HomeMy WebLinkAbout03-4125JOSEPH D. BRENNER, SR., JOSEPH D. :
BRENNER, JR., and MARGARET B. BUSHEY, :
Plaintiffs, :
MANUFACTURERS AND TRADERS TRUST :
COMPANY, a New York corporation, DAVID C. :
GORITY, an individual, and CURT R. :
STAUFFER, an individual, :
:
Defendants. :
NOTICE
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
CW1L ACTION - LAW
NOTICE
You have been sued in court. If you wish to defend against the claims set forth in the following
pages, you must take action within twenty (20) days after this Complaint and Notice are served,
by entering a written appearance personally or by attorney and filing in writing with a court your
defenses or objections to the claims set forth against you. You are warned that if you fail to do
so the case may proceed without you and a judgment may be entered against you by the Court
without further notice for any money claimed in the Complaint or for any other claim or relief
requested by the Plaintiff. You may lose money or property or other rights important to you.
YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT
HAVE A LAYWER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE
SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP.
Cumberland Cotmty Bar Association
32 S. Bedford Street
Carlisle, Pennsylvania 17013-3302
(717) 249-3166
SNELBAKER, BRENNEMAN & SPARE, P.C.
By
Keith O. Brenneman
Richard C. Snelbaker
Attorneys for Plaintiffs
TONKON TORP LI~P
William F. Martson, Jr., OSB No 72163
Robyn E. Ridler, OSB No. 00016
Attorneys for Plaintiffs
JOSEPH D. BRENNER, SR., JOSEPH D.
BRENNER, JR., and MARGARET B. BUSHEY,
Plaintiffs,
1N THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
CIVIL ACTION - LAW
No. O3 - qta O 2;d
MANUFACTURERS AND TRADERS TRUST
COMPANY, a New York corporation, DAVID C. JURY TRIAL DEMANDED
GORITY, an individual, and CURT R.
STAUFFER, an individual,
Defendants.
COMPLAINT
PARTIES
1.
Plaintiff Joseph D. Brenner, Sr. ("Brenner Sr.") is and was, at all material times,
an individual residing in Carlisle, Cumberland County, Pennsylvania. Brenner Sr. is suing in his
capacity as a trustee of three certain trusts described herein.
2.
Plaintiff Joseph D. Brenner, Jr. ("Brenner Jr.") is and was, at all material times, an
individual residing in Carlisle, Cumberland County, Pennsylvania. Brenner Jr. is suing in his
capacity as a trustee of a certain trust described herein.
3.
Plaintiff Margaret B. Bushey ("Bushey") is and was, at all material times, an
individual residing in Carlisle, Cumberland County, Pennsylvania. Bushey is suing in her
capacity as a trustee of a certain trust described herein.
4.
Upon information and belief, defendant Manufacturers and Traders Trust
Company ("M&T") is and was, at all material times, a New York corporation doing business in
Cumberland County, Pennsylvania. M&T is the successor in interest of Farmers Trust Company.
5.
Upon information and belief, defendant David C. Gority, is and was, at all
material times, an individual residing in Carlisle, Cumberland County, Pennsylvania.
6.
Upon information and belief, defendant Curt R. Stauffer, is and was, at all
material times, an individual residing in Mechanicsburg, Cumberland Connty, Pennsylvania.
FACTS COMMON TO ALL CLAIMS
7.
Plaintiff Brenner Sr. is the former CEO of Amp, Inc. ("Amp"), an electrical
products company based in Han'isburg, Pennsylvania, that was acquired by Tyco International
Ltd. ("Tyco") in 1998. As an executive of Amp, Brenner Sr. acquired numerous shares of Amp
stock, which were subsequently converted into shares of Tyco stock.
8.
Plaintiffs Brenner Jr. and Bushey are two of the four children of Brenner Sr. and
his wife Jane Brenner, now deceased. The other two children are Nancy B. Blakely and
Katherine B. Menges.
9.
In the early 1990s, Brenner Sr. and Jane Brenner created several trusts for the
benefit of their children and grandchildren. The sole assets placed into these trusts were shares
of Amp stock.
10.
On or about November 23, 1994, Brenner Sr. and Jane Brenner executed an
Irrevocable Agreement of Trust, which created a trust for the benefit of their four children and,
upon their children's deaths, their grandchildren (hereinafter "the Grandchildren's Trust"). Under
2
the terms of the trust instrument, defendant M&T (as successor to Farmers Trust Company),
plaintiff Bushey, and plaintiff Brenner Jr. have been co-trustees of the Grandchildren's Trust
since Jane Brenner's death on October 24, 1997.
11.
The Grandchildren's Trust is maintained at M&T and is identified by M&T as
account number 43-1075-60-5.
12.
On or about November 23, 1994, Jane Brenner executed an Amendment and
Restatement to Declaration of Trust, which created four trusts, hereinafter referred to as the Jane
Brenner "A" Trust, the Jane Brenner "B" Trust, the Jane Brenner "C" Trust, and the Blakely Trust
(hereinafter, collectively, "the Children's Trusts"). These trusts are for the benefit of Brenner Sr.
and the four Brenner children. Under the terms of the trust instrument, defendant M&T (as
successor to Farmers Trust Company) and plaintiff Brenner Sr. have been co-trustees of the
Children's Trusts since Jane Brenner's death on October 24, 1997.
13.
The Jane Brenner "A" Trust was never funded and is not at issue in this litigation.
14.
The Jane Brenner "B" Trust is maintained at M&T and is identified by M&T as
account number 32-1056-60-8.
15.
The Jane Brenner "C" Trust is maintained at M&T and is identified by M&T as
account number 32-1057-60-6.
16.
The Blakely Trust is maintained at M&T and is identified by M&T as account
number 41-7090-60-2.
/////
3
17.
Since his wife Jane Brenner's death on October 24, 1997, Brenner Sr.'s health and
business acumen have both declined significantly. This fact is and was well known to M&T.
Plaintiffs have a long-standing business relationship with M&T Vice President and Trust Officer
David Gority ("Gority"). Gority has been the M&T officer principally responsible for fulfilling
M&T's fiduciary obligations in regards to the Children's Trusts and the Grandchildren's Trust
since the trusts' creation. Among other things, Gority knows that Brenner Sr. is ~years old,
suffers profound hearing loss, and has significantly impaired vision due to cataracts. On several
occasions since Jane Brenner's death, Gority has commtmicated to plaintiff Bushey his
perception that Brenner Sr. is easily confused about financial details, requires information to be
repeated multiple times (often over a period of days), and generally seems to be slowing down
and losing confidence in his ability to make business decisions.
18.
Because of the decline in Brenner Sr.'s health and abilities, and given Brenner Jr.
and Bushey's status as co-trustees of the Grandchildren's Trust, Gority has consistently invited
Brenner Jr. and Bushey to attend meetings involving the discussion or decision of substantive
financial issues for the Children's Trusts since 1997. In fact, in or about the summer of 1998,
Gority told Bushey that he believed she and/or her brother should attend any meetings at which
decisions would be made about the Children's Trusts in light of Brenner Sr.'s reduced capacity.
