Court Opinion

ID: 4302483
Source: CourtListenerOpinion
Date Created: 2018-08-09 18:16:07.141414+00
Date Added: 2024-06-11T14:30:45.196044
License: Public Domain

J-A06019-18

                            2018 Pa. Super. 227

IN RE: THE ESTATE OF WILLIAM K.         :   IN THE SUPERIOR COURT OF
MCALEER, DECEASED                       :        PENNSYLVANIA
                                        :
                                        :
APPEAL OF: WILLIAM MCALEER              :
                                        :
                                        :
                                        :
                                        :   No. 932 WDA 2017

               Appeal from the Order Entered May 30, 2017
   In the Court of Common Pleas of Allegheny County Orphans' Court at
                         No(s): No. 0334 of 2014

BEFORE:    BENDER, P.J.E., SHOGAN, J., and STRASSBURGER*, J.

OPINION BY SHOGAN, J.:                             FILED AUGUST 9, 2018

     Appellant, William McAleer, appeals from the order directing him to

comply with the discovery request presented by Appellees, Stephen Lange

and Michael Lange, in this estate matter involving a trust created by

Decedent, William K. McAleer. After careful review, we quash.

     We summarize the history of this case as follows.      Appellant is the

trustee of the William K. McAleer Revocable Living Trust (“the Trust”), which

was created by Decedent on November 30, 2012, for the benefit of Appellant

and his two stepbrothers, Appellees.    Trust Document, 11/30/12 (Record

Number 1). Since Decedent’s death on May 4, 2013, Appellees have raised

various issues pertaining to the administration of the Trust, which led to

Appellant retaining two law firms, i.e., Julian Gray & Associates and K&L

Gates.

____________________________________
* Retired Senior Judge assigned to the Superior Court.
J-A06019-18

       On March 17, 2014, Appellant filed a first and partial account relating

to the administration of the Trust.            First and Partial Accounting, 3/17/14

(Record Number 2).          Appellees filed objections to the first and partial

account filed by Appellant. Appellees also sought disclosure of information

pertaining to two bank accounts, and Appellant retained K&L Gates to

respond. On March 30, 2016, the trial court dismissed Appellees’ objections

with prejudice. Order, 3/30/16.

       On August 31, 2016, Appellant filed a Second and Final Accounting.

Second and Final Accounting, 8/31/16 (Record Number 24). On November

14, 2016, Appellees filed objections claiming that Appellant paid expenses in

the administration of the Trust that were unreasonable, including excessive

trustee and attorney fees. Objections, 11/14/16 (Record Number 26). On

March 2, 2017, Appellees served a request for production of documents

including billing statements for all trustee fees and attorney fees. On April

12, 2017, Appellant produced substantially redacted attorney invoices from

both law firms.1

       Appellees filed a motion to compel service of unredacted copies of the

invoices on May 8, 2017.           Motion to Compel Discovery, 5/8/17 (Record

Number 34). The trial court held a hearing on May 18, 2017. On May 30,
____________________________________________

1As the trial court indicated, billing documents from Julian Gray & Associates
were presented to Appellees with 223 entries redacted. Trial Court Opinion,
7/12/17, at 1. Also, Appellees received billing statements from K&L Gates
with 98% of the invoice redacted. Id.

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2017, the trial court entered an order directing Appellant to produce the

unredacted invoices within thirty days. Order, 5/30/17 (Record Number 39).

Appellant turned over unredacted trustee invoices, and only the attorney

invoices are at issue. This timely appeal followed. Both Appellant and the

trial court have complied with Pa.R.A.P. 1925.

      Appellant presents the following issue for our review:

      1) Did the Court of Common Pleas err in ordering Appellant to
      produce unredacted attorney bills where doing so will disclose
      material protected by the attorney-client privilege and the
      attorney work product doctrine?

Appellant’s Brief at 3.

      Our scope of review in an appeal from an Orphans’ Court decree is

limited. When reviewing a decree entered by the Orphans’ Court, we must

determine whether the record is free from legal error and the Orphans’

Court’s factual findings are supported by the evidence.        In re Estate of

Angle, 777 A.2d 114, 122 (Pa. Super. 2001).

