Court Opinion

ID: 4511573
Source: CourtListenerOpinion
Date Created: 2020-02-28 19:10:05.576967+00
Date Added: 2024-06-11T12:15:22.893249
License: Public Domain

J-S03033-20

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    IN RE: RICHARD J. DUFFIN       :            IN THE SUPERIOR COURT OF
    VARIABLE TRUST AGREEMENT       :                 PENNSYLVANIA
    DATED AUGUST 9, 1993 TRUST FBO :
    MARTHA J. DUFFIN EXEMPT        :
                                   :
                                   :
    APPEAL OF: MARTHA J. DUFFIN    :
                                   :
                                   :            No. 1083 WDA 2019

                  Appeal from the Order Entered June 20, 2019
      In the Court of Common Pleas of Allegheny County Orphans' Court at
                            No(s): No. 5237 of 1997

BEFORE: McLAUGHLIN, J., McCAFFERY, J., and PELLEGRINI, J.*

MEMORANDUM BY PELLEGRINI, J.:                      FILED FEBRUARY 28, 2020

        Martha J. Duffin (the Beneficiary) appeals, pro se, the order of the Court

of Common Pleas of Allegheny County, Orphans’ Court Division (the trial

court), determining that title to 20 acres of real property located at 6519 146th

Avenue, Holland, Michigan 49423 (the Property) is held solely by PNC Bank,

National Association (PNC), in its capacity as the lone trustee of “the Martha

J. Duffin Trust.” The Beneficiary also challenges the portion of the subject

order authorizing the Property’s sale. We affirm.1

____________________________________________

*   Retired Senior Judge assigned to the Superior Court.

1  The facts are taken from the certified record, including the trial court’s
findings, and the transcripts of the hearing held on June 3, 2019. See Trial
Court Opinion and Order, 6/20/2019, at 1-3.
J-S03033-20

                                               I.

        Richard J. Duffin was the father of the Beneficiary and Virginia M. Duffin.

Upon his death in 1996, the Beneficiary and her sister each received from their

father one-half shares, held in trust, of the principal of “the Richard J. Duffin

Variable Trust Agreement, dated August 9, 1993” (the Trust Agreement).

“The Martha J. Duffin Trust” provided for the Beneficiary, and “the Virginia M.

Duffin Trust” provided for her sister. PNC served as the trustee of both trusts.

        The Trust Agreement directs that if either sister predeceases the other

while both sisters are childless, then the assets of the deceased sister’s trust

must pass to the trust of the surviving sister. However, the Trust Agreement

gives both sisters the power of appointment as to the principal of their

respective trusts. That is, they each received a restricted right to determine

how the assets of their trusts would be distributed. Importantly, the sisters

could only exercise this power of appointment “by specific reference to this

provision [of the Trust Agreement] in her Will.”2

____________________________________________

2   Article II, subsection C.2.b. of the Trust Agreement states:

        Upon the death of any daughter of the Grantor or upon the division
        into shares . . . in the case of a daughter who is not then
        living, the principal of said daughter’s share shall be
        distributed outright to or on further trust for such one or more
        of the Grantor’s descendants as the Grantor’s said daughter
        directs by specific reference to this provision in her Will[.]

(Emphasis added).

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      In 1997, the sisters’ respective trusts each acquired as principal equal

half shares of the Property.     Article IV of the Trust Agreement gives the

trustee, PNC, “sole and absolute discretion, which shall be conclusive and

binding on all persons,” to “lease, sell, or otherwise dispose of” real property

if it is determined to be “in the best interests of the Trust.” However, the trial

court entered a decree on May 8, 2000, ordering PNC to retain and manage

the Property for the benefit of the trusts until further order of court.      The

decree prohibited PNC from selling the Property without prior court

authorization.

      Virginia M. Duffin died in 2015, and upon her death, the Beneficiary

presented PNC with 19 handwritten pages that she claimed were her sister’s

last will and testament. The Beneficiary contended that the will compelled

PNC to distribute to her an outright ownership interest in the one-half share

of the Property owned by her deceased sister’s trust. PNC declined, concluding

that the writings were not a valid will, and that sole legal title to the Property

passed to the Trust by operation of the default provisions in the Trust

Agreement.

