Court Opinion

ID: 3165423
Source: CourtListenerOpinion
Date Created: 2015-12-23 22:07:33.087012+00
Date Added: 2024-06-11T12:02:33.104414
License: Public Domain

J-A32011-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

IN RE: ESTATE OF HELEN E.                       IN THE SUPERIOR COURT OF
BLUMBERGER, DECEASED,                                 PENNSYLVANIA

APPEAL OF: JOAN OLDEN,

                        Appellant                   No. 2070 WDA 2014

                  Appeal from the Order December 15, 2014
             In the Court of Common Pleas of Allegheny County
                    Orphans’ Court at No(s): 02-14-00386

BEFORE: SHOGAN, OTT, and STABILE, JJ.

MEMORANDUM BY SHOGAN, J.:                       FILED DECEMBER 23, 2015

      Joan Olden (hereinafter “Appellant” or “The Executrix”), appeals from

the order entered on December 15, 2014, that, inter alia, removed her as

executrix of her mother’s estate (“the estate”).     After careful review, we

affirm in part, vacate in part, and remand with instructions.

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

of this matter as follows:

            This matter came before the Court on a Petition for
      Removal of Executrix and a Motion to Dismiss Rule to Show
      Cause Why Executrix should not be removed. A hearing was held
      on the Petition and Motion on December 8, 2014. On December
      15, 2014, the Court issued an Order granting the Petition for
      Removal and denying the Motion to Dismiss. The Executrix filed
      a Notice of Appeal and this appeal follows.

           Helen E. Blumberger [(“the Decedent”)] died testate on
      December 4, 2013. On January 30, 2014, the Decedent’s Will
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     dated August 23, 1973 was admitted to probate and Letters
     Testamentary were granted to [Appellant], who is one of the
     Decedent’s three daughters. The Decedent’s other two daughters
     (Bette A. [Blumberger] Saltzman and Diane J. Blumberger),
     along with [Appellant], are the three residuary legatees named
     in the Will.

           According to the evidence presented at the hearing, the
     primary asset in the estate is stock owned by the Decedent in a
     closely-held corporation, known as Universal Builders Supply
     Company, Inc. (UBS). The Decedent owned 52% of the stock
     and the remaining 48% was owned by the three residuary
     legatees, in equal shares. (N.T. 12/08/14, p. 5)

            Greg Palmieri, who has been the accountant for UBS since
     2006 (although his firm has been involved with the business for
     many years), testified that the corporation is basically a holding
     company. The assets are securities, approximately twenty
     developed lots, and cash. According to Exhibit 1, the fair market
     value of the assets in the corporation as of the date of death was
     approximately $8,800,000. (N.T. 12/08/14, pp. 11-17) Mr.
     Palmieri also testified that the Decedent and [Appellant] took
     significant loans from the corporation. Specifically, [Appellant]
     owed the corporation over $372,000 as of the date of death,
     plus approximately $80,000 in interest. No loans were made to
     Ms. Saltzman and Ms. Blumberger owed less than $400. The
     Decedent executed a Promissory Note for the loans, but
     [Appellant] refused to do so. (12/08/14, pp. 19-32)

           Under the PEF Code [(Probate, Estates and Fiduciaries
     Code, 20 Pa.C.S.A., § 101 et seq.)], the Court has the exclusive
     power to remove a personal representative for stated reasons or
     “when, for any other reason, the interests of the estate are likely
     to be jeopardized by his continuance in office”. 20 Pa.C.S.A.
     §3182. In this case, [Appellant], the Executrix, lists her
     residence as New York City, although it is believed that she
     actually resides most of the year in Switzerland. [Appellant] did
     not appear at the hearing, so she could not be questioned about
     her residence. Her failure to appear was, apparently, on the
     advice of counsel, who did not seek court approval to excuse her
     appearance; but rather, counsel took it upon himself to decide
     that [Appellant] did not have to appear at a hearing seeking her
     removal. This advice was erroneous, as it led the Court to
     believe that she was not interested in the proceedings or she has

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     something to hide and did not want to be subjected to
     examination in open court.

