Rellick-Smith, S. v. Rellick, B. , 147 A.3d 897 ( 2016 )

J-A13037-16
2016 Pa. Super. 184
SHARLEEN M. RELLICK-SMITH, : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
v. :
:
BETTY J. RELLICK AND KIMBERLY V. :
VASIL : No. 1105 WDA 2015
Appeal from the Order entered June 22, 2015
in the Court of Common Pleas of Indiana County,
Orphans' Court at No. 32-14-0490
BEFORE: OLSON, STABILE and MUSMANNO, JJ.
OPINION BY MUSMANNO, J.: FILED AUGUST 22, 2016
Sharleen M. Rellick-Smith (“Rellick-Smith”) appeals from the Order
granting the “Motion to Dismiss” filed by Betty J. Rellick (“Rellick”) and
Kimberly V. Vasil (“Vasil”). We vacate the Order and remand for further
proceedings.
Rellick-Smith commenced this action by filing a Complaint in Orphans’
Court1 against Rellick and Vasil (sometimes collectively referred to as “the
Defendants”) on October 14, 2014. All parties to the instant case are
relatives of Rose M. Rellick (hereinafter “the decedent”),2 who died on
December 20, 2012.3 In March 2006, Rellick and Vasil executed documents
1
Though a case in Orphans’ Court is commenced by filing a petition, rather
than a complaint, see 20 Pa.C.S.A. § 761, we, like the Orphans’ Court, will
overlook this minor defect.
2
Vasil and Rellick-Smith are nieces of the decedent. Rellick is the
decedent’s sister. Complaint, 10/14/14, at ¶¶ 4, 5.
3
The record does not reveal whether the decedent died with a will, or the
identity of the personal representative of her estate.
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giving them power of attorney (“POA”) concerning the decedent’s affairs.
Complaint, 10/14/14, at ¶ 6; see also id., Exhibit A. In August 2006, the
decedent created two certificate of deposit accounts (collectively “the CDs”)
at First Commonwealth Bank (“First Commonwealth”). Id. at ¶¶ 7, 8.4
According to Rellick-Smith, the decedent created these accounts “for the
purpose of estate planning” for “her intended beneficiaries.” Id. at ¶ 7.
Both of the CDs were created in the names of the decedent, Rellick-Smith,
Rellick, and Vasil. Id. at ¶ 9; see also id., Exhibits B and C.5
On July 31, 2009, Rellick and Vasil, using their authority as the
decedent’s agents under the POA, both executed a First Commonwealth form
to remove Rellick-Smith’s name from the CDs. Id. at ¶ 10; see also id.
4
At the time of their creation, the two CDs were valued at $144,678.11 and
$152,043.90, respectively. Complaint, 10/14/14, Exhibits B and C.
5
Notably, the funds in the CDs were held “in trust for” Rellick-Smith, Rellick,
and Vasil. One who deposits money in a savings account in her own name in
trust for another establishes a “Totten trust.” In re Estate of McFetridge,
372 A.2d 823, 825 (Pa. 1977). The name is derived from In re Totten, 179
N.Y. 112, 71 N.E. 748 (N.Y. 1904), the New York Court of Appeals decision
widely credited with first conceiving the notion of a “tentative” trust. “A
Totten trust allows the depositor to retain complete control of the fund
during his life and yet secure to the beneficiary any balance standing in the
account at the death of the depositor.” Estate of McFetridge, 372 A.2d at
825 (citation, quotation marks, and ellipses omitted). “Totten Trusts [] are
essentially a ‘poor man’s will,’ a judicial creation that[,] strictly speaking[,] is
neither a will nor a trust but are fairly obviously testamentary transfers.” In
re Estate of Rood, 121 A.3d 1104, 1108-09 (Pa. Super. 2015) (citation,
brackets and some internal quotation marks omitted).
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Exhibit D.6 Rellick-Smith was not informed that her name had been
removed from the CDs. Id. at ¶ 12.
Rellick-Smith contends that, sometime in March 2013 (approximately
three months after the decedent’s death), Rellick and Vasil withdrew all of
the money in the CDs,7 and divided it evenly among themselves. Id. at
¶¶ 15, 17. Rellick-Smith received no money from the CDs. Id. at ¶ 16.
