Court Opinion

ID: 4522492
Source: CourtListenerOpinion
Date Created: 2020-04-03 18:12:34.577694+00
Date Added: 2024-06-11T09:25:25.235572
License: Public Domain

J-A04015-20

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    IN RE: ESTATE OF GERTRUDE FOX,             :   IN THE SUPERIOR COURT OF
    DECEASED                                   :        PENNSYLVANIA
                                               :
                                               :
    APPEAL OF: BARBARA FOX                     :
                                               :
                                               :
                                               :
                                               :   No. 1974 EDA 2019

                   Appeal from the Order Entered June 6, 2019
              In the Court of Common Pleas of Montgomery County
                      Orphans' Court at No(s): 2007-X0589

BEFORE:      PANELLA, P.J., STRASSBURGER, J.*, and COLINS, J.*

MEMORANDUM BY PANELLA, P.J.:                             FILED APRIL 03, 2020

        Barbara Fox (“Barbara”) appeals from the June 6, 2019 order1 of the

Orphans’ Court of the Court of Common Pleas of Montgomery County that

sustained the preliminary objections of Bruce Fox and Jonathan Fox

(“Trustees”) and held that Barbara is not a beneficiary or creditor of the trust

(“the Trust”) established under the will of Gertrude Fox (“Decedent”).2 In the

same order, the court dismissed Barbara’s objections to the petition for

adjudication of the accounting of the Trust. Barbara now claims the orphans’

____________________________________________

*   Retired Senior Judge assigned to the Superior Court.

1   The order, dated June 5th, was entered the following day.

2 Barbara Fox is the second wife of Decedent’s husband, Norman Fox
(“Norman”).
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court erred in finding that she lacked standing to challenge the accounting.

Based on the following, we affirm.

      The orphans’ court set forth the underlying facts and procedural history

as follows:

             The decedent, Gertrude Fox, died on February 6, 2007. Her
      will dated November 13, 1995, and the codicil thereto dated
      October 3, 2006, were admitted to probate by the Montgomery
      County Register of Wills on February 20, 2007, and letters
      testamentary were issued to her surviving spouse, Norman Fox.
      Article 5 of the will sets forth the provisions of the residuary trust
      here at issue (“the Gertrude Testamentary Trust”) as follows: 1)
      the entire net income shall be accumulated and added to principal;
      2) the trustees shall pay a regular unitrust distribution to Norman
      in each calendar year and also shall pay a tax distribution if any
      of the unitrust distribution carries out taxable income to Norman;
      3) the trustees may make discretionary distributions to Norman,
      provided that, while Norman is the trustee, such discretionary
      distributions to Norman shall be limited to amounts necessary to
      support him in his accustomed manner of living, and while he is
      serving as trustee, Norman may also make distributions to
      Gertrude’s issue of such sums as Norman deems advisable; 4) in
      addition, in any calendar year, Norman may withdraw $5,000 or
      5% of principal; and 5) Norman has a special power of
      appointment which he may exercise only in a valid will executed
      after Gertrude’s death.

            Article 8 of the will provides that the trustee may withhold
      any payment of income or principal which would otherwise be
      made to Norman if he is a disabled individual and the trustees, in
      their sole and absolute discretion shall expend or apply the
      withheld payment for the benefit of Norman as they deem
      advisable. The definition of a disabled individual in Article 10 of
      the will includes one who has been adjudicated an “incompetent.”

            The will named Norman as the trustee and the two sons of
      Gertrude and Norman, Bruce and Jonathan, as successors should
      Norman no longer be able or willing to serve. Norman resigned as
      trustee on or about November of 2015 when his sons began to
      serve. On November 23, 2016, Bruce and Jonathan filed a petition
      to have Norman declared an incapacitated person. On December

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       21, 2016, Norman and John Severson, the agent under his power
       of attorney, filed a petition to compel an account from the
       successor trustees. On October 16, 2017, a final decree was
       entered finding Norman to be totally incapacitated and appointing
       Intervention Associates, Inc., as guardian of his person and
       Pennsylvania Trust Company as guardian of his estate.