           In addition, as indicated above, [Appellant] owes over
     $450,000 to the corporation for loans that were taken between
     1998 and 2004. [Appellant] has a fiduciary responsibility to the
     estate; however, she is also a serious creditor of the estate. The
     Court believes that this demonstrates a conflict of interest, which
     could potentially jeopardize the assets of the estate.

Orphans’ Court Opinion, 2/2/15, at unnumbered 1-3.

     The orphans’ court removed Appellant as executrix of the estate,

denied   Appellant’s   motion   to   dismiss,   directed   the   Orphans’   Court

Department of Court Records to appoint a successor administrator or

administratrix, and scheduled a status conference. Appellant filed a timely

appeal, and on appeal, Appellant raises five issues that are set forth

verbatim as follows:

     I. Whether the lower court abused its discretion when it granted
     the Petition for Removal of Executrix and revoked the Letters
     Testamentary issued by the Allegheny County Department of
     Court Records in the absence of clear and convincing evidence of
     any substantial reason for removal.

     II. Whether the lower court made an error of law and abused its
     discretion by admitting classic hearsay as evidence for the
     reason that it was not being admitted to prove the truth of the
     matter asserted and then relying on said evidence to conclude
     that the Appellant had a conflict of interest as a serious creditor
     (sic) of the Estate.

     III. Whether the lower court abused its discretion and made an
     error of law by revoking Appellant’s Letters Testamentary based
     on a finding of conflict of interest which could potentially
     jeopardize the assets of the Estate when the record contains no
     competent evidence of any conflict between the Appellant’s
     personal affairs and the affairs of the Estate. or the likelihood of

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      waste or mismanagement jeopardizing the assets of the Estate
      or actual proof of a breach of fiduciary duty.

      IV. Whether the lower court abused its discretion and made an
      error of law by revoking Appellant’s Letters Testamentary
      because it believed she was a resident of Switzerland and was
      not interested in the proceedings when the record is void of any
      evidence of either and paragraph 7.3 of the Decedent’s Last Will
      and testament explicitly provides that no bond be required of
      any personal representative 20 Pa.C.S.A. § 3174 (b)(1)(ii).

      V. Whether the lower court abused its discretion and made an
      error of law by directing the Department of Court Records
      Orphans’ Court, to appoint a successor Administrator/
      Administratrix within twenty (20) days in a Testate Estate.

Appellant’s Brief at 3-5 (“(sic)” in original).

      In her first four issues, Appellant argues that the orphans’ court erred

in removing her as executrix. We note that “The removal of an executrix is

a matter vested in the sound discretion of the [orphans’] court, and thus we

will disturb such a determination only upon a finding of an abuse of that

discretion.” In re Estate of Mumma, 41 A.3d 41, 49 (Pa. Super. 2012).

      The court has statutory authority to remove a personal
      representative when, inter alia, “the interests of the estate are
      likely to be jeopardized by his continuation in office.” 20
      Pa.C.S.A. § 3182(5). Furthermore, the court may summarily
      remove a personal representative when such action is
      “necessary to protect the rights of creditors or parties in
      interest.” 20 Pa.C.S.A. § 3183. Our case law has recognized that
      “removal of a fiduciary is a drastic action which should be taken
      only when the estate is endangered and intervention is
      necessary to protect the property of the estate.” In re Estate of
      Pitone, 489 Pa. 60, 68, 413 A.2d 1012, 1016 (1980) (quoting
      Scientific Living, Inc. v. Hohensee, 440 Pa. 280, 295, 270
A.2d 216, 224 (1970)).

In re Estate of Westin, 874 A.2d 139, 142-143 (Pa. Super. 2005).

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      Appellant first claims that there was no clear and convincing evidence

of any substantial reason for her removal. We disagree.