Bushey agreed. She and her brother, either or both, attended all subsequent meetings regarding
the Children's Trusts to which Gority invited them. On at least one occasion, Brenner Sr.'s
accountant also attended a meeting to assist him.
19.
In fall 2001, Curt Stauffer, an Assistant Vice President and Portfolio Manager at
M&T, began assisting Gority with the exercise of M&T's fiduciary obligations regarding the
Children's Trusts and the Grandchildren's Trust.
4
On or about January 23, 2002, Gority and Stauffer recommended to plaintiffs on
M&T's behalf that they diversify the investments held in the various trusts. Plaintiffs agreed to a
plan to liquidate approximately 20% of the Tyco stock held in the trusts. Gority indicated in a
letter dated February l, 2002, that 20% liquidation was "well within the parameters we are
comfortable with."
21.
As a result of the discussion with M&T, the trustees of the Grandchildren's Trust
ultimately sold 40% of the Tyco stock held in that trust during the first half of 2002. No Tyco
stock was sold from the Children's Trusts, however.
22.
On or about March 6, 2002, acting on behalf of M&T, Stauffer sent a letter to
Brenner Sr. recommending that, in light of various negative market events that had reduced the
value of Tyco stock, the investments in the Children's Trusts should be diversified. Stauffer
recommended that a "liquidation plan should be in place and carried out in a disciplined and
timely manner;" stated that "market prices...need not dictate the progress of the liquidation
plan;" and concluded that Tyco stock appeared to "represent a good investment opportunity as
part ora diversified portfolio." Stauffer also indicated that M&T believed the contemporaneous
"panic" surrounding Tyco stock was largely unwarranted. Thus, Stauffer encouraged Brenner Sr.
to agree to sell some, but not all, of the Tyco stock in the trusts. This letter was copied to
Brenner Jr., Bushey, and Gority.
23.
Brenner Sr. believed firmly in Tyco's fundamental financial soundness and, as a
result, believed that it was wise to continue holding Tyco stock both personally and in the
Children's Trusts. He therefore continued to resist selling Tyco stock from the Childreffs Trusts.
/////
5
24.
On Monday, June 3, 2002, Tyco's CEO was arrested and charged with tax evasion.
This event had a negative impact on the stock price.
25.
On Friday, June 7, 2002, Stauffer called plaintiff Bushey in a panic. Stauffer told
Bushey that Gority was on vacation so he was taking it upon himself to call her, Brenner Jr., and
Brenner Sr. regarding the Tyco situation. Stauffer told Bushey that M&T was "eliminating its
position in Tyco immediately" and advised plaintiffs to do the same. Stauffer breathlessly
described his concerns about Tyco and indicated that he would call Bushey later to set up a time
to meet the following week once Gority returned from vacation. Stauffer made a similar call to
Brenner Jr.
26.
On or about Tuesday, June 11, 2002, Stauffer telephoned Brenner Sr. and asked
him to come by M&T's Carlisle office on Wednesday, June 12, at which time Gority would be
back from vacation. Brenner Sr. agreed to come to the bank for a brief informational meeting
about the Tyco situation.
27.
When Brenner Sr. arrived at M&T on June 12, 2002, Stauffer and Gority were
already on a conference call with a senior M&T representative in Buffalo, New York. In contrast
to the informational meeting Brenner Sr. expected, Gority and Stauffer's actual purpose in calling
the meeting was to convince Brenner Sr. to liquidate one-third of the Tyco stock in the Children's
Trusts immediately and to quickly liquidate the remainder if the stock price fell further. Indeed,
Stauffer and Gority had already prepared documents for Brenner Sr. to sign allowing immediate
liquidation of one-third of the Tyco shares in each of the Children's Trusts, and placement of a
"stop loss order" at $9.00 on all remaining Tyco shares in those trusts.
/////
6
28.
Gority and Stauffer were intent upon getting Brenner Sr. to agree to their
liquidation plan and sign the documents. However, Brenner Sr. did not want to sell any Tyco
stock, and Gority and Stauffer knew the strength of Brenner's belief in Tyco's fundamental
financial soundness. Convinced of the correctness of their own desired course of action,
however, Gority and Stauffer did not adequately explain their liquidation plan to Brenner Sr. and
took advantage of his reduced capacity to pressure him into signing the documents. Ultimately,
under pressure from his co-trustees, Brenner Sr. agreed to sell one-third of the Tyco stock held in
the Children's Trusts if it reached $10.50. The documents Gority and Stauffer had Brenner Sr.
sign, however, did not provide for the disposition Brenner Sr. understood he was agreeing to.
Rather, they provided for immediate liquidation of one-third of the Tyco stock in the Children's
Trusts, and placed a "stop loss order" at $9.00 for the remaining two-thirds of the Tyco shares.
Brenner Sr. did not understand or agree to this plan.
29.
Neither Brenner Jr. nor Bushey was present at the meeting on June 12, 2002.
M&T never notified either of them of the meeting, and they were both unaware it was taking
place. Thus, M&T extracted Brenner Sr.'s "agreement" to liquidate the only assets in the
Children's Trusts without anyone present to help him understand M&T's proposal or the
documents M&T told him to sign. M&T's actions were in direct contravention of Gority's
agreement with Bushey and Brenner Jr. about substantive meetings, the established course of
practice for substantive meetings since summer 1998, and M&T's fiduciary duties regarding the
Children's Trusts.
30.
Immediately upon Brenner Sr.'s departure from M&T, Gority and Stauffer
executed their liquidation plan. At 11:33 a.m., M&T caused 4,533 shares of Tyco stock in the
Jane Brenner "B" Trust (one-third of the total) to be sold at $10.23 per share, At the same time,
7
M&T caused 13,866 shares of Tyco stock in the Jane Brenner "C" Trust (one-third of the total) to
be sold at $10.23 per share. At 11:36 a.m., M&T caused 24,274 shares of Tyco stock in the
Blakely Trust (one-third of the total) to be sold at $10.23 per share. At 12:05 p.m., M&T caused
11,134 shares of Tyco stock in the Grandchildren's Trust (one-third of the total) to be sold at
$10.23 per share. M&T also entered "stop loss" orders for all of the remaining Tyco shares in all
of the trusts.
31.
Upon information and belief, only after taking the actions described in paragraph
30 did M&T belatedly realize the potential implications of their failure to include Brenner Jr. and
Bushey in the decision on the Children's Trusts, as well as the fact that Brenner Jr. and Bushey
had not given approval as co-trustees of the Grandchildren's Trust. Gority and Stauffer knew
they had to get Brenner Jr. and Bushey to "agree" to M&T's improper actions in order to avoid
potential disaster.
32.
Pretending they had not yet acted, Gority quickly called plaintiff Bushey shortly
after 12:00 p.m. on June 12, 2002, and informed her that her father had agreed to sell one-third of
the stock in the Children's Trusts at $10.50 and to put a $9.00 "stop loss" order on the remaining
stock. Gority told Bushey that the decision had been made, but that he wanted to make sure he
had Bushey and Brenner Jr.'s "consent." Bushey was surprised and confused that her father
would ever agree to the course of action M&T was representing he had. M&T was desperate to
get her approval, however, so Gority improperly pressured Bushey until she "agreed" to the
course of action her father had allegedly taken on the Children's Trusts.
