Court Opinion

ID: 4555382
Source: CourtListenerOpinion
Date Created: 2020-08-13 18:11:44.064598+00
Date Added: 2024-06-11T13:21:01.556211
License: Public Domain

J-A13004-20

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

 IN RE: TRUSTS UNDER WILL OF              :    IN THE SUPERIOR COURT OF
 ROBERT L. MONTGOMERY, JR.                :         PENNSYLVANIA
 DECEASED FOR THE BENEFIT OF              :
 H.BEATTY CHADWICK (TRUST NO. 6)          :
 AND MARITAL TRUST UNDER WILL             :
 OF ROBERT L. MONTGOMERY, JR.,            :
 DECEASED, FOR THE BENEFIT OF             :
 ELIZABETH B. MONTGOMERY AS               :
 APPOINTED BY THE WILL OF                 :    No. 3007 EDA 2019
 ELIZABETH B. MONTGOMERY,                 :
 DECEASED FOR THE BENEFIT OF H.           :
 BEATTY CHADWICK (TRUST NO. 7)            :
                                          :
                                          :
 APPEAL OF: H. BEATTY CHADWICK            :

             Appeal from the Order Entered September 30, 2019
    In the Court of Common Pleas of Montgomery County Orphans’ Court
                     Division at No(s): No. 1977-X0448

BEFORE: BENDER, P.J.E., LAZARUS, J., and DUBOW, J.

MEMORANDUM BY BENDER, P.J.E.:                           Filed: August 13, 2020

      H. Beatty Chadwick (Appellant) appeals pro se from the orphans’ court’s

adjudication of the 2018 accounts of two trusts created under the will of

Robert L. Montgomery, Jr., (Decedent), and the will of Elizabeth B.

Montgomery, the deceased wife of Decedent.            Pursuant to the court’s

adjudication, Appellant’s objections were dismissed and the payment of

attorney’s fees to PNC Bank, N.A. (Trustee/Appellee) was approved.           We

affirm.

      As noted in a prior decision by this Court, responding to an earlier appeal

filed by Appellant, this matter has a “long, torturous, and infamous” history.
J-A13004-20

See In re Trusts Under the Will of Montgomery, 161 A.3d 392 (Pa. Super.

2017) (unpublished memorandum).           The terms of the trusts provided that

Appellant was to be the lifetime beneficiary of the trusts and that after

Appellant’s death, the principal of each trust was to be distributed to various

charities.     Specifically, with regard to the amount of the payment due

Appellant, he was to receive a percentage of the lesser of the net income of

the trust or a stated percentage of the fair market value of the principal of the

trust.

         The present appeal arises from the filing of the fifth accounting of trust

#6 and the third accounting of trust #7.            As part of the petitions for

adjudication of the accounts, Appellee requested the payment of attorney’s

fees in the amount of $447,635.40 to cover the costs incurred by it, which

were expended to defend itself against Appellant’s claims, both past and

present.     Following the filing of these petitions, Appellant filed objections

alleging Appellee breached its fiduciary duties relating to the investment of

the trusts’ assets and asserting that its request for attorney’s fees should be

denied.

         A hearing was held on February 26, 2019, at which the court heard

testimony and received evidence. On September 30, 2019, the court issued

its adjudications, dismissing Appellant’s objections and approving the

payment of the attorney’s fees. The orphans’ court also denied Appellant’s

motion for reconsideration. Thereafter, Appellant filed a timely appeal.

                                        -2-
J-A13004-20

     We begin by setting forth our standard of review.

     Our standard of review of the findings of an Orphans’ Court is
     deferential.

           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.

     In re Estate of Harrison, 745 A.2d 676, 678-79 (Pa. Super.
     2000), appeal denied, 563 Pa. 646, 758 A.2d 1200 (2000)
     (internal citations and quotation marks omitted). “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.” In re Estate of Luongo, 823 A.2d 942, 951
     (Pa. Super. 2003), appeal denied, 577 Pa. 722, 847 A.2d 1287
     (2003).

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

of Whitley, 50 A.3d 203, 206-07 (Pa. Super. 2012)).

     Appellant raises the following two issues for our review:

     1. Where the trustee of trusts with a beneficiary entitled only to
        receive trust income invests for total return principally by
        capital appreciation and the trusts achieve substantial capital
        appreciation, did the court below err in dismissing objections
        to [a]ccounts that the trustee violated fiduciary duties by
        refusing to exercise its statutory power to adjust the total
        return of the trusts to produce income which will accomplish
        the purposes of the trusts as set forth in the terms thereof?

     2. Whether the court below abused its discretion in allowing a
        trustee to collect from trusts additional counsel fees and

                                     -3-
J-A13004-20

         expenses of $477,635.40 for an [a]ccounting proceeding where
         $516,733.78 already had been allowed for such purposes,
         1,874 hours were billed by counsel to represent the trustee in
         such proceeding where the evidentiary hearing was less than
         one day, and total fees and expenses allowed were 88% of the
         combined assets of the trusts?