      Before we address the underlying merits of Appellant’s issue, we must

determine whether the trial court’s order is appealable. In re Miscin, 885
A.2d 558, 560-561 (Pa. Super. 2005). “The question of the appealability of

an order goes directly to the jurisdiction of the [c]ourt asked to review the

order.” Moyer v. Gresh, 904 A.2d 958, 963 (Pa. Super. 2006). See also

In re Estate of Borkowski, 794 A.2d 388, 389 (Pa. Super. 2002)

(observing that the threshold question of the appealability of an order affects

the jurisdiction of this Court over the case).   As a general rule, an appeal

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can be taken only from a final order.       Estate of Borkowski, 794 A.2d at

389.    No appeal will be permitted from an interlocutory order unless

specifically provided for by statute. Id.

       Pennsylvania Rule of Appellate Procedure 342 addresses appeals as of

right from various orders of the Orphans’ Court and provides, in part, as

follows:

       (a) General rule. An appeal may be taken as of right from the
       following orders of the Orphans’ Court Division:

            (1) An order confirming an account, or authorizing
            or directing a distribution from an estate or trust;

            (2) An order determining the validity of a will or
            trust;

            (3) An order interpreting a will or a document that
            forms the basis of a claim against an estate or trust;

            (4) An order interpreting, modifying, reforming or
            terminating a trust;

            (5) An order determining the status of fiduciaries,
            beneficiaries, or creditors in an estate, trust, or
            guardianship;

            (6) An order determining an interest in real or
            personal property;

            (7) An order issued after an inheritance tax appeal
            has been taken to the Orphans’ Court pursuant to
            either 72 Pa.C.S. § 9186(a)(3) or 72 Pa.C.S. § 9188,
            or after the Orphans’ Court has made a
            determination of the issue protested after the record
            has been removed from the Department of Revenue
            pursuant to 72 Pa.C.S. § 9188(a); or

            (8) An order otherwise appealable as provided by
            Chapter 3 of these rules.

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Pa.R.A.P. 342(a).    Thus, Rule 342 permits appeals as of right from the

enumerated orders or from orders that meet the requirements of the other

Chapter 3 Rules of Appellate Procedure pertaining to the appealability of

orders, as discussed infra.

      Our review of the record on appeal indicates that the Orphans’ Court

order that directed Appellant to comply with discovery did not qualify as one

of the enumerated orders set forth under Rule 342 as being appealable as of

right. Pa.R.A.P. 342(a)(1-7).    Accordingly, we must consider whether this

order is appealable under any of the rules in Chapter 3 of the Rules of

Appellate Procedure. Pa.R.A.P. 342(a)(8). It is well settled that an appeal

may be taken from: (1) a final order or an order certified as a final order

(Pa.R.A.P. 341); (2) an interlocutory order as of right (Pa.R.A.P. 311); (3)

an interlocutory order by permission (Pa.R.A.P. 312, 42 Pa.C.S. § 702(b));

or (4) a collateral order (Pa.R.A.P. 313). See Pace v. Thomas Jefferson

University Hospital, 717 A.2d 539, 540 (Pa. Super. 1998) (discussing the

appealability of orders).

      We next consider whether the order on appeal is a final order.

Pennsylvania Rule of Appellate Procedure 341 defines final orders as follows:

      (a) General rule. Except as prescribed in subdivisions (d),
      and (e) of this rule, an appeal may be taken as of right from any
      final order of an administrative agency or lower court.

      (b)   Definition of final order. A final order is any order that:

            (1)   disposes of all claims and of all parties; or

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               (2)   RESCINDED

               (3) is entered as a final         order   pursuant   to
               paragraph (c) of this rule.