      On February 20, 2019, PNC filed with the trial court a “Petition for

Citation to Show Cause Why Declaratory Judgment Should Not be Entered to

Confirm the Trustee’s Interest in the Trust Real Estate and to Authorize its

Sale.” Specifically, PNC sought determinations as to whether the Beneficiary’s

deceased sister had left a valid will and, if so, whether the power of

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appointment as to the Property was exercised. PNC’s petition was granted,

and a citation was awarded on February 25, 2019, directing the Beneficiary to

respond.

       The trial court held an evidentiary hearing concerning PNC’s interests in

the Property and heard from two witnesses. The Beneficiary testified on her

own behalf. See Transcript of Hearing, 5/3/2019, at 28-48. The Director and

Vice-President of PNC Bank Trust Real Estate Services, James Wilharm

(Wilharm), testified on behalf of PNC, the sole trustee of the Trust. See id.

at 7-24.

       The Beneficiary described the contents of her sister’s purported will,

explaining that it was compiled from scattered writings on her deceased

sister’s desk. The Beneficiary herself then numbered the pages as she thought

her sister would have wanted based on their earlier discussions. Many of the

pages were heavily edited with corrections, notations and other extraneous

markings. Some pages were entirely crossed out.

       Notably, the first page was signed by Virginia M. Duffin on December

10, 1997, and witnessed by the Beneficiary on that same date. It appears to

instruct that the Beneficiary should receive the tax-exempt proceeds of her

sister’s trust3 upon her death:

____________________________________________

3 The Property at issue here appears to fall into the “tax exempt” portion of
the assets of the Virginia M. Duffin Trust.

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      I, Virginia Mae Duffin, will the tax exempt portion of the Richard
      J. Duffin Trust to my sister, Martha J. Duffin.

      I leave the taxable portion of that Trust to be distributed according
      to the provisions of my will. If there is no such will at the time of
      my death, I leave this portion to my sister Martha to distribute to
      family members . . . according to her understanding of my wishes.

      The Beneficiary argued that the first page from 1997 is an original will,

and that more recent pages, dating from 2001 to 2011, are codicils that did

not negate her sister’s stated intent to leave her a share of the trust Property.

Yet, the Beneficiary admitted that her sister had not yet finalized her

will/codicils before her death, and the Beneficiary conceded that she had not

admitted any portion of the collected papers to probate.         Moreover, it is

undisputed that nothing in the 19 pages of Virginia M. Duffin’s writings

specifically refers to the Trust Agreement’s provision outlining the power of

appointment.

      As to the condition of the Property and the Trust’s request to sell it,

Wilharm testified that it contains three structures (a small residence, a one-

car garage and a shed), all of which are in poor states of repair. In fact, years

ago, the garage roof caved in on a parked car owned by the Beneficiary and

the car had since not been moved.       The Property is vacant and has been

unoccupied for about 20 years.

      According to Wilharm, the current total value of the Trust is

approximately $1,100,000, and of that total, the Property has a value of

roughly $210,000, none of which is attributable to the structures. The yearly

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cost of maintaining the Property is about $5,500. Wilharm testified that those

maintenance costs are a drain on the Trust’s resources, that the Property’s

value is stagnant, and that selling the Property would be in the best interest

of the Trust.

      The Beneficiary responded that she has not been to the Property since

2000, but she explained that this absence was caused by circumstances

beyond her control, such as limited finances and ailing health. The Beneficiary

stated that she intended to return to the Property to restore it for the benefit

of future generations of her family and philanthropic enterprises.            She

emphasized that the Property has enormous sentimental value as her family’s

ancestral home.