Appellant’s brief at 37.

      We have reviewed the certified record, the briefs of the parties, the

applicable law, and the thorough 17-page opinion of the Honorable Lois E.

Murphy of the Court of Common Pleas of Montgomery County, dated

September 30, 2019.        We conclude that Judge Murphy’s opinion properly

disposes of the issues and accompanying arguments presented by Appellant.

Accordingly, we adopt her opinion as our own and affirm the order dismissing

Appellant’s objections.

      Order affirmed.

      Judge Dubow joins this memorandum.

      Judge Lazarus files a concurring statement in which President Judge

Emeritus Bender and Judge Dubow join.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 8/13/20

                                     -4-
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IN TiiE COURT OF COMMON PLEAS OF MONTGOMERY COUNTY, PENNSYLVANIA
                      ORPHANS' COURT DIVISION
                            No. 1977·X0448

                                     •        •       •        •       •

                   ESTATE OF ROBERT L. MONTOOMERY, JR., DECEASED
                        Sur Trust for Herbert B. Chadwick (Trust No. 6)

                                     •        •       •        •       •
        The fifth account of PNC Bank, N.A.1, trustee of the testamentary trust created und<:r
Item FOURTH(AX4) (hereinafter refered to as "trust No. 6") of the will of Robert L.

Montgomery, Jr., Deceased, was called for audit on June 4, 2018. The objections filed therete by
H. Beatty Chadwick (hereinafter ''the objectant") were heard on February 26, 2019, and the
matter is now ripe for adjudication

                                          COUNSEL APPEARED AS FOLLOWS:

                                          DUANE MO'RRIS LLP
                                          By: Lewis R. Olshin, Esquire
                                          for the Accountant

                                          COMMONWEALTH OF PENNSYLVANIA
                                          OFFJCE OF THE ATTORNEY GENERAL
                                          By: David Dembe, Esquire, Deputy Attorney General
                                          as par�n: patriae, for charitable interests

I. PNC Bank, N.A. succeeded Provident National Biink \Ylllch was named as a trustee in Item 'f6NTH of Robert
Moncgon.,ery', Win.

                   THIS DOCUMENT WAS DOCKETED AND SENT ON 09l30/2019
                                                                                                 1977-X0448.105.3 Adjudication, Page�
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��                       The account shows a balance of principal and income in the amount of $468,139.89

J!               composed of stocks, bonds, cash, and cash equivalents as set forth on pages 18, 19 and 40.
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                         1t is stated that all parties in interest, including representatives of those not suijuris and
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       .2?       of those still unborn or otherwise undetermined, have had timely notice of the filing of the
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       161 A.3d 392 (Table) (2017).

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                                                                             1977-X0448.105.3 Adjudication, Page 11

stated it is what is commonly known as a NIMCRUT (net income makeup charitable remainder

uni trust) and described the origin of this type of trust as follows:

        You had this problem with the regular uni trust of depleting principal. The idea of the net
        income trust was to try to preserve the principal so you had that available for the
        remaindermen -- in these particular cases, charities -- but you were still providing
        income. And the net income makeup allowed you, basically -- in those years where you
        [ eamed) over the percentage you could pay out in addition to that percentage.

(N.T. 187.) When asked ways to generate additional income. Mr. Davidson suggested the trust

language could be modified to define post-contribution capital gains as income. (N.T. 190.)

When asked about changing the allocation of assets to benefit an income beneficiary, Mr.

Davidson testified:

       [W]hether you are 65/35, whether you're 60/40, 70/30-- l mean pick your range -- within
       that range you' re still balanced, per se, and you' re not changing the income generation
       versus the growth that much. But sometimes just a small tweak, even though you might
       free up only a couple hundred dollars, sometimes that makes a difference to an income
       beneficiary. So you can do those tweakings. It doesn't get you a whole lot of difference
       normally on the smaller trusts ... My understanding is that we're looking at trusts that
       collectively are between a million and $1. l million. And so you are looking at a little
       over a half a million apiece, which doesn't give you a lot of room to play.

(N.T. 192-93). He commented that the present allocation of assets in this trust is in "a safe zone"

and added: .. 1 think you will find that most trust companies will consider that to be a good total

allocation for total return." (N.T. 194.)