33.
Immediately after speaking to Bushey, Gority next telephoned Brenner Jr. Gority
told him that Brenner Sr. had already agreed to the liquidation plan for the Children's Trusts and
that Bushey had agreed to the liquidation plan for the Grandchildren's Trust. Like Bushey,
8
Brenner Jr. was surprised and confused by what M&T was telling him. However, Gority
characterized the plan as "a done deal" and pressured Brenner Jr. to go along with his father's and
sister's purported wishes. Brenner Jr. ultimately "agreed" under this improper pressure to sell
one-third of the stock at $10.50. However, he was uncomfortable with the stop loss order and
told Gority he would get back to M~cT on that issue.
34.
In a subsequent conversation with her brother, Bushey learned that she had
allegedly agreed to allow M&T's liquidation plan to be applied not only to the Children's Trusts
over which her father was named co-trustee, but also to the Grandchildren's Trust over which she
was co-trustee. In M&T's rush to get approval from Bushey, Gority had not adequately informed
Bushey that he was seeking her agreement as to the disposition of assets in the Grandchildren's
Trust as well as the Children's Trusts. Bushey never agreed or intended to agree to liquidate the
Tyeo shares in the Grandchildren's Trust.
35.
In the early afternoon of June 12, 2002, Tyco's stock price fell below $9.00 for a
short period of time.
36.
In the early afternoon of June 12, 2002, as a result of the "stop loss orders" entered
by M&T earlier that morning, all remaining Tyco shares were sold out of the various trusts at
$8.75 per share. Specifically, M&T caused the sale of 9,067 shares held in the Jane Brenner "B"
Trust; 27,734 shares held in the Jane Brenner "C" Trust; 48,468 shares held in the Blakely Trust;
and 22,266 shares held in the Grandchildren's Trust.
37.
After M&T had executed the sale of all Tyco stock from the Children's Trusts and
the Grandchildren's Trust, David Gority sent a letter to Brenner Jr. and Bushey, dated June 12,
2002. Gority requested Brenner Jr. and Bushey sign the letter to confirm their alleged
9
authorization of M&T's actions. Plaintiffs refused to sign.
38.
Subsequent to the events of June 12, 2002, M&T terminated Stauffer's
employment.
FIRST CLAIM FOR RELIEF
(Against Defendant M&T)
(Breach of Fiduciary Duty)
(Children's Trusts)
39.
Plaintiffs restate the allegations in paragraphs 1 through 38.
40.
M&T had an obligation to deal honestly with its co-trustee, Brenner Sr., in the
management of the Children's Trusts.
41.
M&T had an obligation to act in the best interests of the beneficiaries of the
Children's Trusts.
42.
In light of Brenner Sr.'s failing health and reduced capacity, and pursuant to the
agreement reached between Gority and Bushey, M&T had an obligation to take appropriate and
necessary measures to protect the assets and beneficiaries of the Children's Trusts, including,
inter alia, involving Bushey and/or Brenner Jr. in any substantive decisions regarding the
Children's Trusts.
43.
M&T breached its fiduciary duties to the Children's Trusts by capitalizing on its
co-trustee Brenner Sr.'s reduced physical and mental condition in order to accomplish its
unilateral plan to liquidate all Tyco stock held by the trusts. M&T disposed of the entirety of the
10
assets in the Children's Trusts without the informed consent and agreement of its co-trustee.
44.
M&T breached its fiduciary duty by failing to include either Bushey or Brenner Jr.
in the meeting of June 12, 2002, which was in fact the most important, most substantive meeting
ever held regarding the Children's Trusts. If either Brenner Jr. or Bushey had been present to
explain what M&T wanted to their father, Brenner Sr. would not have "agreed" to M&T's
liquidation plan or signed M&T's documents.
45.
M&T's panicked decision to liquidate the entirety of the Tyco stock held in the
Children's Trusts on June 12, 2002, was not in the best interests of the beneficiaries, and
therefore a breach of M&T's fiduciary duty to the beneficiaries.
46.
As a result of M&T's actions, the Children's Trusts have been damaged in the
amount of $764,573.
47.
Plaintiffs are also entitled to punitive damages as a result of M&T's conduct, since
M&T acted with intent or reckless indifference.
SECOND CLAIM FOR RELIEF
(Against Defendant M&T)
(Breach of Fiduciary Duty)
(Grandchildren's Trust)
48.
Plaintiffs restate the allegations in paragraphs 1 through 38.
49.
M&T had an obligation to deal honestly with its co-trustees, Bushey and Brenner
Jr., in the management of the Grandchildren's Trust.
11
50.
M&T had an obligation to act in the best interests of the beneficiaries of the
Grandchildren's Trust.
51.
M&T breached its fiduciary duties to the Grandchildren's Trust by misleading and
coercing its co-trustees Brenner Jr. and Bushey to accede to its unilateral decision to liquidate all
Tyco stock held by the trust. M&T disposed of the entirety of the assets in the Grandchildren's
Trust without the informed consent and agreement of its co-trustees.
52.
M&T's panicked decision to liquidate the entirety of the Tyco stock held in the
Grandchildren's Trust on June 12, 2002, was not in the best interests of the beneficiaries, and
therefore a breach of M&T's fiduciary duty to the beneficiaries.
53.
As a result of M&T's actions, the Grandchildren's Trust has been damaged in the
amount of $199,605.
54.
Plaintiffs are also entitled to punitive damages as a result of M&T's conduct, since
M&T acted with intent or reckless indifference.
THIRD CLAIM FOR RELIEF
(Against Defendants Gority and Stauffer)
(Aiding and Abetting Breach of Fiduciary Duty)
(Children's Trusts)
55.
Plaintiffs restate the allegations in paragraphs 1 through 54.
56.
By their actions, Gority and Stauffer aided and abetted M&T's breach of fiduciary
12
duty with respect to the Children's Trusts.
57.
As a result of Gority and Stauffer's actions, the Children's Trusts have been
damaged in the amount of $764,573.
FOURTH CLAIM FOR RELIEF
(Against Defendants Gority and Stauffer)
(Aiding and Abetting Breach of Fiduciary Duty)
(Grandchildren's Trus0
58.
Plaintiffs restate the allegations in paragraphs 1 through 54.
59.
By their actions, Gority and Stauffer aided and abetted M&T's breach of fiduciary
duty with respect to the Grandchildren's Trust.
60.
As a result of Gority and Smaffer's actions, the Grandchildren's Trusts have been
damaged in the mount of $199,605.
/////
/////
/////
/////
/////
/////
/////
/////
/////
/////
13
WHEREFORE, plaintiffs Joseph D. Brenner, Sr., Joseph D. Brenner, Jr., and
Margaret B. Bushey, pray for judgment against defendants Manufacturers and Traders Trust
Company, David C. Gority, and Curt R. Stauffer; for compensatory damages against all
defendants in the amount of $964,178 on all claims; for punitive damages against defendant
Manufacturers and Traders Trust Company on the first and second claims; for interest at the
statutory rate of 6% fi.om June 12, 2002, until paid, against all defendants on all claims; and for
such other relief as the court deems just and equitable.
