Court Opinion

ID: 4420165
Source: CourtListenerOpinion
Date Created: 2019-07-25 18:48:11.924176+00
Date Added: 2024-06-11T14:50:59.737039
License: Public Domain

J-A10031-19

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

 IN RE: L.G., A MINOR                    :   IN THE SUPERIOR COURT OF
                                         :        PENNSYLVANIA
                                         :
                                         :
                                         :
 APPEAL OF: MATTHEW AND LUANN            :
 GAIN                                    :        No. 2844 EDA 2018

               Appeal from the Order Dated August 13, 2018
              In the Court of Common Pleas of Chester County
                    Orphans’ Court at No(s): 1512-1598

BEFORE: GANTMAN, P.J.E., LAZARUS, J., and OTT, J.

MEMORANDUM BY GANTMAN, P.J.E.:                         FILED JULY 25, 2019

      Appellants, Matthew and Luann Gain, appeal from the order entered in

the Chester County Court of Common Pleas, Orphans’ court, which confirmed

the first and final account of Appellee, Wilmington Trust, N.A., former trustee

of the L.G. Special Needs Trust (“Trust”). For the following reasons, we vacate

and remand for further proceedings.

      The relevant facts and procedural history of this appeal are as follows.

Appellants are the natural parents of L.G., a minor. Soon after her birth, L.G.

was diagnosed with several permanently debilitating developmental and

mental disabilities, rendering her wholly dependent on others for her care for

the rest of her life. On September 26, 2012, the Orphans’ court approved the

establishment of the Trust and appointed Appellee as trustee. Appellee served

as trustee until April 21, 2017, when the Orphans’ court approved the

appointment of a successor trustee.
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        On March 23, 2018, the Orphans’ court ordered Appellee to file an

account of its administration of the Trust.     Appellee filed its first and final

account on May 31, 2018. With its account, Appellee filed a copy of a May 30,

2018 letter that Appellee claimed its counsel had sent to Appellants and

Appellants’ counsel along with Appellee’s first and final account. The May 30,

2018 letter provided, in relevant part: “The audit of the Account will be held

on a date to be determined at 201 West Market Street, West Chester, PA,

19380.” (See Account Notice Letter, dated 5/30/18; R.R. at 381a-382a.) The

letter stated the due date for filing any objections was on or before the audit

date, but the letter did not state that Appellee would provide the date of the

audit upon request.      Appellee does not dispute that Appellants’ counsel

requested notice of the date scheduled for the audit or that Appellee gave no

date.    Appellants filed no objections to the account.     The Orphans’ court

conducted an audit of Appellee’s first and final account on August 1, 2018,

and entered a decree of distribution on August 2, 2018. Subsequently, the

court confirmed Appellee’s account on August 13, 2018.

        On September 12, 2018, Appellants filed a timely notice of appeal from

the August 13th order. The next day, September 13, 2018, Appellants filed a

petition for reconsideration of the August 13th order, a request for leave to file

nunc pro tunc objections to Appellee’s first and final account, and attached a

copy of their proposed objections to the account. The Orphans’ court ordered

Appellants on September 14, 2018, to file a concise statement of errors

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complained of on appeal per Pa.R.A.P. 1925(b); Appellants timely complied

on October 4, 2018. The court did not rule on Appellant’s September 13 th

reconsideration petition.

      Appellants raise the following issues for our review:

         DID THE ORPHANS’ COURT COMMIT AN ERROR OF LAW
         AND/OR    ABUSE   OF  DISCRETION    BY   AFFIRMING
         [APPELLEE’S] ACCOUNT…AND DISCHARGING [APPELLEE]
         OF ALL LIABILITY WHEN [APPELLEE]’S NOTICE OF AUDIT
         WAS FACIALLY DEFECTIVE IN VIOLATION OF ORPHANS’
         COURT RULE 2.5?

