Court Opinion

ID: 4035905
Source: CourtListenerOpinion
Date Created: 2016-09-22 05:12:18.496065+00
Date Added: 2024-06-11T14:37:04.606433
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Straban Township                          :
                                          :
             v.                           : No. 1935 C.D. 2015
                                          : Submitted: July 29, 2016
Hanoverian Trust, Heywood Becker,         :
Trustee and Lisa M. Phillips              :
                                          :
Appeal of: Heywood Becker                 :

BEFORE:      HONORABLE MARY HANNAH LEAVITT, President Judge
             HONORABLE MICHAEL H. WOJCIK, Judge
             HONORABLE JAMES GARDNER COLINS, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY PRESIDENT JUDGE LEAVITT                             FILED: September 16, 2016

             Heywood Becker, pro se, appeals an order of the Court of Common
Pleas of Adams County (trial court) denying, after remand, Straban Township’s
motion to compel Becker to obtain counsel to represent the Hanoverian Trust, one
of the defendants in an injunction action filed by the Township. The trial court
determined that Becker had not successfully conveyed his real property (the
Property) to a valid trust and, thus, he was entitled to represent himself,
individually, as owner of the Property. The trial court also held that Becker was
free to convey the Property to a trust, but if he did so that trust would have to be
represented by a licensed attorney.     Becker contends the trial court erred by
concluding the Property was not conveyed to the Hanoverian Trust and that he
cannot represent the trust. We affirm in part and vacate in part.
              This case began in 2013 when the Township filed a complaint to
enjoin the Hanoverian Trust from operating a motel on the Property, located at
2440 Old Harrisburg Road, in Gettysburg, Pennsylvania.1 The Township served
the complaint upon Becker, who resides in a house on the Property, and upon Lisa
M. Philips, who also resides on the Property.
              According to the Township’s complaint, the Property has been
developed by two houses, a former motel and several mobile homes. In 2009, the
motel housed tenants, which was not a permitted use in that zoning district. The
Township instituted an enforcement action to enjoin the Hanoverian Trust’s
violation of the Zoning Ordinance, and it prevailed. Becker then requested the
Township issue a certificate of a pre-existing legal non-conforming use, asserting
that the motel was a lawful use of the land when it was constructed.                     After
litigation, the Township’s denial of the certificate was upheld. The Township then
filed the instant injunction action to require the defendants to remove all persons
presently residing in the motel. In response, Becker asserted that the Property was
not being used as a motel but, rather, as a multi-unit residence, which use is
permitted in the zoning district.2
              Following a pre-trial conference, the Township filed a motion to
compel the Hanoverian Trust to appoint an attorney to represent it in the injunction

1
  The Hanoverian Trust has recently been before this Court in a related zoning matter. In 2014,
the Hanoverian Trust applied for a permit to convert the Property’s motel rooms into apartments.
The Township denied the permit. The Hanoverian Trust, by counsel, appealed and requested a
variance. The Township’s Zoning Board affirmed the denial, and the Hanoverian Trust appealed
to this Court. In Heywood Becker, Trustee of Hanoverian Trust and Hanoverian Trust v. Zoning
Hearing Board of Straban Township, (Pa. Cmwlth., No. 2092 C.D. 2015, filed August 26, 2016),
we affirmed the Zoning Board.
2
  The trial court ordered the Township to provide notice to the tenants named by Becker.

                                               2
hearing. Becker responded that, as trustee, he represented the Hanoverian Trust.
The trial court granted the motion to compel, and Becker appealed to this Court.
               This Court vacated the trial court’s order and remanded the matter for
lack of evidence. Straban Township v. Hanoverian Trust, (Pa. Cmwlth., No. 708
C.D. 2014, filed April 22, 2015). The record did not contain a complete copy of
the Hanoverian Trust Agreement. Without the trust instrument, it could not be
known whether the Property was its only asset or what type of trust the settlor had
intended to create. Most importantly, it was unclear whether Becker was the sole
trustee and sole beneficiary. Were Becker the sole trustee and sole beneficiary,
then it was not a valid trust by reason of Section 7732(a)(5) of the Uniform Trust
Act.3 Accordingly, we directed the trial court to conduct an evidentiary hearing on
whether the Hanoverian Trust was a valid trust and, if so, what type of trust was
created by the Trust Agreement. Once the trial court made these findings, it could

3
  It states:
         (a) Requirements.--A trust is created only if:
                (1) the settlor has capacity to create a trust;
                (2) the settlor signs a writing that indicates an intention to create
                the trust and contains provisions of the trust;
                (3) the trust has a definite beneficiary or is:
                        (i) a charitable trust;
                        (ii) a trust for the care of an animal …; or
                        (iii) a trust for a noncharitable purpose, as
                        provided in section 7739 (relating to noncharitable
                        trust without ascertainable beneficiary …);
                (4) the trustee has duties to perform; and
                (5) the same person is not the sole trustee and sole beneficiary of
                the trust.
20 Pa. C.S. §7732(a) (emphasis added).