DATED this ~d, dayofAugust, 2003.
SNELBAKER, BRENNEMAN & SPARE, P.C.
Keith O. Brenneman
Richard C. Snelbaker
Attorneys for Plaintiff
TONKON TORP LL? ~
William F. Martson, Jr., OSB No. 721
Robyn E. Ridler, OSB No. 00016
Attorneys for Plaintiffs
14
VERIFICATION
I verify that the statements made in the foregoing Complaint are true and
correct based upon personal knowledge, information and/or belief. I understand
that false statements herein are made subject to the penalties of 18 Pa.C.S. Section
4909 relating to unsworn falsification to authorities.
Date:
~o$$
VERIFICATION
I verify that the statements made in the foregoing Complaint are true and
correct based upon personal knowledge, information and/or belief. I understand
that false statements herein are made subject to the penalties of 18 Pa.C.S. Section
4909 relating to unsworn falsification to authorities.
Date:
VERIFICATION
I verify that the statements made in the foregoing Complaint are true and
correct based upon personal knowledge, information and/or belief. I understand
that false statements herein are made subject to the penalties of 18 Pa.C.S. Section
4909 relating to unsworn falsification to authorities.
Date: /~t~'~ b~'~ °10'~ 3 / -(~'~}~ret B. Bushey (~
JOSEPH D. BRENNER, SR., JOSEPH D.
BRENNER, JR. and MARGARET B.
BUSHEY,
Plaintiffs
MANUFACTURERS AND TRADERS
TRUST COMPANY, a New York
Corporation, DAVID C. GORITY, an
Individual, and CURT R. STAUFFER, an
Individual,
Defendants
1N THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY,
PENNSYLV/~qlA
CIVIL ACTION - LAW
No. 2003 4125
JURY TRIAL DEMANDED
DEFENDANTS' PRELIMINARY OBJECTIONS
AND NOW COME Defendants, Manufacturers and Traders Trust Company
(hereinafter "M&T"), David C. Gority ("Gority"), and Curt R. Stauffer ("Stauffer"), and make
the following preliminary objections to Plaintiffs' Complaint, stating in support thereof as
follows:
MOTION TO DISMISS PURSUANT TO PA. R. CIV. P. 1028(A)(1) FOR LACK OF
SUBJECT MATTER JURISDICTION AND/OR FAILURE; TO ADHERE TO LAW OR
RULE OF COURT.
1. This action is, in substance, a sumharge action brought against M&T as
co-Trustee by certain other co-Trustees.
2. The action is filed in the general civil division of this Court. However,
because this action relates to issues pertaining to trust instruments, and constitutes a surcharge
action, the Orphans' Court Division of this Court has exclusive j~msdiction over this action.
20 Pa. C.S. {}711.
3. The general civil division, correspondingly, lacks any subject matter
jurisdiction over this action.
1
SLI 380215v1/00000.000
4. For this reason, this Court's general civil division lacks subject matter
jurisdiction over the Complaint, the Complaint fails to adhere to law or rule of Court, and must
therefore be dismissed and refiled, if at all, as a Petition for a Citation.
WHEREFORE, Defendants respectfully request that Plaintiffs' Complaint be
dismissed without prejudice.
II. MOTION TO STRIKE JURY TRIAL DEMAND PURSUANT TO PA. R. CIV.
P. 1028(a)(2) FOR FAILURE TO CONFORM TO LAW OR RULE OF COURT.
5. Plaintiffs' Complaint is endorsed with a jury trial demand.
6. As set forth in greater detail hereinabove, this action may only be pursued in
the Orphans' Court division of this Court.
7. Jury trials are available in Orphans' Court matters only in very limited
circumstances, as enumerated in Section 777 of the Pennsylvania Estates and Fiduciaries Code.
20 Pa. C.S. §777.
8. Except with regard to those instances where jury trials are statutorily made
available as of right (20 Pa. C.S. § 777(a) and (b)), there is no "right" to a jury trial in Ophan's
Court. Instead, conducting such a trial is within the discretion of the Court, and would be
advisory in any event.
9. A surcharge action such as that framed by the current Complaint is not within
the narrowly enumerated classes as to which a jury is available as of right.
10. As a result, the jury trial "demand" is improper and must be stricken.
WHEREFORE, Defendants respectfully request that the demand for trial by jury
be stricken.
2
SLI 380215v 1/00000.000
III. MOTION TO STRIKE SPECIFIC PUNITIVE DAMAGES CLAIM PURSUANT TO PA.
R. CIV. P. 1028(a)(2) FOR FAILURE TO ADHERE TO LAW OR RULE OF COURT.
11. Plaintiffs' Complaint purports to state claims for punitive damages. See
Complaint, ¶¶ 47, 54.
12. Punitive damages are unavailable in a surcharge action as a matter of law.
13. Plaintiffs' demand for relief including punitive damages is improper and
unauthorized and must be stricken.
WHEREFORE, Defendants respectfully request that the demand for punitive
damages be stricken.
IV. MOTION TO STRIKE DAMAGE CLAIMS PURSUANT TO PA. R. CIV. P. 1028(a)(2)
AND 1021(d) FOR FAILURE TO CONFORM TO LAW OR RULE OF COURT.
53, 57 and 60.
14. Plaintiffs' Complaint seeks particularized dmnages. See Complaint, ~[~] 46,
15. Although the amounts claimed are specifically set forth, there is no indication
of the manner in which these purported damages have been calculated.
16. The Rules of Civil Procedure, specifically Pt,. R. Civ. P. 1021(b), state that
"any pleading demanding relief for unliquidated damages shall not claim any specific sum."
17. The amount claimed in Plaintiffs' Complaint claims a specific sum, yet same
is not based upon a clearly discernible, objective and calculable basis.
18. Therefore, this demand for relief is unliquidated and unauthorized, and must
be stricken.
WHEREFORE, Defendants respectfully request that plaintiffs' specific demand
for particularized damages be stricken as failing to adhere to law or rule of court.
3
SLI 380215vl/00000.000
V. MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM PURSUANT TO PA.
R. CIV. P. 1028{A)(4) RE: INDIVIDUAL DEFENDANTS GORITY AND STAUFFER.
19. This is a surcharge action based upon a supposed breach of fiduciary duty by
a corporate fiduciary, M&T Bank.
20. The source of M&T's fiduciary duty is a written agreement, specifically a
trust instrument.
21. Although Plaintiffs' Complaint purports to state a claim against two of the
corporate trustees' agents and employees, these individuals were not, themselves, the named
fiduciaries in the trust instrument.
22. The named fiduciary was M&T's predecessor in interest.
23. The purported basis upon which the individuals are sued is "aiding and
abetting" a breach of fiduciary duty. This is not a recognized caase of action.
24. Even assuming such a cause of action existed, a corporation's agents are not
responsible for acts taken on behalf of their corporate principal.
