Court Opinion

ID: 4182726
Source: CourtListenerOpinion
Date Created: 2017-06-30 18:13:18.334987+00
Date Added: 2024-06-11T14:38:44.090039
License: Public Domain

J-S37035-17

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

ESTATE OF RICHARD A. DeVOE,              :      IN THE SUPERIOR COURT OF
Deceased,                                :            PENNSYLVANIA
                                         :
                 Appellant               :
                                         :
           v.                            :
                                         :
JAMES B. MOONEY                          :           No. 1551 MDA 2016

               Appeal from the Order entered August 23, 2016
              in the Court of Common Pleas of Dauphin County,
                  Orphans’ Court Division, No(s): 2210-0053

BEFORE: STABILE, MOULTON and MUSMANNO, JJ.

MEMORANDUM BY MUSMANNO, J.:                          FILED JUNE 30, 2017

     The Estate of Richard A. DeVoe (“Estate”) appeals from the Order

sustaining Objections to the Second and Final Account of the Estate, and

imposing surcharges on the Co-Administrators of the Estate, Keith DeVoe

and M. Corrine Mahla (collectively, “Co-Administrators”). We affirm.

     Richard A. DeVoe (“Decedent”) died intestate on October 25, 2009.

Decedent was survived by his mother, Mary Rizzo DeVoe (“Mrs. DeVoe”) and

his father, Richard DeVoe (“Mr. DeVoe”). At the time of his death, Decedent

jointly owned a residence (“the Residence”) with his domestic partner,

James B. Mooney (“Mooney”).        The Residence was encumbered by a

mortgage, which had been used to purchase, in Decedent’s name alone, a

commercial property (“Commercial Property”). Upon Decedent’s death, Co-

Administrators refused to make any mortgage payments on the Residence.

Subsequently, Mooney sold the Residence to pay off the mortgage.         Co-
J-S37035-17

Administrators sold the Commercial Property on October 14, 2010, for

$95,000.00.

        The trial court described what next transpired as follows:

             On February 18, 2010, [Mooney] filed a Notice of Claim for
        $138,364.11, representing the original amount due on the
        mortgage loan for the Commercial Property. On June 10, 2011,
        Co-Administrators … filed a Petition for Adjudication/Statement
        of Proposed Distribution, which included a revised Accounting.
        [Mooney] filed Objections and a Petition for Surcharge on July
        12, 2011. After a hearing, [the Orphans’ Court] issued an Order
        denying [Mooney’s] Objections and Petition for Surcharge on
        July 11, 2012. This Order was appealed, and the Superior Court
        overruled [the Orphans’ Court’s] decision, by [an] Opinion dated
        August 8, 2013, ruling that [Mooney] was entitled to equitable
        subordination from the Estate.[1] The case was remanded to
        [the Orphans’ Court] to address the remaining objections and
        request for surcharge.

              On remand, [the Orphans’ Court] issued an Order on June
        19, 2014, sustaining [Mooney’s] [O]bjection regarding his
        satisfaction of the mortgage debt[,] and ordering the Estate to
        accept [Mooney’s] claim of $132,400.00 against the Estate.
        [The Orphans’ Court] also sustained [Mooney’s] [O]bjection
        regarding the failure of [Co-Administrators] to promptly liquidate
        the assets of the [E]state[,] and surcharged [Co-Administrators]
        $23,000.00 for [their] failure to sell Decedent’s interest in
        Monard Testing, LLC, at or around the appraisal price. [The
        Orphans’ Court] also granted [Mooney] leave to pursue a claim
        against the surety bond posted by [Co-Administrators] in the
        event the Estate’s assets are not sufficient to pay [Mooney] in
        full for his claim. [The Orphans’ Court] overruled [Mooney’s]
        remaining objections and requests for surcharge.

             On July 11, 2014, [Mooney] filed exceptions to the June
        2014 Order. On July 21, 2014, [Co-Administrators] filed cross-
        exceptions. [All exceptions were denied by operation of law.]

Orphans’ Court Opinion, 11/17/16, at 1-2 (footnote added).

1
    See In re: Estate of DeVoe, 74 A.3d 264 (Pa. Super. 2013).

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      On May 1, 2015, Mooney filed a Petition to Compel Accounting.

