Court Opinion

ID: 2768754
Source: CourtListenerOpinion
Date Created: 2015-01-10 00:06:04.360295+00
Date Added: 2024-06-11T13:13:11.242629
License: Public Domain

J. A20006/14

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

JAN JULIA, EXECUTRIX IN THE ESTATE :          IN THE SUPERIOR COURT OF
OF INGRID SOBOLEWSKA, DECEASED, :                   PENNSYLVANIA
                                   :
                    Appellant      :
                                   :
                 v.                :              No. 3323 EDA 2013
                                   :
LORI J. CERATO, ESQUIRE            :

               Appeal from the Order Dated October 11, 2013,
               in the Court of Common Pleas of Monroe County
                      Civil Division at No. 9653-2012-CV

JAN JULIA, EXECUTRIX IN THE ESTATE :          IN THE SUPERIOR COURT OF
OF INGRID SOBOLEWSKA, DECEASED :                    PENNSYLVANIA
                                   :
                 v.                :
                                   :
LORI J. CERATO, ESQUIRE,           :              No. 3430 EDA 2013
                                   :
                    Appellant      :

               Appeal from the Order Dated October 11, 2013,
               in the Court of Common Pleas of Monroe County
                      Civil Division at No. 9653-2012-CV

BEFORE: FORD ELLIOTT, P.J.E., MUNDY AND MUSMANNO, JJ.

MEMORANDUM BY FORD ELLIOTT, P.J.E.:              FILED JANUARY 09, 2015

      Jan Julia (“Julia”), the executrix of the Estate of Ingrid Sobolewska

(“the deceased”), appeals the order sustaining, in part, and denying, in part,

Attorney Lori J. Cerato’s Preliminary Objections to a Complaint filed by Julia
J. A20006/14

against Cerato as the scrivener of the Will of the deceased. Cerato has filed

a cross-appeal. Finding no error, we affirm.

        On May 7, 2008, the deceased executed a will prepared by Cerato.

Therein, the deceased directed that her debts be paid out of her Estate and

that, thereafter, the residue was to be divided among six beneficiaries

according to percentages stated in the Will.      Among the decedent’s assets

were an Annuity valued at $175,950.67 and an IRA account valued at

$7,182.06.      Unknown to Cerato, the Annuity and the IRA had beneficiary

designations that differed from the testamentary scheme set out in the Will.

Consequently, these assets did not pass to the Estate for distribution under

the Will, but were apparently paid directly to the designated beneficiaries.

Furthermore, the Estate was required to pay inheritance taxes on the

Annuity and the IRA in the amount of $27,469.91 because a provision of the

Will directed the Estate to pay such taxes regardless of whether the

deceased’s assets passed through the Will.

        The deceased died on December 1, 2010. On November 16, 2012, in

her capacity as executrix of the Estate only, Julia filed a Complaint against

Cerato.1     The Complaint alleged two counts, one sounding in breach of

contract, the other in legal malpractice, and requested damages in an

amount equaling the sum of the Annuity, the IRA, and the inheritance taxes.

1
    Julia is also a beneficiary under the Will.

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      On December 18, 2012, Cerato filed Preliminary Objections in the

nature of a demurrer to the Complaint. On September 16, 2013, the trial

court entered an order overruling the Preliminary Objections as to the

breach of contract count and sustaining, in part, and overruling, in part, the

Preliminary Objections as to the legal malpractice count, allowing Julia to

seek recovery on that count as to the inheritance taxes paid by the Estate.

The legal basis stated by the court cited Guy v. Liederbach, 459 A.2d 744

(Pa. 1983) (plurality), for the proposition that the representative of an

estate cannot maintain a legal malpractice action based upon a failed legacy

because the estate was not harmed.       The court found, however, that the

Estate was harmed as to the payment of inheritance taxes. Upon motion for

reconsideration by both parties, on October 15, 2013, the court entered an

order (dated October 11, 2013) revising its original holding. In this order,

the trial court sustained, in part, and overruled, in part, the Preliminary

Objections as to the breach of contract count also, extending its limitation to

recovery for inheritance taxes only, apparently on the dictates of Guy.

      On November 1, 2013, Julia moved to amend and certify the order

dated October 11, 2013, for immediate appeal. On November 13, 2013, the

court certified its order for appeal.    Julia filed her notice of appeal on

November 25, 2013, and Cerato filed her notice of cross-appeal on

December 13, 2013.