             Bruce and Jonathan were directed to file an account and
       they did so on April 3, 2019. Pennsylvania Trust Company and
       Barbara Fox, Norman’s second wife whom he married on
       November 22, 2008, filed objections to the account. Bruce and
       Jonathan filed preliminary objections to Barbara’s objections,
       raising the issue of standing. By order dated June 6, 2019, the
       undersigned sustained the preliminary objections and dismissed
       Barbara’s objections to the trustees’ account.

Orphans’ Court Opinion, 8/29/2019, at 1-3 (footnotes omitted). Specifically,

the orphans’ court found Barbara had no standing to question the

administration of the Gertrude Testamentary Trust because she is neither a

beneficiary nor a creditor. This timely appeal followed.3

       In her sole argument on appeal, Barbara contends she has standing to

object to the Trustees’ administration of the Trust, and therefore, the orphans’

court erred in granting the Trustees’ preliminary objections.

       We are guided by the following:

       [O]ur standard of review of an order of the trial court overruling
       or granting preliminary objections is to determine whether the
       trial court committed an error of law. When considering the

____________________________________________

3 On July 11, 2019, the orphans’ court ordered Barbara to file a concise
statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b).
Barbara filed a concise statement on July 29, 2019. The court issued an
opinion pursuant to Pa.R.A.P. 1925(a) on August 29, 2019.

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      appropriateness of a ruling on preliminary objections, the
      appellate court must apply the same standard as the trial court.

Shafer Elec. & Constr. v. Mantia, 67 A.3d 8, 10 (Pa. Super. 2013). When

we review an order sustaining preliminary objections, we treat as true all well

pled material facts and reasonable inferences contained in the opposing

party’s pleading. See In re Nadzam, 203 A.3d 215, 220 (Pa. Super. 2019).

      By way of background,

      Barbara’s claim to have standing to object to the [T]rustees’
      actions in this matter centers on the terms of the antenuptial
      agreement she and Norman entered into on November 10, 2008.
      That agreement provides, in pertinent part, that Barbara has the
      right to occupy certain real property in Palm Beach Gardens,
      Florida, that the property cannot be sold without her consent and,
      if it is sold, the proceeds must be used to provide a unitrust for
      Barbara’s benefit, or at her request, be reinvested into a new
      residence. The agreement also provides for the Gertrude
      Testamentary Trust to own the Florida property which appears to
      be borne out by the copy of the deed attached to Barbara’s motion
      for reconsideration of the order dismissing her objections.
      Nevertheless, the [T]rustees contend the property is owned by an
      inter vivos trust (the “Appointed Trust”) that Norman established
      in 1995 for the benefit of [Decedent] and into which [Decedent]
      appointed assets in her will. Bruce and Jonathan, who are also the
      trustees of the Appointed Trust, have filed an account of their
      administration of that trust and have included the Florida property
      as one of its assets. Further complicating these matters is the fact
      that Norman executed an irrevocable trust (“the Family Trust”) on
      November 11, 2008, the day after the antenuptial agreement with
      Barbara was signed. Barbara argue[d]4 Norman clearly intended
      the Family Trust, not the Gertrude Testamentary Trust, and not
      the Appointed Trust to hold the Florida property.
      ________________________

         4Barbara has initiated an action in Florida in an attempt to
         have the property titled in the name of the Family Trust.
         Barbara has also filed a complaint against Norman in the
         Civil Division of this Court at docket no. 2018-07263 seeking

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         to enforce her rights under the couple’s antenuptial
         agreement.
Id., at 3 (citation and footnote omitted).

      “Threshold issues of standing are questions of law; thus, our standard

of review is de novo and our scope of review is plenary.” Rellick-Smith v.

Rellick, 147 A.3d 897, 901 (Pa. Super. 2016) (citation omitted). In

Pennsylvania, standing is a principle designed to ensure only those who have

a direct interest in a matter may litigate it. See Nadzam, 203 A.3d at 220.