According to Rellick-Smith, “[i]t was the intention of [the decedent] for the
money in these two CDs to be divided evenly” between Rellick-Smith,
Rellick, and Vasil. Id. at ¶ 18. Rellick-Smith argues that because Rellick
and Vasil abused their authority as agents under the POA agreement in
unilaterally removing Rellick-Smith’s name from the CDs, Rellick-Smith is
entitled to one-third of the suspected value of the CDs at the time the
6
The Complaint alleges that Rellick also signed the form in the decedent’s
name. Complaint, 10/14/14, Exhibit D. None of the parties allege that the
decedent was present at the time of signing, or specifically authorized the
change of beneficiaries.
7
Rellick-Smith states that although she is not certain of the exact value of
the CDs at that time, she believed them to be worth $400,000.00 combined.
Complaint, 10/14/14, at ¶ 15.
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accounts were cashed ($133,000.00, plus interest). Id. at ¶¶ 19, 20, 23.8
Approximately two weeks after the filing of the Complaint, the
Defendants filed an Answer. On February 11, 2015, the Defendants filed the
“Motion to Dismiss,” asserting that Rellick-Smith lacked standing to sue and,
in the alternative, the action was barred by the applicable statute of
8
Nowhere in Rellick-Smith’s three-page Complaint does she specifically
identify any cause of action. Rather, the Complaint alleges only as follows:
“[Rellick-Smith] believes that the Defendants violated Pennsylvania laws by
using their authority as agents of [the decedent] for their own financial gain
through the removal of [Rellick-Smith’s] name from the … CDs.” Complaint,
10/10/14, at ¶ 19. However, “[u]nder Pennsylvania’s fact pleading system,
the complainant need only state the material facts upon which a cause of
action is based. Pa.R.C.P. 1019(a). The duty to discover the cause or
causes of action rests with the trial court.” Grossman v. Barke, 868 A.2d
561, 569 (Pa. Super. 2005) (citation omitted); see also id. at 568-69
(stating that “[e]ven though [the plaintiff] did not separate his factual
allegations into separate counts specifying the legal theories underlying the
complaint, the trial court was obligated to consider what causes of action
were supported by the facts alleged.”). Here, Rellick-Smith’s Complaint,
though terse, stated sufficient material facts upon which a cause of action
could be based. See id. at 569. Rellick-Smith’s above-mentioned assertion
facially alleges a breach of fiduciary duty. See, e.g., In re Estate of
Bechtel, 92 A.3d 833, 839 (Pa. Super. 2014) (discussing breach of fiduciary
duty in the context of an allegation of abuse of authority by an agent under
a POA). Moreover, Vasil and Rellick did not object to the Complaint as being
procedurally defective. See Bartanus v. Lis, 480 A.2d 1178, 1182 (Pa.
Super. 1984) (holding that the defendants waived their claim that the
plaintiff failed to properly divide complaint into separate counts for each
cause of action asserted, where defendants did not challenge form of
complaint in their preliminary objections).
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limitations.9 The Defendants argued that the only persons who had standing
to challenge an agent’s actions under the POA agreement were the decedent
(principal) prior to her death, or, thereafter, the personal representative of
the decedent’s estate.10 Rellick-Smith filed a Response to the Motion to
Dismiss. The Orphans’ Court heard argument on the matter on May 12,
2015.11 By an Order entered on June 22, 2015, the Orphans’ Court granted
the Motion to Dismiss and issued an Opinion in connection with the Order,
9
The Motion to Dismiss was essentially in the form of a preliminary
objection; we will treat it as such. See Pa.R.O.C. 3.9(b)(5) (stating that
lack of standing can be raised by preliminary objection).
10
The Defendants also pointed to a previous decision of the Indiana County
Court of Common Pleas in a case in the civil division involving essentially the
same parties (hereinafter “the civil case”). Vasil and Rellick initiated the civil
case, prior to the filing of the Complaint in the instant case, against Rellick-
Smith and Annabell Marcoaldi (“Marcoaldi”), who had served as the
decedent’s accountant. In the civil case, the trial court ruled that Vasil
lacked standing to sue where the decedent, prior to her death, personally
excluded Vasil as a beneficiary under a separate certificate of deposit
account, observing that Pennsylvania law does not provide grounds for
recovery on the basis of inter vivos transfers alleged to diminish an eventual
bequest. See Trial Court Opinion and Order (No. 11283 CD 2014), 5/18/15,
at 7-9. Vasil appealed the ruling in the civil case, and the appeal is listed
before this panel at 884 WDA 2015. Moreover, in their Answer filed in the
instant case, the Defendants stated that “[Rellick-Smith’s] name was
removed[, i.e., as a beneficiary under the CDs,] because she had acted
inappropriately with respect to other [certificate of deposit] accounts [of the
decedent,] as set forth in the [civil case] ….” Answer, 10/22/14, at 2
(unnumbered).
