARGED $5,000.

       Petitioner asserts in Objection #2 that "certificates of deposit, stock certificates, bonds

and fine jewelry" stored "in a safe deposit box and/or a locked cabinet" were not included among

the Principal Receipts of the Accounting. Under oath, Petitioner stated that she had a safe

deposit box at the former Fidelity Bank in Dresher, PA but does not recall the last time she

accessed the safe deposit box. Petitioner failed to produce corroborating evidence regarding the

                                                 8
                                                                           2007-X0577.46.3.1.7 Adjudication, Page 9

existence of her safe deposit box and its contents, testifying that her search efforts to locate

documentation regarding the existence of the box were unsuccessful. N.T. 6/26/18 pg. 169.

Due to a lack of corroborating evidence regarding the existence of Petitioner's safe deposit box

and its contents, all objections (#2) related to the alleged contents of the safe deposit box are

OVERRULED.

        Respondent's negligent bookkeeping is reflected in her custodial management of estate

personal property and her failure to create an inventory of personal property. Objection #3

claims that Respondent failed to include in the accounting the value of numerous pieces of

jewelry, flatware, collectible art and fur coats, ostensibly valued at approximately $236,000.

However, Petitioner failed to meet her burden of proof to credibly document the existence and

value of personal property items formerly owned by the estate.

       Petitioner introduced Exhibit 20 containing a list of jewelry for which receipts were in the

locked file cabinet but the jewelry was allegedly not returned to her. The listing fails to present

corroborating evidence which this court needs to make a sound decision regarding the alleged

missing jewelry. There were no receipts or pictures of any of these items and no credible

independent testimony of a non-interested party to establish the existence and/or value of any of

these items. Furthermore, Petitioner's credibility was impugned by the conflicting evidence she

presented at trial. For example, Petitioner admitted giving Respondent "some of my more

valuable jewelry but not certainly all of it." N.T. 6/26/18 pg. 146. She also claimed that all of

her jewelry was in a locked cabinet: "I kept all of my jewelry in the top drawer of my locked file

cabinet. So, yes, I believe all the jewelry would have been there." N.T. 6/26/18 pg. 173. This
                                                                                                                      r.
court also received credible evidence that Petitioner's daughter possessed some of her jewelry.

N.T. 6/26/18 pg. 171 and 6/28/18 pg. 159.

                                                  9
                                                                          2007-X0577.46.3.1.7 Adjudication, Page 10

         Respondent however, credibly testified that there was no jewelry in the locked cabinet

when she reviewed the locker contents after it was forcibly opened. More believable is

Respondent's statement that Petitioner gave her a canvas bag of jewelry for safekeeping prior to

the start of guardianship proceedings, and therefore not technically included in the Principle

Receipts section of the Accounting. N.T. 6/26/18, pg. 49.

         For similar reasons, the court cannot make a conclusive determination on the issue of

missing furniture and accessories due to Petitioner's failure to present corroborating evidence in

support of her claim as to the existence of such items and their value. Petitioner is unsure of

what her daughter took possession of, other than items observed during a visit to her daughter's

California residence. N.T., 6/26/18, pg. 171. No contradictory evidence was presented to show

that Petitioner's daughter was not the last person to possess Petitioner's furniture.

         Petitioner's Exhibit 20 lists a fur coat, initially purchased for $8, 150. Respondent

credibly testified regarding her logic for discarding Petitioner's fur coat, given the small resale

value of fur coats and the cost of appropriate storage for an unknown length of time. N. T.,

6/26/18, pg. 62-63. However, Respondent made no effort to preserve the value of that asset in

some format, such as selling the coat on eBay or Craig's List. Accordingly, Respondent is

SURCHARGED $1,000.00 for the fur coat. All other objections listed in Objection #3 are

OVERRULED for failure to present any credible evidence corroborating their existence or

value.

                                                  10
                                                                       2007-X0577.46.3.1.7 Adjudication, Page 11

        3) FIDUCIARY DUTY

        Medical Care Insurance Payments

        Objections #16 and #18 fault Respondent for using estate funds to pay for medical care

that was already covered by Medicare.

        Petitioner became eligible for Medicare in April 2008. Objection #18 contests the

$1,085.84 COBRA payment that Respondent made in April 2008. Respondent credibly testified

that this payment covered medical care for back coverage. N.T. 6/26/18, pg. 116-117. No

contradictory evidence was received. Therefore, Petitioner's request to surcharge Respondent

$1,085.84 is DENIED. Objection 18 is OVERRULED.

        Objection #16 contests payments made to Blue Cross Health Insurance after Petitioner

became eligible for Medicare in April 2008. Respondent justifies this purchase as supplemental

insurance for Medicare and maintains it was a continuation of the health insurance Petitioner had

through her employer (via COBRA). N.T. 6/26/18, pg.I 13. Respondent paid approximately

$28,000 in premiums and was reimbursed 18,000, which was reflected in the accounting.

Respondent's payment of approximately $10,000 over the time period between April 2008 and

November 2010 results in a reasonable monthly payment of approximately $300. Respondent

further noted that she received multiple notices from Blue Cross that they were going to drop

Petitioner's PPO coverage and switch her to a health savings account. Respondent credibly

testified that she thought this would make her administration of the estate more difficult without

any added benefit for Petitioner so she decided to drop this coverage. NT, 6/26/18, pgs. 113-116.

