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HomeMy WebLinkAbout01-10-05 Joanne E. Book, Esquire Attorney J.D. No. 82028 Heather Zink Kelly Attorney J.D. No. 86291 RHOADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, P A 17108-1146 (717) 233-5731 Attorneys for PNC Bank, N.A. ,...,., = {......::J c.n <.- :1"" :';',t= CJ ~O ((:126 i.', .... CJ (;~~) ~~ ~ "'()O c; (::J -n . .....'j :"':'1 o \" IN RE: ESTATE OF MILDRED J. GERBER, an Incapacitated Person IN THE COURT OF COMMON PLEAS OF CUMBE OUNTY, PENNSYLVANIA ANS' COURT VISION No. 21-01-92 INRE: MILDREDJ. GERBER TRUST UNDER AGREEMENT DATED DECEMBER 19, 1997 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION NO. 21-2002-0540 PROPOSED AUDITOR'S REPORT PNC Bank, N.A., by and through counsel, Rhoads & Sinon LLP, submits this Proposed Auditor's Report pursuant to the direction of the Auditor, William A. Duncan, Esquire, appointed by Orders of Court dated November 25, 2003, in the above matters. Following lengthy discovery and pre-trial procedures, a hearing was held in this matter before Auditor Duncan on September 28-29,2004.1 I. Procedural History: 1. In the first above captioned action, PNC Bank, N.A. ("PNC") was appointed Guardian of the Estate of Mildred J. Gerber (hereinafter the "Guardianship Estate") on March 22, 2001. (Exhibit S-1). 1 All citations to the record herein refer to the Transcript ("Tr.") of the hearing before Auditor Duncan and the Exhibits to that Transcript, unless otherwise stated. Exhibits designated with an "S" were admitted by stipulated agreement of the parties, while exhibits designated with an "0" were introduced by Marilyn J. Gerber and Exhibits designated with "PNC" were introduced by PNC. 5.J65B.l ::0 rTl C-) (~ 1) ,'-j '~'1 ,.! "~ :'} ~~_/) C--) ":":-jl , ., ~. ; 2. Frederick E. Gerber, II, was appointed Plenary Guardian of the Person of Mildred J. Gerber on December 21, 2001. (Exhibit PNC-5). 3. Prior to PNC's appointment as Guardian of the Estate and Frederick E. Gerber II's appointment as Guardian of the Person, Frederick E. Gerber II served as Agent for Mildred J. Gerber under financial and medical Powers of Attorney. (Exhibit PNC-6). 4. The second above captioned action concerns matters related to the Mildred J. Gerber Revocable Trust, dated December 19, 1997, as amended, revised and restated on August 2, 1999 and January 25,2001 (hereinafter the "Trust"). (Exhibit S-4 and S-5). 5. On October 3, 2001, acting as Guardian of Mildred J. Gerber, PNC removed Frederick E. Gerber, II, as Trustee of the Trust and designated PNC as Successor Trustee of the Trust. (Exhibit S-6). 6. Mildred Gerber died on January 14, 2003, survived by three children, Marilyn J. Gerber, Frederick E. Gerber, II, and Jane N. Heflin. (Tr., p. 31, 35). 7. On October 24, 2003, PNC filed an accounting of its administration of the Guardianship Estate since the time that PNC was appointed Guardian on March 22, 2001 (the "Guardianship Account"). The Guardianship Account states transactions from March 23, 2001 through October 20,2003. (Exhibit S-1). 8. On the same date, PNC filed a Petition for the Advance Distribution of the real estate in the Guardianship Account to the Executor of the Mildred J. Gerber Estate, Frederick E. Gerber II. This Court ordered the advance distribution of the real estate on November 13,2003. (Exhibit S-15). 9. On October 24,2003, PNC filed an accounting of the administration of the Trust since the time that PNC became Successor Trustee on October 3, 2001 (the "Trust Account"). - 2 - The Trust Account states transactions from October 3,2001 through October 20,2003. (Exhibit S-2). 10. On or about November 21, 2003, Marilyn J. Gerber ("Ms. Gerber"), Mildred Gerber's daughter, filed Objections to both the Trust Account and Guardianship Account (the "Objections"). (Exhibit S-7). 11. By Orders dated November 25, 2003, this Court appointed William Duncan, Esquire as Auditor in both of the above matters to hear the Objections filed by Ms. Gerber to the Trust Account and Guardianship Account. (Exhibit S-9, S-10). 12. On or about December 15, 2003, PNC filed an Answer to Marilyn J. Gerber's Objections to the Trust Account and Guardianship Account. (Exhibit S-8). 13. By Orders dated July 8, 2004, this Court continued the appointment of the Auditor until January 31, 2005 in both of the above matters. (Exhibit S-II, S-12). 14. By Notice dated September 14, 2004, the Auditor provided notice to all parties that the Hearing on both matters would be held September 27-29, 2004, with a possible continuance. (Exhibit S-13, S-14). 