Court Opinion

ID: 4195646
Source: CourtListenerOpinion
Date Created: 2017-08-14 19:12:00.648742+00
Date Added: 2024-06-11T14:39:32.749626
License: Public Domain

J-A09039-17

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

DAVID SAWYER AS THE                     :   IN THE SUPERIOR COURT OF
ADMINISTRATOR OF THE ESTATE OF          :        PENNSYLVANIA
MARY E. SAWYER, DECEASED                :
                                        :
                  Appellant             :
                                        :
            v.                          :
                                        :
RITA SAWYER, M.D.                       :
                                        :
                  Appellee              :          No. 809 MDA 2016

                 Appeal from the Order Entered May 3, 2016
              In the Court of Common Pleas of Lebanon County
                     Civil Division at No(s): 2005-00136

BEFORE:    GANTMAN, P.J., SHOGAN, J., and OTT, J.

MEMORANDUM BY GANTMAN, P.J.:                       FILED AUGUST 14, 2017

     Appellant, David Sawyer, as the administrator of the estate of Mary E.

Sawyer, deceased, appeals from the order entered in the Lebanon County

Court of Common Pleas, which granted the request of Appellee, Rita Sawyer,

M.D., for reimbursement of an overpayment in connection with a wrongful

death lawsuit settlement.

     In its opinion filed May 3, 2016, the trial court accurately set forth the

relevant facts and procedural history of this case.       Therefore, we just

summarize them here. The parties to this appeal are siblings. In 2005, a

jury convicted Appellee of first-degree murder and unlawful administration of

a controlled substance by a practitioner, in connection with the death of the

parties’ mother, Mary E. Sawyer.     The trial court sentenced Appellee on
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December 14, 2005, to life imprisonment for the murder conviction and

imposed a concurrent sentence for the remaining conviction.

       On January 24, 2005, Appellant, as administrator of his mother’s

estate, filed a civil complaint against Appellee for assault, wrongful death,

and survival. After the pleadings and discovery closed, on September 26,

2007, Appellant filed a motion for partial summary judgment on the issue of

liability based on Appellee’s murder conviction. Appellee filed her response

in opposition on October 22, 2007. On November 7, 2007, the court granted

summary judgment in Appellant’s favor on the issue of liability.

       In or around December 2007, Appellant established a Pennsylvania

non-profit    foundation     in   memory       of   the   parties’   deceased   parents

(“Foundation”).     Appellant intended to fund the Foundation with proceeds

from the civil lawsuit against Appellee.

       On September 13, 2011, the parties settled the case.              The terms of

the settlement agreement (“Agreement”) obligated Appellee to make certain

cash payments to the decedent’s estate; and to pay the remainder of the

settlement amount by way of financial transfers to the Foundation.1

Pursuant to the Agreement, Appellee was to make the financial transfers

within thirty (30) days and the cash payments within ninety (90) days. Due

to the complexity of tax related issues surrounding the transfers as well as
____________________________________________

1
  The settlement agreement is marked confidential, and the trial court has
sealed the record.

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Appellee’s incarceration, Appellee could not make all of the transfers within

that timeframe.     Appellant’s counsel agreed to a delay of some of the

transfers until Appellee’s counsel received answers from the Internal

Revenue Service (“IRS”) regarding the relevant tax issues.                Appellee

ultimately completed the transfers required under the Agreement by

February 2013.

     On July 26, 2013, Appellee’s counsel sent Appellant’s counsel a written

request for reimbursement of overpaid settlement funds.               Specifically,

Appellee’s counsel claimed he had inadvertently overfunded the Foundation

by approximately $35,000.00.         Appellant’s counsel acknowledged the

overpayment but insisted for the first time that Appellee owed interest for

the delay in performance under the Agreement.

