Estate of O'Brien, W./Appeal of: Wellington, D. ( 2017 )

J. A32012/16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
ESTATE OF WILLIAM P. O’BRIEN, : IN THE SUPERIOR COURT OF
DECEASED : PENNSYLVANIA
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APPEAL OF: DONNA WELLINGTON : No. 1796 EDA 2016
Appeal from the Order Entered May 5, 2016
In the Court of Common Pleas of Montgomery County
Orphans’ Court at No.: 2014-X3488
BEFORE: DUBOW, RANSOM, AND PLATT, JJ.*
MEMORANDUM BY DUBOW, J.: FILED JANUARY 31, 2017
The Estate of William P. O’Brien, through its executrix Donna
Wellington (“Appellant”), appeals from the Order entered in the Court of
Common Pleas of Montgomery County Orphans’ Court on May 5, 2016,
which granted Terry Terzuolo’s objection to the first and final accounting of
the Estate. After careful review, we affirm.
We adopt the facts as set forth by the trial court’s May 5, 2016
Opinion. See Trial Court Opinion, filed 5/5/16, at 1-4. In summary, the
decedent, William P. O’Brien, operated a business partnership with Terry
Terzuolo starting in 1997. The partners maintained separate income
*
Retired Senior Judge Assigned to the Superior Court.
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accounts and capital accounts.1 Terzuolo primarily maintained the
partnership’s financial records, and an accountant, John Paciello, would
prepare the annual tax returns based on this information.
Beginning in 2013, O’Brien and Terzuolo took steps to dissolve the
partnership, including selling the partnership’s sole asset, a parcel of real
estate in Spring City, Pennsylvania. On February 28, 2014, the partners
disbursed the proceeds of the property sale equally at $80,000 each.
O’Brien died testate on September 6, 2014. Appellant filed the first
and final accounting of the Estate on September 25, 2015. Terzuolo,
through counsel, filed one objection petitioning for payment of an
outstanding debt of $64,905.31. Terzuolo claimed that the distribution of
$80,000 to each partner in February 2014 was made in error because the
partners failed to account for unequal capital accounts prior to distributing
the cash proceeds from the property sale.
At a hearing, Terzuolo and the partnership’s accountant testified. The
court admitted the Partnership Agreement and other documents by
stipulation. On May 5, 2016, the trial court sustained Terzuolo’s objection
1
Each partner initially contributed equally to their respective capital account.
See Partnership Agreement, Plaintiff’s Exhibit 1, at 1-2. Per the Agreement,
upon dissolution of the partnership, once all debts were paid and assets
converted to cash, each partner would receive a final disbursement of the
amount in their respective capital account to bring the balance to zero.
N.T., 3/3/16, at 34. There could be a disparity in the capital accounts based
on a partner’s capital contributions or profits and losses, and there may be a
disparity in the amount each partner receives in this final disbursement of
cash. Id. at 33-34.
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and directed Appellant to pay $64,143 from the Estate to Terzuolo.
Appellant filed a timely Notice of Appeal.
Appellant complied with Pa.R.A.P. 1925; the trial court did not prepare
a Pa.R.A.P. 1925(a) Opinion responsive to Appellant’s Concise Statement of
Errors Complained of on Appeal.
Appellant presents two issues for our review:
1. Must a claim against an estate be established by clear, direct,
precise and convincing evidence?
2. May the Dead Man’s Act be contravened by presentation of
the incompetent evidence through a third-party “expert[?”]
Appellant’s Brief at 5.
Our standard and scope of review are as follows:
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. 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.
This Court’s standard of review of questions of law is de
novo, and the scope of review is plenary, as we may
review the entire record in making our determination.
When we review questions of law, our standard of review
is limited to determining whether the trial court committed
an error of law.
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In re Fiedler, 132 A.3d 1010, 1018 (Pa. Super. 2016) (citations and
quotation marks omitted).
In her first issue, Appellant avers that, in sustaining Terzuolo’s
objection, the trial court “ignored the requirement of proof that is clear,
direct, precise and convincing” because “[t]here is no mention of this
standard of proof” in the trial court’s May 5, 2016 Opinion. Appellant’s Brief
at 11-12. Before addressing the merits of Appellant’s first issue raised on
appeal, we must determine whether this issue was properly preserved and
developed for review.