Petitioner's request that Respondent be surcharged for the purchase of Medicare supplemental

insurance from April 2008 to November 2010 is DENIED. Objection 16 is OVERRULED.

                                                11
                                                                         2007-X0577.46.3.1.7 Adjudication, Page 12

        At trial, Petitioner's expert witness raised the question of whether Petitioner needed Blue

Cross health insurance as a supplemental policy, noting the inconsistency of adequate medical

insurance coverage throughout the guardianship period. This court shared this observation.

Respondent's testimony indicated Petitioner had no Medicare supplemental coverage from

November 2010 until the guardianship was terminated in April 2015. The court agrees that

Medicare supplemental insurance, be it Medicare Advantage or Blue Cross health insurance, is a

basic necessity, especially when an individual can afford it. Both parties testified similarly

regarding the need for Medicare supplemental insurance. N.T. 6/26/18, pgs. 113 and 161. The

court deeply disapproves of Respondent's failure to provide Medicare supplemental insurance

coverage from November 201 0 to January 2015.

       Prescription Drug Payments

       Objection #22 charges that, because Respondent applied for Medicare Part D (to cover

payment of medications) during the latter stage of her guardianship, Respondent unnecessarily

paid $69,238.56 for drugs that Medicare Part D would have covered. Due to Respondent's

untimely enrollment, the estate incurred a $972 late enrollment fee.

       Petitioner's Exhibit P-27 reflects an alleged loss of $22,538 for the estate. Petitioner's

calculation encompasses the time period of November 2010 through March 2015. At trial,

Petitioner testified that her Medicare Pm1 D and Medicare Advantage began in January 2015.

Petitioner failed to provide credible evidence reflecting the difference between the amount

Respondent paid for drugs and the amount the drugs would have cost under Medicare Part D.

Furthermore, Respondent credibly testified that the costs for medication were high because

Petitioner was not compliant with taking her prescribed pil1s. She had been hiding them in her

cheeks and then hiding them around her room. Doctors later prescribed the liquid form of

                                                 12
                                                                           2007-X0577.46.3.1.7 Adjudication, Page 13

    medication but Petitioner was still noncompliant resulting in the use of expensive medical

    patches not covered by insurance. NT, 6/26/18, pgs. 117-118. Therefore, Petitioner's request to

    surcharge Respondent $22,538 for failing to apply for Medicare Part Dis DENIED.

            Due to Respondent's untimely Medicare application, Petitioner's request that Respondent

    incur as a surcharge the $972 late enrollment fee is GRANTED. Accordingly, Objection 22 is

    SUSTAINED in part and OVERRULED in part.

           Payment of Accountant's Counsel Fees, Court & Litigation Costs

            In paragraph (c) of the Rider to the Petition for Adjudication, the Accountant/Respondent

requests this court to approve the payment of her counsel fees, costs and filing fees associated

with the filing of this Account. Petitioner filed an objection to this request which is identified as

Objection 31 in the document filed July 17, 2017. Due to Respondent's negligence in managing

Petitioner's estate and her failure to continuously uphold her fiduciary duty, the Petition of

Accountant for Payment of Attorney's Fees and Estate Litigation Costs is DENIED. Objection

#31 is SUST AINED.3

           There are no remaining questions before this Court requiring adjudication.

           Subject to the views expressed in this Adjudication, to distributions heretofore properly

made, and to any Pennsylvania inheritance transfer tax that may properly be due, the net

ascertained balances of principal and income are awarded as set forth in the last paragraph of the

Petition for Adjudication.
                           this�ay
           AND NOW,                of July, 2019, the First and Final Account is confirmed subject
                                                                                                                       .,,,_
to the findings of the Court herein, and it is hereby ORDERED and DECREED that the

Guardian reimburse the estate for surcharges herein awarded.

3
    Counsel fees stated in the First and Final Account are confirmed.

                                                           13
       "O                                                                                  2007-X0577.46.3.1.7 Adjudication, Page 14
��
(I)    t::
8�
q;     (lJ

gE
.Q,E
ct .s                      A motion for reconsideration of this adjudication may be filed within twenty (20) days
i�
:::: ai
�t:: ;gt::         from the entry of the Adjudication. An appeal from this adjudication may be taken to the
-� 8
-� c:
eg
Q. t::
(I)    (lJ
                   appropriate appellate court within thirty (30) days from the entry of the adjudication. See, Pa.
££
S<'
-� t:              0.C. Rule 8.2 and Montgomery County Local Rule 8.2A, and Pa.R.A.P. 902 and 903.
Cl)�

��
�'6
o�
O t::
0, (I)
:§     §                                                                   BY THE COURT:
""0
-� .g
:S     "O
16 �
��
""(lJ

�E
o,E
 ij; .s
il:: 1t..,ll
� 0,
                   July /S- , 2019, to:
!�                 Michael L. Galbraith, Esquire
tf �
:ii' ·g.
a..�               �� Kreng , E�quire
