Court Opinion

ID: 2799139
Source: CourtListenerOpinion
Date Created: 2015-05-07 03:33:56.479081+00
Date Added: 2024-06-11T11:29:30.904038
License: Public Domain

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

IN RE: ESTATE OF MARY L. BECHTEL,                 IN THE SUPERIOR COURT OF
DECEASED AND LARRY E. BECHTEL                           PENNSYLVANIA

                            Appellees

                       v.

DONALD R. BECHTEL AND MICHAEL T.
BECHTEL

                            Appellants                No. 1287 MDA 2014

                   Appeal from the Order Entered July 2, 2014
                In the Court of Common Pleas of Dauphin County
                       Orphans' Court at No(s): 2209-1033

BEFORE: MUNDY, J., STABILE, J., and FITZGERALD, J.*

MEMORANDUM BY MUNDY, J.:                                 FILED MAY 06, 2015

        Appellants, Donald R. Bechtel and Michael T. Bechtel, appeal from the

July 2, 2014 orphans’ court order, imposing a surcharge of $17,230.40

against Donald1 for the breach of his fiduciary duty as attorney-in-fact for his

mother, Mary L. Bechtel (Decedent), entered on remand from a prior

decision of this Court.       After careful review, we reverse and remand for

further proceedings consistent with this memorandum.

____________________________________________

*
    Former Justice specially assigned to the Superior Court.
1
  We refer to most of the parties in this appeal by their first name because
their surname is the same.
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      A prior panel of this Court noted the facts and procedural history as

follows.

                       On April 9, 1996, as a result of injuries
                 she had sustained in a serious automobile
                 accident, the Decedent executed a Power of
                 Attorney (“POA”) naming her son, Donald, as
                 her attorney-in-fact, a designation which
                 remained in effect until the day of her death.
                 Pursuant to the authority granted by the POA,
                 Donald managed the Decedent’s finances,
                 paying her bills and depositing any income into
                 her bank account[s, including her Mid Penn
                 Bank checking account]. Donald and his wife,
                 Donna, to whom Donald had apparently
                 delegated some of his duties, were responsible
                 for writing hundreds of checks on behalf of the
                 Decedent and at the Decedent’s request.

                                        …

                       On October 23, 2009, the Decedent died
                 testate and was survived by [her three sons,]
                 Donald, Michael and Larry [Bechtel, a residual
                 beneficiary under Decedent’s Will].      Shortly
                 thereafter, on November 5, 2009, Donald and
                 Michael were appointed coexecutors of the
                 Decedent’s Estate as provided in the
                 Decedent’s [] Will [] dated January 4, 2008. …

           Orphans’ Court Opinion, 12/21/2012, at 2-3.

In re Estate of Bechtel, 92 A.3d 833, 835-836 (Pa. Super. 2014).

      Larry, on behalf of the Estate of Mary L. Bechtel (Estate), filed

objections to Donald’s account of Decedent’s Mid Penn Bank checking

account. From 1996 until 2000, only Decedent and Donald, as her attorney-

in-fact, were able to issue checks from the account. On February 7, 2000,

Donna Bechtel, Donald’s wife, was added as an authorized signatory to the

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account. Id. at 836 n.2. On March 26, 2002, Decedent added Donald and

Donna to the checking account as joint owners with the right of survivorship.

Id.

             On September 30, 2011, Donald filed an [a]ccount
             with the orphans’ court for the period from 1996 to
             2009. The [a]ccount showed [over 2,000] deposits
             and withdrawals for the Decedent’s Mid Penn Bank
             checking account for the years 1996-2009, and
             included 36 checks with no identified payee. [From
             1996-2009, there were 1,048 itemized expenses,
             including 1,018 checks.] The checks without payees,
             according to year, are as follows:        1999—four
             checks; 2000—ten checks; 2001—nine checks;
             2002—ten checks; 2003—two checks; and 2009—
             one check. The largest unaccounted-for check was
             Check Number 605, written on July 13, 1999, for
             $10,000.      The orphans’ court sustained Larry’s
             objections to the Account, and surcharged Donald
             $17,230.40—the total of the 36 checks—for breach
             of fiduciary duty.