Central to standing is the ideal that only those who have a substantial, direct

and immediate interest in the outcome of litigation have standing to

participate. See id.

      A person’s interest is substantial if it is more than just the general

interest of all citizens that the law be obeyed. See id. The interest is direct if

the claimed violation is causally connected to the asserted harm. See id. The

interest is immediate when the causal connection is neither remote nor

speculative. See id., at 220-221.

      Relying on In re Francis Edward McGillick Foundation, 642 A.2d
467 (Pa. 1994), and In re Milton Hershey School, 911 A.2d 1258 (Pa.

2006), Barbara argues:

      It is irrelevant that [Barbara] is not a named beneficiary or
      creditor of the Trust, as she has a substantial, direct, and
      immediate interest in the Trust’s administration … because
      Norman is obligated under the Agreement to (i) contribute to the

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       Living Fund[4] and (ii) provide certain rights to occupy the Florida
       property during her lifetime. The amount of Norman’s
       contributions to the Living Fund are based on his income, which
       includes the distributions Norman receives from the Trust. The
       Trustees seek to amend the Will to remove the required unitrust
       distribution in favor of a lesser net rental income distribution to
       Norman. Further, the Trustees, by their own admission have failed
       to distribute the required unitrust amount to Norman to date and,
       instead, have distributed only the Trust’s nominal net rental
       income to Norman. This unilateral decision by the Trustees in
       contravention of the Will’s unambiguous terms significantly
       decreases Norman’s contributions to the Living Fund, causing
       direct harm to [Barbara].

Appellant’s Brief, at 13-14.

       Barbara further asserts that she has a direct interest in the outcome the

Trust’s accounting because: (1) if it is determined that the Trust owns the

Florida Property, then her right to occupy the residence will be adversely

affected by the Trustees’ continued attempts to sell the property without her

consent; and (2) with any determination as to the required unitrust amount,

the Florida Property’s owner and/or the ability to sell the Florida Property could

cause Barbara to immediately lose income derived from the Living Fund in

addition to her right to occupy the property. See id., at 14.

____________________________________________

4 The first amendment to Norman’s and Barbara’s antenuptial agreement
provided that Norman and Barbara would maintain a joint checking account,
referred to as a “Living Fund.” See Preliminary Objections of Bruce Fox and
Jonathan Fox to the Objections of Barbara Fox to the Petition of Bruce Fox and
Jonathan Fox for Adjudication and Statement of Proposed Distribution,
5/31/2019, at Exhibit B (First Amendment to Antenuptial Agreement dated
November 10, 2008).

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      Barbara alleges her interest is immediate as she has already suffered

from the decreased value of the Living Fund because the Trustees admitted

they were not making the required unitrust distributions to Norman. See id.

Moreover, she argues her interest is not speculative:

      [T]here is no evidence to suggest that the Florida Property is
      owned by the Appointed Trust and not the Trust, as the Trustees
      claim. If it is determined that the Florida Property is not owned by
      the Fox Family Trust, there is more than a remote chance that the
      Florida Property could be owned by the Trust.
Id.

      Barbara suggests that because the orphans’ court did not summarily

dismiss her response to the Trustees’ preliminary objections, it believed that

she, “at a minimum, has standing with respect to any trust that holds the

Florida Property.” Id., at 15. Furthermore, Barbara points to her numerous

objections to the Trustees’ First and Partial Account that were not asserted by

the guardian of Norman’s estate, including issues of self-dealing and

mismanagement by Trustees. See id. She states, “To the extent the Trustees

may have endeavored to address the issues raised by [Barbara] with the

Guardian as part of their ‘amended informal account,’ such corrections only

evidence the utility of [Barbara]’s involvement in this matter and, thus, her

right to standing with respect to the Trust’s administration.” Id.

