In Re: Estate of Jabbour, C., Appeal of: Jabbour ( 2018 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
IN RE: ESTATE OF CALEEM L. : IN THE SUPERIOR COURT OF
JABBOUR : PENNSYLVANIA
:
:
APPEAL OF: ARLENE JABBOUR AND :
TERRI L. VARGO :
:
:
: No. 75 WDA 2017
Appeal from the Order Entered December 15, 2016
In the Court of Common Pleas of Allegheny County Orphans' Court at
No(s): 02-15-01692
BEFORE: BOWES, J., OLSON, J., and KUNSELMAN, J.
MEMORANDUM BY BOWES, J.: FILED JULY 17, 2018
Co-Executrix Terri L. Vargo, the stepdaughter of Caleem L. Jabbour
(“Decedent”),1 and her mother, Arlene Jabbour, Decedent’s second wife
(collectively “Petitioners”), appeal from the December 15, 2016 order
dismissing the citation directed to Emmett Pais, Maura Nicotra, and Donna
Genes (collectively “Respondents”). Petitioners alleged that Respondents
removed assets of Decedent’s accounting business,2 and they sought
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1 The record reflects that the underlying petition for citation was filed solely
by Co-Executrix Terri L. Vargo. Co-Executrix Maura Nicotra also filed a
petition for citation directed to Arlene Jabbour challenging her exercise of a
power of attorney. Both citations were disposed of by the order entered
December 15, 2016, and the parties filed separate appeals to this Court.
The Nicotra appeal is listed at No. 1952 WDA 2016. We declined to
consolidate the appeals, but listed them consecutively for oral argument
before the same panel.
2 The petition purportedly sought a citation directing an accounting, a denial
of which would not have been a final order for purposes of appeal. However,
(Footnote Continued Next Page)
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compensation on behalf of the Estate for the income allegedly received by
Respondents therefrom. After thorough review, we affirm.
Decedent had a public accounting business trading under the name
“C.L. Jabbour, PA.” He was a sole practitioner and his office was located in
the home he shared with his second wife, Arlene. Decedent prepared tax
returns for approximately 400 clients, and provided additional accounting
services for another twenty to thirty business clients. N.T, 10/12-13/16, at
34. Maura is Decedent’s daughter from his first marriage, and Co-Executrix
of his estate. Mr. Pais is a CPA whom Decedent knew professionally, and to
whom Maura turned for assistance in winding up Decedent’s accounting
practice. Ms. Genes was Decedent’s secretary for thirty years.
In early August of 2014, Decedent suffered a stroke and was
hospitalized for one month. During that time, Mr. Pais went to Decedent’s
office and performed services for Decedent’s clients. When Decedent was
still unable to work upon returning home, Decedent referred his clients in
need of assistance to Mr. Pais and another accountant, Bill Knight.
In December 2014, Decedent sent a letter to each of his business
clients informing them that he would be unable to prepare their personal and
(Footnote Continued) _______________________
Petitioners was actually seeking compensation either from Mr. Pais for his
alleged misappropriation/conversion of Decedent’s business and/or from
Maura Nicotra for breach of fiduciary duty in failing to obtain payment from
Mr. Pais for the business. As such, it is an order determining an interest in
real or personal property, appealable pursuant to Pa.R.A.P. 342(6).
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corporate tax returns. He stated therein that he would provide them with
their income and expense information to enable them to prepare the
returns. He told them he would continue to do their monthly work and
prepare W-2s until they retained another accountant. Decedent thanked
them for being loyal clients, and expressed his pleasure working with them
over the years. At approximately the same time, at Decedent’s direction,
Ms. Genes cancelled his prior order for a $2,000 computer tax preparation
program.
Decedent died on December 22, 2014. Shortly thereafter, clients
began calling the office about their fourth quarter payroll taxes and files.