11
The notes of testimony from this hearing are not contained in the certified
record. Accordingly, we asked our prothonotary to contact the trial court’s
prothonotary to obtain the transcript. The trial court prothonotary
responded that no transcript exists, as the hearing was apparently not
transcribed.
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ruling that Rellick-Smith lacked standing to sue. In response, Rellick-Smith
timely filed a Notice of Appeal.
Rellick-Smith presents a single issue for our review: “Whether the
[Orphans’] Court erred by determining that [Rellick-Smith] did not have
standing[?]” Brief for Appellant at 7.12
In determining whether the Orphans’ Court properly granted the
Defendants’ preliminary objections (i.e., the Motion to Dismiss), we review
the ruling for an error of law or abuse of discretion. In re B.L.J., Jr., 938
A.2d 1068, 1071 (Pa. Super. 2007). “On an appeal from an order sustaining
preliminary objections, we accept as true all well-pleaded material facts set
forth in the appellant’s complaint and all reasonable inferences which may
be drawn from those facts.” Estate of Gentry v. Diamond Rock Hill
Realty, LLC, 111 A.3d 194, 198 (Pa. Super. 2015) (citation and brackets
omitted). Preliminary objections seeking 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, it should be resolved in favor of
overruling the objections. Id.
“Threshold issues of standing are questions of law; thus, our standard
of review is de novo and our scope of review is plenary.” Johnson v. Am.
Std., 8 A.3d 318, 326 (Pa. 2010).
12
Neither party addresses on appeal the statute of limitations issue raised in
the Defendants’ Motion to Dismiss.
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In Pennsylvania, the doctrine of standing … is a prudential,
judicially created principle designed to winnow out litigants who
have no direct interest in a judicial matter. In re Hickson, 573
Pa. 127, 821 A.2d 1238, 1243, (Pa. 2003)[; see also id.
(stating that “[o]ur [] standing doctrine is not a senseless
restriction on the utilization of judicial resources ….”)]. For
standing to exist, the underlying controversy must be real and
concrete, such that the party initiating the legal action has, in
fact, been “aggrieved.” … [T]he core concept of standing is that
a person who is not adversely affected in any way by the matter
he seeks to challenge is not “aggrieved” thereby and has no
standing to obtain a judicial resolution to his challenge. A party
is aggrieved for purposes of establishing standing when the
party has a substantial, direct and immediate interest in the
outcome of litigation. A party’s interest is substantial when it
surpasses the interest of all citizens in procuring obedience to
the law; it is direct when the asserted violation shares a causal
connection with the alleged harm; finally, a party’s interest is
immediate when the causal connection with the alleged harm is
neither remote nor speculative.
Office of Governor v. Donahue, 98 A.3d 1223, 1229 (Pa. 2014)
(quotation marks, brackets, and some citations omitted).
Rellick-Smith argues that the Orphans’ Court committed an error of
law in ruling that she lacked standing to sue the Defendants, and that only
the decedent or her estate have standing to pursue an action against the
Defendants for changing the beneficiaries of the CDs. See Brief for
Appellant at 11-14.
The Orphans’ Court offered the following reasoning in its Opinion for
its ruling:
Courts in this Commonwealth have held that when a principal
has passed away, it is his/her estate, through a personal
representative[,] who is [the] only party with standing to
challenge the agent’s actions.
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To this may be added that orderly procedure requires a
strict adherence to the rule for only the personal
representative of a deceased party in interest stands in
the shoes of such decedent. Legatees, spouses or next
of kin of that decedent really have no such interest[,] as
Section 48 of the Fiduciaries Act of 1917 (20 PS ch. 3,
app. 843) requires until[,] by an accounting[,] it is
shown that all creditors or those having a prior claim
have been satisfied and the distributees’ rights fixed.
To hold otherwise would impose on the court a
preliminary or collateral inquiry as to whether the
petitioner has[,] in fact[,] a possible interest as
distributee that would be enlarged by any additional
sum brought into the other estate by successful
maintenance of the review.
In re Kilpatrick Estate, 84 A.2d 339, 341 (Pa. [] 1951)
[(emphasis in original).]
Kilpatrick further elucidated the definition of “party in interest”
within this very context.