25. Similarly, M&T's agents carmot be responsible for any arguable breach of a
fiduciary duty imposed by a contract to which they are not a party
26. The individual Defendants are unnecessary parties and have been improperly
joined for purposes of intimidation or harassment.
27. The Complaint is insufficient to state a claim against these individual
Defendants, and they should be summarily dismissed from this action.
WHEREFORE, Defendants David C. Gority and Curt R. Stauffer respectfully
request their dismissal as parties.
Dated: September / ,~2003
STEVENS & LEE
By ~'~~
Mark D. Bradshaw
Attorney I.D. No. 61975
4
SL1 380215vl/00000.000
Christopher M. Cicconi
Attorney I.D. No. 1!¢331
4750 Lindle Road
P.O. Box 11670
Harrisburg, PA 17108-1670
(717) 561-5242
Attorneys for Manufacturers and Traders Trust
Company, a New York Corporation, David C. Gority,
an Individual, and Curt R. Stauffer, an Individual,
Defendants
5
SL1 380215v 1/00000.000
CERTIFICATE OF SERVICE,
I, MARK D. BRADSHAW, ESQUIRE, certify that on this date, I served a
certified tree and correct copy of the foregoing Defendants' Preliminary Objections upon the
following counsel of record, by depositing the same in the United States mail, postage prepaid,
addressed as follows:
Keith O. Brenneman, Esquire
Snelbaker, Brenneman & Spare, P.C.
44 West Main Street
P.O. Box 318
Mechanicsburg, PA 17055-6249
William F. Martson, Esquire
Tonkon Torp, LLP
1600 Pioneer Tower
888 S.W. Fifth Avenue
Portland, OR 97204-2099
Date: September /~,2003
SL1 380215vl/00000.000
SHERIFF'S RETURN -
CASE NO: 2003-04125 P
COMMONWEALTH OF PENNSYLVANIA:
COUNTY OF CUMBERLAND
BRENNER JOSEPH D SR ET AL
VS
MANUFACTURERS AND TP~ADERS TR
REGULAR
KENNETH GOSSERT ,
Cumberland County.,Pennsylvania,
says,
STAUFFER CURT R
DEFENDANT
at 35 EMLYN LANE
MECHANICSBURG, PA 17050
PATRICIA STAUFFER, WIFE
Sheriff or Deputy Sheriff of
who being duly sworn according to law,
the within COMPLAINT & NOTICE was served upon
the
at 1630:00 HOURS, on the 3rd day of September, 2003
by handing to
together with
a true and attested copy of COMPLAINT & NOTICE
and at the same time directing Her attention to the contents thereof.
Sheriff's Costs: So Answers:
Docketing 6. O0 ........ /
Service 6.90 ~:~ ~.~. · ~. .';'.'"-
Affidavit .00 ~
Surcharge 10.00 R. Thomas Kline
.00
22.90 09/04/2003
SNELBAKER BRENNEM3~N SPARE
Sworn and Subscribed to before
me this /? ~-- day of
~ ~2~ A.D.
; grothonotary ' '
SHERIFF ' S
CASE NO: 2003-04125 P
COMMONWEALTH OF PENNSYLVANIA:
COUNTY OF CUMBERLAND
BRENNER JOSEPH D SR ET AL
VS
MANUFACTURERS AND TRADERS TR
RETURN - REGULAR
SGT. BARRY HORN , Sheriff or Deputy Sheriff of
Cumberland County, Pennsylvania, who being duly sworn according to law,
says, the within COMPLAINT & NOTICE was served upon
MANUFACTURERS ~kND TRADERS TRUST COMPANY
DEFENDANT , at 1030:00 HOURS,
at ONE WEST HIGH STREET
CARLISLE, PA 17013
DAVID GORITY, VICE PRESIDENT, ADULT
a true
on the 26th day of August
by handing to
IN CHARGE
the
, 2003
and attested copy of COMPLAINT & NOTICE
together with
and at the same time directing His attention to the contents thereof.
Sheriff's Costs:
Docketing 18.00
Service 3.45
Affidavit .00
Surcharge 10.00
.00
31.45
Sworn and Subscribed to before
me this /Z~ day of
/ P~othonot ary
So Answers:
Thomas Kline
09/04/2003 ,~
SNELBAKER BRENNEMAN ~:~ARE
SHERIFF ' S
CASE NO: 2003-04125 P
COMMONWEALTH OF PENNSYLVANIA:
COUNTY OF CUMBERLAND
BRENNER JOSEPH D SR ET AL
VS
MANUFACTURERS AND TRADERS TR
RETURN - REGULAR
SGT. BARRY HORN , Sheriff or Deputy Sheriff of
Cumberland County,Pennsylvania, who being duly sworn according to law,
says,
GORITY DAVID C
DEFENDANT , at 1030:00
at ONE WEST HIGH STREET
CARLISLE, PA 17013
DAVID GORITY
a true and attested copy of
the within COMPLAINT & NOTICE
was served upon
the
HOURS, on the 26th day of August , 2003
by handing to
COMPLAINT & NOTICE
together with
and at the same time directing His attention to the contents thereof.
Sheriff's Costs:
Docketing 6,00
Service .00
Affidavit .00
Surcharge 10.00
.00
16.00
Sworn and Subscribed to before
me this /2~ day of
~~ ~2 ~Lt3 A.D.
/ 'Prothonotary ' '
So Answers:
R. Thomas Kline
09/04/2003
SNELBAKER BRENNEMANS~ARE
By: ~D~Sheriff
PRAECIPE FOR LISTING CASE FOR ARGUMENT
TO THE PROTHONOTARY:
Please list the within matter for the next Argument Court.
JOSEPH D. BRENNER, SR., JOSEPH D. BRENNER, JR.,
and MARGARET B. BUSHEY,
Plaintiffs
V.
MANUFACTURERS AND TRADERS TRUST COMPANY,
a New York corporation, DAVID C. GORITY, an individual,
and CURT R. STAUFFER, an individual,
Defendants
I. State matter to be argued:
No.: 2003-4125 Civil
Defendants' Preliminary Objections
2. Identify counsel who will argue case:
(a) for Plaintiff:
(b) for Defendant:
Richard C. Snelbaker, Esqrdre
Snelbaker, Brenneman & Spare, P. C.
44 W. Main Street
Mechanicsburg, PA 17055
Mark D. Bradshaw, Esquire
Stevens & Lee, P. C.
P. O. Box 11670
Harrisburg, PA 17108-1670
3. I will notify all parties in writing within two days that this case has been listed for argument.
4. Argument Court Date:
December 3, 2003
Date: October 3, 2003
Attorney for Plaintiffs
LAW OFFICES
SNELBAKer.
BRENnEmAN
& SPARE
JOSEPH D. BRENNER, SR., JOSEPH
D. BRENNER, JR., and MARGARET B.
BUSHEY,
Plaintiffs
MANUFACTURERS AND TRADERS
TRUST COMPANY, a New York
corporation, DAVID C. GORITY, an
individual, and CURT R. STAUFFER,
an individual,
Defendants
: IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
: CIVIL ACTION- LAW
: NO. 20013-4125 CIVIL
MOTION FOR ADMISSION PRO HAC VICE OF CO-COUNSEl.