Id. at 837-838. In imposing said surcharge, the orphans’ court focused on

three   of   the   36   checks   with   no    identified   payee.   Namely,   the

aforementioned check number 605 for $10,000.00, check number 625,

dated October 6, 1999, for $2,790.00, and check number 698, dated

September 11, 2000, for $400.00. The orphans’ court found as follows.

             Donald breached his fiduciary duty as the Decedent’s
             attorney-in-fact in that he failed to “[k]eep full and
             accurate record[s] of all actions, receipts and
             disbursements on behalf of the principal.”          20
             Pa.C.S. § 5601(e)(4). The testimony at the hearing
             established that Donald and/or Donna had, while
             preparing the [Decedent’s] Homestead for sale,
             inadvertently destroyed several years’ worth of
             financial records relating to Donald’s representation
             of the Decedent. A thorough review of the record

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              shows that Donald could not account for the
              disbursement of at least thirty-six (36) checks
              written while he was acting as the Decedent’s
              attorney-in-fact. By this Court’s tally, the total of
              the disbursements represented by these missing
              checks was $17,245.40,[2] and it is that amount for
              which Donald will be surcharged.

Orphans’ Court Opinion, 12/21/2012, at 4.             The orphans’ court also

dismissed Donald and Michael’s request for counsel fees and costs.

Bechtel, supra at 837. Donald and Michael appealed to this Court.

       A prior panel of this Court reversed and remanded, instructing the

orphans’ court to evaluate the sufficiency of the testimony presented by

Donald and the witnesses who testified on his behalf.          Id. at 839-840.

Specifically, we directed the orphans’ court to analyze the 1999 checks and

evidence under the standard set forth in In re Strickler’s Estate, 47 A.2d

134, 135 (Pa. 1946), and to utilize Section 5601(e)(4) for the evidence and

checks issued from 2000 through 2009.3           Id. at 842.   This Court noted

certain evidence that the orphans’ court did not discuss in connection with

____________________________________________

2
  In response to Donald and Michael’s motion for post-trial relief, the
orphans’ court amended the amount of the surcharge to $17,230.40 to
correct a mathematical error. Id. at 837.
3
  This Court explained that the effective date of Section 5601(e), which
codified certain fiduciary duties of an attorney-in-fact, was December 12,
1999. Prior to that date, Strickler established the duty of a fiduciary to
justify disbursements claimed by the fiduciary. Therefore, Donald, acting as
Decedent’s attorney-in-fact from 1996 until 2009, had to comply with the
Strickler standard for any checks issued prior to December 12, 1999 and
with Section 5601(e)(4) thereafter. Id. at 839.

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the surcharge.      See id. at 840-842.        Specifically, Appellants introduced a

chart that tracked gifts the Decedent made to her four sons4 between July

1996 and March 2003.          Id. at 841.      The chart showed that from 1996 to

2003, Decedent gave gifts totaling $273,500.00 to her sons, mostly in

$10,000.00 amounts.         Id.    Decedent’s granddaughter, Stacy Fenice, also

testified that Decedent gave her a $10,000.00 gift in May 1998 to assist her

in purchasing a townhouse.            Id. at 842.     There was also evidence of

Decedent loaning her family tens of thousands of dollars. Id. Regarding the

two other checks numbered 625 and 698, Appellants admitted into evidence,

without objection, a letter from counsel for Donald and Michael identifying

the payees for those checks. Id. at 840. Specifically, check number 625 for

$2,790.00 was made payable to J.H. Rissinger & Sons for new windows, and

check number 698 was for $400.00 to Eugene Adams, a dentist, for

dentures. Id. This Court explained that we were reversing and remanding

the case to the orphans’ court as follows.