      In addressing the standing issue, the orphans’ court first found that a

determination as to ownership of the Florida property was not relevant to the

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substantive claim. See Orphans’ Court Opinion, 8/29/2019, at 3-4. Moreover,

the court opined:

        As noted in our order of June 5, 2019, Barbara has no standing to
        question the administration of the Gertrude Trust because she is
        neither a beneficiary nor a creditor. She is a potential creditor of
        Norman individually, not this trust, under the antenuptial
        agreement and a beneficiary of the Family Trust. Even if she had
        a liquidated claim against Norman at this time, she would have no
        standing to complain about the trustees[] not making payments
        to him from the Gertrude Testamentary Trust because of the
        spendthrift clause in Article Eight, paragraph 8.04.[5]

        Barbara cites In re: Francis Edward McGillick Foundation,
        537 Pa. 194, 642 A.2d 467 (Pa. 1994) and In re: Milton Hershey
        School, 590 Pa. 35, 911 A.2d 1258 (Pa. 2006) for the propositions
        that one need not be a beneficiary or creditor to have standing to
        object to the actions of a trustee and one merely need show he is
        aggrieved by showing he or she has a substantial, direct and
        immediate interest in the outcome of the litigation. These cases
        involved the standing of parties other than the Attorney General,
        as parens patriae for charities, to participate in the affairs of
        charitable entities, and these analyses by the Supreme Court have
        little relevance to this matter. Much more instructive to us is the
        situation in In re: Rosemary C. Ford Inter Vivos QTIP Trust,
        176 A.3d 992 (Pa. Super. 2017). There, during the parties’
        marriage, Rosemary created an irrevocable [Qualified Terminable
        Interest Property (“QTIP”)] Trust of which her husband, George,
        was trustee and primary beneficiary and Rosemary was the
        contingent beneficiary. The trust had a spendthrift clause to
        prevent a creditor of a beneficiary from accessing the income and
____________________________________________

5   Paragraph 8.04 provides:

        8.04. Protective Provisions. No payment of income or principal
        hereunder shall be pledged, assigned, transferred, or sold, in any
        manner whatsoever, nor be in any manner liable in the hands of
        the trustees for the debts or liabilities of my husband.

Preliminary Objections of Bruce Fox and Jonathan Fox to the Objections of
Barbara Fox to the Petition of Bruce Fox and Jonathan Fox for Adjudication
and Statement of Proposed Distribution, 5/31/2019, at Exhibit A, 12.

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     principal. The trust held certain commercial real estate which was
     leased to a family business. The couple divorced and the parties
     reached an agreement which was memorialized in an arbitration
     award that equitably distributed the parties’ assets. The
     agreement provided that [Rosemary] would share in the income
     generated by the trust’s commercial properties. Eventually,
     [Rosemary] stopped receiving any rental income and she obtained
     a Court order compelling the filing of a trust account. After the
     account was filed and [Rosemary] filed objections, George filed
     preliminary objections raising lack of standing that were
     sustained. In dismissing [Rosemary]’s appeal, the Superior Court
     quoted the opinion of the Hon. Lois E. Murphy of this Court in
     support of her grant of the preliminary objections as follows:

       Rosemary Ford has a contingent beneficial interest in the
       event that she survives her husband, at which time she
       would become entitled to the income and discretionary
       distributions of principal. However, she is not a current
       beneficiary of either the income or principal.... [D]uring
       George’s lifetime, only he is entitled to the distributions of
       income, and Rosemary has no standing to raise the
       questions posed by her objections. Rosemary Ford’s counsel
       insist that she has been added as a current income
       beneficiary of the [T]rust by virtue of the agreement in
       principle. This is not correct. The agreement resolved the
       parties’ marital issues and did not change the beneficiaries
       of the [T]rust or add Rosemary as a new beneficiary.
Id., at 998. The Superior Court approved of the Orphans’ Court’s
     finding that the arbitration award was an equitable distribution
     award, not a support order that would have imbued [Rosemary]
     with the status of a creditor with standing to bypass the
     spendthrift clause under 20 Pa. C.S.A. 7743(b)(2).5 The Superior
     Court also noted the trust gave the husband alone the right to
     compel the trustee to make the properties productive and stated
     that:

       Because the terms of the trust deprive Rosemary of any
       right to require the ... properties to be made productive
       during George’s lifetime, we agree with the orphans’ court
       that Rosemary lacked standing as a trust beneficiary to
       pursue this remedy through her objections to George’s
       accounting.

