Court Opinion

ID: 4364378
Source: CourtListenerOpinion
Date Created: 2019-02-04 18:54:09.467011+00
Date Added: 2024-06-11T14:49:10.401568
License: Public Domain

J. S58034/18

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

IN RE: JOSEPHINE A. GALLO, AN            :    IN THE SUPERIOR COURT OF
INCAPACITATED PERSON                     :          PENNSYLVANIA
                                         :
MARGARET GALLO                           :
                                         :
                     v.                  :
                                         :
PETER GALLO,                             :         No. 554 WDA 2018
                                         :
                          Appellant      :

                    Appeal from the Order, March 28, 2018,
               in the Court of Common Pleas of Cambria County
                   Orphans’ Court Division at No. 11-13-995

BEFORE: OLSON, J., MURRAY, J., AND FORD ELLIOTT, P.J.E.

MEMORANDUM BY FORD ELLIOTT, P.J.E.:             FILED FEBRUARY 04, 2019

      Peter Gallo appeals the order of the Court of Common Pleas of

Cambria County that surcharged appellant in the amount of $28,715.63

payable to the Estate of Josephine A. Gallo (“decedent”).        After careful

review, we affirm.

      The background and relevant findings of fact as found and recounted

by the trial court are as follows:

            On January 22, 2014, after receiving testimony, the
            Court    concluded    that   [decedent]     was      an
            incapacitated person and appointed her son,
            [appellant], as the plenary guardian of her Person
            and Estate. On January 7, 2015, the Petitioner
            herein, Margaret Gallo (“Margaret”) who is the
            daughter of [d]ecedent and sister of [appellant,] filed
            a Petition for Review Hearing alleging that
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          [d]ecedent was not being cared for properly by
          [appellant] nor was [appellant] accounting for her
          expenses.      An Amended Petition was filed by
          Margaret on February 16, 2015 alleging additional
          deficiencies in [appellant’s] care of [d]ecedent. On
          February 20, 2015 this Court ordered Cambria
          County Area Agency on Aging (“Agency”) to make
          frequent, random and unannounced visits to the
          residence of [d]ecedent and to report to the Court.
          Throughout 2015, the Court received reports from
          the Agency indicating that [d]ecedent was being
          properly cared for, however, in at least one of these
          reports [appellant] would refuse to identify the full
          names of the caretakers of [d]ecedent to the Agency
          investigator.

          On June 18, 2016, [d]ecedent passed away. On
          September 22, 2016, as noted above, the instant
          Petition [“Objections to Final Report of Guardian of
          Estate”] was filed. On October 20, 2017, [appellant]
          submitted to the Court an unfiled Accounting of the
          Guardianship Estate. After several continuances, a
          hearing was held by the Court on January 30, 2018.
          As a result of the hearing, the Court makes the
          following:

                         FINDINGS OF FACT

          1.   At the hearing on January 30, 2018,
               [appellant’s] answers to questions regarding
               the compensation for [d]ecedent’s caretakers
               were evasive and inconsistent.

          2.   When questioned by the Court, [appellant]
               continued to provide little to no explanation
               regarding who the caretakers were, how often
               they were paid and by what measure they
               were paid.

          3.   He indicated he had comingled his funds with
               those of [d]ecedent and that he had
               contributed sums of money to her account and
               reimbursed himself therefrom.

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            4.    [Appellant’s] testimony was not credible.

            5.    [Appellant]    expended      $28,715.63       of
                  [d]ecedent’s principal assets without Court
                  approval and has not satisfactorily nor credibly
                  established where those sums went.

Trial court opinion, 3/28/18 at 1-2, ¶¶ 1-5.

      The trial court concluded:

            Based on the testimony of [appellant] under cross
            examination and in response to the Court’s inquiries,
            it is clear that he has not exercised the type of skill,
            prudence and/or caution that the law mandates he
            must in his former capacity as guardian for
            [d]ecedent. The argument made that the cost of
            [d]ecedent’s care would have been much more had
            she been in an assisted-living facility does not relieve
            [appellant] of his fiduciary duties. Having found his
            testimony to be not credible and having given
            [appellant] every opportunity to account for amounts
            that were purportedly spent for the care of
            [d]ecedent, the Court determines that he has not
            done so in a way that the Court can countenance.