Arlene had a difficult time returning the calls. In early January, she began
to pack up Decedent’s files. Decedent’s former attorney, Gary Kalmeyer,
advised her that Decedent’s daughter, Maura, wanted to close her father’s
business, which she was entitled to do as Co-Executrix under Decedent’s
Will. Shortly thereafter, Arlene left a message on Maura’s answering
machine asking that she and her husband help with the transition of
Decedent’s files. Maura returned the call and arranged with Arlene to stop
by with Mr. Pais on January 17, 2015, to collect the files in order to contact
the clients.
When Maura and Mr. Pais arrived with their spouses, Arlene and her
grandson were present. Many of the files were boxed and “pretty
organized.” Id. at 127. Several telephone calls were made to Ms. Genes to
ask for assistance in locating certain items. At Mr. Pais’s direction, Maura
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removed the hard drives from the computers, which contained confidential
client information that needed to be secured. Maura subsequently returned
the hard drives to Arlene after they had been wiped clean.
Mr. Pais contacted all of Decedent’s former clients and arranged for
the return of their files. Where there were outstanding balances owing for
accounting services rendered by Decedent, he collected those sums and
forwarded the checks to the Estate.
On April 6, 2015, letters testamentary issued to Maura and Terri
Vargo, as co-executrices for the Decedent’s estate. On December 22, 2015,
Ms. Vargo filed the within petition for citation directed to Respondents in
which she alleged that Decedent died testate possessed of personal property
in the nature of his accounting practice, C.L. Jabbour, PA. Petition for
Citation, 12/22/15, at 1. She charged that Respondents removed the
business property of Decedent without legal authority and prior to the official
opening of the Estate, and that the Estate was owed compensation for Mr.
Pais’s “impromptu and informal assumption of decedent’s accounting
practice.” Id. at ¶21. She alleged further that the removal of Decedent’s
business property, without compensation, “constitute[d] theft, breach of
contract, assumpsit, trespass, unjust enrichment and unlawful conversion of
estate property.” Id. at ¶23.
Mr. Pais filed an answer admitting that he took possession of the files
in the presence of and with the permission of Maura and Arlene to assist the
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Estate in releasing records necessary for clients to prepare fourth quarter
and year-end payroll tax returns. Mr. Pais denied engaging in any illegal
activity, and averred that he had provided to the Estate an accounting of all
of his business revenues on March 9, 2015, together with copies of checks
payable to the Estate that he had turned over. He denied that he removed
the hard drives from the office computers and averred that he never agreed
to purchase the business. He alleged that Decedent terminated his business
with the mailings on December 10, 2014. Pais Answer to Petition for
Citation, 2/2/15, at 3 ¶14.
Ms. Genes filed an answer stating that she was not present when the
files were removed, and denying that she supplied any passwords to Mr. Pais
and Maura to enable them to gain access to the computers. Maura averred
that she had been advised by her late father’s attorney that, as co-executrix,
it was her responsibility to windup Decedent’s practice. Nicotra Answer and
New Matter, 1/28/16, at ¶26. She became involved upon learning from
former clients that Arlene was not responding to their requests for their files,
and that at least two clients had complained to the district justice about the
situation. Id. at ¶¶27-28. She enlisted Mr. Pais’s assistance in contacting
Decedent’s former clients to inform them that they could retrieve their files
from him, and to enable him to collect outstanding balances owing to the
Estate for services performed by Decedent’s business. Id. at ¶17. She
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denied that she received any financial remuneration from the business. Id.
at ¶29.
After a two-day evidentiary hearing, the orphans’ court dismissed the
citation, finding no proof of any agreement between the Estate and Mr. Pais
for the purchase of the business. Orphans’ Court Opinion, 3/7/17, at
unnumbered 3. In addition, the court found that Mr. Pais assisted Maura in
winding up the business and returning files to clients. Finally, the court
noted that without competent expert testimony from a valuation expert, it
could not ascertain the fair market value of the business. Id. at 4.
Petitioners timely appealed and they raise three issues for our review,
which we have re-ordered for ease of disposition: 3
I. Did the lower court err when it held that Emmet Pais did
not owe any money to the Estate when there was
absolutely no evidence that the accounting practice was a
gift?