Following the issuance of a Rule to Show Cause, the Co-Administrators filed

a Second and Final Accounting. Mooney filed Objections to the Second and

Final Accounting, after which the Orphans’ Court conducted a hearing on the

Objection.    On August 23, 2016, the Orphans’ Court sustained, in part,

Mooney’s     Objections,   and   imposed   surcharges   on   Co-Administrators.

Thereafter, upon the Petition of Co-Administrators, this Court granted

allowance of appeal of the Orphans’ Court’s Order. The Co-Administrators

timely filed a Pa.R.A.P. 1925(b) Concise Statement of Matters Complained of

on appeal, after which the Orphans’ Court filed its Opinion.

      Co-Administrators present the following claims for our review:

      A.     Whether [Co-Administrators] should be surcharged
      $14,120.00 for fees paid by the [E]state for storage of
      Decedent’s personalty; $5,000 for fees paid by the [E]state for
      storage of Decedent’s vehicle; and $3,600.00 for fees paid by
      the [E]state for organizing and re-packing the personalty[?]

      B.     Whether [Co-Administrators] should be surcharged
      $15,000.00 for legal fees paid to Attorney Neil A. Grover
      [(“Attorney Grover”)] in May[] 2012, and $5,000.00 for legal
      fees paid to Attorney Shaun E. O’Toole [(“Attorney O’Toole”)]in
      January[] 2015[?]

      C. Whether [Co-Administrators] should be surcharged to the
      extent that the amounts [that Co-Administrators] receive when
      they liquidate the personal property and automobile is less than
      the appraised values of $11,105.00 for the personalty and
      $5,000.00 for the vehicle[?]

      D. Whether the $22,692.00 of legal fees that the Second and
      Final Accounting showed as due and owing are excessive and
      improper and should not be paid by the Estate[?]

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Brief for Appellants at 5.

        Initially, we observe our scope and standard of review:

        When reviewing a decree entered by the Orphans’ Court, this
        Court must determine whether the record is free from legal error
        and the court’s factual findings are supported by the evidence.
        Because the Orphans’ Court sits as the fact-finder, it determines
        the credibility of the witnesses and, on review, we will not
        reverse its credibility determinations absent an abuse of that
        discretion. However, we are not constrained to give the same
        deference to any resulting legal conclusions. The Orphans’ Court
        decision will not be reversed unless there has been an abuse of
        discretion or a fundamental error in applying the correct
        principles of law.

        This Court’s standard of review of questions of law is de novo,
        and the scope of review is plenary, as we may review the entire
        record in making our determination. When we review questions
        of law, our standard of review is limited to determining whether
        the trial court committed an error of law.

In re Fiedler, 132 A.3d 1010, 1018 (Pa. Super. 2016) (citations and

quotation marks omitted).

        Co-Administrators first claim that the Orphans’ Court improperly

imposed a surcharge upon them for expenses incurred as a result of the

storage of Decedent’s personal property, the fees paid by the Estate for

organizing and packing Decedent’s personal property, and for storage of

Decedent’s vehicle.     Brief for Appellants at 27. Co-Administrators present

several arguments in this regard.

        First, Co-Administrators argue that Mrs. DeVoe was Decedent’s sole

heir.   Id.   According to Co-Administrators, Mrs. DeVoe indicated that she

preferred to have Decedent’s personal property distributed to her “in kind.”

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Id.   Co-Administrators contend that, “[w]hen the [Orphans’ Court] denied

Mooney’s Objections to the First and Partial Accounting, … it appeared at

that time that the sale of the personal property was not necessary to pay

debts and expenses” of the Estate. Id. at 28. Co-Administrators argue that

Mooney had not established the four criteria for equitable subrogation, and

accordingly, his claim should have failed both before the Orphans’ Court and

during the first appeal. Id.

      Co-Administrators claim that their actions were reasonable, in light of

the fact that Mrs. DeVoe ultimately was to receive Decedent’s personal

property.    See Brief for Appellants’ at 27.   Co-Administrators assert that

Mrs. DeVoe “understood that the storage fees were coming out of what

would have been her share of the [E]state, and that was acceptable to her.”