     On   January    29,   2014,   Appellee   filed   a   “motion   for   a   status

conference.”   Appellee alleged various issues had arisen within respect to

overpayment of the amount specified in the Agreement which the parties

had been unable to resolve and that a status conference was necessary to

discuss these outstanding issues.       The trial court scheduled a status

conference for March 7, 2014. After discussing the outstanding issues with

the court in chambers, the court conducted hearings on the disputed issues

on September 4, 2014, April 2, 2015, and November 30, 2015. During the

hearings, Appellant argued that Appellee’s overpayment as well as other

payments made pursuant to the Agreement were designated as “charitable

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deductions” on her tax returns, precluding Appellee from requesting any

reimbursement if those payments were made with the donative intent

necessary to take a charitable deduction.2 At the conclusion of the hearings,

the court ordered the parties to submit post-hearing briefs limited to four

issues: (1) did Appellant’s counsel need express authority from Appellant to

agree to extend the time for performance under the Agreement; (2) could

Appellee’s counsel rely on the apparent authority of Appellant’s counsel to

delay performance under the Agreement; (3) could the settlement amount

be deemed a “gift”; and (4) what is the import of declaring a transfer as a

charitable deduction.

       Following the submission of post-hearing briefs on the issues, by order

dated April 28, 2016 and filed on May 3, 2016, the trial court granted in part

and denied in part Appellee’s request for reimbursement.                The trial court

rejected Appellant’s argument that Appellee’s designation of settlement

payments      as   “charitable     deductions”     on   her    tax   return   precluded

reimbursement.         The    court    decided    Appellee’s    overpayment     to   the

Foundation was merely inadvertent.               Regarding whether Appellee owed

interest, the court found the parties had agreed Appellee could delay some

transfers until the IRS answered certain tax inquiries, which the IRS

____________________________________________

2
  Upon discovery of the overpayment, Appellee’s counsel amended
Appellee’s tax return to remove the overpaid amount from Appellee’s list of
charitable deductions.

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provided around June 2012. Nevertheless, the court found Appellee’s delay

in payments after July 2012, should be subject to interest. The court issued

a final order, directing Appellant to remit $28,422.85 to Appellee within 60

days for the overpayment,3 which was the amount of overpayment

requested, less $6,831.15 in interest accumulated from July 2012 to

February 2013.4

       Appellant timely filed a notice of appeal on May 20, 2016. On May 23,

2016, the trial court ordered Appellant to file a concise statement of errors

complained of on appeal pursuant to Pa.R.A.P. 1925(b).      Appellant timely

complied on June 10, 2016.

       Appellant raises five issues for our review:

          DID THE TRIAL COURT [ERR] BY FAILING TO FIND THAT
          [THE   FOUNDATION]    WAS    A   NECESSARY    AND
          INDISPENSABLE PARTY TO THIS ACTION?

          DID THE TRIAL COURT [ERR] BY ORDERING [APPELLANT],
          ADMINISTRATOR OF THE ESTATE OF MARY E. SAWYER TO
          REPAY FUNDS THAT [APPELLANT], ADMINISTRATOR OF
          THE ESTATE OF MARY E. SAWYER DID NOT RECEIVE?

          DID THE TRIAL COURT [ERR] BY NOT FINDING THAT
          [APPELLEE], RITA SAWYER [CAN ONLY] RECOVER
          AGAINST THE [FOUNDATION]?

          DID THE TRIAL COURT [ERR] BY FAILING TO FIND THAT
____________________________________________

3
 The court directed “[Appellant] and/or [the] Foundation” to remit payment.
(Opinion in Support of Order, filed May 3, 2016, at 40).
4
  Appellee did not file a cross-appeal challenging the amount of interest
owed.

                                           -5-
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          THE [FOUNDATION] WAS THE PARTY WHO ACTUALLY
          BENEFITTED AND WHO APPRECIATED SUCH BENEFIT
          FROM THE ALLEGED OVERPAYMENT?

          DID THE TRIAL COURT [ERR] BY FAILING TO FIND THAT
          THE ADDITIONAL $140,000.00 WHICH [APPELLEE]
          CLAIMED ON HER 2012 AMENDED FEDERAL INCOME TAX
          RETURN WAS CHARITABLE CONTRIBUTIONS AND COULD
          NOT BE USED TO OFFSET AMOUNTS DUE PURSUANT TO
          THE MEDIATION AGREEMENT?

(Appellant’s Brief at 4).