II. Did the lower court err when it found it would have to
speculate as to the value of [Decedent’s] practice when
Mr. Pais’[s] own testimony was sufficient to establish a
value on the business when he testified that he had billings
of $53,060.00 of income in 2015 and $30,140.00 from
January 1 to August 23, 2016[,] from [Decedent’s] clients?
III. Did the lower court err when it disallowed Michael Wilson,
a CPA, from testifying as an expert witness when he met
the criteria under Pa.R.E. 702 and demonstrated that he
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3 Petitioners’ first issue, and to a certain extent their second issue, involve
the orphans’ court’s findings as to liability. Since the third issue is an
evidentiary one affecting damages only, we will address it last.
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possessed the appropriate knowledge[,] skill, training[,]
and education?
Appellants’ brief at 4. Essentially, Petitioners allege that Mr. Pais either
agreed to purchase Decedent’s business or that he converted its assets, and
that Maura breached her fiduciary duty when she did not demand
compensation from him for the business assets.4
“Our standard of review of an orphans’ court’s decision is deferential.”
In re Estate of Strahsmeier, 54 A.3d 359, 362 (Pa.Super. 2012). Viewing
the record in the light most favorable to the appellee, we must determine
whether the record is free from legal error and whether the findings are
supported by the record. Id. at 362-63. Since the orphans’ court sits as the
factfinder and determines the credibility of witnesses, we “will not reverse its
credibility decisions absent an abuse of discretion.” Id. at 363. “[A]n abuse
of discretion is not merely an error of judgment. . . . [I]f in reaching a
conclusion, the court overrides or misapplies the law, or the judgment
exercised is shown by the record to be manifestly unreasonable or the
product of partiality, prejudice, bias, or ill will, discretion has been abused.”
Id. The same deference is not afforded to the orphans’ court’s conclusions
of law. “Where the rules of law on which the orphans' court relied are
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4Petitioners speak generally in terms of the value of the business and do not
define the assets or ascribe value to particular assets.
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palpably wrong or clearly inapplicable, we will reverse the court’s decree.”
Id.
Petitioners allege that the orphans’ court erred when it found that Mr.
Pais did not owe money to the Estate. They argue that absent evidence of a
gift of the practice, Mr. Pais must compensate the Estate for the business
assets he either agreed to purchase, or that he misappropriated and
converted.
We find no merit in Petitioners’ position. The orphans’ court found that
Mr. Pais did not agree, either orally or in writing, to buy the practice. Thus,
he owed no compensation on a contract theory. Furthermore, it rejected the
notion that Mr. Pais converted or misappropriated the business. Rather, the
court found that Mr. Pais assisted in winding up the practice and collecting
outstanding receivables on behalf of the Estate at Maura’s behest. We find
that the record supports those findings.
In early January 2015, after Decedent’s death, Arlene left a recorded
message on Maura’s answering machine that “clients are calling here crazy
that they want to pick up their stuff.” N.T., 10/12-13, at 66. Arlene asked
for Maura’s help in “getting the office cleared up.” Id. When Maura
returned the call and asked whether she could bring Emmett Pais with her,
Arlene agreed. Arlene testified further that Ms. Vargo also knew that “Maura
and Emmett were going to come over, and the business files were going to
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be returned to people.” Id. at 62. Arlene acknowledged that one client,
Auto Addiction, intended to sue to get its file back. Id. at 63.
Mr. Pais removed and retained the files at Maura’s request for
purposes of winding up the practice. Maura removed the hard drives from
the computers, took them to be wiped clean, and returned them to Arlene.
Decedent’s former clients were directed both by letter and by a message on
Decedent’s answering machine to contact Mr. Pais for their files.
In the process of returning client files, Mr. Pais collected balances
owing to the Estate for work, totaling approximately $5,000, performed by
Decedent, and turned over the checks to the Estate. The Estate did not
compensate him for the services he provided in winding up the business.