Our Pennsylvania Rules of Appellate Procedure and our case law lay
out the well-established requirements for preserving a claim for appellate
review. This Court will address only those issues properly presented and
developed in an appellant’s brief as required by our rules of appellate
procedure. See Pa.R.A.P. 2101-2119. “Appellate arguments which fail to
adhere to these rules may be considered waived, and arguments which are
not appropriately developed are waived.” Karn v. Quick & Reilly Inc, 912
A.2d 329, 336 (Pa. Super. 2006) (citation and quotation marks omitted).
Thus, issues raised in a Brief’s Statement of Questions Involved but not
developed in the Brief’s argument section will be deemed waived. Harkins
v. Calumet Realty Co., 614 A.2d 699, 703 (Pa. Super. 1992).
To properly develop an issue for our review, Appellant bears the
burden of ensuring that his argument section includes citations to pertinent
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authorities as well as discussion and analysis of the authorities. See
Pa.R.A.P. 2119(a); Commonwealth v. Hardy, 918 A.2d 766, 771 (Pa.
Super. 2007) (“[I]t is an appellant’s duty to present arguments that are
sufficiently developed for our review. The brief must support the claims with
pertinent discussion, with references to the record[,] and with citations to
legal authorities.” (citation omitted)).
As this Court has made clear, we “will not act as counsel and will not
develop arguments on behalf of an appellant.” Hardy, supra at 771.
Where defects in a brief “impede our ability to conduct meaningful appellate
review, we may dismiss the appeal entirely or find certain issues to be
waived.” Id.
In the instant case, Appellant seemingly attempts to draw several
unsupported inferences from the trial court’s May 5, 2016 Opinion. Although
Appellant contends that the trial court ignored the applicable standard of
proof, she fails to point to any evidence to which the trial court applied a
different (inapplicable) standard of proof. Appellant also makes a vague and
confusing reference to her second argument regarding the Dead Man’s Act
that appears to challenge the competency and weight given to the evidence.
Appellant provides only a single case citation, four sentences of purported
“argument,” and a large block quotation of the trial court’s Opinion.
Appellant has simply failed to construct and develop a coherent first issue for
appellate review.
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Appellant’s failure to adhere to the rules of appellate procedure and to
develop this issue prevents this Court from conducting a meaningful
appellate review. Therefore, we conclude Appellant has waived this issue.2
In her second issue, Appellant avers that the trial court erroneously
applied the Dead Man’s Act3 by permitting the partnership’s accountant,
John Paciello, to rely on financial documents during his testimony that
Terzuolo prepared. Appellant’s Brief at 12, 18.
“It is well settled that the admissibility of evidence is a determination
left to the sound discretion of the trial court, and it will not be overturned
absent an abuse of discretion or misapplication of law.” In re Fiedler,
supra at 1025. “For a ruling on the admissibility of evidence to constitute
reversible error, it must have been harmful or prejudicial to the complaining
party.” Id.
The Dead Man’s Act provides, in pertinent part:
§ 5930. Surviving party as witness, in case of death,
mental incapacity, etc.
[I]n any civil action or proceeding, where any party to a thing or
contract in action is dead, . . . and his right thereto or therein
has passed, either by his own act or by the act of the law, to a
party on the record who represents his interest in the subject in
controversy, neither any surviving or remaining party to such
2
Even if we did not find waiver, Appellant’s claim would merit no relief. Our
review of the certified record demonstrates that the trial court carefully,
thoughtfully, and adequately explained the resolution of Terzuolo’s claim in
the May 5, 2016 Opinion and applied the proper burden of proof.
3
42 Pa.C.S. § 5930.
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thing or contract, nor any other person whose interest shall be
adverse to the said right of such deceased . . . party, shall be a
competent witness to any matter occurring before the death of
said party. . . .
42 Pa.C.S. § 5930. The Dead Man’s Act prohibits “surviving parties who
have an interest which is adverse to decedent’s estate [] from testifying as
to any transaction or event which occurred before [the] decedent’s death.”