15. By Stipulation of the parties filed September 27, 2004, it was agreed as follows: the Hearing would be held September 28-29,2004; the scope of the Hearing would be limited to the administration of the Trust and Guardianship Estate by PNC as Trustee and Guardian as disclosed in the Trust Account and Guardianship Account; the scope of the relevant time periods would be limited to the time period from October 3, 2001 to October 20,2003 in the case of the Trust, and the time period from March 23, 2001 to October 20, 2003, in the case of the Guardianship Estate; and the subject matter of the Hearings would be limited to those matters which are relevant to the Objections raised by Marilyn J. Gerber and PNC's defense of those - 3 - Objections, which include as to both the Guardianship Estate and Trust the alleged mismanagement of assets, including real property and tangible and intangible personal property, alleged improper investment, alleged improper involvement of Frederick E. Gerber II, alleged improper expenditures, alleged excessive fiduciary fees, and alleged excessive attorneys' fees. (Exhibit S-16). 16. By Stipulation of the Parties filed December 7, 2004, it was agreed that all pending Motions in both of the above actions were withdrawn without prejudice, the substance and content of such withdrawn Motions to be argued in the proposed Auditor's Report to be submitted by the parties. 17. By Orders dated December 7, 2004, this Court continued the appointment of the Auditor until March 31,2005, in both of the above matters, and dismissed all pending Motions and Petitions in both matters without prejudice. II. Statement of Issues 18. Most of Marilyn J. Gerber's Objections to both the Guardianship Account and the Trust Account alleged that PNC has failed to provide documentation for each transaction shown in the Accounts. 19. Marilyn J. Gerber objected to the fees for services and extraordinary services charged by PNC as Guardian and Trustee. (Exhibit S-7 ~~ 28, 54, 82, 84, 98). 20. Marilyn J. Gerber objected to the fees of Rhoads & Sinon, LLP, as attorney for PNC. (Exhibit S-7 ~~ 80, 83). 21. Marilyn J. Gerber objected to PNC's failure to immediately take over the administration of the Trust upon its appointment as Guardian on March 22, 2001. (Exhibit S-7 ~ 74). -4- 22. Marilyn J. Gerber objected to PNC's investment of the assets of the Trust. (Exhibit S-7 ~ 78). 23. In addition to the matters set forth above, during the Hearing Marilyn J. Gerber stated various other Objections that were not directly set forth in her Objections filed with this Court, including allegations of general mismanagement of the tangible, intangible and personal property in Trust and Guardianship Account, allegations that PNC conspired with Frederick E. Gerber II and his attorneys, allegations that PNC showed preferential treatment to other beneficiaries, allegations that PNC prevented Marilyn J. Gerber from receiving timely information, and numerous other allegations concerning PNC's alleged mismanagement and alleged improper administration ofthe Trust and Guardianship Account. (Tr. pp. 27-33, 36-37). III. Findines of Fact 24. The witnesses presented at the hearing were David A. Brown, Vice President and Trust Officer for PNC ("Mr. Brown"), Joanne Book Christine, Esquire ("Ms. Christine"), attorney at Rhoads & Sinon LLP which served as counsel for PNC, Frederick E. Gerber II, and Marilyn J. Gerber. 25. The testimony of all of the witnesses, and in fact the entire record before this Court, sets forth the difficulties and interference that PNC encountered in the administration of the Guardianship Estate and Trust and establishes that this was not a routine administration. 26. Mr. Brown testified that he had over 20 years experience as a trust and guardianship administrator, and that he had the primary responsibility at PNC for the administration of Guardianship Estate and Trust. (Tr. p. 39,42-43). - 5 - 27. Mr. Brown testified that the fees charged by PNC for the administration of the Guardianship Estate and Trust were according to PNC's standard schedule of fees and based on the value of the assets under management. (Exhibit 0-1, Tr. p. 54-55,61-63). 28. Mr. Brown testified that immediately following PNC's appointment as Guardian of the Estate, PNC obtained appraisals of Mildred J. Gerber's tangible personal property and real estate. (PNC-l, Tr. p. 64). 29. The testimony of W. K. "Dusty" Chapman, the appraiser of the real estate and tangible personal property, was introduced by transcript of a deposition taken for purposes of trial, since Mr. Chapman was unavailable to testify on the date of the Hearing. The transcript established Mr. Chapman's expertise and experience as a appraiser, that he appraised the tangible personal property at its fair market value, and that to the extent property was not included in the appraisal it was based on his determination that it had no market value. (Exhibit ST-I). 30. Mr. Brown testified that the tangible personal property of Mildred J. Gerber included an automobile, which was taken out of state without PNC's permission or knowledge in January 2002, and was later sold to one of Mildred J. Gerber's children, Jane Heflin, by taking a note from Ms. Heflin for the automobile's appraised market value at the prevailing rate of interest at the time. (Tr. p. 144-148). 