Id. at 3.

      Appellant filed a notice of appeal on April 12, 2018. On April 12, 2018,

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 complied

with the order on April 30, 2018. On May 17, 2018, the trial court issued an

opinion pursuant to Pa.R.A.P. 1925(a).

      On appeal, appellant raises the following issues for this court’s review:

            I.    Whether or not the Trial Court erred in failing
                  to   adequately  identify   the   basis    and
                  methodology of arriving at or calculating the
                  surcharge imposed upon [a]ppellant[?]

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            II.    Whether or not the Trial Court erred in
                   surcharging [a]ppellant where no “loss” to the
                   Estate at issue has been clearly identified[?]

            III.   Whether or not the Trial Court erred in failing
                   to give consideration and/or weight to the
                   argument that any alleged “loss” would have
                   been greater had [a]ppellant enrolled his Ward
                   in a nursing home rather than care for her in
                   her home and the evidence that the Ward was
                   well taken care of at her residence[?]

            IV.    Whether or not the Trial Court erred in
                   surcharging     [a]ppellant   to   compensate
                   Beneficiaries for a loss caused by a fiduciary’s
                   failure to meet his standard of care when no
                   consideration or allowance is made for the fact
                   that [a]ppellant is one (1) of four (4)
                   Beneficiaries which would necessitate a
                   decrease in the surcharge by twenty-five
                   (25%) percent[?]

            V.     Whether or not the Trial Court erred in failing
                   to acknowledge and recognize that the joint
                   account for which payment allegedly made for
                   the benefit of the Ward was established by the
                   incapacitated, evidencing her testamentary
                   intent to leave the same to [a]ppellant and any
                   “loss” associated with [a]ppellant’s decisions
                   were a “loss” to [a]ppellant only, not to his
                   Ward’s Estate[?]

Appellant’s brief at 4-5.

      We begin our analysis with our standard of review:

            When an appellant challenges a decree entered by
            the Orphans’ Court, our standard of review “requires
            that we be deferential to the findings of the Orphans’
            Court.” In re Estate of Miller, 18 A.3d 1163, 1169
            (Pa.Super.2011) (en banc).

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                     [We] 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.
                     Where the rules of law on which the
                     court relied are palpably wrong or clearly
                     inapplicable, we will reverse the court’s
                     decree.

               Id. (alterations and citation omitted). Evaluating the
               reasonableness of the amount of a surcharge is
               within the province of a trial court. In re Wade’s
               Estate, 343 Pa. 520, 23 A.2d 493, 495 (1942).
               Absent an abuse of discretion, we will not disturb a
               trial court’s finding. Id.

In re Estate of Brown, 30 A.3d 1200, 1206 (Pa.Super. 2011).

     When a party seeks to recover assets misused by a fiduciary, it is

seeking   to    surcharge    the   fiduciary.   “[I]t   is   well   settled   in   this

Commonwealth that a fiduciary who had negligently caused a loss to an

estate may properly be surcharged for the amount of such loss.” Estate of

Lohm, 269 A.2d 451, 454 (Pa. 1970). A surcharge is the penalty imposed

for the failure to exercise common prudence, common skill, and common

caution in the performance of a fiduciary duty and is imposed in order to

compensate beneficiaries for a loss caused by a fiduciary’s lack of due care.

In re Estate of Schultheis, 747 A.2d 918, 927 (Pa.Super. 2000).                    The

objecting party bears the burden of proving wrongdoing on the part of the

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fiduciary.   Once the objecting party establishes evidence of wrongful

conduct, the burden shifts to the fiduciary to prove due care. Id. “Where a

fiduciary claims credit for disbursements made by him, the burden rests

upon the fiduciary to justify them. Proper vouchers or equivalent proof must

be produced in support of such credits. Accountant’s unsupported testimony

is generally insufficient.” Strickler Estate, 47 A.2d 134, 135 (Pa. 1946).

      Appellant   addresses    his    argument    to   the   first    three   issues

simultaneously because he believes that all three issues are interrelated and

that separate arguments for all three would be duplicative.           In these first

three issues, appellant essentially argues that the trial court failed to identify

how it calculated the surcharge and that even if there was a loss, the alleged

loss to the estate was much less than it would have been if decedent had

been placed in a nursing home.