Id. at 28.    In addition, Co-Administrators posit that Mooney’s claim for

subrogation was ultimately determined on November 18, 2014, and,

therefore, “that [day] would have been the first day that [Co-]Administrators

became obligated to sell the personal property.” Id. at 29.

      As this Court has explained,

             [b]y statute, one aspect of the fiduciary duty of the
      executor is to “take possession of, maintain and administer all
      the real and personal estate of the decedent ….” 20 Pa.C.S.A.
      § 3311. In other words, the executor bears the responsibility to
      “preserve and protect the property for distribution to the proper
      persons within a reasonable time.” In re Estate of Campbell,
      692 A.2d 1098, 1101 (Pa. Super. 1997). In the performance of
      his fiduciary duties, the executor must exercise the “judgment,
      skill, care and diligence that a reasonable or prudent person

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     would ordinarily exercise in the management of his or her own
     affairs.” Id. at 1101-02.

            When the executor of an estate fails to fulfill his fiduciary
     duty of care, the court may impose a surcharge against him. In
     re Estate of Lux, 480 Pa. 256, 264, 389 A.2d 1053, 1057
     (1978) (citing Estate of Stephenson, 469 Pa. 128, 138, 364
A.2d 1301, 1306 (1976)). A surcharge is a penalty imposed to
     compensate the beneficiaries for loss of estate assets due to the
     fiduciary’s failure to meet his duty of care; however, a surcharge
     cannot be imposed merely for an error in judgment. Id.; In re
     Estate of Ellis, 460 Pa. 281, 289, 333 A.2d 728, 732 (1975).
     Our Supreme Court has held that a standard of negligence is
     applied when evaluating whether an executor’s management of
     an estate warrants a surcharge. Estate of Stephenson, 469
     Pa. [at] 139, 364 A.2d [at] 1306 []; In re Bender’s Estate,
     278 Pa. 199, 204, 122 A. 283, 284 (1923).

In re Estate of Westin, 874 A.2d 139, 144-45 (Pa. Super. 2005).

     In its Opinion, the Orphans’ Court addressed Co-Administrators’ claim,

and concluded that it lacks merit. See Orphans’ Court Opinion, 11/17/16, at

4-5. We agree with the sound reasoning of the Orphans’ Court, and affirm

on this basis with regard to Co-Administrators’ first claim, see id., albeit

with the following addendum.

      In determining    whether   Co-Administrators    acted reasonably     as

fiduciaries, the Orphans’ Court applied a broader perspective, addressing Co-

Administrators’ duty to the Estate and the value of its assets. See Orphans’

Court Opinion, 11/17/16, at 4-5. We discern no abuse of discretion or error

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in this regard.2

      In their first claim, Co-Administrators also contend that Mooney’s

request for a surcharge should have been rejected, because he came into

court with “unclean hands.”     Brief for Appellant at 29.    Co-Administrators

assert that upon Decedent’s death, Mooney denied them entry to the

Residence, which contained Decedent’s personal property.             Id. at 30.

Because of this, Co-Administrators assert, they were unable to take an

inventory or appraise the personalty.      Id. at 30.   Co-Administrators claim

that Mooney is therefore responsible for the storage fees incurred during the

administration of the Estate. Id. at 32.

      Our review of the record discloses that this claim is specious, at best.

There is no evidence that Co-Administrators incurred additional storage fees

and costs, based upon any delay in entering the Residence. The record does

not reflect that Co-Administrators were required to incur additional legal

expenses to secure entry to the Residence. As such, we discern no error or

abuse of discretion by the Orphans’ Court in determining that Co-

Administrators failed to fulfill their fiduciary duty regarding the disposition of

the Decedent’s personal property.

2
  Co-Administrators also argue that Mooney previously had failed to establish
the four factors necessary for a claim of subrogation. Brief for Appellants at
28. However, that argument is presented only in the context of Co-
Administrators’ claim that the issue of subrogation was not finally
determined until November 18, 2014, and that their duty to sell the personal
property of Decedent did not arise until that time. Id. at 29. As set forth
above, we conclude that this issue lacks merit.

                                   -7-
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     Co-Administrators additionally assert that they did not act in bad faith,

and therefore, the imposition of a surcharge was not appropriate.      Id. at

33. Co-Administrators take issue with the Orphans’ Court’s application of a

“mere negligence” standard of care for imposing a surcharge.       Id. at 34.