             Sufficient reason for removal of a fiduciary has been found
      when the fiduciary’s personal interest is in conflict with that of
      the estate, such that the two interests cannot be served
      simultaneously. In re Estate of Dobson, 490 Pa. 476, 483 n. 6,
      417 A.2d 138, 142 n.6 (1980); In re Estate of Lux, 480 Pa.
256, 269-71, 389 A.2d 1053, 1059-60 (1978); In re Estate of
      Rafferty, 377 Pa. 304, 305-06, 105 A.2d 147, 148 (1954). The
      reasons for removal of a fiduciary must be clearly proven. Lux,
      supra at 269, 389 A.2d at 1059; Scientific Living, supra at
      295, 270 A.2d at 224. However, proof of a conflict of interest
      can be inferred from the circumstances. See In re Estate of
      Gadiparthi, 158 Pa.Cmwlth. 537, 632 A.2d 942, 946 (1993)
      (ordering removal of an administrator, based on conflict of
      interest, after he challenged decedent’s ownership of property
      titled in decedent’s name). When a conflict of interest is
      apparent from the circumstances, bad faith or fraudulent intent
      on the part of the fiduciary need not be proven. Dobson, supra
      at 483 n. 6, 417 A.2d at 142 n. 6 (citing In re Estate of Banes,
      452 Pa. 388, 395, 305 A.2d 723, 727 (1973); In re Estate of
      Noonan, 361 Pa. 26, 32-33, 63 A.2d 80, 84 (1949)).

Westin, 874 A.2d at 143.

      As the orphans’ court pointed out, Appellant owed UBS, the primary

asset in the estate, more than $372,000.00, plus approximately $80,000.00

in interest.   Orphans’ Court Opinion, 2/2/15, at unnumbered 2.            The

orphans’ court found that “[Appellant] has a fiduciary responsibility to the

estate; however, she is also a serious creditor of the estate.      The Court

believes that this demonstrates a conflict of interest, which could potentially

jeopardize the assets of the estate.”    Orphans’ Court Opinion, 2/2/15, at

unnumbered 3.     We agree.    The unpaid debt to UBS undoubtedly places

Appellant in the position of a creditor to the largest asset of the estate. As

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Appellant’s interests as a creditor are adverse to UBS and jeopardize the

value of the estate, we discern no abuse of discretion in the orphans’ court

finding a conflict of interest and removing Appellant as executrix. Westin,
874 A.2d at 142; 20 Pa.C.S. § 3182(5).

       In her second issue, Appellant argues that the orphans’ court erred by

admitting hearsay into evidence and relying on it to conclude that Appellant

had a conflict of interest.         Specifically, Appellant claims that witnesses

Dorothy Kirsch and Greg Palmieri, of the accounting firm of R.D. Hoag &

Associates1 who provided accounting services to UBS, testified based on

documents prepared by other persons, and the orphans’ court permitted this

hearsay testimony and relied on it in making its decision. Appellant’s Brief

at 17-19.

       “When we review a trial court ruling on admission of evidence, we

must acknowledge that decisions on admissibility are within the sound

discretion of the trial court and will not be overturned absent an abuse of

discretion or misapplication of law.” Stumpf v. Nye, 950 A.2d 1032, 1035-

1036 (Pa. Super. 2007). “An abuse of discretion is not merely an error of

judgment, but if in reaching a conclusion the law is overridden or

misapplied, or the judgment exercised is manifestly unreasonable, or the

result of partiality, prejudice, bias or ill-will, as shown by the evidence or the
____________________________________________

1
  Mr. Palmieri testified that R.D. Hoag & Associates had performed
accounting services for UBS since as early as 1999. N.T., 12/8/14, at 11-12.

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record, discretion is abused.” Id. (quoting Geise v. Nationwide Life and

Annuity Co. of America, 939 A.2d 409, 417 (Pa. Super. 2007) (quotations

omitted)).