                                                 3
address the Township’s motion to compel the appointment of counsel for the
Hanoverian Trust.
             On remand, the trial court held a hearing at which Becker was the sole
witness. Becker testified that he has executed a number of trust agreements, and
always lists his wife, Karen Becker, as the beneficiary. He created the Hanoverian
Trust because he “needed to close with the [bank that] held the mortgage because,
[he] acquired the property by way of buying the mortgage that covered it.” Notes
of Testimony, June 1, 2015, at 15-16 (N.T. __); Reproduced Record at 67-68
(R.R.__).4 However, his wife, a citizen of Norway, was out of the country at that
time.   Because she was unavailable, he signed as trustee and beneficiary.
Recognizing this was error, on March 8, 2014, Becker later assigned his beneficial
interest in the Hanoverian Trust to his wife. Becker Exhibit No. 2.
             Becker also submitted a complete, albeit unsigned and undated, copy
of the Hanoverian Trust Agreement at the hearing. Becker Exhibit No. 1. The trial
court noted that the pages of the Hanoverian Trust Agreement presented in the
earlier hearing were dated September 3, 2003. Accordingly, the trial court decided
that the effective date of the trust document identified as Becker Exhibit No. 1 was
September 3, 2003.
             Based on Becker’s testimony and the Hanoverian Trust Agreement,
the trial court found that Becker had intended to create a business trust. The
Hanoverian Trust paid the trustee $100 per month in compensation to acquire, hold
and manage the Property. A real property business trust authorizes the trustee to
inter alia, receive title, invest or disperse receipts, earnings, rents or profits and

4
 Originally, Becker believed the obligees on the original mortgage would continue to pay.
However, they were insolvent and deeded him the property in lieu of foreclosure. Id.

                                           4
conduct any lawful business conveyed in the trust agreement.                       15 Pa. C.S.
§9502(a).5 A business trust limits liability for the beneficiaries in the same way
that a corporation limits the liability of its shareholders. 15 Pa. C.S. §9506(a)(1)
(“Except as otherwise provided in the instrument, the beneficiaries of a business
trust shall be entitled to the same limitation of personal liability as is extended to
shareholders in a domestic business corporation.”). Further, a trustee is not liable
for the actions of the business trust. 15 Pa. C.S. §9506(a)(2) (“Except as otherwise
provided in the instrument, the trustees of a trust, as such, shall not be personally
liable to any person for any act or obligation of the trust or any other trustee.”). A
business trust is “a separate legal entity” and required “to be filed in the
Department of State.” 15 Pa. C.S. §§9502(c), 9503(a).
               For purposes of legal representation, the trial court considered a
business trust to be similar to a corporation. Pennsylvania Rule of Civil Procedure
No. 2176 defines “corporation or similar entity” as

5
 It states:
        (a) Creation.--Except as provided in the instrument, the trustee has the power:
               (1) To receive title to, hold, buy, sell, exchange, transfer and
               convey real and personal property for the use of the business trust.
               (2) To take, receive, invest or disburse the receipts, earnings, rents,
               profits or returns from the trust estate.
               (3) To carry on and conduct any lawful business designated in the
               deed or other instrument of trust, and generally to do any lawful
               act in relation to such trust property that any individual owning the
               same absolutely might do.
               (4) To merge with another business trust or other association, to
               divide or to engage in any other fundamental or other transaction
               contemplated by the deed or other instrument of trust.
15 Pa. C.S. §9502(a).

                                                5
             any public, quasi-public or private corporation, insurance
             association or exchange, joint stock company or association,
             limited liability company, professional association, business
             trust, or any other association which is regarded as an entity
             distinct from the members composing the association ….

Pa. R.C.P. No. 2176 (emphasis added).
             The trial court thoroughly analyzed whether a non-attorney may
represent a business trust.   In the absence of direct precedent, the trial court
analogized a business trust to a corporation, which is generally required to be
represented by counsel. See Westmoreland County v. RTA Group, Inc., 767 A.2d
1144, 1149 n.8 (Pa. Cmwlth. 2001) (“[I]n this Commonwealth, and elsewhere, ...
non-attorneys may not represent corporations before Pennsylvania courts and most
administrative agencies.”).
             The trial court next considered our Supreme Court’s holding in
Harkness v. Unemployment Compensation Board of Review, 920 A.2d 162 (Pa.
2007), which addressed the unauthorized practice of law and established factors for
making this determination. Representation of another person is not likely the
unauthorized practice of law where the proceedings are designed to be brief and
informal in nature; the formal rules of evidence do not apply; the amount in
controversy is not great; where prehearing discovery is not allowed; the legal
issues involved are not complex; and the factfinder is not required to be an
attorney. Id. at 168.
             Because the Township sought to enjoin a violation of its Zoning
Ordinance, it could not be said the proceeding would be brief or informal. Further,
the rules of evidence would apply; the outcome of the litigation could have
significant financial repercussions; the case would involve complex legal issues
involving the interpretation of zoning regulations; and the factfinder would be a