                    In light of the unrebutted testimony discussed
              above, and specifically the Decedent's history of gift-
              giving to her sons, mostly in $10,000.00 amounts,
              between the years 1996 and 2003, we conclude the
              orphans’ court judge committed error in failing to
              apply Strickler, supra, and evaluate the evidence in
              order to answer the question of whether the
              unaccounted-for checks issued in 1999 represent a
              breach of fiduciary duty.
____________________________________________

4
 In addition to Donald, Michael, and Larry, Decedent had a fourth son,
Harold Bechtel, who is now deceased.

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                  Furthermore, the orphans’ court judge imposed
           a surcharge for every unaccounted-for check written
           after December 12, 1999. The judge provided no
           analysis as to how Donald failed to perform his
           fiduciary duty under Section 5601(e)(4), given that
           of 850 itemized expenses for the ten year period
           from 2000 through 2009, there were only 32 checks
           at issue, and the court specifically found that the
           records were inadvertently destroyed.10 Again, we
           conclude the orphans’ court judge committed an
           error of law.

                 Accordingly, based on our review of the record,
           we reverse the order of the orphans’ court regarding
           the surcharge and remand for the court to use the
           appropriate standards and analyze the evidence
           thereunder.

           10
              We note that after March 26, 2002, the date the
           Decedent changed the ownership of the Mid Penn
           Bank checking account, any remaining amounts in
           that account did not pass under her Will, but passed
           directly to Donald and Donna as joint owners with
           the right of survivorship.

Id. at 842 (footnote in original). Further, we “conclude[d] that the motion

[for counsel fees and costs] was timely and the orphans’ court erred in

finding that it was without jurisdiction to entertain the request for counsel

fees.” Id. at 843. No one filed a petition for allowance of appeal with our

Supreme Court.

     Following remand, the orphans’ court, without conducting any further

hearings or receiving any additional evidence, issued its July 3, 2014

memorandum opinion and order that again imposed the $17,230.40

surcharge on Donald. Orphans’ Court Opinion, 7/3/14, at 4-5. The orphans’

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court reasoned that Donald and Michael “had the burden to justify all

disbursements through the use of proper vouchers or equivalent proof in

support of each disbursement[, and a] thorough review of the record reveals

that [they] had issued [36] checks which were not properly explained or

documented[.]”    Id. at 2.   Specifically, regarding the $10,000.00 check

(number 605), the orphans’ court found there was no evidence “as to who

received this money, nor was there any documentary evidence provided to

support the argument that [c]heck number 605 was similar to prior gifts.

Nor was there evidence to support a conclusion that the check ‘must have

been written to one of Decedent’s children or relatives.’”    Id. at 3.   With

respect to check numbers 625 and 698, for $2,790.00 and $400.00,

respectively, the orphans’ court concluded that the letter from Appellants’

attorney, which set forth the purported payees of said checks, “did not

provide any documentary evidence in support of this statement. Since this

letter was not prepared under oath, it does not even rise to the level of the

accountant’s unsupported testimony [under Strickler].”       Id.   Further, the

orphans’ court concluded that Donald had a fiduciary duty to maintain the

financial records, which he violated “by either personally destroying [the

records], or allowing [them] to be [inadvertently] destroyed by another[,]

after Decedent passed away. Thus, a surcharge was proper because Donald

failed to exercise common prudence, skill or caution in the performance of

his fiduciary duty.” Id. at 5, citing In re Miller’s Estate, 26 A.2d 320, 321

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(Pa. 1942). The orphans’ court scheduled a hearing to consider Appellants’

post-trial motion for witness fees, costs of suit, and reasonable attorneys’

fees, but cancelled the hearing after Appellants again filed a timely appeal

with this court.5

       On appeal, Appellants present the following issue for our review.

              Whether the orphans’ court erred in ordering the
              surcharge of Donald R. Bechtel on remand in the
              amount of $17,230.40[?]

Appellants’ Brief at 4.

       We begin by noting our deferential standard of review.