         DID THE ORPHANS’ COURT COMMIT AN ERROR OF LAW
         AND/OR ABUSE OF DISCRETION BY RELYING INSTEAD ON
         THE MAILBOX RULE AND AN AUDIT CALENDAR AS
         PROVIDING THE REQUISITE NOTICE TO [APPELLANTS]
         WHEN NEITHER THE MAILBOX RULE NOR THE AUDIT
         CALENDAR REMEDIED THE FACIALLY DEFECTIVE NOTICE?

         DID THE ORPHANS’ COURT COMMIT AN ERROR OF LAW
         AND/OR ABUSE OF DISCRETION BY CONCLUDING THAT
         THE LACK OF NOTICE TO [APPELLANTS] DID NOT
         PREJUDICE THEM AS A MATTER OF LAW?

         DID THE ORPHANS’ COURT COMMIT AN ERROR OF LAW
         AND/OR AN ABUSE OF DISCRETION BY FAILING TO
         CONSIDER [APPELLANTS]’ OBJECTIONS AFTER THEY WERE
         FILED?

         FOR INSTANCE, DID THE ORPHANS’ COURT COMMIT AN
         ERROR OF LAW AND/OR ABUSE OF DISCRETION BY
         APPROVING AN ACCOUNT THAT CONTAINED PAYMENTS TO
         AN ARCHITECT AND ENGINEER, CHILTON DESIGNS, LLC
         AND MICHAEL J. SIGGINS, FOR SERVICES THAT WERE SO
         SUBSTANDARD THAT [APPELLANTS] HAD TO HAVE THE
         SERVICES OF A NEW SET OF PROFESSIONALS OBTAINED
         AND APPROVED BY THIS COURT FOR A RESIDENCE TO BE
         OWNED BY THE TRUST AND WHICH HAS AND WILL COST
         THE TRUST A SUBSTANTIAL AMOUNT?

(Appellants’ Brief at 5-6).

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      In    their   issues   combined,    Appellants    argue   Appellee’s   letter

accompanying its accounting failed to include the date and time of the audit

of Appellee’s first and final account. Appellants claim Appellee also failed to

provide written notice of the audit date and time, when Appellants’ counsel

specifically requested that information. Appellants aver the Orphans’ court

incorrectly relied upon the “mailbox rule” codified in Orphans’ Court Rule 2.5(f)

to decide that Appellee provided Appellants proper notice of the account filing

and audit. Appellants maintain the audit calendar did not serve to put them

on written notice of the audit date of Appellee’s account, or substitute for the

required written notice from Appellee of the account and audit, or relieve

Appellee of its obligation to comply with Orphans’ Court Rule 2.5(d).

Appellants submit Appellee’s failure to comply with the notice requirements in

Orphans’ Court Rule 2.5 precluded Appellants from raising objections to

Appellee’s account and deprived Appellants of an opportunity to challenge the

account in a hearing on the record. Appellants conclude this Court should

reverse the Orphans’ court’s order confirming Appellee’s account and remand

for further proceedings on Appellants’ objections to Appellee’s account. We

agree relief is due.

      Initially, we observe:

           Our standard of review of the findings of an [O]rphans’ court
           is deferential.

              When reviewing a decree entered by the Orphans’
              [c]ourt, this Court must determine whether the record
              is free from legal error and the court’s factual findings

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            are supported by the evidence. Because the Orphans’
            [c]ourt sits as the fact-finder, it determines the
            credibility of the witnesses and, on review, we will not
            reverse its credibility determinations absent an abuse
            of that discretion.

            However, we are not constrained to give the same
            deference to any resulting legal conclusions.

         [T]he Orphans’ court decision will not be reversed unless
         there has been an abuse of discretion or a fundamental error
         in applying the correct principles of law.