       In Appellant’s first four issues,5 he argues jurisdiction is improper in

this case because Appellee failed to join the Foundation as an indispensable

party to this action.         Appellant contends the court intended for the

Foundation to reimburse Appellee for the overpayment; but the court’s order

actually directed Appellant, as administrator of his mother’s estate, to remit

payment to Appellee.         Appellant claims he did not personally receive the

overpayment, and the Foundation was the entity that directly benefitted

from the overpayment.          Appellant insists the Foundation is therefore an

indispensable party to this appeal. Appellant concedes he raises for the first

time on appeal his claim that Appellee failed to join the Foundation as a

necessary party to this action, but he maintains that claim is non-waivable

____________________________________________

5
  Notwithstanding Appellant’s number of questions presented, Appellant
combines issues one through four in one argument section, in contravention
of the rules of appellate procedure.       See Pa.R.A.P. 2119(a) (stating
argument shall be divided into as many parts as there are questions to be
argued and shall have at head of each part, in distinctive type, particular
point treated therein, followed by such discussion and citation of authorities
as are deemed pertinent).

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under Pennsylvania law.         Appellant concludes the trial court lacked

jurisdiction, and this Court should vacate the trial court’s order and dismiss

Appellee’s request for reimbursement. We disagree.

      Pennsylvania Rule of Civil Procedure 1032 provides, in relevant part:

         Rule 1032.       Waiver of Defenses.    Exceptions.
         Suggestion of Lack of Subject Matter Jurisdiction or
         Failure to Join Indispensable Party

                                   *    *    *

            (b) Whenever it appears by suggestion of the parties
         or otherwise that the court lacks jurisdiction of the subject
         matter or that there has been a failure to join an
         indispensable party, the court shall order that the action
         be transferred to a court of the Commonwealth which has
         jurisdiction or that the indispensable party be joined, but if
         that is not possible, then it shall dismiss the action.

Pa.R.C.P. 1032(b).    “In Pennsylvania, an indispensable party is one whose

rights are so directly connected with and affected by litigation that [the

entity] must be a party of record to protect such rights[.]” Columbia Gas

Transmission Corp. v. Diamond Fuel Co., 464 Pa. 377, 379, 346 A.2d
788, 789 (1975). “The absence of an indispensable party goes absolutely to

the court’s jurisdiction.   If an indispensable party is not joined, a court is

without jurisdiction to decide the matter. The absence of an indispensable

party renders any order of the court null and void.”               Sabella v.

Appalachian Development Corp., 103 A.3d 83, 90 (Pa.Super. 2014),

appeal denied, 631 Pa. 744, 114 A.3d 417 (2015) (internal citation omitted).

The failure to join an indispensable party is a non-waivable issue.       Id.;

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Fiore v. Oakwood Plaza Shopping Center, Inc., 585 A.2d 1012, 1020

(Pa.Super. 1991) (stating issue of failure to join indispensable party cannot

be waived).

      In determining whether a party is “indispensable,” courts analyze: “(1)

whether the party has a right or interest related to the claim; (2) the nature

of the right or interest; (3) whether the right or interest is essential to the

merits; and (4) whether justice can prevail without violating due process

rights of the absent party.”     Id.   “[T]he basic inquiry remains whether

justice can be done in the absence of a third party.” Orman v. Mortgage

I.T., 118 A.3d 403, 407 (Pa.Super. 2015). Significantly, not all parties or

entities related to an action are “indispensable” parties.         Corman v.

National Collegiate Athletic Ass’n, 74 A.3d 1149 (Pa.Cmwlth. 2013). For

example, “where a person’s official designee is already a party, the

participation of such designee may alone be sufficient, as the interests of the

two are identical, and thus, the participation of both would result in

duplicative filings.”   Id. at 1163.    See, e.g., City of Philadelphia v.

Commonwealth, 575 Pa. 542, 568, 838 A.2d 566, 582 (2003) (holding

petitioners’ failure to join all parties who were potentially affected by

challenged legislation did not deprive Supreme Court of jurisdiction to review

merits of petitioners’ claims; requiring participation of all parties having any

interest which could be potentially affected by invalidation of statute would

be impractical; while legislation at issue purports to alter rights and

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obligations of numerous persons, achieving justice is not dependent upon

participation of all of those persons; complaint named as respondents

Commonwealth and Governor, both of whom are represented by Attorney

General who stands in representative capacity for, at minimum, all non-

Commonwealth parties with interest in seeing statute upheld, and Presiding

Officers and Minority Leaders of both Houses of General Assembly, who are

capable of representing interests of Legislature as whole; substantial justice

can be done without joining any parties other than those who are presently

participating in litigation).