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      On appeal, Julia purports to raise 13 separate issues. However, upon

closer review, all of Julia’s issues go to the propriety of applying Guy to her

Complaint such that her causes of action are not sustainable as to the

Annuity and the IRA.    Cerato, on the other hand, argues that under Guy,

Julia cannot maintain her causes of action as to the inheritance taxes either.

      We begin our analysis with our standard of review:

                  The standard of review we apply when
            reviewing a trial court’s order granting preliminary
            objections in the nature of a demurrer is as follows:

                  Our standard of review of an order of the
                  trial   court    overruling  or    granting
                  preliminary objections is to determine
                  whether the trial court committed an
                  error of law.      When considering the
                  appropriateness      of    a   ruling    on
                  preliminary objections, the appellate
                  court must apply the same standard as
                  the trial court.

                         Preliminary    objections   in    the
                  nature of a demurrer test the legal
                  sufficiency of the complaint.         When
                  considering preliminary objections, all
                  material facts set forth in the challenged
                  pleadings are admitted as true, as well
                  as all inferences reasonably deducible
                  therefrom. Preliminary objections which
                  seek the dismissal of a cause of action
                  should be sustained only in cases in
                  which it is clear and free from doubt that
                  the pleader will be unable to prove facts
                  legally sufficient to establish the right to
                  relief. If any doubt exists as to whether
                  a demurrer should be sustained, it
                  should be resolved in favor of overruling
                  the preliminary objections.

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Liberty Mutual Insurance Co. v. Domtar Paper Co., 77 A.3d 1282, 1285

(Pa.Super. 2013), appeal granted in part, 92 A.3d 809 (Pa. 2014),

quoting Feingold v. Hendrzak, 15 A.3d 937, 941 (Pa.Super. 2011).2

      Preliminarily, we find that although Julia’s original Complaint purported

to raise a breach of contract claim as well as a legal malpractice claim, the

Complaint actually sounded in legal malpractice only.

                  In general, courts are cautious about
            permitting tort recovery based on contractual
            breaches. See Glazer v. Chandler, 414 Pa. 304,
            308, 200 A.2d 416, 418 (1964); Bash v. Bell
            Telephone Company of Pennsylvania, 411
            Pa.Super. 347, 601 A.2d 825 (1992). In keeping
            with this principle, this Court has recognized the
            “gist of the action” doctrine, which operates to
            preclude a plaintiff from re-casting ordinary breach
            of contract claims into tort claims. eToll, Inc. v.
            Elias/Savion Advertising, Inc., 811 A.2d 10, 14
            (Pa.Super.2002).        The conceptual distinction
            between a breach of contract claim and a tort claim
            has been explained as follows:

                  Although they derive from a common
                  origin, distinct differences between civil
                  actions for tort and contractual breach
                  have been developed at common law.
                  Tort actions lie for breaches of duties
                  imposed by law as a matter of social
                  policy, while contract actions lie only for
                  breaches of duties imposed by mutual
                  consensus        agreements       between
                  particular individuals . . . . To permit a
                  promisee to sue his promisor in tort for

2
  Julia argues in her brief that in a contract action, preliminary objections in
the nature of a demurrer are an improper method to challenge an incorrect
allegation of damages. (Julia’s brief at 20-21.) This argument was not
raised in the concise statement of matters complained of on appeal;
consequently, it is waived.

                                     -5-
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                  breaches of contract inter se would
                  erode the usual rules of contractual
                  recovery and inject confusion into our
                  well-settled forms of actions.

            Id. (quoting Bash, supra at 829). However, a
            breach of contract may give rise to an actionable tort
            where the wrong ascribed to the defendant is the
            gist of the action, the contract being collateral. Id.
            “The important difference between contract and tort
            claims is that the latter lie from the breach of duties
            imposed as a matter of social policy while the former
            lie from the breach of duties imposed by mutual
            consensus.” Id. (quoting Redevelopment Auth.
            v. International Ins. Co., 454 Pa.Super. 374, 685
A.2d 581, 590 (1996) (en banc), appeal denied,
            548 Pa. 649, 695 A.2d 787 (1997)). “In other
            words, a claim should be limited to a contract claim
            when the parties’ obligations are defined by the
            terms of the contracts, and not by the larger social
            policies embodied by the law of torts.” Id. (quoting
            Bohler-Uddeholm Am., Inc. v. Ellwood Group,
            Inc., 247 F.3d 79, 104 (3rd Cir.Pa.2001), cert
            denied, 534 U.S. 1162, 122 S. Ct. 1173, 152 L. Ed. 2d
116 (2002)).