In re Estate of Whitley, 50 A.3d 203, 206-07 (Pa.Super. 2012), appeal

denied, 620 Pa. 724, 69 A.3d 603 (2013) (internal citations and quotation

marks omitted). “An abuse of discretion is not merely an error of judgment;

if, in reaching a conclusion, the court overrides or misapplies the law, or the

judgment exercised is shown by the record to be either manifestly

unreasonable or the product of partiality, prejudice, bias or ill will, discretion

has been abused.” Silver v. Pinskey, 981 A.2d 284, 291 (Pa.Super. 2009)

(en banc) (quoting Mencer v. Ruch, 928 A.2d 294, 297 (Pa.Super. 2007)).

“Our scope of review is also limited: we determine only whether the court’s

findings are based on competent and credible evidence of record.”          In re

Estate of Karschner, 919 A.2d 252, 256 (Pa.Super. 2007) (quoting In re

Estate of Westin, 874 A.2d 139, 142 (Pa.Super. 2005)).

      The Probate, Estates and Fiduciaries (“PEF”) Code provides in relevant

part that the court at any time can direct a personal representative to file an

account of administration. 20 Pa.C.S.A. § 3501.1. The PEF Code requires the

person or entity filing the account to give notice to all persons entitled to

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notice.    20 Pa.C.S.A. § 3501.2.       Section 3503 states in pertinent part as

follows:

           § 3503. Notice to parties in interest

           The personal representative shall give written notice of
           the filing of his account and of its call for audit or
           confirmation to every person known to the personal
           representative to have or assert an interest in the estate as
           beneficiary, heir, next of kin or claimant, unless the interest
           of such person has been satisfied or unless such person fails
           to respond to a demand under section 3532(b.1) (relating
           to at risk of personal representative).

20 Pa.C.S.A. § 3503 (emphasis added).          The rules governing court procedure

in the Orphans’ Court provide in relevant part:

           Rule 1.2. Construction and Application of Rules

           (a) The Rules adopted by the Supreme Court regulating the
           practice and procedure of the Orphans’ Court Divisions of
           this Commonwealth and the local rules adopted by such
           courts shall be liberally construed to secure the just, timely
           and efficient determination of every action or proceeding to
           which they are applicable. The court at every stage of any
           action or proceeding may disregard any error or defect of
           procedure that does not affect the substantive rights of
           the parties in interest.

                                    *     *     *

Pa.O.C. Rule 1.2(a) (emphasis added). Rule 2.5 addresses an accountant’s

duty to provide notice of filing an account, in pertinent part, as follows:

           Rule 2.5. Notice of Account Filing

           (a) No Account shall be confirmed or statement of proposed
           distribution approved unless the accountant has given
           written notice of the filing of the Account as provided in
           subparagraph (d) of this Rule to the following, as applicable:

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                                   *    *    *

         (3) any other individual or entity known to the accountant
         to have or claim an interest in the estate or trust as a
         beneficiary, heir, or next of kin, except for those legatees or
         claimants whose legacies or claims have been satisfied in
         full as reflected in the Account or will be satisfied in full as
         proposed in the petition for adjudication/statement of
         proposed distribution; and

                                   *    *    *

         (d) Written notice, as provided in subparagraph (a) of this
         Rule, shall be mailed at least 20 days prior to the audit in
         those counties having a separate Orphans’ Court Division or
         20 days prior to the date by which objections must be filed
         in all other counties, and the written notice shall state
         the date of the audit or the date by which objections
         must be filed, and the time and place of the audit, if
         one is to be held, to the extent then known. If an
         audit is to be held and the time and place of the audit
         is not known at the time the notice is mailed, the
         notice shall state that the time and place of the audit
         will be provided upon request. A copy of the Account,
         petition for adjudication/statement of proposed distribution,
         and any legal paper filed therewith shall be sent with the
         notice, unless the recipient of the notice is a trust
         beneficiary who is not a “qualified beneficiary” as defined in
         20 Pa.C.S.[A]. § 7703, or unless the court orders otherwise
         in a particular matter.

                                   *    *    *

         (f) All notices and additional notices shall be sent by first-
         class United States mail, postage prepaid. Service by mail
         is complete upon mailing.