However, as a consequence of Decedent’s referrals to Mr. Pais during his
lifetime, as well as Mr. Pais’s contact with Decedent’s clients regarding the
files, approximately sixty of Decedent’s 420 former clients opted to retain his
services. As the orphans’ court observed, someone was going to have to do
the work for these clients. Id. at 147. Even Arlene conceded that the
clients were free to go wherever they wanted, and that some chose to retain
Mr. Pais. Id. at 50.
Based on the foregoing, the orphans’ court found no evidence that
Respondents misappropriated or converted Decedent’s business assets. We
agree. “The classic definition of conversion under Pennsylvania law is ‘the
deprivation of another's right of property in, or use or possession of, a
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chattel, or other interference therewith, without the owner's consent and
without lawful justification.’” HRANEC Sheet Metal, Inc. v. Metalico
Pittsburgh, Inc., 107 A.3d 114, 119 (Pa.Super. 2014) (quoting
McKeeman v. Corestates Bank, N.A., 751 A.2d 655, 659 n.3 (Pa.Super.
2000)). Even Arlene acknowledged that the Decedent’s client files were the
property of the clients. Furthermore, Mr. Pais’s removal and retention of the
client files was with the consent of Arlene and Ms. Vargo, and at the request
of Maura, one of the designated personal representatives. The purpose for
removing the files was a legitimate one: to facilitate the expeditious return
of client files and stave off threatened lawsuits for failing to do so. Mr. Pais
also collected for the Estate outstanding accounts receivables, which were
assets of the Estate. We agree with the orphans’ court that Mr. Pais assisted
Maura in winding up the business, returning files, collecting outstanding
receivables for the Estate, and avoiding threatened lawsuits. We find no
breach of fiduciary duty on Maura’s part, or theft or conversion by Mr. Pais.
Nor do we find any merit in Petitioners’ premise that money is owing
unless the business was a gift to Mr. Pais. Appellant’s brief at 25. As we
explained supra, Petitioners failed to prove that Mr. Pais acquired Decedent’s
business either contractually or through misappropriation. Petitioners do not
allege on appeal that the equitable doctrine of unjust enrichment provided a
basis for liability herein. “Where unjust enrichment is present, the law
implies the existence of a contract requiring the defendant to pay to the
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plaintiff the reasonable value of the benefit conferred.” Temple Univ.
Hosp., Inc. v. Healthcare Management Alternatives, Inc., 832 A.2d
501, 508 (Pa.Super. 2003) (citing Mitchell v. Moore, 729 A.2d 1200
(Pa.Super. 1999)). In order to prevail on such a claim, the plaintiff must
prove: (1) benefits conferred on defendant by plaintiff; (2) appreciation of
such benefits by defendant; and (3) acceptance and retention of such
benefits under such circumstances that it would be inequitable for defendant
to retain the benefit without payment of value. Id. at 508. The most
important factor to be considered in applying the doctrine is whether the
enrichment of the defendant is unjust, and only upon such a finding will the
law require a party to pay the value of the benefit conferred. Id.
The orphans’ court found that Mr. Pais assisted in winding up
Decedent’s practice and collecting outstanding receivables for the Estate.
The Estate paid him no compensation for these valuable services. In the
process, some of Decedent’s former clients chose to retain Mr. Pais to
perform accounting or tax services, which they were free to do. On these
facts, we find no unjust enrichment.
Petitioners contend that the trial court should have used Mr. Pais’s
gross revenues from Decedent’s former clients to arrive at a value for the
business. The orphans’ court rejected that approach, finding Mr. Pais’s 2015
and 2016 “gross revenues are not equivalent to the fair market value of the
business.” Orphans’ Court Opinion, 3/7/17, at unnumbered 3.
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Again, we agree. Petitioners did not prove that Mr. Pais received the
business. Rather, the evidence revealed only that some of Decedent’s
former clients chose to retain Mr. Pais to perform accounting services.
