Court Opinion

ID: 4218006
Source: CourtListenerOpinion
Date Created: 2017-11-06 19:16:12.119413+00
Date Added: 2024-06-11T14:42:25.436846
License: Public Domain

J-A18025-17

                            2017 PA Super 346

IN RE: THE ESTATE OF ANNA S.                    IN THE SUPERIOR COURT
WIERZBICKI A/K/A ANNA WIERZBICKI,                         OF
DECEASED                                             PENNSYLVANIA

JOAN AND CHRISTOPHER CLARK,
APPELLANTS
               v.

WANDA KORENOSKI, EXECUTRIX

                                                   No. 1959 WDA 2016

                  Appeal from the Order December 12, 2016
              In the Court of Common Pleas of Allegheny County
                   Orphans' Court at No(s): NO. 021102276

BEFORE: BOWES, J., LAZARUS, J., and OTT, J.

OPINION BY LAZARUS, J.:                       FILED NOVEMBER 6, 2017

      Joan and Christopher Clark (“the Clarks”) appeal from the order entered

in the Court of Common Pleas of Allegheny County, Orphans’ Court Division,

denying their motion for summary judgment seeking a determination that a

certain Wells Fargo account belonging to Anna S. Wierzbicki, Deceased

(“Decedent”), was a testamentary asset and determining, sua sponte, that

the account is a non-probate asset. Upon careful review, we affirm in part

and reverse in part.

      Decedent died on February 25, 2011, leaving a will dated September 2,

2008. Decedent gave her estate, in three equal parts, to: (1) her niece, Joan

Clark, and her husband, Christopher Clark, or the survivor of them; (2) her

niece, Wanda Korenoski, and her husband, Allen Korenoski, or the survivor of
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them; and (3) her niece, Florence Eileen Zalewski, and her husband, Chester

Zalewski, or the survivor of them. Decedent appointed Florence Zalewski and

Wanda Korenoski as co-executrices. However, Florence renounced her right

to serve and died thereafter, leaving Wanda Korenoski (“Executrix”) as sole

executrix.

        At issue in this case is the ownership of a Wells Fargo account ending in

the number 6428 (“Account”). Decedent opened the Account in January 2008.

At the time, the Decedent did not execute a transfer on death designation.

On September 19, 2008, Decedent gave Executrix power of attorney over the

Account.

        At some point in January 2011, Executrix went to Decedent’s apartment,

at which time Decedent asked her to complete the beneficiary designation

page of a Transfer on Death (“TOD”) Application for the Account. Executrix

hand-wrote the names, addresses, social security numbers, telephone

numbers, birth dates and percentage interests of the beneficiaries on page

two of the application. On January 29, 2011, Decedent signed and dated the

beneficiary designation, which gave Executrix 60% of the account proceeds

and 40% to Florence Eileen Zalewski. The TOD application was date-stamped

upon receipt by Wells Fargo on February 3, 2011. Decedent died on February

25, 2011.     On March 3, 2011, Wells Fargo preliminarily rejected the TOD

application for failure to designate a contingent TOD beneficiary. The rejection

was ultimately reversed and the TOD application was approved on April 6,

2011.

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      On December 5, 2014, the Executrix filed an account of her

administration.   The Clarks filed objections asserting, inter alia, that the

Executrix breached her fiduciary duties by failing to pursue, for the benefit of

the estate, recovery of the funds contained in the Account and, instead,

retained a percentage of them for her own benefit. Specifically, the Clarks

asserted that the TOD beneficiary designation was invalid because: (1) Wells

Fargo failed to accept it prior to Decedent’s death; (2) the beneficiary

designations were completed by Executrix, who held power of attorney on the

account, in contravention of 20 Pa.C.S.A. §§ 6407 and 6410; and (3) Wells

Fargo rejected the TOD application after Decedent’s death, rendering it

unenforceable under 20 Pa.C.S.A. §§ 6407, 6409 and 6410. The Clarks also

alleged that Executrix exercised undue influence upon the Decedent.

Accordingly, the Clarks claim that the beneficiary designation is invalid and

the Account is the property of the estate.

      The Executrix filed an answer to the Clarks’ objections, in which she

denied that the failure to designate a contingent beneficiary invalidated the

TOD designation. The Executrix also asserted that Wells Fargo followed its

own procedures in screening and ultimately accepting Decedent’s TOD

designation and that the legal bases for the Clarks’ claims are unsound.

      On March 23, 2016, the Clarks filed a motion for partial summary

judgment asking that the Account be deemed a testamentary asset because

the TOD designation was facially invalid under the Transfer on Death Security

Registration Act (“the Act”), 20 Pa.C.S.A §§ 6401-6413, and the common law

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of contracts.1    The motion did not, however, address the undue influence

claim.   On December 12, 2016, the court denied the motion and further

concluded, as a matter of law, that the Account was a non-probate asset. This

appeal follows, in which the Clarks raise the following issues for our review:

       1. Did the [Orphans’ Court] commit an error of law by failing to
       conclude that the Wells Fargo account is a testamentary asset?