      (c) Determination of finality. When more than one claim
      for relief is presented in an action, whether as a claim,
      counterclaim, cross-claim, or third-party claim or when multiple
      parties are involved, the trial court or other governmental unit
      may enter a final order as to one or more but fewer than all of
      the claims and parties only upon an express determination that
      an immediate appeal would facilitate resolution of the entire
      case. Such an order becomes appealable when entered. In the
      absence of such a determination and entry of a final
      order, any order or other form of decision that adjudicates
      fewer than all the claims and parties shall not constitute a
      final order. . . .

Pa.R.A.P. 341 (emphasis added). Thus, pursuant to Rule 341, an order is

final if it disposes of all claims and all parties or if a statute expressly defines

it as final.   An Orphans’ Court’s confirmation of the final accounting of an

estate, after exceptions have been filed and ruled upon, is the final order for

purposes of appeal. In re Estate of Habazin, 679 A.2d 1293 (Pa. Super.

1996). Moreover, we have stated that, in general, discovery orders are not

final and are therefore unappealable.        In re Estate of Moskowitz, 115
A.3d 372, 389 (Pa. Super. 2015) (quoting T.M. v. Elwyn, Inc., 950 A.2d
1050, 1056 (Pa. Super. 2008)).

      Our review of the record reflects that the order on appeal is not a

confirmation of the final account and that the estate and its assets remain

under administration.      Rather, the appealed order compels Appellant to

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satisfy a discovery request. Therefore, the order in question is not a final

order under Pa.R.A.P 341.

      We also consider whether the order on appeal is an interlocutory order

that is appealable as of right. Pennsylvania Rule of Appellate Procedure 311

addresses “interlocutory appeals as of right.” Generally, discovery decrees

do not give rise to an interlocutory appeal as of right under Rule 311.

Estate of Moskowitz, 115 A.3d at 390. Consequently, the order on appeal

directing discovery   does not fall     within the   category   of appealable

interlocutory orders under Rule 311.

      Next, we address whether the matter before us is an appeal from an

interlocutory order by permission. Pennsylvania Rule of Appellate Procedure

312 addresses “interlocutory appeals by permission.” Such permission must

be sought from and granted by the appellate court under the rules set forth

in Chapter 13 of the Rules of Appellate Procedure. Our review of the record

reflects that Appellant never sought permission from this Court to appeal

from the order in question.     Consequently, no permission was granted

allowing the appeal. Therefore, Rule 312 is not applicable to this matter.

      We last turn to Pa.R.A.P. 313, which permits appeals as of right from

collateral orders. Pa.R.A.P. 313(a); J.S. v. Whetzel, 860 A.2d 1112, 1116

(Pa. Super. 2004). For an order to be appealable under Rule 313(b), it must

satisfy the three factors identified in the rule: “(1) the order is separable

from the main cause of action; (2) the right involved is too important to be

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denied review; and (3) the claim would be irreparably lost if review is

postponed.”    Id. (citing Ben v. Schwartz, 729 A.2d 547 (Pa. 1999);

Pa.R.A.P. 313(b)).

      An order is “separable” from the main cause of action if it is capable of

review without considering the underlying merits of the case.        Crum v.

Bridgestone/Firestone N. Am. Tire, LLC, 907 A.2d 578, 583 (Pa. Super.

2006).   Second, the “importance prong” is satisfied if the interests that

potentially   go   unprotected   without   immediate   appellate   review   are

significant relative to the efficiency interests sought to be advanced by

adherence to the final judgment rule. Id. Moreover, “it is not sufficient that

the issue be important to the particular parties. Rather it must involve rights

deeply rooted in public policy going beyond the particular litigation at hand.”

Id. (quoting Melvin v. Doe, 836 A.2d 42, 47 (Pa. 2003)). To satisfy the

third factor, an issue must actually be lost if review is postponed. Keefer v.

Keefer, 741 A.2d 808, 813 (Pa. Super. 1999). “All three elements must be

satisfied to permit review of an interlocutory appeal under the collateral

order rule.” Estate of Moskowitz, 115 A.3d at 389 (quoting Jacksonian

v. Temple University Health System Foundation, 862 A.2d 1275, 1279

(Pa. Super. 2004)).