We do not agree with the argument of the learned
counsel for the appellant that we should apply[,] to the
phrase “by any party interested therein” in Section 48
of the Fiduciaries Act of 1917[,] the same definition as
that contained in Section 17 of the Orphans’ Court Act
of 1917 (20 P.S. 2331)[,] which reads, “On petition to
the court of any person interested, whether such
interest be immediate or remote.” An all[-]sufficient
reason is that these two acts, though in pari materia,
are providing for different things. Section 17 of the
Orphans’ Court Act, set forth at the beginning of that
section immediately preceding the above quoted
portion, provides for “the manner of proceeding in the
orphans’ court to obtain the appearance of a person
amenable to its jurisdiction, and the procedure in
default of appearance.” Obviously a totally different
matter from a review under Section 48 of the
Fiduciaries’ Act of an accounting already in the court.
Had the legislature meant in the latter proceeding to
permit anyone having a remote interest therein to have
this special right, it would no doubt have said so.
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[Kilpatrick, 84 A.2d at 341].
Rellick-Smith has not pled that she is the personal
representative of the [decedent’s] estate, which would allow
[Rellick-Smith] to request an accounting and audit of the
agent’s[, i.e., Rellick and Vasil,] use of [their] authority under
the [POA agreement]. Therefore, … Rellick-Smith does not have
standing to contest the actions of [the Defendants], acting in
[their] capacity as [the decedent’s] agent[s].”
Orphans’ Court Opinion, 6/22/15, at 4-5.13
In response to the Orphans’ Court’s above reasoning, Rellick-Smith
argues as follows:
To apply the ruling of Kilpatrick to the present facts would set a
dangerous precedent. Here, [the decedent] specifically set aside
the money in question from her estate. It was her plan[,] while
working with her accountant[, Marcoaldi,] to have the money for
[Rellick-Smith] and [the Defendants] in the CDs. The whole
intention of the creation of the CDs was to avoid the money
going into the estate. It therefore does not make any sense to
suggest[,] as the [Orphans’] Court has in this case[,] that the
only challenge to the actions of the agents must come from the
personal representative of the [decedent’s] estate.
Brief for Appellant at 13-14; see also id. at 13 (arguing that Kilpatrick
“involved a request of an account of an estate fourteen years after the
individual had died, and shares very little[,] if anything[,] in common with
the present case.”).
13
In so ruling, the Orphans’ Court appears to have relied upon 20 Pa.C.S.A.
§ 3373 (governing actions by or against personal representative), which
provides that “[a]n action or proceeding to enforce any right or liability
which survives a decedent may be brought by or against his personal
representative alone or with other parties as though the decedent were
alive.”
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The issue presented by Rellick-Smith is one of first impression in
Pennsylvania. However, we are guided by the following persuasive
authority. Section 58 of The Restatement (Second) of Trusts provides as
follows:
Where a person makes a deposit in a savings account in a bank
or other savings organization in his own name as trustee for
another person[,] intending to reserve a power to withdraw the
whole or any part of the deposit at any time during his lifetime
and to use as his own whatever he may withdraw, or otherwise
to revoke the trust, the intended trust is enforceable by the
beneficiary upon the death of the depositor as to any part
remaining on deposit on his death if he has not revoked the
trust.
RESTATEMENT OF TRUSTS (SECOND), § 58 (emphasis added); see also Estate of
McFetridge, 372 A.2d at 825 (relying upon section 58 and explaining Totten
trusts).
Moreover, the treatise, Scott on Trusts, lends additional persuasive
support for beneficiary standing, providing as follows concerning Totten trust
accounts:
Where a third person wrongfully withdraws money from the
account before the death of the depositor and without his
consent, the beneficiary can, after the death of the depositor
maintain a suit against him for the money so withdrawn. The
beneficiary had a sufficient interest during the life of the
depositor to entitle him to recover the money after the death of
the depositor where the trust was not revoked by the depositor.
Scott, Trusts (4th Ed. 1987) § 58.4, p. 224; see also Silk v. Silk, 295
N.Y.S. 517, 520 (N.Y. Sup. Ct. 1937) (holding that a Totten trust beneficiary
has standing to sue for injury to his/her tentative property interest in the
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funds held in the trust account after the death of the trust creator, where
funds have been withdrawn during the creator’s life, without consent or
approval); In re Guardianship of Medley, 573 So. 2d 892, 907 (Fla. Dist.