       2. Did the [Orphans’ Court] commit an error of law and/or abuse
       its discretion when concluding – sua sponte and as a matter of law
       – that the Wells Fargo account is not a testamentary asset?

Brief of Appellants, at 4-5.

       We begin by briefly noting that this Court has jurisdiction to decide the

instant matter pursuant to Pa.R.A.P. 342(a)(6). Rule 342(a)(6) provides that

an appeal may be taken as of right from an order of the Orphans’ Court

Division that determines an interest in real or personal property. In this case,

the Orphans’ Court held, as a matter of law, that the Account was a non-

probate asset belonging to the beneficiaries named in the TOD designation.

As the order “determines an interest in . . . personal property,” we may

proceed with our review.

       In reviewing a ruling on a summary judgment motion,

       [a] reviewing court may disturb the order of the trial court only
       where it is established that the court committed an error of law or
       abused its discretion. Upon appellate review, we are not bound
       by the trial court’s conclusions of law, but may reach our own
       conclusions. As with all questions of law, our review is plenary.
____________________________________________

1 The summary judgment motion addressed only the Clarks’ claims with
respect to the nature of the Account and not any other issues raised in their
objections to the Executrix’s account of her administration of the estate.

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      Furthermore, in deciding a motion for summary judgment, we will
      view the record in the light most favorable to the nonmoving
      party, and accept as true all well-pleaded allegations, giving that
      party the benefit of all reasonable inferences that can be drawn
      from those allegations. In evaluating the trial court’s decision to
      enter summary judgment, we focus on the legal standard
      articulated in the summary judgment rule. See Pa.R.C.P. 1035.2.
      The rule states that where there is no genuine issue of material
      fact as to a necessary element of the cause of action and the
      moving party is entitled to relief as a matter of law, summary
      judgment may be entered. See Pa.R.C.P. 1035.2(1).

In re Estate of Scharlach, 809 A.2d 376, 380–81 (Pa. Super. 2002), quoting

Kenner v. Kappa Alpha Psi Fraternity, 808 A.2d 178 (some citations

omitted).

      The Clarks first assert that the Orphans’ Court erred in failing to

conclude that the Account is a testamentary asset. They argue that the TOD

designation executed by the Decedent was invalid and unenforceable under

various provisions of the Act and black letter contract law. First, the Clarks

assert that the court’s ruling violates the requirements of section 6407, which

provides as follows:

      On death of a sole owner or the last to die of all multiple owners,
      ownership of securities registered in beneficiary form passes to
      the beneficiary or beneficiaries who survive all owners. On proof
      of death of all owners and compliance with any applicable
      requirements of the registering entity, a security registered
      in beneficiary form may be reregistered in the name of the
      beneficiary or beneficiaries who survived the death of all owners.
      Until division of the security after the death of all owners, multiple
      beneficiaries surviving the death of all owners hold their interests
      as tenants in common. If no beneficiary survives the death of all
      owners, the security belongs to the estate of the deceased sole
      owner or the estate of the last to die of all multiple owners.

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20 Pa.C.S.A. § 6407 (emphasis added). In particular, the Clarks argue that

the Decedent’s failure to check the contingent beneficiary box renders the

entire TOD designation invalid under the highlighted language. Our reading

of the statute does not comport with that of the Clarks. Contrary to their

interpretation, it is clear that the highlighted portion of section 6407 refers to

any requirements of the registering entity with respect to reregistration of the

account in the name of the beneficiaries following the death of the owner.

Thus, the cited language is inapplicable.

      Likewise, section 6410(a) garners the Clarks no relief. The Clarks rely

upon the following language to assert that the TOD designation is invalid:

      (a) Terms and conditions.--A registering entity offering to accept
      registrations in beneficiary form may establish the terms and
      conditions under which it will receive requests for registrations in
      beneficiary form and for implementation of registrations in
      beneficiary form, including requests for cancellation of previously
      registered TOD beneficiary designations and requests for
      reregistration to effect a change of beneficiary. . . .

20 Pa.C.S.A. § 6410(a).

      Wells Fargo’s internal Document Rejection Policy states that, “[t]o

comply with regulatory requirements, all documents must be completed in

their entirety.” Motion for Partial Summary Judgment, Exhibit F. The Clarks

again argue that, because Decedent did not check the contingent beneficiary

box, her registration did not comply with the registering entity’s “terms and

conditions” and is, therefore, invalid.     We disagree.   Section 6410 merely

provides protection for registering entities by authorizing such entities to, in

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their discretion, establish the terms and conditions under which it will accept

requests for registration in beneficiary form. It does not mandate that any

request for registration be deemed invalid for failure to conform exactly to the

entity’s terms and conditions. Under the circumstances of this case, in which

both primary beneficiaries were alive at the time of the owner’s death, nothing

in section 6410 precluded Wells Fargo from exercising its discretion and

disregarding   Decedent’s    irrelevant   failure   to   designate   unnecessary

contingent beneficiaries. Moreover, the purpose of the Act is to provide a

mechanism by which account owners can provide for the non-probate transfer

of their assets upon their death. It also provides protections for the financial

institutions offering registration in beneficiary form. Section 6412 of the Act

provides that its provisions “shall be liberally construed and applied to

promote [its] underlying purposes” and that “the principles of law and equity

supplement its provisions.” 20 Pa.C.S.A. § 6412. The purposes of the Act are

not served by applying its provisions narrowly to thwart the clear intent of

account owners based on an irrelevant technicality.