31. Mr. Brown also testified that upon its appointment as Guardian, PNC made immediate attempts to collect Mildred J. Gerber's financial assets and encountered some difficulties transferring the bank accounts due to two main factors: first, the automatic payments and pension deposits that were attached to the accounts had to be discontinued, and second, the fact that Frederick E. Gerber II continued writing checks from Mildred J. Gerber's bank accounts -6- following PNC's appointment as Guardian, despite PNC's repeated instructions to him to stop writing checks. (Tr. 68-75). A spreadsheet of the checks written by Frederick E. Gerber II from the PNC checking accounts was submitted as a Stipulated Exhibit, totaling slightly over $3,000, for utilities, subscriptions, taxes, store purchases, lawn care, and similar expenses. (Exhibit S- 18). 32. Frederick E. Gerber II had served as Mildred J. Gerber's agent under financial Power of Attorney prior to PNC's appointment as Guardian. (Exhibit PNC-6). 33. Mr. Brown testified that he moved assets from Mildred J. Gerber's personal bank accounts to the Guardianship account in attempt to gain control over the assets, but because Frederick E. Gerber II continued to write checks from those accounts there were two insufficient funds charges against the accounts totaling $60. (Exhibit 0-6, Tr. p. 116). 34. Mr. Brown testified that once PNC was appointed as Guardian, PNC requested information from Frederick E. Gerber II on numerous occasions regarding income and assets of the Mildred 1. Gerber Revocable Trust but because no information was forthcoming, PNC obtained counsel, removed Frederick E. Gerber II as Trustee, appointed PNC as Successor Trustee on October 1,2001, and demanded an accounting of Frederick E. Gerber II. (Exhibit S- 6, Tr. 76-80). 35. Mr. Brown also testified that PNC demanded an accounting of Frederick E. Gerber II as Trustee of the Frederick E. Gerber Sr. Revocable Trust, of which Mildred J. Gerber was a beneficiary. (Tr. 234-235). 36. Mr. Brown testified that PNC encountered difficulties in marshalling the assets of Mildred J. Gerber and obtaining the necessary asset and income tax information not only due to the lack of cooperation of Frederick E. Gerber II, but also because it had difficulties collecting - 7 - her mail due to various interruptions in the mail. (Tr.p.90-92).Mr. Brown testified that in April 2002, Marilyn J. Gerber provided PNC with 15 pounds of mail that had been accumulated that PNC was unaware of. (Tr. p. 98). 37. Mr. Brown testified due to the difficulty PNC had in obtaining information concerning the assets and income of Mildred J. Gerber, that the Guardianship incurred a penalty of $128 for the late filing of Mildred J. Gerber's 2000 tax return and no penalties for the late filing ofthe 2001 tax return. (Exhibits 0-3, 0-4, Tr. p. 110). 38. Mr. Brown testified that PNC used the tax accountant previously used by Frederick E. Gerber II to prepare Mildred J. Gerber's tax returns, since that individual had all of the relevant financial information, and because PNC would have charged the same fee, if not more, to prepare the tax returns. (Tr. p. 114-115). 39. Mr. Brown testified that PNC retained Rhoads & Sinon LLP as counsel with regard to the Guardianship Estate and Trust to assist it in marshalling assets and obtaining financial information. (Tr. p. 124). 40. The legal services provided to PNC by Rhoads & Sinon LLP included responding to numerous litigation filings instigated by Marilyn J. Gerber, and filing several actions against Frederick E. Gerber II to provide Trust accounts. Mr. Brown testified that the invoices of Rhoads & Sinon LLP were not excessive, the average hourly rate was approximately $170, and that the invoices were generally reviewed by in-house counsel for PNC and found to be reasonable. (Tr. p. 125-127,203). 41. Ms. Christine testified on behalf of Rhoads & Sinon LLP that the majority of legal services performed by Rhoads & Sinon LLP was performed by one attorney at a billing rate of approximately $160 an hour, that PNC authorized and directed all services performed by - 8 - Rhoads & Sinon LLP, that Rhoads & Sinon LLP provided itemized bills for its services, that the large amount of time expended was necessary due to the difficulties encountered with the Gerber family and their counsel and the numerous Court filings that were required. (Tr. p. 163-188). 42. In addition, Ms. Christine testified that Rhoads & Sinon LLP discounted the bills to PNC on several occasions, including a significant discount on an invoice dated September 30, 1993, which resulted in a billing rate for that invoice of less than $100 for the time shown as expended. (Exhibit S-17, Tr. p. 189-192). Ms. Christine testified that the legal services performed by Rhoads & Sinon LLP were extraordinary given the size of the Guardianship Estate and Trust. (Tr. p. 199-200). 