                     The findings of a judge of the orphans’ court
              division, sitting without a jury, must be accorded the
              same weight and effect as the verdict of a jury, and
              will not be reversed by an appellate court in the
              absence of an abuse of discretion or a lack of
              evidentiary support. This rule is particularly
              applicable to findings of fact which are predicated
              upon the credibility of the witnesses, whom the
              judge has had the opportunity to hear and observe,
              and upon the weight given to their testimony. In
              reviewing the Orphans’ Court’s findings, our task is
              to ensure that the record is free from legal error and
              to determine if the Orphans’ Court’s findings are
              supported by competent and adequate evidence and
              are not predicated upon capricious disbelief of
              competent and credible evidence.

                    When the [orphans’] court has come to a
              conclusion through the exercise of its discretion, the
              party complaining on appeal has a heavy burden. It
____________________________________________

5
 The orphans’ court and Appellants have complied with Pennsylvania Rule of
Appellate Procedure 1925.      The orphans’ court’s September 16, 2014
1925(a) opinion directs this Court to its July 3, 2014 memorandum opinion.

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           is not sufficient to persuade the appellate court that
           it might have reached a different conclusion if, in the
           first place, charged with the duty imposed on the
           court below; it is necessary to go further and show
           an abuse of the discretionary power. 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 of record,
           discretion is abused. A conclusion or judgment
           constitutes an abuse of discretion if it is so lacking in
           support as to be clearly erroneous …. If the lack of
           evidentiary support is apparent, reviewing tribunals
           have the power to draw their own inferences and
           make their own deductions from facts and
           conclusions of law. Nevertheless, we will not lightly
           find reversible error and will reverse an orphans’
           court decree only if the orphans’ court applied an
           incorrect rule of law or reached its decision on the
           basis of factual conclusions unsupported by the
           record.

In re Estate of Warden, 2 A.3d 565, 571 (Pa. Super. 2010) (citations and

quotations omitted).

     On remand, the orphans’ court found that Appellants’ testimony and

evidence was not sufficient to justify each of the 36 unidentified checks

contained in Appellants’ accounting of Decedent’s Mid Penn Bank checking

account.   Orphans’ Court Opinion, 7/3/14, at 2.          The orphans’ court

concluded that the failure to explain the expenditures was a breach of

Donald’s fiduciary duty.   Id. at 4. As a result, it imposed a surcharge on

Donald in the amount of those checks. Id. at 5. Upon careful review, we

are again constrained to reverse because the orphans’ court erred in

applying Strickler and Section 5601(e).

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      An orphans’ court may surcharge an attorney-in-fact for the loss

caused by a breach of his fiduciary duty.      In re Shahan, 631 A.2d 1298,

1303 (Pa. Super. 1993), appeal denied, 644 A.2d 1202 (Pa. 1994).

“Surcharge is the penalty for failure to exercise common prudence, common

skill and common caution in the performance of the fiduciary’s duty and is

imposed to compensate beneficiaries for loss caused by the fiduciary’s want

of due care. … [I]f the fiduciary exercise[s] judgment in good faith, he will

have done his duty.” In re Miller’s Estate, supra.

              In general, one who seeks to surcharge a [fiduciary]
              bears the burden of proving that the [fiduciary]
              breached an applicable fiduciary duty. However,
              when a beneficiary has succeeded in proving that the
              [fiduciary] has committed a breach of duty and that
              a related loss has occurred, we believe that the
              burden of persuasion ought to shift to the [fiduciary]
              to prove, as a matter of defense, that the loss would
              have occurred in the absence of a breach of duty.
              We believe that, as between innocent beneficiaries
              and a defaulting fiduciary, the latter should bear the
              risk of uncertainty as to the consequences of its
              breach of duty.

In re Estate of Aiello, 993 A.2d 283, 289 (Pa. Super. 2010), quoting, In

re Estate of Stetson, 345 A.2d 679, 690 (Pa. 1975) (citations and footnote

omitted).