ON BEHALF OF PLAINTIFFS
Snelbaker, Brenneman & Spare, P. C., attorneys for Plaintiffs Joseph D. Brenner, Sr.,
Joseph D. Brenner, Jr. and Margaret B. Bushey, hereby moves this Court pursuant to
Pennsylvania Bar Admission Rule 301 for the admission ~ro hac vice of William F. Martson, Jr.,
Esquire and Robyn E. Ridler, Esquire of Tonkon Torp, LLP as co-counsel in the above-
captioned case and in support thereof represents as follows:
1. Richard C. Snelbaker, Esquire and Keith O. Brenneman, Esquire are members in good
standing of the bar of the Commonwealth of Pennsylvania and are qualified to practice in the
courts of the Commonwealth of Pennsylvania.
2. Snelbaker, Brenneman & Spare, P. C., through Richard C. Snelbaker, Esquire and
Keith O. Brenneman, Esquire, represents the Plaintiffs in this matter and is their local counsel of
record.
3. Plaintiffs desire to have William F. Martson, Jr., Esquire and Robyn E. Ridler, Esquire
assist in the trial of this matter on their behalf and represent them in all related proceedings in
this matter before this Court.
SNELBAKER.
BRENNEMAN
& SPARE
4. William F. Martson, Jr., Esquire is duly licensed to practice law by the State of
Oregon and is an attorney with the Portland, Oregon law firm of Tonkon Torp, LLP. Attorney
Martson was admitted to the bars of the following courts on the dates indicated below:
Court
Oregon Circuit Court
U. S. District Court for the District of Oregon
U. S. Court of Federal Claims
U. S. Court of Appeals, Ninth Circuit
United States Supreme Court
U. S. District Court, Northern District of
Califomia
U. S. Court of Appeals for the Federal
Circuit
Date
September 22, 1972
October 16, 1972
June 18, 1973
March 13, 1974
September 14, 1979
December 18, 1992
October 16, 1996
William F. Martson, Jr. is a member of good standing of the bar of each of the above-
listed courts and is not under suspension or disbarment by any court.
5. Robyn E. Ridler, Esquire is duly licensed to practice law by the State of Oregon and is
an attorney with the Portland, Oregon law firm of Tonkon Torp, LLP. Attorney Ridler was
admitted to the bars of the following courts on the dates indicated below:
Court
Oregon Circuit Court
U. S. District Court for the District of Oregon
Date
April 24, 2000
March 19, 2001
Robyn E. Ridler is a member of good standing of the bar of each of the above-listed
-2-
LAW OFFICES
SNELBAKER,
BREMNEMAN
& Spare
courts and is not under suspension or disbarment by any court.
6. There will be no prejudice in any way to the Defendants if Attorney Martson and
Attorney Ridler are admitted to the bar of this Court l~ro hac vice.
7. Counsel of record for the Defendams consems to this Motion.
WHEREFORE, Richard C. Snelbaker, Esquire and Keith O. Brenneman, Esquire
respectfully request this Court to issue an order admitting William F. Martson, Jr., Esquire and
Robyn E. Ridler, Esquire as co-counsel l~ro hac vice for Plaintiffs Joseph D. Brenner, Sr., Joseph
D. Brenner, Jr. and Margaret B. Bushey.
SNELBAKER, BRENNEMAN & SPARE, P. C.
BY:
Keith O. Brenneman, Esquire
Richard C. Snelbaker, Esquire
44 W. Main Street
Mechanicsburg, PA 17055
(717) 697-8528
Attorneys for Plaintiffs
Date: October 7, 2003
-3-
VERIFICATION
I verify that the statements made in the foregoing Motion are true and correct. I
understand that false statements herein are made subject to the penalties of 18 Pa.C.S. Section
4904 relating to unsworn falsification to authorities.
9qilh'~a~n F:~,Ia'rts~)n, J~/ 'i
Date: October 7, 2003
VERIFICATION
I verify that the statements made in the foregoing Motion are true and correct. I
understand that false statements herein are made subject to the penalties of 18 Pa.C.S. Section
4904 relating to unswom falsification to authorities.
Robyn E.'Ridler
October 7, 2003
Date:
LAW OFFICES
SNELBAKER,
BRENNEMAN
& SPARE
CERTIFICATE OF SERVICE
I, KEITH O. BRENNEMAN, ESQUIRE, hereby certify that I have, on the below date,
caused a tree and correct copy of the foregoing Motion to be served upon the persons and in the
manner indicated below:
FIRST CLASS MAIL. POSTAGE PREPAID, ADDRESSED AS FOLLOWS:
Christopher M. Ciccone, Esquire
Mark D. Bradshaw, Esquire
Stevens & Lee, P. C.
P. O. Box 11670
Harrisburg, PA 1'7108-1670
SNELBAKER, BRENNEMAN & SPARE, P.C.
Date: October 7, 2003
By:.
Keith O. Brenneman, Esquire
44 W. Main Street
P.O. Box 318
Mechanicsburg, PA 17055
(717) 697-8528
Attorneys for Plaintiffs
LAW OFFICES
SNELBAKEr,
BReNNEMAN
& Spare
JOSEPH D. BRENNER, SR.,JOSEPH
D. BRENNER, JR.,and MARGARET B.
BUSHEY,
Plaintiffs
MANUFACTURERS AND TRADERS :
TRUST COMPANY, a New York :
corporation, DAVID C. GORITY, an :
individual, and CURT R. STAUFFER, :
m individual, :
Defendants
: IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
: CIVIL ACTION - LAW
: NO. 2003-4125 CIVIL
ORDER
AND NOW, this q~ ~ day of Oe.~/,~
,2003 it is hereby ORDERED
that William F. Martson, Jr., Esquire and Robyn E. Ridler, Esquire are hereby specially admitted
to the bar of this Commonwealth as co-counsel representing the Plaintiffs in the above-captioned
matter.
BY THECOURT:
JOSEPH D. BRENNER, SR.,
JOSEPH D. BRENNER, JR. AND
MARGARET B. BUSHEY,
PLAINTIFFS
: IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
MANUFACTURERS AND TRADERS :
TRUST COMPANY a New York
Corporation, DAVID C. GORITY, an
Individual and CURT R. STAUFFER, an:
Individual,
DEFENDANTS : 03-4125 CIVIL TERM
IN RE: DEFENDANTS' PRELIMINARY OBJECTIONS TO PLAINTIFFS' COMPLAINT
ORDER OF COURT
AND NOW, this ~! ~ day of January, 2004, IT IS ORDERED:
(1) Plaintiffs' complaint, IS STRICKEN.
(2) The action is transferred to the Orphans' Court division.
(3) Plaintiffs are granted twenty days to file a petition for the issuance of a
citation.
VRichard C. Snelbaker, Esquire
P.O. Box 318
44 W. Main Street
Mechanicsburg, PA 17055
For Plaintiffs
Edgar B. Bayley, J.