Zigmantanis v. Zigmantanis, 797 A.2d 990, 995 (Pa. Super. 2002).
This court has held that “[t]he rationale behind the Dead Man’s Act is
that the law should not permit the surviving party to testify since he could lie
and attempt to testify favorably to himself and adversely to the deceased
party, knowing the other party is incapable of contradicting the fallacious
testimony.” Id. (citation and quotation omitted). “The theory is that
because the decedent’s representative is unable to present evidence
regarding the transaction, the other party to the transaction should be
similarly restricted.” Visscher v. O’Brien, 418 A.2d 454, 458 (Pa. Super.
1980). “The rule is inapplicable, however, when the witness does not have
an interest in the outcome of the proceeding, for in that case, the witness
would have no reason to misrepresent his dealing with the decedent.” Id.The disqualification of testimony under the Dead Man’s Act only applies
to two classes of witnesses: surviving parties to a transaction, and any other
person whose interest is adverse to the estate. In re Hendrickson’s
Estate, 130 A.2d 143, 146 (Pa. 1957). If a witness is not a surviving party
and has no adverse interest, he or she is competent to testify. See, e.g.,
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Visscher, supra (finding that a real estate broker and appraiser were both
competent to testify regarding an oral contract for broker’s commission
allegedly made between a surviving party and decedent on the sale of a
parcel of decedent’s land); Estate of Grossman, 406 A.2d 726 (Pa. 1979)
(Dead Man’s Act did not prohibit the testimony of decedent’s daughter’s
husband regarding an alleged oral contract the daughter had with the
decedent to leave her one-half of his estate).
Moreover, this court has previously concluded that the Dead Man’s Act
only applies to witness testimony and does not apply to documentary
evidence, including checks and receipts. See Larkin v. Metz, 580 A.2d
1150, 1153 (Pa. Super. 1990) (holding that “the trial court erred when it
precluded the receipts and canceled checks offered [] to prove the existence
of a contract for the sale of the property between themselves and the
decedent.”).
In the instant case, the trial court properly applied the Dead Man’s Act.
See Trial Court Opinion at 4-5. The court allowed Terzuolo to proffer
checks, the partnership agreement, and other documentary evidence in
accordance with Larkin, supra. See N.T. Hearing, 3/3/16, at 8-30. In
addition, the accountant, John Paciello, a person with no interest in the
outcome of the proceedings, also testified about the tax records and other
documentary evidence. See id. at 31-62. Contrary to Appellant’s
contention, the Dead Man’s Act does not preclude the admission of
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documentary evidence pertaining to the partnership and does not preclude
Paciello’s testimony.
After a careful review of the certified record and the parties’
arguments, we discern no abuse of discretion or misapplication of law and
affirm the trial court’s May 5, 2016 Order.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/31/2017
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Circulated 12/27/2016 12:38 PM
IN THE COURT OF COMMON PLEAS OF MONTGOMERY COUNTY, PENNSYLVANIA
ORPHANS' COURT DIVISION
NO. 2014-X3488
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ESTATE OF WILLIAM P. O'BRIEN, DECEASED
(Lale of Conshohocken Borough)
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The First and Final Account of Donna Wellington, Executrix of the Estate of William P.
O'Brien, Deceased, was called for audit by this court on November 2, 2015. Objections were
filed by Terry Terzuolo on October 20, 2015.1 A hearing on these Objections was held on March
3, 2016 at which time the Court decided the issue of whether the decedent's estate owes the
objectant the amount of $64,905.31 for an erroneous partnership distribution made to the
decedent during his lifetime.2 This matter is now ripe for adjudication.
COUNSEL APPEARED AS FOLLOWS:
VANGROSSI AND RECCHUITI
By: Francis Recchuiti, Esquire
For the Accountant
KRAUT HARRIS, P.C.
By: David Kraut, Esquire
For Objectant, Terry Terzuolo.
The Decedent, William P. O'Brien, died on September 6, 2014, leaving a Will dated
September 9, 2010, which was duly probated by the Register of Wills of Montgomery County on
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Prior to filing Objections, Terry Terzuolo filed a claim against the Estate of William P. O'Brien on December 3,
2014.