       During cross examination by counsel for the trustee, Mr. Davidson suggested a trustee

might change a 65/3 5 allocation to 70/30 "to ease some of the pressure that the trustee is under

because of the income beneficiary." (N.T. 197.) Mr. Davidson acknowledged that he reviewed

neither this Court's adjudications of the prior accounts filed for this trust nor the Superior

                                                  10
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                   change to the trust to allow for principal invasions for the income beneficiary. (N.T. 202.)
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                  firm of Duane Morris. He testified that he served as co-trustee of this trust through the
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8 .5;             adjudication of the last accounts, at which point his resignation became effective. Mr. Cass
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�j                tallied the surcharges that the objectant had sought in connection with the prior accounts of this
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   7ii            (Exh. A-14.) He stated that the amount being sought has been reduced to $447,635.40. He

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                  explained the extensive filings and proceedings that were required in the surcharge litigation.
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E::     431 Pa. 542, 246 A.2d 337 (1968). The LaRocca factors
       include:        (1) the amount of work performed; (2) the character of the services
       rendered; (3) the difficulty of the problems involved; (4) the importance of the litigation;
       (5) the amount of money or value of the property in question; (6) the degree of
       responsibility incurred; (7) whether the fund involved was created by an attorney; (8) the
       professional skil I and standing of the attorney in his profession; (9) the results he was
       able to obtain; (10) the ability of the client to pay a reasonable fee for the services
       rendered, and (10) very importantly, the amount of money or value of the property in
       question. LaRocca Estate, 431 Pa. at 547, 246 A.2d at 339. See also, Wanamaker Trust,
       30 Fiduc. Rep. 240 (O.C. Montg. 1980). In Thompson Estate, 426 Pa. 270, pages 281-
       282, 232 A.2d 625, page 631, supra, the Court pertinently said: 'It is a 'well-entrenched
       rule of Jaw in this State that the responsibility for determining the amount of counsel fees
       rests primarily with the auditing judge. An executor or a trustee is an officer of the
       orphans' court and accountable to such court for all his actions of commission and
       omission in the performance of his fiduciary duties; such duty to account embraces all
       payments made from estate or trust funds by way of compensation to himself or his
       counsel. Thompson Estate, at 276, 678.

(Slip opinion, pp. 11-12.) The evidence produced at the hearing established the extraordinary

amount of work by counsel that was needed after the prior account was filed, which included

defending the account against the objections, filing exceptions to the Court's adjudication, and

litigating the objectant's appeal before the Superior Court. The trustee's counsel accomplished

the tasks at hand at all stages, having fended off an $800,000+ surcharge request, having

obtained a successful result on the exceptions before the Court en bane, and having prevailed

                                                    14
                                                                                       1977-X0448.105.3 Adjudication, Page 15

before the appellate court. These services were clearly necessary and were rendered by counsel

    from a highly-regarded law firm. The objectant, due to his training as an attorney," had the

option of litigating without incurring any counsel fees. A corporate trustee cannot appear in

propria persona and PNC was obligated to retain counsel who could defend it competently

Accordingly, objections nos. 9 and 1 l are dismissed.

           The trustee established that the additional counsel fees now being sought are not

duplicative of amounts previously considered by the Court and objection no. l O is dismissed. In

addition. counsel for the trustee took pains to establish that the additional compensation being

sought related only to legal work performed in connection with the litigation relating to the prior

accounts up through the appeal process, not to time expended to substantiate the fees.

Objections nos. 12 and 13 are also dismissed.

           Regarding objection no. 14, Mr. Cass testified he received commissions for his work as a

trustee and charged for his time as an attorney when he was serving trust counsel. The objectant

offered no evidence to the contrary and this objection is dismissed.

          Finally, the objectant suggests no additional fees and costs should be allowed on

equitable grounds. No grounds for disapproving any of the trustees actions having been

established, we find this objection no. 15 to be wholly without merit and it is dismissed.

7 The objectant was admitted to the practice of law in Pennsylvania in 1961, but his license has been suspended
since 2005.

                                                         15
                                                                                                    1977-X0448.105.3 Adjudication, Page 1 E
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                             Upon confirmation of the fifth account, PNC Bank, N.A.1 trustee, is hereby discharged
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�a§                   and released from all liability with respect to the trust herein and the beneficiaries thereunder for
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L. 5-                 its administration of the trust from April 7, 2014 to February 15, 2018, in accordance with this
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                             AND NOW, this        '2. 1.�      day of September, 2019, the fifth account is confirmed .
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                              A motion for reconsideration of this adjudication may be filed within twenty (20) days
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 �i                   from the entry hereof. An appeal from this adjudication may be taken to the appropriate
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 l'.    iii           appellate court within thirty (30) days from the entry of the adjudication. See, Pa.O.C. Rule 8.2
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and Montgomery County Local Rule 8.2A, and Pa. R.A.P. 902 and 903.

                                                BY THE COURT:

                                                                                /

This adjudication efiled '1';./c,/J 9
Lewis R. Olshin, Esquire
David Dembe, Sr. Deputy Attorney General
Herbert B. Chadwick, prose

                                           17