Indeed, only sixty of Decedent’s 420 clients, who were given a choice as to
which accountant to use after their files were returned to them, decided to
utilize Mr. Pais. Nor were Mr. Pais’s revenues from those clients probative of
the value of Decedent’s practice.5 Assuming that the value of the
Decedent’s business was relevant, competent expert testimony using an
accepted valuation method was required to establish its value at the
appropriate time.6
Moreover, the evidence indicated that Decedent had started to
liquidate the business prior to his death. In the fall of 2014, he was
referring clients to Mr. Pais and Mr. Knight. Ms. Genes explained that on
December 10, 2014, Decedent sent letters to each of his business clients
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5 The revenue figures may have had some probative value if it had been
determined that Mr. Pais was unjustly enriched. However, since that basis
for liability was not proved below, and Petitioners do not argue on appeal
that reversal is warranted on that theory, we find no merit in Petitioners’
claim.
6 Notably, on appeal, Petitioners list several methods for valuing a business,
to wit: investment value; going-concern value; fundamental or intrinsic
value; fair market value; book value; and liquidation value. See Appellants’
brief at 28-29. Absent from that list is the gross revenues approach
advocated by Mr. Wilson. Furthermore, Petitioners cite no valuation method
that would look to Mr. Pais’s revenues in the years after Decedent’s
practice closed to calculate the date of death value of the business.
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advising them that he was unable to prepare their individual and corporate
tax returns, but that he would provide them with the income and expense
information to enable them to prepare the returns. He directed them to
obtain another accountant, without specifying Mr. Pais, and thanked them
for their loyalty. Id. at 137. Ms. Genes testified further that Decedent
asked Mr. Pais to prepare tax returns in December 2014 because he realized
that he could not do them. At that same time, Decedent also directed Ms.
Genes to cancel the tax program that he purchased, explaining that he could
not do the work. Id. at 141.
Hence, we find ample support for Mr. Pais’s contention that Decedent
was in the process of liquidating his business when he died. While the
business may have had some assets in January 2015, they consisted largely
of office furniture, computers, and accounts receivables. As this Court noted
in Beasley v. Beasley, 518 A.2d 545, 552 (Pa.Super. 1986), which involved
the value of a law practice operated as a sole proprietorship for purposes of
equitable distribution, there may be some good will value based on
professional reputation. Nonetheless, we observed:
When a sole proprietor terminates his activity, the lights go out,
the value of the sole proprietorship is extinguished and is non-
transferable; the clients in the law firm cannot be sold, they can
only be transferred and they have the absolute right to select
their own future representation; nothing remains in residue
which could be determined of value aside from tangible physical
property, or work performed on partially completed cases, which
may entitle the lawyer or his heirs to a quantum meruit
payment.
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Id. at 552. Those same considerations are relevant herein in determining
what value, if any, should be assigned to Decedent’s sole proprietorship.
We turn now to the evidentiary issue raised by Petitioners. “When we
review a trial court ruling on admission of evidence, we must acknowledge
that decisions on admissibility are within the sound discretion of the trial
court and will not be overturned absent an abuse of discretion or
misapplication of law” Phillips v. Lock, 86 A.3d 906, 920 (Pa.Super. 2014)
(citation omitted). “In addition, for a ruling on evidence to constitute
reversible error, it must have been harmful or prejudicial to the complaining
party.” Id. (citation omitted); see also Mitchell v. Shikora, 161 A.3d 970,
972 (Pa.Super. 2017).
The specific ruling at issue herein involved the court’s determination
that Mr. Wilson was not qualified to provide expert valuation testimony
under Pa.R.E. 702. The question whether a witness is qualified to testify as
an expert rests within the sound discretion of the trial court. Miller v.
Brass Rail Tavern, Inc., 664 A.2d 525, 528 (Pa. 1995). Where a proffered
expert has any reasonable pretension to specialized knowledge on the
subject, generally he will be permitted to testify. The weight to be given the
testimony is for the factfinder to determine. Id. The admissibility of expert
testimony is not based solely on academic credentials. Id. An expert may
possess sufficient knowledge based on his experience and training to qualify.
Id.