      This court does not agree with appellant’s reasoning concerning the

calculation of the amount of surcharge. In the “Final Report of the Guardian

of the Estate of Josephine Gallo, an Incapacitated Person,” which appellant

prepared,    Paragraph   III.A.2.b.   lists   expenditures   for     caregivers   as

$57,670.79. Paragraph III.B.1. lists total income received during the report

period as $28,955.16.     In the “Objections to Final Report of Guardian of

Estate, filed by Margaret Gallo,” these amounts are both listed, and the

objection stated that the accounting did not provide detail as to the dates,

amounts, and caregivers paid from income and principal of decedent and

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that appellant failed to obtain court approval for the expenditure of principal

for decedent’s care and maintenance.        (“Objections to Final Report of

Guardian of Estate”, 9/21/16 at 2.)     The amount of the surcharge is the

difference between the amount expended for caregivers, $57,670.79, and

the income the estate received, $28,955.16 or $28,715.63.              At the

commencement of the hearing on January 30, 2018, Eric Hochfeld, Esq.,

attorney for Margaret Gallo, stated that there was an expenditure of

principal assets of $28,715.63 for paid caregivers and explained the

calculation of total expenses for caregivers minus estate income described

above. (See notes of testimony, 1/30/18 at 3-5.)

      In its opinion pursuant to Pa.R.A.P. 1925(a), the trial court explained

that there was not an adequate accounting provided to it to explain this

expenditure when the trial court specifically found appellant not credible.

The trial court further explained that there was no credible explanation for

the expenditure and no supporting documentation.         (Trial court opinion,

5/17/18 at 2.)    Section 5536(a) of the Probate, Estates, and Fiduciaries

Code, 20 Pa.C.S.A. § 5536(a), provides that a court may ratify payments

made from principal after the payments are made but is not required to do

so.   The trial court determined that Margaret Gallo established that there

was a lack of care on the part of the fiduciary and that appellant failed to

establish due care.   This court finds that the trial court did not abuse its

discretion when it imposed the surcharge.

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      Appellant also argues that the loss would have been much greater had

he placed decedent in an assisted-living or other nursing facility. However,

appellant fails to cite to any authority for the relevance of that statement.

The test of whether a fiduciary fulfills his or her requisite duties is not

whether the fiduciary’s lack of due care resulted in less of a loss than some

alternate arrangement. Further, there was no testimony as to what type of

care decedent needed and what would have been the cost to the estate if

that care had been provided.

      Appellant next contends that the trial court erred as a matter of law

and abused its discretion in surcharging appellant to compensate the

beneficiaries of decedent’s estate for an alleged loss where appellant was

one of the four beneficiaries of decedent’s estate so the amount of the

surcharge should be reduced by 25%.

      Appellant fails to support this argument with any relevant case law or

statute. The trial court surcharged him for his actions as the guardian of the

estate of an incapacitated person. The trial court did not surcharge him for

his actions as the executor of the estate of decedent. At issue before the

trial court was whether appellant discharged his duties as guardian of the

estate of a living incapacitated person. While he may receive some of this

money back as a beneficiary of the estate of his deceased mother, that issue

was not before the trial court.

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      Finally, appellant argues that the trial court erred when it surcharged

him because the joint account from which most of the payments were made

in relation to the payment to caregivers was established by decedent with

appellant as co-owner on November 1, 2007, and evidenced her intent to

leave the same to appellant at her death and/or make a lifetime gift to him

so that the only loss was to appellant and not to the estate.

      At the hearing, appellant attempted to advance the argument that he

and his mother had a joint checking account but that his money went into

the account. (Notes of testimony, 1/30/18 at 11-12.) However, he did not

mention that the account was intended to be his upon her death and did not

provide any evidence of the funds he allegedly contributed to this account.

Once again, the trial court did not find appellant credible.       There is no

evidence in the record to support his argument. The surcharge was applied

for actions appellant took as a fiduciary while his mother was alive.

Appellant has not established that the trial court abused its discretion.

      Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 2/4/2019

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