      Hearsay is defined as an out-of-court statement offered to prove the

truth of the matter asserted.    Pa.R.E. 801(c).   This rule, however, is not

absolute, and there are exceptions.        Records of a regularly conducted

activity is one such exception that is defined in Pa.R.E. 803(6) as follows:

      Exceptions to the Rule Against Hearsay--Regardless of
      Whether the Declarant Is Available as a Witness

                                    * * *

      The following are not excluded by the rule against hearsay,
      regardless of whether the declarant is available as a witness:

                                    * * *

      (6) Records of a Regularly Conducted Activity. A record (which
      includes a memorandum, report, or data compilation in any
      form) of an act, event or condition if,

             (A) the record was made at or near the time by--or
             from information transmitted by--someone with
             knowledge;

             (B) the record was kept in the course of a regularly
             conducted activity of a “business”, which term
             includes    business,    institution,   association,
             profession, occupation, and calling of every kind,
             whether or not conducted for profit;

             (C) making the record was a regular practice of that
             activity;

             (D) all these conditions are shown by the testimony
             of the custodian or another qualified witness, or by a

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              certification that complies with Rule 902(11) or (12)
              or with a statute permitting certification; and

              (E) neither the source of information nor other
              circumstances indicate a lack of trustworthiness.

Pa.R.E. 803(6)(A)-(E).

       Here, Mr. Palmieri and Ms. Kirsch testified that in providing accounting

services to UBS, they relied on records kept in the regular course of business

to determine the debt Appellant owed to UBS. N.T., 12/8/14, at 25. These

records, which were admitted into evidence, consisted of ledgers, bank

statements, check registers, and other documents kept by R.D. Hoag &

Associates in the file it maintained for UBS. N.T., 12/8/14, at 28-33, 58-76.

Under the business records exception provided in Pa.R.E. 803(6), UBS’s

records of loans to Appellant were properly admitted as an exception to

hearsay.2 Accordingly, there was no abuse of discretion or error of law in

____________________________________________

2
  We note that these records would also have been admissible under 42
Pa.C.S. § 6108, which provides as follows:

       (a) Short title of section.--This section shall be known and
       may be cited as the “Uniform Business Records as Evidence Act.”

       (b) General rule.--A record of an act, condition or event shall,
       insofar as relevant, be competent evidence if the custodian or
       other qualified witness testifies to its identity and the mode of its
       preparation, and if it was made in the regular course of business
       at or near the time of the act, condition or event, and if, in the
       opinion of the tribunal, the sources of information, method and
       time of preparation were such as to justify its admission.

(Footnote Continued Next Page)

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the orphans’ court admission of these documents into evidence or in its

reliance on them in reaching its decision.

      Next, Appellant avers that the orphans’ court abused its discretion and

made an error of law in finding a conflict of interest because the record

contains no competent evidence of any conflict between Appellant’s personal

affairs and the affairs of the estate. Appellant’s Brief at 19. We disagree.

      As noted above, the testimony of Mr. Palmieri and Ms. Kirsch was

properly admitted.         Their testimony revealed unpaid debt of more than

$400,000.00 from Appellant to UBS, which was the largest asset in the

estate. Because we have concluded that the aforementioned testimony was

properly admitted, we discern no error in the orphans’ court relying on said

testimony in reaching its decision.               We reiterate, because Appellant’s

interests as a creditor are adverse to UBS and jeopardize the value of the

estate, there was no abuse of discretion in the orphans’ court finding a

conflict of interest and removing Appellant as executrix. Westin, 874 A.2d

at 142; 20 Pa.C.S. § 3182(5).3

                       _______________________
(Footnote Continued)

      (c) Definition.--As used in this section “business” includes
      every kind of business, profession, occupation, calling, or
      operation of institutions whether carried on for profit or not.