Pittsburgh Construction Co. v. Griffith,           834 A.2d 572,   581-582

(Pa.Super. 2003), appeal denied, 852 A.2d 313 (Pa. 2004).

      A review of the Complaint’s averments under the purported breach of

contract claim readily reveals that the allegations do not arise from the

breach of any of the terms of the alleged agreement between the parties,

but rather from Cerato’s negligent preparation of the Will:

            27.   Attorney Cerato breached her express and
                  implied contractual obligations to Decedent
                  and    failed    to  meet   her   professional
                  responsibilities to Decedent in the following
                  respects.

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               a.   Attorney Cerato failed to outline
                    the scope of Attorney Cerato’s
                    services to Decedent in a written
                    engagement agreement and/or
                    written contract.

               b.   Attorney Cerato failed to ascertain
                    the assets and nature of assets of
                    Decedent by a reasonably prepared
                    questionnaire which was to be
                    completed by Ingrid prior to
                    Attorney Cerato’s preparation of
                    Ingrid’s Will.

               c.   Attorney Cerato failed to ascertain
                    the exact nature of, and manner in
                    which, Decedent owned her various
                    assets.

               d.   Attorney Cerato induced Ingrid to
                    believe that all of Ingrid’s assets at
                    the time of Decedent’s death would
                    be transferred in accordance with
                    the wishes expressed in Decedent’s
                    Will        when         rudimentary
                    investigation would have revealed
                    that    the   non-probate       assets
                    identified in paragraph 24 of the
                    Complaint would not pass in
                    accordance with the provisions of
                    the Will.

               e.   As a direct result of Attorney
                    Cerato’s failure to meet her
                    express and/or implied contractual
                    obligations   to   Decedent    and
                    provide professional services of a
                    quality which should have been
                    provided to Ingrid, assets owned
                    by Decedent at her death which
                    Decedent anticipated would be
                    assets of, and received into,
                    Decedent’s Estate by her Executrix
                    and distributed in accordance with

                                 -7-
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                         Ingrid’s desires expressed in the
                         Will were not assets of, and
                         received by, the Estate or the
                         Executrix and were not distributed
                         in accordance with Ingrid’s desires
                         expressed in Decedent’s Will.

                 f.      As a direct result of Attorney
                         Cerato’s failure to meet her
                         express and/or implied contractual
                         obligations        and      provide
                         professional services of a quality
                         which should have been provided,
                         the Executrix was required to pay
                         inheritance taxes from Decedent’s
                         Estate     in   the     amount   of
                         $27,469.91, based upon the 15%
                         inheritance tax rate imposed by the
                         Pennsylvania      Department     of
                         Revenue, on the transfer of the
                         Annuity or proceeds of the Annuity
                         in the amount of $175,950.67 and
                         on the transfer of the IRA or
                         proceeds of the IRA in the amount
                         of $7,182.06, which payment by
                         the Estate was mandated because
                         Section SECOND of the Will
                         required the residue of the Estate
                         to pay all death taxes.

Complaint, 11/16/12 at paragraph 27, a through f.

     None of these alleged failures by Cerato stems from the failure to

adhere to any of the terms of any agreement between the parties, but

instead arise from a breach of a duty of care, which is the heart of a

negligence claim.     Moreover, the central and crucial allegation, listed at

Paragraph 27 c., the failure of Cerato to ascertain the exact nature of, and

manner in which, the decedent owned her various assets, is plainly and

                                     -8-
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purely an averment pertaining to negligence and not to breach of contract.

Consequently, as a preliminary matter, we regard Julia’s Complaint as

raising a claim of legal malpractice only. That being stated, the law is clear

that the executrix of an estate cannot bring a legal malpractice action

against the scrivener of a will which results in a failed legacy.

                  We therefore turn to the question of whether
            the estate could sue the drafting attorney for
            malpractice and receive damages for the failure of
            the instrument to effectuate testator’s intent. In any
            cause of action for malpractice, some harm must be
            shown to have occurred to the person bringing suit.
            In the case of a failed legacy, the estate is not
            harmed in any way. California, the first state to find
            a cause of action in malpractice for beneficiaries has
            held that the executor has no standing to bring an
            action.

                  Indeed, the executor of an estate has no
                  standing to bring an action for the
                  amount of the bequest against an
                  attorney who negligently prepared the
                  estate plan, since in the normal case the
                  estate is not injured by such negligence
                  except to the extent of the fees paid;
                  only the beneficiaries suffer the real loss.