Ct. App. 4th Dist. 1990) (holding that Totten trust beneficiaries had standing
to sue the bank/guardian that held the trust account funds following the
death of the account co-owner/co-trustee (“wife”), where (1) the other co-
owner/co-trustee (“husband”) had unilaterally withdrawn funds from the
accounts prior to his death, without wife’s knowledge or consent; (2) it was
the joint intent of wife and husband that the trust would not be revoked by
such a withdrawal; and (3) husband and wife held the trust funds as tenants
by the entireties).
In the instant case, accepting as true the allegations in Rellick-Smith’s
Complaint, the decedent created the CDs as a means for estate planning,
and intended for the beneficiaries she named to equally share the account
funds upon her death. The decedent never revoked the CDs nor personally
changed the named beneficiaries. The Complaint averred that the
Defendants abused their power, as the decedent’s agents under the POA
agreement, by changing the beneficiaries of the CDs, without the decedent’s
authorization. Complaint, 10/10/14, at ¶ 19. Thus, in determining whether
Rellick-Smith had standing to sue the Defendants directly for breach of
fiduciary duty as the decedent’s agents, we consider whether the POA
agreement authorized the Defendants to change the beneficiaries of the
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CDs. The POA agreement authorized Rellick and Vasil to, inter alia, (1)
“engage in banking and financial transactions”; (2) “handle interests in
estates and trusts”; and (3) “make additions to an existing trust for [the
decedent’s] benefit.” Complaint, 10/14/14, Exhibit A (POA Agreement), at
5, 6.
Power of attorney actions are governed by statute, 20 Pa.C.S.A.
§ 5601 et seq. (hereinafter “the POA Act”). The POA Act mandates that, as
a fiduciary of the principal, an agent must at all times “[e]xercise [her]
powers for the benefit of the principal.” 20 Pa.C.S.A. § 5601(e)(1).
Concerning an agent’s “power to make additions to an existing trust,” the
POA Act provides, in relevant part, as follows: “The agent and the trust and
its beneficiaries shall be answerable as equity and justice may require to the
extent that an addition to a trust is inconsistent with … the known or
probable intent of the principal with respect to disposition of his estate.” Id.
§ 5603(c).14 In the instant case, accepting the Complaint’s allegations as
14
On July 2, 2014, the General Assembly passed Act No. 2014-95, which
amended the POA Act to include section 5601.4 (effective on January 1,
2015). That section provides, in relevant part, that “[a]n agent under a
power of attorney may do the following on behalf of the principal or with the
principal’s property only if the power of attorney expressly grants the agent
the authority[,] and exercise of the authority is not otherwise prohibited by
another agreement or instrument to which the authority or property is
subject: … Create or change a beneficiary designation.” 20 Pa.C.S.A.
§ 5601.4(a)(4) (emphasis added). However, Act No. 2014-95 provides as
follows concerning the application of its provisions: “Except as provided by
this section, the provisions of this act apply to powers of attorney created
before, on or after the respective effective dates of such provisions, but do
not apply to the acts or omissions of agents … that occur before such
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true, the decedent’s intent was known, and the Defendants’ actions in
changing the beneficiaries of the CDs was inconsistent with that intent.
Based upon the foregoing, we conclude that Rellick-Smith, as a
beneficiary of the CDs named by the decedent/principal during her life, had
standing to challenge the propriety of the Defendants’ unilateral action, as
agents under the POA agreement, in changing the decedent’s beneficiary
designation, to the Defendants’ benefit. See, e.g., RESTATEMENT OF TRUSTS
(SECOND), § 58; Silk, supra. To not afford named beneficiaries of a Totten
trust standing to sue in circumstances such as those presented in the instant
case could lead to an absurd and unjust result. Moreover, Rellick-Smith has
met the above-mentioned requirements for standing discussed in Donahue,
supra; she is certainly an aggrieved party as she has a substantial, direct
and immediate interest in the outcome of this litigation.
In summary, the Orphans’ Court erred in ruling that only the decedent
or her personal representative had standing to challenge the Defendants’
change of the beneficiary designation under the CDs. Accordingly, we
vacate the Order granting the Defendants’ Motion to Dismiss and remand for
further proceedings.
Order vacated. Case remanded for further proceedings consistent with
this Opinion. Superior Court jurisdiction relinquished.
respective effective dates.” 2014 Pa. Laws 95 (HB 1429), Section 9(1)
(emphasis added). Therefore, the prior version of the POA Act applies to the
Defendants’ changing of the beneficiaries under the CDs, which occurred in
July 2009, long before the effective date of section 5601.4(a)(4).
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Judge Stabile joins the opinion.
Judge Olson files a dissenting statement.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/22/2016
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