      In the order now on review, the trial court resolved all issues in PNC’s

favor. See Trial Court Opinion and Order, 6/20/2019, at 4-5. The trial court

found that the writings offered by the Beneficiary did not constitute a valid will

of her sister, Virginia M. Duffin, and that the power of appointment was not

exercised.   Id.      The trial court ruled that PNC held sole legal title to the

Property, and that PNC presented credible evidence that selling it would be in

the best interests of the Trust, warranting authorization of its sale. Id. The

earlier decree prohibiting the Property’s sale was vacated.            Id.    The

Beneficiary timely appealed and filed a 1925(b) statement of errors as directed

by the trial court.

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      The Beneficiary’s 1925(b) statement is, for the most part, a scattershot

summary of facts, making it difficult to identify the precise legal claims the

Beneficiary intended to raise on appeal. See 1925(b) Statement, 8/14/2019,

at 1-4. It is apparent, though, that she disputed the trial court’s rulings on

the validity of her sister’s will, PNC’s sole ownership of the Property, and PNC’s

authorization to sell the Property. See id. The Beneficiary also argued for

the first time that PNC, through its conduct with respect to the Property,

breached its fiduciary duties as trustee. See id.

      In its 1925(a) opinion, the trial court incorporated its earlier factual

findings and conclusions of law. See 1925(a) Opinion, 8/26/2019 (attaching

Trial Court Order and Opinion, 6/20/2019). The trial court also found that the

Beneficiary’s 1925(b) statement did “not allege any legal errors,” but rather

expressed disagreement “with the [factual] findings of the Court as set forth

in the attached [Order and Opinion]”. Id.

      The Beneficiary filed a revised 1925(b) statement on October 24, 2019.

See Revised 1925(b) Statement, 10/24/2019, at 1-6. In it, the Beneficiary

stated numerous new facts, authorities and arguments that were never

addressed in the prior proceedings.

      Excluding the grounds asserted for the first time on appeal, the

Beneficiary’s appellate brief raises three main issues, which we rephrase as

follows:

      (a) Whether the trial court erred in ruling that the purported will
      of Virginia M. Duffin is invalid;

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       (b) Whether the trial court erred in ruling that the power of
       appointment as to the Property was not exercised; and

       (c)   Whether the trial court erred in authorizing the Property’s
       sale.

See Appellant’s Brief, at 5.

                                               II.

                                               A.

       The trial court did not err in ruling that PNC, as trustee of the Trust,

holds sole legal title to the Property.4             The Trust Agreement permitted a

beneficiary to exercise the power of appointment as to Trust assets only “by

specific reference to this provision [of the Trust Agreement] in her Will.” The

____________________________________________

4 The applicable standard of review as to all issues in this case is whether the
trial court abused its discretion:

       “In reviewing the decision of the orphans' court, this Court’s
       responsibility is to assure that the record is free from legal error
       and to determine if the orphans’ court’s findings are supported by
       competent and adequate evidence.” In re Klein's Estate, 378
       A.2d 1182, 1187 (Pa. 1977). “In determining whether the findings
       of the orphans’ court are supported by competent evidence, we
       must take as true all the evidence supporting the findings and all
       reasonable inferences therefrom.” In re William L., 383 A.2d
       1228, 1237 n.12 (Pa. 1978). “Further, all conflicts in testimony
       must be resolved by the hearing judge, who is the sole arbitrator
       of credibility.” In re C.A.W., 409 A.2d 16, 18 (Pa. 1979).
       “Findings of the orphans’ court supported by evidence of record
       are entitled to the same weight given a jury verdict and must be
       sustained unless the court abused its discretion or committed an
       error of law.” William L., 383 A.2d at 1237.

In re Estate of Plance, 175 A.3d 249, 259–60 (Pa. 2017) (some citations
omitted).

                                           -8-
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writings which the Beneficiary asserts to be her deceased sister’s will

contained no such reference.       So even assuming the will is valid, the

Beneficiary’s sister failed to exercise the power of appointment in accordance

with the Trust Agreement, and the Beneficiary is not entitled to an outright

ownership share of the Property due to that defect alone.