      We are mindful that orders are not deemed to be collateral orders

liberally. The Pennsylvania Supreme Court noted that:

      [t]he United States Supreme Court has stated that the “collateral
      order doctrine” must be narrowly applied lest it be allowed to

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      swallow the general rule, Digital Equipment Corporation [v.
      Desktop Direct, Inc., 511 U.S. 863, 868 (1994)], and has
      characterized the requirements for an appealable collateral order
      as “stringent.” See Midland Asphalt Corp. v. United States,
      489 U.S. 794, 799, 109 S. Ct. 1494, 1498, 103 L. Ed. 2d 879
      (1989). Although in Pennsylvania the doctrine has been reduced
      from case law and set forth in our Rules of Appellate Procedure
      as establishing a class of orders that may be appealed as of
      right, it nevertheless remains a specialized, practical application
      of the general rule that only final orders are appealable as of
      right. Accordingly, we find it appropriate to interpret Rule 313
      narrowly. Claims must be analyzed not with respect to the
      specific facts of the case, but in the context of the broad public
      policy interests that they implicate. Only those claims that
      involve interests “deeply rooted in public policy,” Digital
      Equipment Corp., 511 U.S. at 884 [], can be considered “too
      important to [be] denied review.”

Geniviva v. Frisk, 725 A.2d 1209, 1214 (Pa. 1999).

      We now address whether the order directing Appellant to comply with

Appellees’ discovery request and to produce complete and unredacted billing

statements for trustee billing, as well as all attorney billing, meets all of the

three prongs necessary to establish a collateral order. First, our review of

the record reflects that the order on appeal is interrelated with the

underlying merits of the pending challenges brought by Appellees, that being

the proper billing of the Trust and subsequent payments from the Trust

proceeds. Consequently, the first factor is not met in this case. Accordingly,

because all three factors must be present, and the order before us fails to

satisfy the first factor, we conclude that the instant appeal is not taken from

a collateral order.

      We observe Appellant has asserted that the order on appeal qualifies

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as an immediately appealable collateral order because it compels the

production of privileged information.    Appellant’s Brief at 1.   Appellant

contends that the attorney invoices sought in discovery are protected by the

attorney-client privilege and the work product doctrine. Appellant’s Brief at

16-29.

     As we previously noted, in general, discovery orders are not final and

are therefore unappealable. Estate of Moskowitz, 115 A.3d 372, 389 (Pa.

Super. 2015). “However, discovery orders involving privileged material are

nevertheless appealable as collateral to the principal action pursuant to

Pa.R.A.P. 313.” Id.

        In Pennsylvania, the attorney-client privilege operates in a
     two-way fashion to protect confidential client-to-attorney or
     attorney-to-client communications made for the purpose of
     obtaining or providing professional legal advice. Gillard v. AIG
     Ins. Co., 15 A.3d 44, 59 (Pa. 2011); see 42 Pa.C.S. § 5928. In
     describing the purpose of the privilege, we have said: “The
     attorney-client privilege exists to foster a confidence between
     attorney and client that will lead to a trusting and open
     dialogue.” Gocial v. Independence Blue Cross, 827 A.2d
1216, 1222 (Pa. Super. 2003).

Custom Designs & Mfg. Co. v. Sherwin-Williams Co., 39 A.3d 372, 376

(Pa. Super. 2012).

     Further, we have explained the following:

         Pennsylvania law imposes a shifting burden of proof in
     disputes over disclosure of communications allegedly protected
     by attorney-client privilege. The party invoking a privilege must
     initially “set forth facts showing that the privilege has been
     properly invoked; then the burden shifts to the party seeking
     disclosure to set forth facts showing that disclosure will not
     violate the attorney-client privilege, e.g., because the privilege

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       has been waived or because some exception applies.”
       Nationwide Mut. Ins. Co. v. Fleming, 924 A.2d 1259, 1266
       (Pa. Super. 2007) (citations omitted), aff’d, 605 Pa. 468, 992
A.2d 65 (Pa. 2010). Accordingly, “[i]f the party asserting the
       privilege does not produce sufficient facts to show that the
       privilege was properly invoked, then the burden never shifts to
       the other party, and the communication is not protected under
       attorney-client privilege.” Id. at 1267.

