Court Opinion

ID: 4197279
Source: CourtListenerOpinion
Date Created: 2017-08-18 18:12:09.248412+00
Date Added: 2024-06-11T14:39:46.086206
License: Public Domain

J-A10022-17

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

PENNSYLVANIA TRUST COMPANY,                          IN THE SUPERIOR COURT OF
CAROL LADEN KAUFMAN AND STEPHEN                            PENNSYLVANIA
JOHN KAUFMAN

                       v.

MICHAEL JOHN LEIDEN

                            Appellant                     No. 2079 EDA 2016

                   Appeal from the Order Dated June 3, 2016
             In the Court of Common Pleas of Montgomery County
                     Orphans' Court at No(s): 2016-0347

BEFORE: DUBOW, J., SOLANO, J., and FORD ELLIOTT, P.J.E.

MEMORANDUM BY SOLANO, J.:                               FILED AUGUST 18, 2017

       Appellant Michael John Leiden appeals pro se from the order of June 3,

2016, dismissing his exceptions to the decree dated April 19, 2016, that

declared the interests of beneficiaries under a trust established by Helen T.

Kaufman (“Settlor”). We affirm.

       On August 13, 1981, Settlor created a revocable trust.            On May 28,

2009, she executed a “Complete Amendment and Restatement of Revocable

Deed of Trust” (“the 2009 Deed”) that revoked all articles of the 1981 trust

document and substituted new provisions. The 2009 Deed named Settlor’s

three children, Carol Laden Kaufman (“Carol”),1 Stephen John Kaufman

(“Stephen”),     and    Susan     Carpenter    (collectively,   “the   Children”)   as
____________________________________________
1
 At some places in the record, this party is identified as “Carol K. Laden.”
The trial court referred to her as “Carol Layden.”
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beneficiaries of the Trust upon Settlor’s death. Item III of the 2009 Deed

stated:

      [M]y trustee shall pay a fraction of $1,000,000 to each of my
      children who survives me, the numerator of which shall be the
      number of children (who survive me) of such child, and the
      denominator of which shall be the total number of my
      grandchildren who survive me; provided that if a child of mine
      does not survive me, but leaves descendants who survive me,
      such descendants shall receive, per stirpes, the share such child
      would have received had he or she survived me; and provided
      further that any amounts passing to my daughter Carol under
      this article shall be paid to the trustees of the Trust for Carol
      hereunder to be held in accordance with the terms therein (this
      shall not apply to any amounts passing to Carol’s descendants if
      she does not survive me).

2009 Deed at 2-3 (parentheticals in original).    Item V of the 2009 Deed

established the “Trust for Carol” that is referenced in Item III. See id. at

3-4. Item XX named the Pennsylvania Trust Company, Carol, and Stephen

(collectively, “Trustees”) as her trustees. Id. at 7. When Settlor died, all

three of Settlor’s Children survived her.

      Appellant is Carol’s son.   He contends that through Item III of the

2009 Deed, Settlor intended to provide for Appellant and Settlor’s other

grandchildren by requiring Settlor’s Children (the direct beneficiaries under

Item III) to hold their gifts under Item III for the benefit of their own

children.   In light of this claim, on January 29, 2016, the Trustees filed a

petition for declaratory judgment that asked the orphans’ court to determine

whether Settlor had gifted the $1,000,000 to the Children, as maintained by

the Trustees, or whether the Children were to retain their respective shares

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in further trust for the benefit of the Children’s respective children – that is,

Settlor’s grandchildren.

      On February 1, 2016, the orphans’ court entered a preliminary decree

setting a date of March 1, 2016, to show cause “why a judgment should not

be entered by the [orphans’ c]ourt declaring that [Settlor’s] grandchildren

have no beneficial interest in the Trust.” Prelim. Decree, 2/1/16; see also

Trial Ct. Op., 10/7/16, at 1.       On February 17, 2016, Appellant filed

“objections” that sought a contrary interpretation of the 2009 Deed and a

ruling that “[a]ny trustee who is also a beneficiary must not or may not

exercise discretion over the trust in relation to other beneficiaries, heirs or

assigns.” Objections at 6. On February 29, 2016, Trustees filed preliminary

objections to Appellant’s “objections,” asserting various procedural grounds

for the “objections” to be stricken or dismissed.

      The orphans’ court held a hearing on April 19, 2016, at which it heard

argument but did not receive evidence.       At the conclusion of the hearing,

Appellant claimed that the Trustees lacked standing “to pursue a particular

theory of beneficiary.” N.T., 4/19/16, at 26. After the hearing, by an order

of the same date, the orphans’ court sustained the Trustees’ preliminary

objections and dismissed Appellant’s “objections.” By a separate order, also

dated April 19, 2016, the orphans’ court granted Trustees’ petition for a

declaratory judgment and declared:

      Helen T. Kaufman’s grandchildren have no beneficial interest in
      the . . . Trust, but rather the $1 million gift under Item III of the
      . . . Trust vested in, and shall be paid as follows: 1/7 to Susan

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      Carpenter, 2/7 to Stephen Kaufman and 4/7 to the Trust
      established for the benefit of Carol K. Laden.