According to Co-Administrators, the standard for imposing a surcharge is a

lack of due care and willful bad faith—not mere negligence. Id.

     Our review discloses that the Orphans’ Court set forth and applied the

appropriate legal standard in addressing this claim, and we discern no error

in this regard. See Orphans’ Court Opinion, 11/17/16, at 4-5; see also In

re Estate of Westin, 874 A.2d at 144-45 (recognizing that “[o]ur Supreme

Court has held that a standard of negligence is applied when evaluating

whether an executor’s management of an estate warrants a surcharge.”)

(citing Estate of Stephenson, 364 A.2d at 1306, and In re Bender’s

Estate, 122 A. at 284).

     In their second claim of error, Co-Administrators argue that the trial

court erred in surcharging Co-Administrators for legal fees paid to Attorney

Grover and Attorney O’Toole by the Estate. Brief for Appellants at 35. Co-

Administrators state that they retained the services of Attorney Grover for

litigation regarding Objections to the First and Partial Accounting, and paid

him a “Reserve” expense of $15,000.         Id. at 36.     According to Co-

Administrators, Attorney Grover successfully defended the Objections before

the Orphans’ Court. Id. Co-Administrators contend that, although Mooney’s

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Objections to the First and Partial Accounting challenged Attorney Grover’s

$15,000 fee, that objection was overruled, and Mooney did not appeal. Id.

at 37.       Therefore, Co-Administrators argue, Mooney could not again

challenge that fee. Id.

      In its Opinion, the Orphans’ Court addressed this claim and concluded

that it lacks merit.    See Orphans’ Court Opinion, 11/17/16, at 5-7.       We

agree with the reasoning of the Orphans’ Court, as set forth in its Opinion,

and affirm on this basis with regard to Co-Administrators’ second claim. See

id.

      In their third claim, Co-Administrators argue that the Orphans’ Court

improperly surcharged them the difference between the appraised value of

the Estate’s personal property and automobile, and the price realized upon

the liquidation of those assets. Brief for Appellants at 45. Co-Administrators

dispute the Orphans’ Court’s use of an appraisal conducted by Mooney,

claiming that they were unable to access the property to conduct their own

appraisal.    Id.   Co-Administrators further argue that, the Orphans Court

“clearly does not know if such a shortfall in the sale price will be a result of

[Co-Administrators] acting in bad faith in the manner in which they

conducted the sale of assets.” Id.

      Once again, we note that a standard of negligence, rather than bad

faith, is applied when evaluating whether an executor’s management of an

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estate warrants a surcharge.        See Estate of Stephenson, 364 A.2d at

1306.

        The record reflects that Co-Administrators had possession of the

personalty since October 2010. Notwithstanding, Co-Administrators failed to

seek their own appraisal of the personalty. Because the record supports the

Orphans’ Court’s findings and valuation, we cannot grant Co-Administrators

relief on this claim. See In re Estate of Mumma, 125 A.3d 1205, 1216

(Pa. Super. 2015) (stating that the Orphans’ Court, as fact-finder, is not

bound by the testimony of a particular expert witness and is under no

obligation to accept the expert’s conclusions).

        Finally, Co-Administrators claim that the Orphans’ Court erred in ruling

that the $22,692.00 of legal fees, set forth in the Second and Final

Accounting, were excessive, and should not be paid by the Estate. Brief for

Appellants at 47. According to Co-Administrators, these fees were incurred

by the Estate, “almost exclusively, for services associated with the post-

remand litigation and general estate administration, including the filing of

the Second and Final Accounting and the litigation associated with it.” Id. at

48. Co-Administrators argue that the fees were not incurred as a result of

frivolous litigation.   Id.   Co-Administrators assert that the legal fees were

necessary to fulfilling their fiduciary duties. Id. at 49.

        In its Opinion, the Orphans’ Court addressed this claim and concluded

that it lacks merit.     See Orphans’ Court Opinion, 11/17/16, at 5-7.      We

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agree with the sound reasoning of the Orphans’ Court, as set forth in its

Opinion, and affirm on this basis with regard to Co-Administrators’ fourth

claim. See id.

     Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 6/30/2017

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Circulated 06/06/2017 02:36 PM