                                        6
judge, i.e., someone required to be an attorney. The trial court held that under
Harkness principles, the trust created by the Hanoverian Trust Agreement had to
be represented by counsel.
               However, the trial court concluded that the issue was moot. Because
Becker created the Trust in 2003 and named himself sole trustee and beneficiary, a
valid trust was never created. 20 Pa. C.S. §7732(a)(5).6 Becker could not remedy
this defect in the putative trust by transferring his interest to his wife a decade later.
               In sum, the trial court found that Becker was the owner of the
Property and was permitted to proceed pro se in the litigation in his individual
capacity as owner. Alternatively, because it was Becker’s intent to have the
Property held in trust, he could create a new trust. In that case, the yet-to-be
created trust would have to be represented by a licensed attorney.
               Becker appealed to this Court.7 First, he claims that the court erred in
holding that the Hanoverian Trust was a nullity, despite his later assignment of the
beneficial interest to his wife. Second, he claims that the Hanoverian Trust is not a
business trust.
               The principal issue in this case is the legal status of the Hanoverian
Trust. Becker does not dispute that when he created that trust, he was the sole
beneficiary and the sole trustee. Unquestionably, this is not a valid trust pursuant
to Section 7732(a)(5) of the Uniform Trust Act. It specifically states “a trust is

6
  It states that “[a] trust is created only if ... the same person is not the sole trustee and sole
beneficiary of the trust.” 20 Pa. C.S. §7732(a)(5).
7
  When the issue before us involves a pure question of law, our standard of review is de novo and
our scope of review is plenary. Buffalo Township v. Jones, 813 A.2d 659, 664 n.4 (Pa. 2002).

                                                7
created only if … the same person is not the sole trustee and sole beneficiary of the
trust.” 20 Pa. C.S. §7732(a)(5) (emphasis added). As treatise authority explains:

             A trustee may be a beneficiary of the trust as long as he or she
             is not the sole beneficiary, or if he or she is the sole beneficiary,
             not the sole trustee.
             Observation:
             Where a sole trustee is also the sole beneficiary, he or she owns
             both the legal and equitable interests in the res. Because a trust
             requires a separation of the legal and equitable ownership of
             trust property, no trust is created.

11 SUMMARY     OF   PENNSYLVANIA JURISPRUDENCE “Probate, Estates, and Trusts,”
§30:22 (2d ed.) (July 2016 update) (internal footnotes omitted). Because Becker
did not create a valid trust, the issue of whether Becker may represent the non-trust
is moot. Likewise, Becker’s second claim of error, i.e., that the trust was not a
business trust, is moot.
             Becker does not question the trial court’s determination that should a
business trust for the Property be created, that trust must be represented by counsel.
However, this Court does question that determination. Because the trial court
addressed an issue not yet ripe for review, this impacts subject matter jurisdiction,
an issue we may raise sua sponte. See Texas Keystone Inc. v. Pennsylvania
Department of Conservation and Natural Resources, 851 A.2d 228, 239 n. 17 (Pa.
Cmwlth. 2004) (holding that lack of ripeness impacts subject matter jurisdiction, a
matter to be raised sua sponte by the court). Whether or not Becker will create a
new trust is unknown, as is the question of whether this trust will be a business
trust and, as such, required to be represented by a licensed attorney.
             For its part, the Township requests that this Court decide the issue of
whether a business trust must be represented by counsel. It explains that “Becker
                                           8
may attempt to do so with another trust of his own creation and trigger the identical
question as is currently before the Court. It would well serve judicial economy to
settle the question now.” Township Brief at 11. We disagree.
             As the trial court observed, there is no case precisely on point that
addresses “the issue whether a trust or trustee need[s] to be represented by counsel
before the courts of this Commonwealth.” Trial Court Op. 9/2/15 at 5. There is no
bright-line rule and no “all-encompassing statement of what activities comprise the
practice of law.” Harkness, 920 A.2d at 166. “[W]hat constitutes the practice of
law [is determined] on a case-by-case basis.” Id. Neither this Court nor the trial
court has “the ability to grant any relief that is merely advisory, one that does not
involve any case or controversy.” Brown v. Liquor Control Board, 673 A.2d 21,
23 (Pa. Cmwlth. 1996). An action “may not be employed to determine rights in
anticipation of events which may never occur or for consideration of moot cases or
as a medium for the rendition of an advisory opinion which may prove to be purely
academic.” Id. An issue that “may” occur in the future “is not considered ‘ripe’
for judicial interpretation.” Id.
             Accordingly, we vacate the trial court’s order to the extent it holds
that a business trust must be represented by counsel. This is a question of first
impression best addressed in the context of a live controversy.         In all other
respects, we affirm the trial court’s order.

                                     ______________________________________
                                     MARY HANNAH LEAVITT, President Judge

Senior Judge Colins concurs in the result only.

                                           9
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Straban Township                      :
                                      :
            v.                        : No. 1935 C.D. 2015
                                      :
Hanoverian Trust, Heywood Becker,     :
Trustee and Lisa M. Phillips          :
                                      :
Appeal of: Heywood Becker             :

                                  ORDER

            AND NOW, this 16th day of September, 2016, the order of the Court
of Common Pleas of Adams County, dated September 2, 2015, is AFFIRMED in
part and VACATED in part in accordance with the attached opinion.

                                 ______________________________________
                                 MARY HANNAH LEAVITT, President Judge