On May 2, 2016, Appellant filed exceptions to the orphans’ court’s decree.

The orphans’ court dismissed the exceptions on June 3, 2016.

      On June 22, 2016, Appellant filed a notice of appeal to this Court. He

raises the following issues on appeal:

      [1.] Did the [orphans’] court err as a matter of law by allowing
      the Trustees to seek any theory of beneficiaries?

      [2.] Did the [orphans’] court err as a matter of law in failing to
      respect the four corners of the document as written?

      3.    Did the [orphans’] court err as a matter of law by allowing
      the Trustees to present a petition to impose a constructive trust
      masked as a plea for declaratory judgment?

      4.    Did the [orphans’] court commit a manifest abuse of
      discretion by refusing to allow a full and uninterrupted
      evidentiary hearing including discovery process?

      5.    Did the [orphans’] court err[] as a matter of law by
      refusing to allow a full and uninterrupted evidentiary hearing
      including discovery process?

      6.     Did the [orphans’] court commit an abuse of discretion by
      failing to disenfranchise heirs and beneficiaries Steven John
      Kaufman and his sister Carol Layden Kaufman under the anti-
      challenge provision at Settlor[’]s Article 18?

      7.    Did the [orphans’] court commit an abuse of discretion by
      refusing to impose a constructive trust in the interest of justice
      and to see the actual intent of the late settlor[’]s wishes?

      8.    Did the [orphans’] court misconstrue and misunderstand
      the purpose and context of the process?

Appellant’s Brief at 7-8 (suggested answers and unnecessary capitalization

omitted; first two issues re-numbered).

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        Appellant’s first issue challenges Trustees’ standing to bring their

petition for declaratory judgment.       In his brief to this Court, Appellant

asserts:

        The [Trustees] had no stake in the outcome with respect to any
        theory of beneficiary and their entire claim should have been
        struck for lack of standing; which was plead in Court at the
        [April 19, 2016] hearing on the record — I specifically said “they
        have no standing as trustees here to seek a beneficiary”. If finer
        legal minds dispute the use of this term “standing”, then the
        liberal construction due to any pro se applicant will bear in view
        the intent and purpose of the word.

Appellant’s Brief at 24 (emphasis in original).

        The Supreme Court has explained:

        Standing requires that an aggrieved party have an interest which
        is substantial, direct, and immediate. That is, the interest must
        have substance — there must be some discernible adverse effect
        to some interest other than the abstract interest of all citizens in
        having others comply with the law. That an interest be direct
        requires that an aggrieved party must show causation of the
        harm to his interest by the matter of which he complains. To
        find an immediate interest, we examine the nature of the causal
        connection between the action complained of and the injury to
        the person challenging it.

In re Francis Edward McGillick Found., 642 A.2d 467, 469 (Pa. 1994)

(citations and internal quotation marks omitted). However, lack of capacity

to sue and standing are waived if not objected to at the earliest possible

time.    See Hall v. Episcopal Long Term Care, 54 A.3d 381, 399 (Pa.

Super. 2012) (standing and lack of capacity to sue are related concepts and

must be raised at earliest possible opportunity), appeal denied, 69 A.3d
243 (Pa. 2013); see also Kuwait & Gulf Link Transport Co. v. Doe, 92

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A.3d 41, 45 (Pa. Super. 2014) (an issue of standing is waived if not raised at

first opportunity).

        In Huddleston v. Infertility Ctr. of Am., Inc., 700 A.2d 453, 457

(Pa. Super. 1997), we held that a defendant waived the issue of standing

when she did not raise it in preliminary objections.              See Pa.R.C.P.

1028(a)(5) (“Preliminary objections may be filed by any party to any

pleading and are limited to the following grounds: . . . lack of capacity to

sue”).    Here, Appellant did not raise the issue of standing in preliminary

objections. Nor did he include it in the “objections” he filed on February 17,

2016. Appellant acknowledges that he raised the issue for the first time “in

Court at the [April 19, 2016] hearing on the record.” Appellant’s Brief at 24.

Because Appellant did not raise the issue of standing in preliminary

objections, we may consider this issue waived. See Huddleston, 700 A.2d

at 457; see also Kuwait & Gulf Link, 92 A.3d at 45; Hall, 54 A.3d at 399.

        Apart from waiver, Appellant’s standing contention is without merit.

This is an action for a declaratory judgment regarding the proper

interpretation of a trust. The Declaratory Judgments Act2 provides:

        Any person interested, as or through an executor, administrator,
        trustee, guardian, or other fiduciary . . . in the administration of
        a trust . . . may have a declaration of rights or legal relations in
        respect thereto:

                                       *       *   *

____________________________________________
2
    42 Pa.C.S. §§ 7531-7541.

                                           -6-
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          (3) To determine any question arising in the administration
          of the estate or trust, including questions of construction of
          wills and other writings.