2
The parties submitted Memoranda of Law to the Honorable Stanley R. Ott regarding the applicability of the Dead
Man's Rule. By Order dated January 7, 2016 Judge Ott determined that "the Dead Man's Rule does not bar either
documentary evidence or testimony from third parties, including that of Mr. Paciello. Issues of hearsay and
privilege are reserved for the time of trial."
THIS DOCUMENT WAS DockETED AND SENT ON 05/05/2016
October 7, 2014, at which time the Register granted Letters Testamentary to the Accountant
herein.
The Decedent left no surviving spouse. No person qualified for the Family Exemption.
The First and Final Account for this Estate is stated to September 25, 2015. Therein, the
Accountant reports receipts of $449,678.06, since decreased by disbursements of $95,591.07 and
distributions of$157,350.00 leaving $196,736.99 on hand.
Written notice of the filing of the Account and Audit was given to all persons to whom
written notice is required to be given by law and Rules of Court, on September 25, 2015.
All parties having any interest in this Estate are said to be living, of age, and sui juris.
The Accountant has raised one issue for adjudication, which relates to the objection of
Terry Terzuolo (hereinafter "Ms. Terzuolo" or "Objectant"), namely whether the claim by Ms.
Terzuolo, in the amount of $64,905.31 is a valid claim against the Estate. The Accountant
maintains it is not. This Court disagrees. A hearing was held March 3, 2016 regarding this issue,
particularly whether a partnership distribution resulting from the partnership dissolution in 2013-
14 and made to the decedent a few months prior to his death, was improper. This Court heard
testimony from two witnesses; the Objectant3 and John A. Paciello, CPA.
Ms. Terzuolo was a police officer with Upper Merion Township for just under twenty-
nine years, having retired in October 2000. NT, 3/3/16, p. 8. Ms. Terzuolo formed a
partnership with the decedent, William O'Brien, on January 6, 1997 for the purposes of buying,
developing and selling property, real and personal. See, Exhibit P-1, Partnership Agreement
The partnership was named Bri-Ter Developments. John A. Paciello, CPA has been the
accountant for this company since its inception.
3 The testimony of Terry Terzuolo was limited to the introduction of documents in order to avoid a violation of the
Dean Man's Rule.
2
On December 30, 2013, the partnership liquefied its last asset, a property in Spring City,
Pennsylvania. See, Exhibit P-2, HUD-1 Settlement Statement; NT, 3/3/16, p. 10-11. The
proceeds of $170,858.92 from the sale of this property were deposited into the partnership's
checking account. See, Exhibit P-2 and P-3; NT, 3/3/16, p. 12. Ms. Terzuolo testified that she
maintained the partnership's financial records by hand and did not use a computer. NT, 3/3/16,
p. 13, 27. The independent testimony of Mr. Paciello confirmed that Ms. Terzuolo primarily
handled the financial operations of the partnership. NT, 3/3/16, p. 31-33. These detailed records
would be given to the accountant for the partnership, Mr. PacielJo, in order to generate the tax
returns. NT, 3/3/16, p. 14-16.
On February 28, 2014, Terry Terzuolo issued two checks from the partnership checking
account. each in the amount of $80,000, to herself and the decedent, dividing the proceeds from
the sale of the property evenly. See, Exhibit Pw4 and P-5; NT, 3/3/16, p. 17. The remaining
balance in the partnership checking account as of March 3, 2014 was $7,524.30. This
distribution of $80,000 to herself and Mr. O'Brien however was in error as the distribution
should have been made in accordance with the capital accounts of the two partners and not on a
50/50 basis as was done. Once the capital accounts were reconciled, any remaining profit would
be split 50/50. See, NT, 3/3/16, p. 42.