03-4125 CIVIL TERM
¢'Mark D. Bradshaw, Esquire
P.O. Box 11670
Harrisburg, PA 17108-1670
For Defendants
:sal
JOSEPH D. BRENNER, SR.,
JOSEPH D. BRENNER, JR. AND
MARGARETB. BUSHEY,
PLAINTIFFS
: IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
MANUFACTURERS AND TRADERS
TRUST COMPANY a New York
Corporation, DAVID C. GORITY, an :
Individual and CURT R. STAUFFER, an:
Individual,
DEFENDANTS : 03-4125 CIVIL TERM
IN RE: DEFENDANTS' PRELIMINARY OBJECTIONS TO PLAINTIFFS' COMPLAINT
OPINION AND ORDER OF COURT
Bayley, J., January 21, 2004:--
On August 22, 2003, plaintiffs Joseph D. Brenner, Sr., Joseph D. Brenner, Jr.
and Margaret B. Bushey, filed this civil complaint against defendants, Manufacturers
and Traders Trust Company (M&T), David C. Gority and Curt R. Stauffer. Plaintiffs'
aver that Joseph D. Brenner, Jr., and Margaret B. Bushey are two of the four children of
Joseph D. Brenner, Sr., and his wife Jane Brenner, deceased. David Gority is vice
president and trust officer of M&T. Curt R. Stauffer is assistant vice president and
portfolio manager of M&T. In the eady 1990's, Brenner Sr. and his wife, Jane Brenner,
created several trusts for the benefit of their children and grandchildren, the sole asset
of the trusts being Amp, Inc. stock which was subsequently converted by acquisition to
Tyco International Ltd. stock. In November 1994, Brenner Sr. and Jane Brenner
executed an Irrevocable Agreement of Trust for the benefit of their four children, and
03-4125 CIVIL TERM
upon their deaths to their children. Bushey and Brenner Jr. have been co-trustees of
the Grandchildren Trust since October 24, 1997. In November, 1994, Jane Brenner
executed four trusts for the benefit of Brenner Sr. and the four Brenner children. Since
October 24, 1997, M&T has been co-trustee with Brenner Sr. of the Children Trusts.
David Gority has been primarily responsible for working with Brenner Jr., Bushey and
Brenner Sr. as co-trustees of the Grandchildren Trust and Children Trusts. Beginning
in the fall of 2001, Curt Stauffer has assisted Gority with the administration of both
trusts.
On January 23, 2002, Gority and Stauffer, in the course of their duties as M&T
employees, recommended that the Children Trusts and Grandchildren Trust diversify by
liquidating some of the Tyco stock. As co-trustees, plaintiffs agreed to liquidate twenty
percent of the stock. After further discussions between all of the co-trustees, forty
percent of the Tyco stock was sold from the Grandchildren Trust during the first half of
2002. No stock was sold from the Children Trusts. In March, 2002, as a result of
market events that negatively impacted the market value of Tyco stock, Gority and
Stauffer recommended liquidation of the stock in the Children Trusts. Brenner Sr. did
not consent. Subsequently, the CEO of Tyco was arrested, causing the stock to
sharply drop in value. M&T's employees then recommended to the co-trustees a
further diversification of the assets in the trusts. In early June, 2002, Gority and
Stauffer met with Brenner Sr. to discuss diversifying the Children Trusts. Brenner Sr.
executed an agreement consenting to immediate liquidation of one-third of the Tyco
-2-
03-4125 CIVIL TERM
stock in the Children Trusts and to place a stop loss order at nine dollars a share on the
remaining stocks. Brenner Jr. and Bushey did not attend that meeting. After obtaining
the approval of Bushey and Brenner, Jr. to liquidate the shares and diversify both trusts,
Gority and Stauffer implemented the agreed-upon plan for the liquidation of all of the
Tyco shares from the Children Trusts and the Grandchildren Trust. On June 12, 2002,
as a result of the stop loss order, all remaining shares of Tyco stock were sold from the
trusts.
As to M&T, plaintiffs allege: (1) the bank had an obligation to deal honestly with
its co-trustees, (2) it had an obligation to act in the best interests of the trusts, (3) its
"panic decision to liquidate the entirety of the Tyco stock held in the [trusts] on June 12,
2002, was not in the best interest of the beneficiaries, and was a breach of M&T's
fiduciary duty to the beneficiaries," and:
In light of Brenner Sr.'s failing health and reduced capacity, and
pursuant to the agreement reached between Gority and Bushey, M&T had
an obligation to take appropriate and necessary measures to protect the
assets and beneficiaries of the Children's Trusts, including, inter alia,
involving Bushey and/or Brenner Jr. in any substantive decisions
regarding the Children's Trusts.
M&T breached its fiduciary duties of the Children's Trusts by
capitalizing on its co-trustee Brenner Sr.'s reduced physical and mental
condition in order to accomplish its unilateral plan to liquidate all Tyco
stock held by the trusts. M&T disposed of the entirety of the assets in the
Children's Trusts without the informed consent and agreement of its co-
trustee.
M&T breached its fiduciary duty by failing to include either Bushey
or Brenner Jr. in the meeting of June 12, 2002, which was in fact the most
important, most substantive meeting ever held regarding the Children's
Trusts. If either Brenner Jr. or Bushey had been present to explain what
-3-
03-4125 CIVIL TERM
M&T wanted to their father, Brenner Sr. would not have "agreed" to M&T's
liquidation plan or signed M&T's documents.
As to the Grandchildren Trust, plaintiffs allege:
M&T breached its fiduciary duties to the Grandchildren's Trust by
misleading and coercing its co-trustee Brenner Jr. and Bushey to accede
to its unilateral decision to liquidate all Tyco stock held by the trust. M&T
disposed of the entirety of the assets in the Grandchildren's Trust without
the informed consent and agreement of its co-trustees.
As to Gority and Stauffer, plaintiffs allege that they "aided and abetted M&T's breach of
fiduciary duty with respect to the [trusts]."
Plaintiffs seek the following damages: (1) $764,573 against M&T for alleged
breach of its fiduciary duty as co-trustee of the Children Trusts, (2) $199,605 against
M&T for alleged breach of its fiduciary duty as co-trustee of the Grandchildren Trust, (3)
$764,573 against Gority and Stauffer for allegedly aiding and abetting M&T's breach of
fiduciary duty in regard to the Children Trusts, and (4) $199,605 against Gority and
Stauffer for allegedly aiding and abetting M&T's breach of fiduciary duty in regard to the
Grandchildren Trust. Plaintiffs seek punitive damages against M&T for allegedly acting
"with intent or reckless indifference." Plaintiffs demand a jury trial.
Defendants filed preliminary objections to the complaint which were briefed and
argued on December 3, 2003. They maintain that the causes of action in the civil
division involving the administration of trust investments constitutes an action for a
surcharge over which the Orphans' Court division has exclusive jurisdiction pursuant to
20 Pa.C.S. § 711. Section 711, titled Mandatory exercise of jurisdiction through
orphans' court division in general, provides:
-4-
03-4125 CIVIL TERM
Except as provided in section 712 (relating to nonmandatory
exercise of jurisdiction through the orphan's court division) and
section 713 (relating to special provisions for Philadelphia County),
the jurisdiction of the court of common pleas over the following shall
be exercised through its orphans' court division:...