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Id., at 999-1000.
        _________________________

          5 This section provides that a spendthrift provision is
          unenforceable against any other person who has a judgment
          or court order against the beneficiary for support or
          maintenance, to the extent of the beneficiary’s interest in
          the trust’s income.
        _________________________

        Comparing the Ford matter to the instant matter, [Rosemary]
        was found to have no standing to pursue an action against the
        trustee even though she was a contingent beneficiary of the trust.
        Barbara is not a contingent beneficiary. [Rosemary] had a
        colorable argument that her arbitration award permitted her to
        bypass the spendthrift clause. Barbara does not allege she has a
        support order. Barbara is, at present, as was [Rosemary], a
        creditor of her husband with no present avenue of redress against
        the trustees of the Gertrude Testamentary Trust.

Orphans’ Court Opinion, 8/29/2019, at 3-6.

        We agree with sound legal reasoning of the orphans’ court, and conclude

its August 29, 2019 opinion properly disposes of the issue in this case.

Pursuant to Uniform Trust Act (“UTA”),6 the terms of a trust instrument

generally prevail over any contrary provisions of the UTA. See 20 Pa.C.S.A. §

7705(a). Here, based on the unambiguous provisions of the Trust, Barbara is

neither a named beneficiary nor a creditor. Additionally, unlike Rosemary in

In re: Rosemary C. Ford Inter Vivos QTIP Trust (“Ford”), one cannot

even consider Barbara a contingent beneficiary under the language of the

____________________________________________

6   20 Pa.C.S.A. §§ 7701 - 7790.3.

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Gertrude Testamentary Trust. See 20 Pa.C.S.A. § 7703 (“beneficiary” under

the Uniform Trust Act includes contingent beneficiary).

      Furthermore, Barbara’s reliance on In re Francis Edward McGillick

Foundation and In re Milton Hershey School for the proposition that she

does not have to be a beneficiary or creditor to have standing so long as she

demonstrates that she has a substantial, direct, and immediate interest in the

outcome of the litigation is misplaced. Both of those cases concern trusts

created for the benefit of charitable organizations whereas here, the trust was

created for the benefit of a spouse. See McGillick Foundation, 642 A.2d at

469-70; Hershey School, 911 A.2d at 1262

      As the orphans’ court points out, Ford is more applicable here, as this

matter concerns a trust created for the benefit of a spouse. While Barbara is

a purported creditor of Norman, she does not argue that a support or

maintenance order is in place. In accordance with Ford, 176 A.3d at 1000,

such an order would have bestowed upon Barbara the status of a creditor with

standing to bypass the spendthrift clause in Paragraph 8.04 of the Gertrude

Testamentary Trust pursuant to 20 Pa.C.S.A. § 7743(b)(2) (“A spendthrift

provision is unenforceable against … any other person who has a judgment or

court order against the beneficiary for support or maintenance, to the extent

of the beneficiary’s interest in the trust’s income”). See also In re Rosemary

C. Ford Inter Vivos QTIP Tr., 176 A.3d at 1000. Therefore, we find Barbara’s

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assertions unpersuasive, and agree that she presently has no rights to object

to an accounting of the Trust.

      In addition, if we were to apply the substantial, immediate, and direct

analysis test as set forth in Nadzam, Barbara would receive no relief. While

Barbara’s interest may be considered both substantial as it is more than just

the general interest of all citizens and immediate because it is neither remote

nor speculative, her interest is not direct as the alleged harm is not causally

connected to the Trust. See id. Pursuant to the antenuptial agreement, she

receives her funds from Norman, individually, and not from the Trust. In other

words, there is no direct payment from the Trust to her. Therefore, Barbara

does not have a direct interest that would afford her proper standing to

challenge the accounting of the Trust.

      Accordingly, we affirm on the basis of the court’s August 29, 2019

opinion, and conclude the court did not err in granting the Trustees’

preliminary objections.

      Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 4/3/20

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