Id.   Likewise, the same burden applies to a party seeking to invoke the

protections of the work-product doctrine.          See generally T.M. v. Elwyn,

Inc., 950 A.2d at 1062.

       In addition, we are mindful that the duty to furnish information to

beneficiaries of a trust is defined in Section 82 of The Restatement (Third) of

Trusts, which provides, in part, as follows:

       § 82 Duty to Furnish Information to Beneficiaries

       (2) Except as provided in § 74 [(relating to the effect of power of
       revocation)2] or as permissibly modified by the terms of the
       trust, a trustee also ordinarily has a duty promptly to respond to
       the request of any beneficiary for information concerning the
       trust and its administration, and to permit beneficiaries on a
       reasonable basis to inspect trust documents, records, and
       property holdings.

Restatement (Third) of Trusts § 82(2).

       Comment e addresses requests for information under subsection 2,

and provides as follows:

____________________________________________

2 The comment to Section 82 explains that the information requirements of
the section do not apply to revocable trusts while the settlor is alive and
competent. Restatement (Third) of Trusts § 82, cmt. a.

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      e. Requested information and access. Under the general rule of
      Subsection (2), a trustee ordinarily has a duty, with reasonable
      promptness, to provide information that is requested regarding
      the trust property or its administration by any beneficiary, a
      right not limited to fairly representative beneficiaries.     The
      trustee is also to grant access to books and records of the trust,
      and to permit inspection of the trust’s property holdings, on a
      reasonable basis, at reasonable hours and intervals, to any
      beneficiary, including with the participation of the beneficiary’s
      accountant, attorney, or other advisor. On petition by the
      trustee or a beneficiary, however, a court may limit the
      frequency or extent of such inquiries by one or more of the
      beneficiaries, weighing the remoteness or substantiality of their
      interests in the trust against the burdens, intrusiveness, and
      privacy considerations that may be involved.

Restatement (Third) of Trusts § 82, cmt. e.

      Also, comment f explains the following limitations on disclosure to

beneficiaries:

      f. What need not be disclosed? A trustee is privileged to refrain
      from disclosing to beneficiaries or co-trustees opinions obtained
      from, and other communications with, counsel retained for the
      trustee’s personal protection in the course, or in anticipation, of
      litigation (e.g., for surcharge or removal). This situation is to be
      distinguished from legal consultations and advice obtained in the
      trustee’s fiduciary capacity concerning decisions or actions to be
      taken in the course of administering the trust. Communications
      of this latter type are subject to the general principle entitling a
      beneficiary to information that is reasonably necessary to the
      prevention or redress of a breach of trust or otherwise to the
      enforcement of the beneficiary’s rights under the trust.

Restatement (Third) of Trusts § 82, cmt. f.

      We observe that our Supreme Court considered the issue of a

beneficiary’s right to access trust files in In re Estate of Rosenblum, 328
A.2d 158 (Pa. 1974).     In addressing the issue, the Court relied upon the

precursor to Section 82, i.e., Section 173 of the Restatement (Second) of

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Trusts, to support its proposition that “[t]he right of access to trust records

is an essential part of a beneficiary’s right to complete information

concerning the administration of the trust.” Id. at 164-165. The Court in

Rosenblum noted that “[t]his section [from the Restatement] is declaratory

of the common law of Pennsylvania.”        Id. at 165.    The Court then stated

that

       “[i]t places [the beneficiaries of a trust] on a different footing
       from other litigants who seek discovery of documents under our
       Rules of Civil Procedure. A beneficiary’s right of inspection has
       an independent source in his property interest in the trust
       estate, and the right may be exercised irrespective of the
       pendency of an action or proceeding in court.”

Id.