(3) Inter vivos trusts.--The administration and distribution
of the real and personal property of inter vivos trusts, and the
reformation of setting aside of any such trusts, whether created
before or after the effective date of this chapter, except any inter
vivos trust jurisdiction of which was acquired by the court of
common pleas prior to January 1, 1969 unless the president judge
of such court orders the jurisdiction of the trust to be exercised
through the orphans' court division.
"Inter vivos trust" means an express trust other than a trust
created by a will, taking effect during the lifetime or at or after the
death of the settlor. (Emphasis added.)
Section 712, titled Nonmandatory exercise of jurisdiction through orphans'
court division, provides that: "The jurisdiction of the court of common pleas over
the following may be exercised through either its orphans' court division or
appropriate division," to include "Title to real estate," "Guardian of person," and:
(3) Other matters.--The disposition of any case where
there are substantial questions concerning matters
enumerated in section 711 and also matters not enumerated in
that section. (Emphasis added.)
Plaintiffs' cite Baskin & Sears v. Edward J. Boyle Company, 506 Pa. 62
(1984), in which the will of Edward J. Boyle, Jr., was probated in the Orphans' Court
Division of Allegheny County. It provided, inter alia, for a bequest to the decedent's
estate which would qualify for the maximum marital deduction to Pittsburgh National
Bank as trustee of a revocable life insurance trust. Exceptions by the trust beneficiary
were filed to the executor's First and Final Account and to the trustee's First and Partial
-5-
03-4125 CIVIL TERM
Account. Ensuing litigation was resolved by a family settlement agreement. The
Orphans' Court then confirmed the executor's account and entered a final distribution.
A subsequent complaint filed in the civil division alleged negligent estate planning and
administration, unfair trade practices, malpractice fraud, and intentional infliction of
emotional distress. The Supreme Court concluded that the complaint was only
collaterally related to the administration and distribution of the decedent's estate and
the revocable life insurance trust. The Court held:
As such, the action does not fall within the orphans' court's mandatory
exercise of jurisdiction as set forth in that section [711].
Thus, the claims proceeded in the civil division under the non-mandatory provisions of
Section 712.
Unlike the complaint in Baskin, the crux of plaintiffs' complaint is that M&T, as
trustee, through its employees Gority and Stauffer, breached fiduciary duties while
administering the inter vivos Children Trusts and Grandchildren Trust which resulted in
a pecuniary loss to the trusts. In Homer v. First Pennsylvania Banking and Trust
Company, 412 Pa. 72 (1963), the children of a life tenant in a testamentary trust
brought an action in assumpsit against the trustee in the civil division of Montgomery
County seeking damages on the basis that: (1) in an action in the Orphans' Court of
Philadelphia County the trustee had improperly employed an attorney with a conflict of
interest, (2) the trustee's attorney mislead the Orphans' Court to produce an
adjudication and a final decree that the Supreme Court of Pennsylvania determined
was erroneous, and (3) the trustee was grossly negligent and careless in the
03-4125 CIVIL TERM
administration of the trust and had neglected and failed to properly defend and protect
the interests of the plaintiffs. The Supreme Court of Pennsylvania construed the suit as
an action for a sumharge of the fiduciary, and held that the claim was within the
jurisdiction of the Orphans' Court division. Likewise, in the case sub judice, plaintiffs
are seeking to surcharge defendants which is directly, not collaterally, related to their
administration of the inter vivos trusts, and falls under the mandatory jurisdiction
requirement of Section 711(3). See also, Pew Trusts, 14 Fiduciary Reporter.2d 393
(Montgomery County 1994). Accordingly, the causes of action lie within the Orphans'
Court division.
Plaintiffs further argue that this court has jurisdiction under Section 712(3)
because their claim against Gority and Stauffer for aiding and abetting M&T's breach of
fiduciary duty constitutes a question not enumerated in Section 711(3). As pleaded
however, the claim against the co-trustee M&T rests on the actions of its employees
Gority and Stauffer in the course of their administration of the inter vivos trusts for the
bank. The allegations against the employees are directly related to the administration
of the inter vivos trusts. Therefore, there is no substantial question involving any
matter not enumerated in Section 711(3).
Defendants' other preliminary objections to plaintiffs' complaint maintain that: (1)
the demand for a jury trial should be stricken, (2) the claim for punitive damages should
be stricken, (3) the demand for particularized compensatory damages should be
stricken, and (4) the claims against David C. Gority and Curt R. Stauffer should be
-7-
03-4125 CIVIL TERM
dismissed. We need not address these objections. In In re Estate of Freedman, 307
Pa. Super. 413 (1982), the beneficiaries of the Freedman trust filed a complaint in
assumpsit and trespass in the civil division of Allegheny County naming Equibank N.A.
as defendant. The assets of the Freedman Estate had been placed in a common trust
established by Equibank's predecessor. Plaintiffs, seeking damages, alleged inter alia,
that the trustee, Equibank, mismanaged the common trust fund resulting in a
substantial depletion of the assets. Equibank filed preliminary objections maintaining
that the Orphans' Court division had jurisdiction over the action. The court transferred
the action to the Orphans' Court. Equibank then filed preliminary objections in the
Orphans' Court raising, inter alia, that plaintiff had to file a petition for a citation.
Plaintiffs countered with a petition for remand to the civil division. The Court struck the
complaint allowing twenty days for appellants to preceed by petition and citation in the
Orphans' Court. On appeal, the Superior Court of Pennsylvania, citing Horner, supra,
held that:
the lower court correctly found that appellants' case should be heard in
the Orphans' Court as that court has exclusive jurisdiction over both
testamentary and inter vivos trusts and therefore over an action to
surcharge a trustee of such a trust.
The Court further stated that, "The legislature has mandated that such proceedings in
Orphans' Court be commenced by petition for issuance of a citation. 20 Pa.C.S.
§ 761." The order of the Orphans' Court was affirmed and plaintiffs were granted time
~ Section 761 provides that, "All applications to the orphans' court division shall be by
petition..."
03-4125 CIVIL TERM
to file a petition for the issuance of a citation.
Likewise, in the present case, we will strike plaintiffs' complaint, transfer the
action to the Orphans' Court division, and grant plaintiffs time to file a petition. It is the
allegations in that petition, not the within complaint, that will form the basis of plaintiffs'
claims.
ORDER OF COURT
AND NOW, this ¢~/"Z~f;'da of Janua
y ry, 2004, IT IS ORDERED:
(1) Plaintiffs' complaint, IS STRICKEN.
(2) The action is transferred to the Orphans' Court division.
(3) Plaintiffs are granted twenty days to file a petition for the issuance of a
citation.
Richard C. Snelbaker, Esquire
P.O. Box 318
44 W. Main Street
Mechanicsburg, PA 17055
For Plaintiffs
Mark D. Bradshaw, Esquire
P.O. Box 11670
Harrisburg, PA 17108-1670
For Defendants
:sal
Edgar B. Bayley, J.
-9-