       Instantly, the trial court analyzed Appellant’s claims as follows:6

          From its inception, [the] Foundation in this case was
          controlled by [Appellant]. [Appellant’s] lawyer created the
          Foundation and communicated all information about it to
          [Appellee] and her lawyer.      Throughout the litigation
          during 2014 and 2015, [Appellant] and/or his attorney
          spoke for [the] Foundation and even raised issues on
          behalf of it.1
              1
                 For example, [Appellant] argued that interest
              should be paid to [the] Foundation during the period
              of time when [Appellee] delayed payment of what
              she owed.

          As we see it, [Appellant] is the “official designee” for [the]
          Foundation.    Moreover, [Appellant’s] interest and the
          interest of [the] Foundation are identical.         As such,
          [Appellant’s] participation in the litigation that has
          progressed since 2014 is sufficient to protect [the]
____________________________________________

6
  Given the existing legal precedent, we bypass the trial court’s initial
conclusion of waiver and move directly to the court’s resolution of the
dispute on the merits. See Sabella, supra; Fiore, supra.

                                           -9-
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         Foundation and its interests. Reversing the decisions we
         have already rendered regarding the overpayment because
         [the] Foundation was not a party would do nothing more
         than result in “duplicative litigation.” Accordingly, we
         believe that all components of the legal principle
         articulated in Corman and City of Philadelphia…apply in
         this case. So too should the conclusion of those cases
         apply—[the] Foundation should not be declared an
         indispensable party.

(Trial Court Opinion, filed July 12, 2016, at 7-8) (internal capitalization

omitted).    We agree with the court’s decision.          The trial court’s order

directed “[Appellant] and/or the Foundation” to remit payment to Appellee.

The record makes clear the court expected Appellant to make that payment

from   the   Foundation,     which   Appellee    had   inadvertently    overfunded.

Appellant admits he is the Board President, Treasurer, and Founding Director

of the Foundation.     The record confirms Appellant is the individual who

speaks for and on behalf of the Foundation; in other words, Appellant is the

“official designee” of the Foundation. No violation of the Foundation’s due

process rights occurred because Appellant represented the Foundation’s

interest at each of the hearings.      See Fiore, supra.       See also Orman,

supra.       Under   these    circumstances,     the   Foundation      was   not   an

indispensable party that deprived the court of jurisdiction.           See City of

Philadelphia, supra; Corman, supra.             Therefore, Appellant’s issues one

through four merit no relief.

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

applicable law, and the well-reasoned opinion of the Honorable Bradford H.

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Charles, we conclude Appellant’s fifth issue merits no relief. The trial court

opinion comprehensively discusses and properly disposes of that question.

(See Opinion in Support of Order at 27-33; 40-41) (finding: Appellee’s

counsel   characterized   some   of    settlement   payments   as   “charitable

contributions” on Appellee’s tax return because that benefited Appellee from

tax standpoint, where ultimate purpose of Foundation was to be benevolent,

and based on advice that IRS would likely approve such characterization;

upon discovery of $35,254.55 overpayment, Appellee’s counsel amended her

2012 tax return to delete that overpayment from list of charitable

contributions; Appellee’s decision to pay Foundation was motivated by desire

to resolve wrongful death lawsuit and was not act of “disinterested

generosity”; whether Appellee should or will be required to pay additional

taxes based upon her tax filing characterizations is issue to be addressed

between Appellee and IRS; court rejected Appellant’s argument that

Appellee’s attempt to claim some of her settlement payments as charitable

deductions precluded court from determining that $35,254.55 was mistaken

overpayment; Appellee’s counsel credibly testified regarding inadvertent

overpayment; court was convinced without doubt that Appellee mistakenly

overfunded Foundation by $35,254.55, and that Appellee had no donative

intent to contribute that amount gratuitously to Foundation; to permit

Appellant to take advantage of Appellee’s overpayment would be unjust;

principles of equitable restitution apply; Appellee established both mistake of

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fact and consequential unjust enrichment; thus, Appellee was entitled to

return of overpayment (less interest)).         Therefore, with respect to

Appellant’s fifth issue on appeal, we affirm on the basis of the trial court’s

May 3, 2016 opinion.

      Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 8/14/2017

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Circulated 07/18/2017 12:32 PM