       The trial court offered the following discussion pertaining to Appellant’s

attempt to assert the attorney-client privilege:

              On May 18th, [Appellant’s counsel] set forth only a general
       argument of privilege on behalf of the Trustee as to the Gray
       billings. As to the K&L bills, [Appellant’s counsel] stated: “I can’t
       speak for the K&L Gates bills because they belong to K&L Gates.
       I produced them to Attorney Caplan as an attorney to K&L
       Gates, but have no knowledge of them. (5/18/17 Motions
       argument at p. 7). The Trustee presented no facts to the Court
       to show that he properly invoked a privilege in this case.

              Furthermore, the Court finds persuasive Follansbee v.
       Gerlach, 56 Pa. D. & C. 4th 483, 22 Fiduc. Rep. 2d 319, 6
       All. Co. Disc. Op. 15 (Civ. Div. Allegh., June 13, 2002). In
       Follansbee, the Honorable R. Stanton Wettick Jr. found that
       where the trustee-client obtains legal advice from an attorney
       relating to the trust, that legal advice must be shared with the
       beneficiaries. Pursuant to Follansbee and the logic set forth in
       that opinion, the billings that are the subject of this appeal
       should be shared in full, since the Beneficiaries, in effect, paid
       for the legal services rendered by Gray and K&L.

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Trial Court Opinion, 7/12/17, at 2.   We are constrained to agree with the

trial court.

      Our review of the record reflects that, prior to the trial court’s order

compelling Appellant to produce the discovery documents in question,

Appellant did not provide any facts to support his attempt to invoke the

attorney-client privilege and work-product doctrine protections.     Appellant

never filed an objection to Appellees’ discovery request in which he could

have raised those protections.     Instead, Appellant simply replied to the

discovery request by presenting Appellees with substantially redacted copies

of attorney invoices. Appellees then filed a motion to compel discovery, to

which Appellant failed to respond or object. Rather, Appellant’s first attempt

to invoke the protections was during oral argument at a hearing in response

to the motion to compel, which was held on May 18, 2017. N.T., 5/18/17,

at 5-6.   At the hearing, Appellant’s counsel mentioned the attorney-client

privilege and the work-product doctrine as justification for redacting the

documents provided to Appellees. Id. However, Appellant failed to set forth

specific facts to show that either the attorney-client privilege or the work

product doctrine was applicable and properly invoked.

      Further, a non-final discovery order can be subject to appellate review

under the collateral order doctrine if a colorable claim of the attorney-client

privilege is raised.   See Sherwin-Williams Co., 39 A.3d at 375-376.

However, beyond a general discussion of relevant legal principles at the

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hearing, Appellant did not describe, explain, or substantiate the applicability

of the attorney-client privilege or the work product doctrine before the trial

court in this particular case. Accordingly, appellate review is precluded.

      Moreover, we conclude that under the law as presented in the

Restatement (Third) of Trusts and our Supreme Court’s ruling in Estate of

Rosenblum, Appellant, as a trustee, has a duty to share with Appellees, as

beneficiaries, complete information concerning the administration of the

Trust. As set forth in comment f of Section 82, “[a] trustee is privileged to

refrain from disclosing to beneficiaries or co-trustees opinions obtained from,

and other communications with, counsel retained for the trustee’s personal

protection in the course, or in anticipation, of litigation (e.g., for surcharge

or removal).” However, Appellant neither argued nor presented evidence to

establish that the redacted information pertained to communications from

counsel retained for Appellant’s personal protection in the course of

litigation. Accordingly, there is no evidence that the information qualifies as

privileged under comment f to the Restatement (Third) of Trusts. Hence, we

are left to conclude that the information contained in the attorney invoices

qualifies as communications subject to the general principle entitling a

beneficiary to information reasonably necessary to the prevention or redress

of a breach of trust or otherwise to the enforcement of the beneficiary’s

rights under the trust. For this reason as well, Appellant cannot invoke the

protections of the attorney-client privilege.

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     In conclusion, the order under review in the instant case is not a final

order, an order certified as final, an interlocutory order appealable as of

right, an interlocutory order appealable by permission, or an appealable

collateral order. Consequently, we conclude that this appeal is not properly

before this Court. Accordingly, the appeal is hereby quashed.

     Appeal quashed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 8/9/2018

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