                                   *    *    *

Pa.O.C. Rule 2.5(a)(3), (d), (f) (emphasis added).          In other words, an

accounting party must provide interested individuals written notice of its filing

of an account in the Orphans’ court.        20 Pa.C.S.A. § 3503; Pa.O.C. Rule

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2.5(a)(3), (d). The accountant also bears the burden to provide interested

parties with written notice of (i) the date by which objections to its account

are due and (ii) the time and place the court will conduct an audit of the

account. Id. Where the accountant is unaware, at the time it files its account,

of the time and place the court will hold an audit, the accountant must state

in the written notice that the accountant will provide the time and place of the

audit upon future request. Pa.O.C. Rule 2.5(a)(3), (d). A fundamental legal

doctrine applicable in this context is: “[P]ersons having property rights cannot

be deprived of them by judicial proceedings of which they were not notified

and in which they were not given an opportunity to be heard.” In re Galli’s

Estate, 340 Pa. 561, 572, 17 A.2d 899, 904 (1941). If the accountant fails

to comply with the notice requirements and affects the substantive rights of

the uninformed party, the error cannot be disregarded and the court’s

confirmation of the account cannot stand.      Pa.O.C. Rules 2.1, 2.5; In re

Galli’s Estate, supra.

      Instantly, Appellants are the parents of L.G., a permanently disabled

minor child and beneficiary of the Trust. Appellee served as trustee of the

Trust from September 26, 2012, to April 21, 2017.         In March 2018, the

Orphans’ court ordered Appellee to file an account of its administration of the

Trust, and Appellee filed an account on May 31, 2018.            Appellee filed

contemporaneously with its account a copy of a May 30, 2018 notice letter

addressed to Appellants that read, in part: “The audit of the Account will be

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held on a date to be determined at 201 West Market Street, West Chester,

PA, 19380.” (See Account Notice Letter, dated 5/30/18; R.R. at 381a-382a.)

The letter stated the due date for filing any objections was on or before the

audit date, but the letter did not state that Appellee would provide the date of

the audit upon request. See Pa.O.C. Rule 2.5(d). Appellee does not dispute

that Appellants’ counsel requested notice of the date scheduled for the audit

or that Appellee gave no date. Appellants filed no objections to the account.

The Orphans’ court audited Appellee’s account on August 1, 2018, entered a

decree of distribution on August 2, 2018, and subsequently confirmed

Appellee’s account on August 13, 2018.

      Appellee characterizes its failure to provide the date as a “minor

omission” that did not prejudice Appellants or prevent them from filing timely

objections. In essence, Appellee offers a “constructive notice” defense to its

failure to comply with the relevant procedural rules. Nevertheless, Rule 2.5(d)

requires actual written notice of the time and place of the audit. Appellee’s

error affected the substantive rights of Appellants, which the law will not

disregard. Thus, the court’s confirmation of Appellee’s account as entered,

without proper notice of the audit to Appellants, cannot stand. Pa.O.C. Rules

2.1, 2.5; In re Galli’s Estate, supra.

      Based upon the foregoing, we conclude Appellee failed to provide

compliant notice per Pa.O.C. Rule 2.5(d). Therefore, the Orphans’ court erred

when it confirmed Appellee’s account.      Accordingly, we vacate the order

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confirming Appellee’s account and remand for Appellee to provide Appellants

with actual written notice of the time and place of a new audit and the filing

deadline for Appellants’ objections.   See Estate of Whitley, supra.       The

Orphans’ court shall then conduct a new audit of Appellee’s account, where

Appellants shall have the opportunity to attend and argue their objections to

Appellee’s account. Due to our disposition, we decline to address Appellants’

other claims on appeal. Additionally, nothing in our disposition of this appeal

resolves any substantive claims regarding Appellee’s account.

         Order vacated; case remanded with instructions.        Jurisdiction is

relinquished.

              Judge Ott joins this memorandum.

              Judge Lazarus files a concurring statement in which Judge Ott

joins.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 7/25/19

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