      An attorney-in-fact has the fiduciary duty to, among other things,

account for distributions he makes independently on behalf of the principal,

but there is no duty to account for distributions made by the principal

herself.    Bechtel, supra at 839; 20 Pa.C.S.A. § 5601(e)(4).      Prior to the

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effective date of Section 5601(e)(4) in December 1999, “In re Strickler’s

Estate, supra, established the duty of a fiduciary to justify disbursements

claimed by him [through ‘[p]roper vouchers or equivalent proof’]. Under

Strickler, ‘[a]ccountant’s unsupported testimony is generally insufficient.’

Accordingly, the orphans’ court must evaluate the sufficiency of the

accountant’s testimony and evidence.”        Bechtel, supra at 839 (emphasis

added,    citations   omitted).   “Once   the    fiduciary   has   validated   the

disbursements, the burden then shifts to the objector to disprove them.”

Id. (citation omitted).     After the December 12, 1999 effective date of

Section 5601(e), “[a]n agent acting under a power of attorney has a

fiduciary relationship with the principal [and], the fiduciary relationship

includes the duty to[, among others,] … (4) Keep a full and accurate record

of all actions, receipts and disbursements on behalf of the principal.” 20

Pa.C.S.A. § 5601(e)(4) (emphasis added), deleted effective 1/1/15 and

moved to new 20 Pa.C.S.A. § 5601.3(b)(4) (“Agent’s duties”); see Pa. H.B.

1429, 198th Gen. Assem., Reg. Sess. (2014), Pa. Legis. Serv. Act No. 2014-

95. Therefore, the checks issued prior to December 12, 1999 should have

been reviewed in accordance with Strickler, with Larry’s initial burden, as

the objector, being to supply sufficient evidence the checks were issued by

Donald.   Under Strickler, Donald has a fiduciary duty to account only for

those checks that he issued on Decedent’s behalf. Bechtel, supra.

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      In this case, the orphans’ court erred when applying these standards.

The orphans’ court’s conclusion that Larry, as the objector, met his initial

burden of proving that Donald breached his fiduciary duty of keeping a full

and accurate record of all independent distributions that Donald made on

Decedent’s behalf, was not supported by competent and adequate

evidence.   Specifically, the evidence does not show that Donald, in his

capacity as Decedent’s attorney-in-fact, independently issued any of the 36

unidentified checks on Decedent’s behalf, as opposed to Decedent issuing

the checks herself.

      Regarding check number 605 for $10,000.00, issued on July 13, 1999,

Appellants presented unrebutted testimony that Decedent signed the check

as a gift. Appellants introduced a chart documenting Decedent’s history of

gift-giving to her sons, mostly in $10,000.00 amounts, from her Prudential

checking account.

            [T]he chart showed Donald received $1,000.00 on
            July 13, 1996; $10,000.00 in December of 1997,
            1998, 1999, 2000, 2001, and 2002, and $6,000.00
            on March 20, 2003. Harold received $10,000.00 in
            December of 1997 and 1998, two separate
            $10,000.00 amounts in December of 2000, and
            $10,000.00 in December of 2001 and 2002. Michael
            received $4,500 on July 13, 1996, $10,000.00 in
            December of 1996, 1997, 1998, 1999, 2000, 2001,
            and 2002, and $6,000.00 on March 20, 2003. …
            Decedent gave her granddaughter, Stacy, a check
            for $10,000 on May 6, 1998.

Bechtel, supra at 841. Donna testified that Decedent wrote and signed all

of these checks. N.T., 7/30/12, at 53.

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       In contrast, there was no evidence that anyone other than Decedent

signed the checks. Donna testified that she did not sign check 605 because

she was not an authorized signatory on the Mid Penn account until 2000.

Id. at 52. Likewise, Donald testified that he did not remember signing check

605. Id. at 108-109. In addition, both Donna and Donald maintained that

they did not make gifts on Decedent’s behalf. Id. at 61, 108. Therefore,

under the Strickler standard, there was inadequate evidence from which

the orphans’ court could conclude that Donald made the $10,000.00

disbursement.   Bechtel, supra at 839.      Instead, the unrebutted evidence

showed that Decedent, not Donald, issued check 605 as a gift. Id. at 839,

842.    Absent any contrary evidence provided by Larry, there is no

evidentiary support for the conclusion that Donald had a fiduciary duty to

account for the $10,000.00 check. Warden, supra.