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Petitioners listed Mr. Wilson as her valuation expert in her pretrial
statement and later supplemented it with his expert report. Mr. Wilson’s
report consisted of one paragraph:
Our firm has acquired tax and accounting practices over
the past several years. The common method for valuation of
accounting practices is based on the annual revenues for the
practice. Typically, the value is based upon the most recent
year’s gross revenue, with adjustments for varying
circumstances relative to the particular practice. Based on
information that has been provided to me, the gross revenues
for Mr. Jabbour’s practice for the year ended 12/31/13 were
$38,250, as reported on Pa. Schedule C – Profit or Loss from
Business on his Pa 40 Individual Income Tax Return. I believe
that this amount is an appropriate value to be used to establish
the value of his practice.
Expert Report of Michael C. Wilson CPA, 3/2/16, at 1.
Prior to trial, Respondents moved to strike the expert report, citing its
lack of detail, the absence of supporting documentation, and the fact that
the opinions contained therein were not stated to a reasonable degree of
accounting certainty. The orphans’ court declined to rule, noting that
Respondents could explore the inadequacies on cross-examination. It
concluded, “If you feel and I feel at the end of that that there’s some
substance, we’ll grant your motion.” N.T., 10/12-13/16, at 13.
Respondents added that the report should be stricken on the additional basis
that valuation of the business was not relevant. The only issue was whether
an accounting should be done.
During voir dire as to qualifications, Petitioners established that Mr.
Wilson had a master’s degree in accounting, had been a CPA for twenty-one
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years, and that he was currently a member of the tax practice of Donnelly-
Boland and Associates. Mr. Wilson’s experience in valuing accounting
practices came from Donnelly-Boland’s acquisition of three practices from
deceased or retiring practitioners, as well as client engagements that
involved business acquisitions or divestitures. He maintained that he had
experience in the field although he had never testified as a valuation expert.
On cross-examination as to his qualifications, Mr. Wilson acknowledged
that he was not accredited or certified as a business valuator, and that he
had never taught any courses or written any articles or books on the
subject. He did not refer to any AICPA7 guidelines in authoring his report or
in arriving at his opinion. He had never prepared a valuation report before,
although he stated that his firm had purchased practices based on the same
type of information that was provided in his letter report. The witness
testified that if one was to “ask any CPA that has acquired practices, they
will tell you that the common method used to value accounting practices is
gross revenues.” Id. at 27. When asked if there was any way to check his
figures, the witness stated that “[i]f we had a copy of the 2013 tax return,
they can verify the gross revenues reported.”8 Id.
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7 The American Institute of Certified Public Accountants.
8 The tax return is not contained in the certified record.
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Counsel for Respondents renewed his objection to the qualifications of
Mr. Wilson and argued that his report did not meet the standards for a
valuation report under the AICPA principles. The orphans’ court agreed and
excluded the proffered expert testimony, but left the door open to revisiting
its ruling later. The court also was receptive to the possibility of Mr. Wilson
testifying as a fact witness regarding Decedent’s tax returns. Petitioners
made a proffer of the witness’ proposed factual testimony: “The proffer
would be that he has an opinion on the basis of the business.” Id. at 31.
The court rejected the proffer as opinion testimony.9
In its Rule 1925(a) opinion, the orphans’ court further explained the
rationale for its decision. The court found that Mr. Wilson had never
performed a business valuation, and he had no knowledge of the
methodologies used in the field to value businesses. Thus, the court
concluded that he was not qualified to offer expert testimony regarding the
value of Decedent’s business.
Petitioners contend herein that the orphans’ court abused its discretion
in excluding the expert testimony of Mr. Wilson. They maintains that he is a
CPA by education, and his experience and practical training qualified him to
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9 A brief discussion occurred during which Petitioners represented to the
court that the witness’s accounting firm “examined the business to
potentially purchase it and decided not to.” N.T., 10/12-13/16, at 31. The
court found the testimony irrelevant in the “constellation upon which
[Petitioners were] bringing this,” and sustained Respondents’ objection. Id.
at 31-32. That ruling is not challenged on appeal.
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testify as a valuation expert. Thus, they contend, he had the pretension to
specialized knowledge on the valuation of Decedent’s business to qualify as
an expert under Pa.R.E. 702.