42 Pa.C.S. § 6108.
3
 Appellant’s argument on this issue, wherein she claims that there was no
demand made for repayment of the loans and no damage to the estate,
Appellant’s Brief at 23, are contradicted by the record. The record reveals
(Footnote Continued Next Page)

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      In her fourth issue on appeal, Appellant argues that the orphans’ court

abused its discretion and made an error of law by removing her as executrix

because it believed she was a resident of Switzerland and was not interested

in the proceedings.4 We conclude that Appellant’s argument is misplaced.

      Appellant cites no authority for the proposition that the orphans’ court

abused its discretion in concluding that Appellant’s failure to attend the

proceedings was indicative of Appellant’s lack of interest in the proceedings

or that she sought to avoid examination in open court.              Orphans’ Court

Opinion, 2/2/15, at unnumbered 3.                   Moreover, the orphans’ court’s

consideration of Appellant’s failure to attend the hearing was not the basis

for its decision; it was merely a factor, as Appellant’s outstanding debt to

UBS was the focus of the orphans’ court decision. See id. at unnumbered 1-

3 (“[Appellant] is also a serious creditor of the estate. The Court believes

                       _______________________
(Footnote Continued)

Mr. Palmieri testified that the funds paid to Appellant were loans. N.T.,
12/8/14, at 19. He stated that if the funds were considered otherwise, they
would be subject to tax, IRS scrutiny as to whether there was a second class
of stock, and exposure to the IRS revoking S corporation status and placing
UBS in C corporation status with significantly greater tax liability. Id. at 20.
Mr. Palmieri also testified that Appellant was asked to sign a promissory note
memorializing the debt, and she refused.           Id. at 22.       Accordingly,
Appellant’s argument is specious; Appellant refused to acknowledge the
debt, the necessity to repay it, and exposed the corporation to significant
detrimental tax ramifications.
4
  Appellant states that no bond was required pursuant to her mother’s will
and 20 Pa.C.S. § 3174 (b)(1)(ii). We point out that the orphans’ court did
not require Appellant to post a bond; thus, no further discussion of 20
Pa.C.S. § 3174 is necessary.

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that this demonstrates a conflict of interest, which potentially could

jeopardize the assets of the estate.”).         As discussed above, the orphans’

court may remove an executrix for a conflict of interest under 20 Pa.C.S. §

3182(5), and that decision is left to the discretion of the orphans’ court.

Mumma, 41 A.3d at 49; Westin, 874 A.2d 139 at 143.                We discern no

abuse of discretion and conclude that Appellant is entitled to no relief on this

issue.

         Finally, Appellant argues that the orphans’ court abused its discretion

and made an error of law by directing the department of court records to

appoint a successor Administrator/Administratrix.        Appellant’s Brief at 25.

Appellant avers that this was improper because it is a testate estate. Id.

After careful consideration, we agree, and we vacate and remand with

instructions.

         Procedure for and effect of removal

               The court on its own motion may, and on the petition of
         any party in interest alleging adequate grounds for removal
         shall, order the personal representative to appear and show
         cause why he should not be removed, or, when necessary to
         protect the rights of creditors or parties in interest, may
         summarily remove him. Upon removal, the court may direct
         the grant of new letters testamentary or of administration
         by the register to the person entitled and may, by summary
         attachment of the person or other appropriate orders, provide
         for the security and delivery of the assets of the estate, together
         with all books, accounts and papers relating thereto. Any
         personal representative summarily removed under the provisions
         of this section may apply, by petition, to have the decree of
         removal vacated and to be reinstated, and, if the court shall
         vacate the decree of removal and reinstate him, it shall

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        thereupon make any orders which may be appropriate to
        accomplish the reinstatement.

20 Pa.C.S. § 3183 (emphasis added).

        In In re Estate of Andrews, 92 A.3d 1226 (Pa. Super. 2014), a

panel of this Court addressed a similar scenario where the decedent died

testate, but the orphans’ court, after removing an executrix, directed the

appointment of an administratrix.     This Court held that was error.   Id. at

1234.