42 Pa.C.S. § 7535 (emphasis added).              The Trustees brought their action

pursuant to this provision, and they have standing under it.3

       All of Appellant’s remaining claims challenge the orphans’ court’s

interpretation of the Trust and its failure to hold a factual hearing in making

that interpretation.      “[T]he interpretation of a trust or a will presents a

question of law. As such, our standard of review is de novo, and our scope

of review is plenary. Our analysis therefore is not confined by the decision

of the orphans’ court.”       In re McFadden, 100 A.3d 645, 650 (Pa. Super.

2014) (en banc) (citations omitted).

       Certain principles guide trust interpretation.     The testator’s
       intent is the cornerstone of such an endeavor. As we articulated
       in Estate of Pew, 440 Pa. Super. 195, 655 A.2d 521, 533
       (1994), it is “hornbook law that the pole star in every trust . . .
____________________________________________
3
  Appellant’s sixth issue suggests that by bringing the declaratory judgment
action, Carol and Stephen should be penalized under Item XVIII of the 2009
Deed, which states that any person who “challenges the validity of this
deed” or any provision of the deed “shall not be entitled to benefits under
this deed during such time as that challenge is pending. Item XVIII permits
the trustees to determine, in their “sole judgement,” whether an action
constitutes a “challenge” under this provision, and it says that a “challenge”
includes an action that “seeks to render any of the provisions of this
instrument invalid or ineffective, in whole in in part, which seeks the removal
of my trustee appointed hereunder, or which seeks to compel a discretionary
distribution of funds to him or her.” 2009 Deed at 7. Because the Trustees’
action sought an interpretation of the 2009 Deed and did not challenge its
validity or effectiveness, there is no basis to hold that it falls within this
provision. Indeed, Appellant’s action to obtain an interpretation of the deed
favorable to him and to preclude action by the trustees with respect to him
or other beneficiaries would appear to more closely implicate this provision.

                                           -7-
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          is the settlor’s . . . intent and that intent must prevail.” See
          also Estate of McFadden, supra. We are not permitted to
          construe a provision in a trust so as “to destroy or effectually
          nullify what has always been considered the inherent basic
          fundamental right of every owner of property to dispose of his
          own property as he desires, so long as it is not unlawful.”
          Estate of Pew, supra at 533. Critically, the settlor’s intent
          must be ascertained from the language of the trust, and we give
          effect, to the extent possible, to all words and clauses in the
          trust document.      See In re Estate of McFadden, supra;
          accord Farmers Trust Co. v. Bashore, 498 Pa. 146, 445 A.2d
492, 494 (1982) (“A settlor’s intent is to be determined from all
          the language within the four corners of the trust instrument, the
          scheme of distribution and the circumstances surrounding the
          execution of the instrument.”).

          Only when the language of the trust is ambiguous or conflicting
          or when the settlor’s intent cannot be garnered from the trust
          language do the tenets of trust construction become applicable.
          Farmers Trust, supra at 494 (“Only if a settlor’s intent cannot
          be ascertained with reasonable certainty will a court apply
          canons of construction, to attribute a reasonable intention to the
          settlor in the circumstances.”).

In re Loucks, 148 A.3d 780, 781–82 (Pa. Super. 2016); see also

McFadden, 100 A.3d 645, 649-50 (in interpreting a trust, court may rely

upon extrinsic evidence of a settlor’s intent only if the trust is ambiguous

and only to the extent that the extrinsic evidence informs the ambiguous

language in question, not in some relatively unbounded effort to glean a

settlor’s broader intent).

          After a thorough review of the record, the briefs of the parties, the

applicable law, and the well-reasoned opinion of the Honorable Cheryl L.

Austin dated October 7, 2016, we conclude that Appellant’s issues merit no

relief.     The trial court’s opinion comprehensively discusses and properly

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interprets the Trust, including the language of the 2009 Deed. See Trial Ct.

Op., 10/7/16, at 3-4 (finding (1) Item III is not ambiguous, clearly indicating

that Settlor intended to gift the $1,000,000 to her three children, all of

whom survived her; (2) the clause in Item III as to what happens “if a child

of [Settlor’s] does not survive [her]” is not applicable, since all of Settlor’s

children survived her; and (3) due to the lack of ambiguity in the language

of the 2009 Deed, the trial court correctly refused to accept any extrinsic

evidence of Settlor’s intent offered by Appellant).         Nothing in Item III

requires Settlor’s Children to hold their gifts under that item for the benefit

of Settlor’s grandchildren, including Appellant. With the exception of the gift

to Carol, which is to be held in trust pursuant to Item V of the 2009 Deed,

the gifts need not be held in trust at all.

      For the reasons stated above, we affirm the order of June 3, 2016.

Because we affirm partly on the basis of the trial court’s opinion of

October 7, 2016, the parties are instructed to attach a copy of the trial

court’s opinion of that date to all future filings that reference this decision.

      Order affirmed.

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Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 8/18/2017

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Circulated 07/26/2017 03:37 PM