      In similar cases, where a grantor has conditioned a power of

appointment as to trust assets, courts have found that the conditions must be

satisfied in order for that power to be exercised:

      [T]he law has been clearly settled that strict and literal compliance
      with the terms of a special power of appointment is absolutely
      necessary for its valid and effective exercise. That means that the
      appointing instrument must specifically refer in the instant case to
      the power which was granted by (the donor’s) will and which (the
      donee) seeks to exercise and execute. A general residuary clause,
      even if and when it included the words, ‘I hereby exercise every
      power of appointment which I possess,’ would not and does not
      comply with and fulfill the donor’s condition and is not a valid
      exercise of the special power of appointment granted to (the
      donee).

Schede’s Estate, 231 A.2d 135, 137 (Pa. 1967).

      Despite the above requirement of “strict and literal compliance”, the

recipient of a power of appointment does not have to use “magic words” in

order to exercise it. If a grantor conditions the exercise of that power as to

trust assets, it is enough to achieve “a reasonable substantive compliance with

[the grantor’s] expressed intention that [the beneficiary] identify his grant of

power to her by her deliberate act.” In re Passmore, 416 A.2d 991, 994

(Pa. 1980) (holding that requiring verbatim recital of trust language would

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frustrate donor’s intent, and finding that power was effectively exercised

through an express intention to exercise it).

       In this case, the putative will of the Beneficiary’s sister did not at all

identify the grant of power needed to confer an ownership interest in a Trust

asset. The terms of the Trust Agreement imposed that requirement to make

an appointment valid, and under the above cases, Pennsylvania law

recognizes the condition as legally enforceable. Thus, because the power of

appointment was not exercised, the Trust Agreement precludes the

Beneficiary from receiving an outright ownership share in the Property, and

under the default terms of the Trust Agreement, PNC, as trustee, must receive

full legal title.

                                        B.

       Next, we find that the trial court did not err in authorizing PNC to sell

the Property or in finding that its sale is in the best interests of the Trust. The

gist of the Beneficiary’s argument seems to be that the trial court did not

properly weigh her testimony about the sentimental value the Property has to

her family.     She argues that the trial court should have discounted PNC’s

evidence that selling the Property would be in the Trust’s best interests.

       The terms of the Trust Agreement give PNC “sole and absolute

discretion” over the management of assets, including real property. It was

the grantor’s prerogative to give a trustee such discretion and to deprive the

beneficiaries of any say about such matters. See e.g., In re Holbrook’s

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Estate, 62 A. 368 (Pa. 1905) (“[A] donor, not under any obligation to give,

may give with such conditions as he [or she] pleases, subject only to the

restriction that the conditions shall be clearly illegal.”). As long as it performs

in accordance with its fiduciary duties as trustee,5 PNC may buy or sell real

property on behalf of the Trust as it sees fit.

       To the extent that the trial court heard conflicting testimony as to the

financial or sentimental value of the Property and could block a sale on that

basis, it was the trial court’s job to resolve the conflict by weighing the

evidence. The trial court credited PNC’s evidence concerning the Property’s

worth vis-à-vis the interests of the Trust, and, on appeal, the findings of the

trial court must be taken as true. Thus, the trial court did not err and its

rulings as to the Property’s sale must stand.

       Order affirmed.

____________________________________________

5  The Beneficiary did not assert that PNC breached any of its fiduciary duties
until after the appeal had begun, making such claims untimely. Those claims
are waived and this Court cannot consider their merits. See Pa.R.A.P.
1925(b)(3)(iv) (“[A]ny issue not properly included in the Statement timely
filed and served pursuant to subdivision (b) shall be deemed waived.”).
Further, even if the Beneficiary’s fiduciary duty claims could be considered
timely, they were still waived because the form of her revised 1925(b)
statement clearly does not comport with the procedural rules. See Pa.R.A.P.
1925(b)(4)(iv) (“The Statement should not be redundant or provide lengthy
explanations as to any error.”); see also Pa.R.A.P. 1925(b)(4)(vii) (“Issues
not included in the Statement and/or not raised in accordance with the
provisions of this paragraph (b)(4) are waived.”).

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Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 2/28/2020

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