            Heyer v. Flaig, 70 Cal. 2d 223, 228, 449 P.2d 161,
            165, 74 Cal. Rptr. 225, 229 (1969). Even if the
            estate would have standing to bring the suit, the fact
            that no harm had occurred to it and the estate has
            nothing to gain would remove any incentive for suit.

Guy, 459 A.2d at 749.

      Julia attempts to characterize this language as mere dicta.      (Julia’s

brief at 20.) We disagree. Guy involved the beneficiary under a will suing

the attorney scrivener of the will over a failed legacy attributable to the

                                      -9-
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attorney’s malpractice. The Guy court decided to allow beneficiaries of such

failed legacies to bring suit against the attorney scrivener under a third party

beneficiary theory because relief by suit brought by the estate was

unavailable.3 Thus, the holding in Guy that the representative of an estate

cannot maintain a legal malpractice action over a failed legacy was vital to

the court’s ultimate ruling. The language is not dicta.

        We reject Julia’s various other arguments.        Julia contends that the

language, “[e]ven if the estate would have standing to bring the suit, the

fact that no harm had occurred to it and the estate has nothing to gain

would     remove    any   incentive   for   suit,”   implies   that   the   personal

representative does have standing to sue if the representative chooses to do

so.   (Julia’s brief at 20.)   We find no such implication.      The statement is

merely a hypothetical reason why granting third party beneficiaries the right

to bring suit might be appropriate even if the personal representative had

standing to sue.     The clear implication is that the personal representative

does not have standing.

        We find no merit in Julia’s public policy argument that it is burdensome

to require each beneficiary to bring suit rather than allowing the executrix to

bring a single action.    Multiple actions filed by multiple beneficiaries could

3
  “[W]e nevertheless feel that a properly restricted cause of action for third
party beneficiaries in accord with the principles of Restatement (Second) of
Contracts § 302 (1979) is available to named legatees, such as appellee,
who would otherwise have no recourse for failed legacies which result from
attorney malpractice.” Guy, 459 A.2d at 746 (emphasis added).

                                      - 10 -
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simply be joined and tried at a single trial. Undoubtedly, that is precisely

what the attorney defendant would seek to avoid unnecessary time and

expense.     We also see no merit in Julia’s contention that permitting the

executrix to bring a malpractice action facilitates public policy by increasing

the likelihood that lawyers will be held responsible for their malpractice.

Rather, we find that interested beneficiaries are more likely to pursue legal

action than the personal representative who may be disinterested.4

      In sum, we agree with the trial court that Julia cannot, as executrix,

maintain a legal malpractice action against Cerato based upon the failed

legacies involving the Annuity and the IRA. However, the overpayment of

inheritance taxes has directly damaged the Estate and will sustain a legal

malpractice action.

      The Complaint states that the inheritance taxes on the Annuity and the

IRA were calculated at the standard 15% rate.        (Complaint, 11/16/12 at

paragraph 24.) However, if the Annuity and the IRA had passed through the

Estate to the designated beneficiaries, a lesser inheritance tax would have

resulted.    Four of the six beneficiaries listed in the Will appear to be

charitable   takers.    Pennsylvania   exempts    charitable   bequests   from

inheritance tax. 72 P.S. § 9111(c)(1). Furthermore, it is possible that the

remaining two beneficiaries might also qualify for a lower inheritance tax

4
  Instantly, it happens that the executrix is also a beneficiary and is,
therefore, interested.

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rate.     Pennsylvania calculates inheritance taxes at a lesser rate for

beneficiaries who have a certain familial relationship with the deceased. For

instance, for a child of the deceased the tax rate is 4.5%, and for a sibling of

the deceased, 12%. 72 P.S. § 9116(a)(1) and (a)(1.3), respectively. The

remaining two beneficiaries in the Will are Julia and an individual named

Susan Robinson.      The Will does not reveal if either of these persons are

children or siblings of the deceased, but if they are, a lower inheritance tax

would apply. Consequently, taking the averments of the Complaint as true,

as our standard of review requires, we find that Julia and the Estate have

made out a valid action for legal malpractice based upon the overpayment of

inheritance taxes which, unlike the failed legacies, directly harmed the

Estate. This case can go forward as to the inheritance taxes only.

        Accordingly, we will affirm the order of the trial court and remand this

case for further proceedings.

        Order affirmed. Case remanded. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 1/9/2015

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