At the time the partnership was created, the partnership consisted of $30,000 in capital
contributions. Each partner had contributed $8,000, and each were required to contribute an
additional $7,000. See, Exhibit P-1, paragraph 4. The partnership agreement also required each
partner to maintain their own capital account," Id. at paragraph 5. Exhibit P-6 is a compilation
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Accountant John Paciello explained what a capital account is: "Capital accounts begin with the partners' initial
contribution offunds in their partnership, and that capital account changes on an ongoing basis. It can increase it the
partner contributes additional capital. It can increase if the partnership shows a profit and the partner would be
credited with the appropriate percentage of profits, or it could decrease if the partnership shows a loss and the
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of the partnership's tax returns from 1997 through 2013. A review of these returns details the
capital accounts for Terry Terzuolo and William O'Brien for each year. The accountant testified
that when a partnership is dissolving and the assets have been liquidated so that the only
remaining asset is cash, the disbursement of cash would be equal to the capital accounts, thereby
bringing all capital accounts to zero. NT, 3/3/16, p. 34-35.
The evidence established that the 2013 partnership tax return showed a zero balance in
both Terry Terzuolo and William O'Brien's capital accounts. See, Exhibit P-6, 2013 Return;
NT, 3/3/16, p. 37-39. These documents also show that given the disparity between Terzuolo's
capital account and O'Brien's capital account, Terzuolo should have received a disbursement of
$153,192.00 and O'Brien should have received a disbursement of$15,857.00 as opposed to the
$80,000 disbursed to each partner. Id. It appears evident to this Court, based on a review of the
tax returns of the partnership and the testimony of Mr. Paciello that Mr. O'Brien received a
larger disbursement than he was entitled to and he was over paid by the amount of $64,143.00.
NT, 3/3/16, p.42; Exhibit P-6.
Mr. O'Brien died on September 6, 2014. Counsel for the Executrix argues that this
disbursement discrepancy was discovered in March of 2014, yet repayment was not sought from
Mr. O'Brien until after his death sometime in October of 2014. We note the oddity of the timing
of this, but a review of Mr. Paciello's independent testimony, which this Court found quite
credible, coupled with the tax documents that speak for themselves, quell any concern this Court
may have of duplicity on the part of Ms. Terzuolo. Further this Court notes that Ms. Terzuolo
was precluded from testifying in Court as to the reasoning behind this delay or with regard to her
partner would receive a charge for their share of the loss, decrease in capital. So every year when the tax returns
were prepared, we had a beginning balance which would be the ending balance of the prior year for each capital
account, and to that was added any capital contributionsduring the year, and added or subtracted whether there was
a profit or a loss during the year. And also could decrease if there was any distributions to the parties during the
year. NT, 3/3/16, p. 33-34.
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discussions with the decedent about this issue as it would have violated the Dead Man's Rule.
Accordingly, this Court SUSTAINS the objections of Terry Terzuolo and directs the Executrix
of the Estate of William O'Brien to repay the sum of $64,143.00 to the claimant/objectant, Terry
Terzuolo,
The Accountant has requested approval of a reserve in the amount of $80,000.00 for
litigation expenses and potential liability with regard to the claim of Terry Terzuolo. Due notice
of this request was given to all interested persons and no one appeared to object. Accordingly,
by this Adjudication, a reserve in the amount of $64,143.00 is granted with regard to Terry
Terzuolo's claim and the remaining $15,857.00 is approved as a reserve for litigation expenses
related to the hearing on March 3, 2016, as needed. Any unexpended portion of this reserve is to
be distributed to the beneficiaries in accordance with the terms of decedent's Will, without the
necessity of further accounting.
There are no remaining questions before this Court requiring adjudication.
Subject to the views expressed in this Adjudication, to distributions heretofore properly
made, and to any Pennsylvania inheritance transfer tax that may properly be due, the net
ascertained balances of principal and income are awarded as set forth in the last paragraph of the
Petition for Adjudication.
AND NOW, this day of May, 2016, the First and Final Account is confirmed subject
to the findings of this Court in this Adjudication and it is hereby ORDERED and DECREED that
the Executrix forthwith pay the distributions herein awarded.
Exceptions to this Adjudication may be filed within twenty (20) days from the entry of
the Adjudication. An appeal from this Adjudication may be taken to the appropriate appellate
court within thirty (30) days from the entry of the Adjudication. See, Pa. 0.C. Rule 7.1, as
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amended, and Pa , R ..A P. 902 and 903 .
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