Respondents counter that, in a non-jury proceeding, the trial court’s
discretion is even broader as it is “the finder of fact and the sole judge of
credibility.” Costa v. City of Allentown, 153 A.3d 1159, 1168 (Pa.Cmwlth.
2017). In addition, they cite Ramalingam v. Keller Williams Realty
Group, Inc., 121 A.3d 1034, 1047 (Pa.Super. 2015), and Pa.R.C.P. 1038,
for the proposition that “in a non-jury trial, the trial judge has the dual
function of making rulings of law, and weighing the evidence as a fact-
finder.” They suggest that the court’s ruling was part and parcel of its larger
credibility determination, and that the court rejected Mr. Wilson’s premise
that the fair market value of the business was equivalent to its gross
revenues from the most recent year. Respondents contend that the decision
should not be reversed absent an abuse of discretion, which was not
demonstrated herein.
We agree with Petitioners that Mr. Wilson had sufficient pretension to
specialized knowledge and/or experience to offer his expert opinion of the
value of [Decedent’s] practice. However, even though the trial court erred
in this respect, we affirm the exclusion of the proffered expert on the two
alternative bases argued by Respondents, namely, that his expert report
was inadequate, and that the value of the business was irrelevant.
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Pennsylvania Rule of Civil Procedure 4003.5 requires parties “to state
the substance of the facts and opinions to which the expert is expected to
testify and a summary of the grounds for each opinion.” Pa.R.C.P.
4003.5(a)(1)(b). The reports must be specific and fully disclose the basis for
the opinions. Walsh v. Kubiak, 661 A.2d 416, 422 (Pa.Super.
1995); Wilkes Barre Iron & Wire Works, Inc. v. Pargas Wilkes Barre
Inc., 502 A.2d 210, 213 (Pa.Super. 1985).
The report herein was barebones and conclusory. Mr. Wilson did not
even identify the relevant date for valuation purposes. Apparently, he
reviewed only a tax return showing gross revenues for 2013. His opinion
was simply that the gross revenues reported for the year ending December
31, 2013 on PA Schedule C appended to Decedent’s PA 40 individual income
tax return for 2013 was an appropriate value for Decedent’s business. The
tax return was not in evidence. Although his methodology contemplated
“adjustments for varying circumstances relative to the particular practice,”
he did not identify or consider any circumstances.
We find the report wholly inadequate under Pa.R.C.P. 4003.5. It
lacked foundation and specificity. Moreover, it was apparent from the face
of the report that Mr. Wilson did not actually apply the gross revenues
method he described therein. Despite Mr. Wilson’s representation that the
method typically references the most recent year of gross revenues, he used
the 2013 figure instead of the gross revenues from most recent year, 2014,
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and offered no explanation for the departure. Nor did he identify or consider
any other information peculiar to Decedent’s practice to determine whether
adjustments were warranted. Nevertheless, Mr. Wilson concluded that the
2013 gross revenues figure was “an appropriate value to be used to
establish the value of [Decedent’s] practice.” Simply stated, the expert
report, on its face, did not establish that he applied the valuation method
that he advocated. Furthermore, although his opinion need not be rendered
with the magic words “reasonable accounting certainty,” Mr. Wilson’s belief
that the 2013 gross revenue figure was “appropriate,” without more, did not
meet the requisite certainty for expert testimony. On this basis, we find the
expert’s proffered testimony was properly excluded.
Finally, since we have concluded that Petitioners failed to prove that
Respondents were liable to the Estate for the value of Decedent’s business,
we find any valuation of the business irrelevant. Since we may affirm on
any basis supported by the record, we affirm the trial court’s decision to
exclude Mr. Wilson’s proffered expert testimony on these alternative
grounds. See Skiff re Business, Inc. v. Buckingham Ridgeview, LP,
991 A.2d 956, 963 n.9 (Pa.Super. 2010) (this Court may affirm on an
alternative basis from the trial court).
Order affirmed.
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J-A02009-18
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/17/2018
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