       The same is true for check number 625 for $2,790 issued on October

6, 1999. The evidence shows that Decedent, as opposed to Donald, made

this disbursement because the evidence clearly established that check 625

was issued to J.H. Rissinger & Sons for new windows at one of Decedent’s

rental properties. N.T., 7/30/12, at 21, 190, Appellants’ Exhibit 9, 2/17/11

Letter; Bechtel, supra at 840.     This was a justified expenditure.    See

Bechtel, supra at 839. Larry did not object to this evidence or introduce

any evidence to the contrary. See id. at 840. The orphans’ court erred in

refusing to consider this unrebutted evidence, admitted at the hearing with

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no objection.      See id.       Similarly, Larry did not present any evidence

regarding the two other checks with unidentified payees issued in 1999.6

Therefore, the trial court erred in concluding that Donald had a fiduciary

duty to account for these four checks.7 See Aiello, supra.

       The third check specifically discussed by the orphans’ court was check

number 698, issued on September 11, 2000, for $400.00.                Similar to the

previously discussed check 625, the evidence established that check 698

was issued to Dr. Eugene Adams, a dentist, as payment for Decedent’s

dentures. N.T., 7/30/12, at 21, 190, Appellants’ Exhibit 9, 2/17/11 Letter;

Bechtel, supra at 840.          The orphans’ court again erred in rejecting this

evidence.    See Bechtel, supra at 839.            Larry did not object or introduce

any adverse evidence tending to show that Donald, rather than Decedent,

issued this check. See id. Therefore, the evidence was likewise inadequate

to conclude that Donald breached a fiduciary duty by failing to account for

this check. See generally 20 Pa.C.S.A. § 5601(e)(4).

       The orphans’ court did not specifically discuss any of the remaining 31

checks with unidentified payees issued from 2000 through 2009.              As with

the other checks, Larry failed to offer any evidence that Donald or Donna

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6
  Check number 594 issued on June 11, 1999 for $50.00 and number 620
issued on September 8, 1999 for $105.00.
7
  We note that Larry did not object to any of the 189 other checks issued
from the start of 1996 through the end of 1999, for $73,077.24.

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issued any of these 31 checks.       See Aiello, supra.      Although ten of the

checks, totaling $1,912.71, were issued after March 26, 2002, when Donald

and Donna were joint owners of the account, Donna testified that they only

used the account for Decedent’s expenses, and Larry did not present any

evidence to the contrary. N.T., 7/30/12, at 59.

       In addition, the remaining 31 unaccounted for checks are de minimis

in   amount   and   the   evidence    shows    they   were    inadvertently,   not

intentionally, destroyed by Donna when she was in the process of cleaning

out her house in anticipation of moving. Orphans’ Court Opinion, 7/3/14, at

4-5.    From 2000 to 2009, the account shows 850 itemized expenses,

including 825 checks totaling $277,232.27.       In contrast, the 31 checks at

issue amounted to $3,885.40, or less than one-and-a-half percent of the

value of all checks issued. In light of the 818 other legitimate, uncontested

transactions and the de minimis nature of the contested checks, we conclude

that there was no evidentiary support in the record to support the finding

that Donald breached any fiduciary duty or that a breach resulted in a loss to

the Estate. See Bechtel, supra at 842; Warden, supra; Aiello, supra.

       Based on the foregoing, we conclude the orphans’ court erred when it

imposed a surcharge on Donald.          As Donald and Michael are now the

prevailing parties, they may seek attorneys’ fees.           See generally 42

Pa.C.S.A. § 2503. Accordingly, we reverse the orphans’ court July 2, 2014

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order, and remand for further proceedings on only Appellants’ post-trial

motion for witness fees, costs of suit, and reasonable attorneys’ fees.

      Order reversed. Case remanded. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 5/6/2015

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