        The Andrews Court explained:

        It is fundamental estate law that letters testamentary are issued
        when the decedent leaves a will while letters of administration
        are issued when the decedent dies intestate. An executor(rix) is
        the person named in the will to act as personal representative
        while an administrator(rix) is the personal representative when
        the decedent died intestate. Section 3183 pertains to the
        removal of a personal representative in general and, accordingly,
        to the removal of either an executor(trix) or administrator(rix).
        Thus, the language in that section necessarily provides that,
        upon removal, the court is authorized to direct the grant of
        letters testamentary or of administration, as the case may be.

               This verbiage, however, does not provide authority for the
        orphans’ court to disregard the strictures regarding who is
        entitled to serve as the personal representative of an estate.
        Under section 3155 of the Probate, Estates, and Fiduciaries
        Code, the following persons are delineated as eligible to be
        granted letters:

             (a) Letters testamentary.—Letters testamentary
             shall be granted by the register to the executor
             designated in the will, whether or not he has
             declined a trust under the will.

             (b)   Letters    of   administration.—Letters    of
             administration shall be granted by the register, in
             such form as the case shall require, to one or more

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            of those hereinafter mentioned and, except for good
            cause, in the following order:

                  (1) Those entitled to the residuary estate
                  under the will.

                  (2) The surviving spouse.

                  (3) Those entitled under the intestate
                  law as the register, in his discretion, shall
                  judge will best administer the estate,
                  giving preference, however, according to
                  the sizes of the shares of those in this
                  class.

                  (4) The principal creditors of           the
                  decedent at the time of his death.

                  (5) Other fit persons.

      20 Pa.C.S. § 3155.

Andrews, 92 A.3d at 1234 (emphasis added).

      Thus, because the Decedent died testate, letters testamentary must

issue. Andrews, 92 A.3d at 1234. In this regard, the              Decedent’s will

provided for an executor and potential substitute executrices as follows:

                                  ARTICLE VII

                                   Executor

      Section 7.1     Appointment. I appoint my husband, BEN A.
      BLUMBERGER, Executor of this my Will. In the event of the
      inability or unwillingness of my husband to serve or to continue
      to serve as my Executor, I appoint as successor Executrix my
      daughter, [Appellant], if she is willing and able to serve; if she is
      not, I appoint my daughter, DIANE JULIA BLUMBERGER, if she is
      willing and able to serve; if she is not, I appoint my daughter,
      BETTE A. BLUMBERGER.

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The Decedent’s Will, 8/23/73, at 9, Article VII, Section 7.1 (Certified Record

at 2).

         “Thus, the people who can serve as personal representatives are

limited to those who are designated in the will.” Andrews, 92 A.3d at

1234 (emphasis added).     As noted above, the will states that if Appellant

cannot serve as executrix, the Decedent’s daughter Diane shall serve in this

capacity, and if Diane is unwilling or unable, then the Decedent’s daughter

Bette shall serve. Accordingly, because the list of potential executrices has

not been exhausted, it was error for the orphans’ court to direct the

appointment of an administrator because viable substitute executrices

remain in the Decedent’s will.

         For the reasons set forth above, we affirm the orphans’ court’s

removal of Appellant as executrix of the Decedent’s estate.     However, we

vacate that part of the order which directed the appointment of an

administrator or administratrix.   We remand this matter to the orphans’

court for a determination as to whether Diane Blumberger is willing and able

to serve as executrix, and if she is not, the orphans’ court shall then

determine if Bette A. Blumberger Saltzman is willing and able to serve as

executrix.     If neither Diane Julia Blumberger nor Bette A. Blumberger

Saltzman can serve as executrix, the orphans’ court shall then direct the

appointment of an administrator or administratrix as provided in 20 Pa.C.S.

§ 3155.

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      Order affirmed in part and vacated in part.   Case remanded with

instructions. Jurisdiction is relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

DATE: 12/23/2015

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