      The Clarks also argue that the Executrix executed the TOD designation

form in her capacity as power of attorney and, in doing so, rendered the

application invalid under sections 6407 and 6410. This argument fails for two

reasons.   First, it is undisputed that the Decedent herself executed the

document. The Clarks do not dispute that the signature on page three of the

document is that of the Decedent. The fact that the Executrix assisted the

Decedent by handwriting the names and other information of the Decedent’s

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chosen beneficiaries is of no moment. Second, nothing in section 6407 or

6410 invalidates a TOD designation executed by an agent under a power of

attorney or precludes an agent from validly executing a TOD designation. This

argument is patently meritless.

      The Clarks further assert that section 6409 and black letter contract law

render the designation ineffective because there was no “acceptance” of the

Decedent’s “offer.” Section 6409 provides, in relevant part, as follows:

      (a)    General rule. – A transfer on death resulting from a
      registration in beneficiary form is effective by reason of the
      contract regarding the registration between the owner and the
      registering entity and this chapter and is not testamentary.

20 Pa.C.S.A. § 6409.

      “It is black letter law that in order to form an enforceable contract,

there must be an offer, acceptance, consideration or mutual meeting of the

minds.” Jenkins v. Cty. of Schuylkill, 658 A.2d 380, 383 (Pa. Super. 1995).

      The Clarks argue that the “offer” in this case was made by the Decedent

when she submitted her TOD registration application to Wells Fargo. Wells

Fargo did not “accept” her application until after her death.     Because an

offeree’s power of acceptance “is terminated when the offeree or offeror dies,”

no contract was formed.      Brief of Appellant, at 19, citing Restatement

(Second) of Contracts, § 48. We disagree.

      The very section of the Act upon which the Clarks base many of their

claims undermines their argument by framing the registration process in

terms of the registering entity being the offeror. Section 6410(a) begins by

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stating: “A registering entity offering to accept registrations in beneficiary

form may establish the terms and conditions . . .” 20 Pa.C.S.A. § 6410(a)

(emphasis added).      In addition, section 6408(a) of the Act provides as

follows:   “A registering entity is not required to offer or to accept a

request for security registration in beneficiary form.     If a registration in

beneficiary form is offered by a registering entity, the owner requesting

registration in beneficiary form assents to the protections given to the

registering entity by this chapter.” 20 Pa.C.S.A. § 6408(a) (emphasis added).

In short, Wells Fargo offered TOD registration and Decedent accepted by

executing the application, which was delivered to Wells Fargo on February 3,

2011, prior to Decedent’s death.     The Clarks can cite no authority for the

proposition that Wells Fargo’s internal administrative delay in approving

Decedent’s application renders the TOD designation invalid.             Formal

procedures required by an institution in order to effect a change of beneficiary

are in place to protect the institution. See In re Estate of Golas, 751 A.2d

229, 231 (Pa. Super. 2000). Thus, an original beneficiary is without the right

to insist upon strict compliance with those requirements in an effort to

invalidate a subsequent beneficiary designation. Id.

      For the foregoing reasons, we find that the Clarks have failed to

demonstrate that the Orphans’ Court committed an error of law in concluding

that, on its face, the TOD beneficiary designation was valid. Accordingly, we

affirm the court’s denial of the Clarks’ motion for partial summary judgment.

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      Nevertheless, we are constrained to agree with the Clarks that the court

went a step too far when it held conclusively and as a matter of law that the

Account is a non-probate asset. The sole issue before the court on partial

summary judgment was whether the TOD designation was unenforceable, on

its face and as a matter of law, pursuant to the Act and the common law of

contracts. The motion did not address the Clarks’ alternative contention –

that, regardless of its facial validity, the designation was the product of undue

influence exercised upon the Decedent by the Executrix.          See Amended

Objections to Account, 11/20/15, at ¶ 64.        Because the issue of undue

influence was not raised in the motion for partial summary judgment, it was

premature for the court to rule, as a matter of law, that the Account is a non-

probate asset where evidence regarding the Clarks’ undue influence claim was

not yet before the court. Accordingly, to the extent that the court conclusively

determined the non-probate nature of the Account, we reverse and remand

for further proceeding consistent with the dictates of this opinion.

      Affirmed in part and reversed in part. Remanded for further proceedings

consistent with the dictates of this opinion. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 11/6/2017

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