43. As to other payments to third parties shown in the Guardianship Account and Trust Account, the only matters that were addressed during the Hearing were charges for lawn maintenance, which were from a professional maintenance company as PNC was required to have insured entities perform that service and were not excessive given the need for an insured professional maintenance company; and charges for certain personal, medical and living expenses of Mildred J. Gerber which PNC also deemed to be not excessive given Mildred J. Gerber's medical needs and the determination by her personal Guardian, Frederick E. Gerber II, that she should receive those services outside of her home. (Tr. p. 150-153,228-233). 44. Mr. Brown testified that as to the investment of the assets, the Trust Account showed an investment principal loss of approximately $9,000, offset by a principal gain of approximately $3,000, and income earned of approximately $15,700, and Guardianship Account showed a gain of $17,000 in the value of the house during PNC's administration. (Tr. p. 221- 223). During the administration of Mildred J. Gerber's Guardianship Estate and Trust, the market generally declined approximately 10 percent. (Tr.271). -9- 45. Mr. Brown testified that gIven the liquidity concerns of the Guardianship Account, the accounts were invested in PNC's conservative profile which consisted of20-25% in equity, and 75-80% in short-term and intermediate-term bonds. (Tr. p. 224). 46. Mr. Brown testified that after Mildred J. Gerber left her home in January 2002, and PNC later learned that she would not return to her home, PNC determined that it would not be prudent to rent the home but rather prepared the home for sale. (Tr. p. 236). 47. Mr. Brown testified that in preparation for the sale of the home, all tangible personal property with value as determined by the appraiser was inventoried and removed from the home and placed in storage. (Tr. p. 424). Mr. Brown testified that PNC provided Marilyn J. Gerber with a copy of the inventory to identify property allegedly belonging to her but received no response. (Tr. p. 425). 48. Mr. Brown testified that PNC received one offer for the real estate in written, proper form, which offer was accepted although the buyers eventually withdrew that offer. (Tr. p. 248). 49. Mr. Brown testified that the administration of the Guardianship and Trust was difficult due to the interference and harassment caused by Marilyn J. Gerber and the contention between her and her siblings, Jane Heflin and Frederick E. Gerber II. (Tr. p. 243-247). 50. Mr. Brown provided a basis both in testimony and a memo produced in discovery for PNC's charge of $12,500 in extraordinary fees in the Guardianship Account and Trust Account, substantiated by numerous factors including the lack of cooperation from the family, the difficulty in marshalling and administering the assets due to the family's interference, the numerous court filings, and the time expended by PNC staff and in-house legal counsel in dealing with the administration. (Tr. p. 256-257, Exhibit PNC-4). - 10- 51. Mr. Brown estimated that the extra time spent by Mr. Brown, his staff and PNC in-house legal counsel in the administration of the Guardianship Estate and Trust, amounted to time expended of several hours a week for 128 weeks over the time period of the Accounts, which Mr. Brown valued conservatively at over $20,000. (Tr. p. 257-259). Thus, Mr. Brown based the $12,500 fee for PNC's extraordinary expenses at roughly 60% of what PNC was cost in lost opportunity, lost hours and general abuse. (Tr. p. 259). 52. The standard schedule of fees for PNC does permit a charge for an extraordinary fee based on the circumstances. (Tr. p. 160, Exhibit 0-1). 53. Mr. Brown testified that PNC administered the Guardianship Estate and Trust in the best interest of Mildred J. Gerber at all times, and that the management and investment ofthe Guardianship Estate and Trust were reasonable and prudent under the circumstances at the time. (Tr. p. 276-277). 54. Frederick E. Gerber II testified that he and Marilyn J. Gerber did not get along during the period of time that PNC served as Guardian. (Tr. p. 304). 55. Frederick E. Gerber II testified that he continued to write checks as Trustee of the Mildred J. Gerber Trust for several months after he was removed as Trustee by PNC. (Tr. 305- 313). Copies ofthe checks written by Frederick E. Gerber II as Trustee from November 6,2001 through December 31, 2001, were submitted, together with an e-mail from Mr. Brown to Frederick E. Gerber, II asking for an explanation of the checks. (Exhibits S-19, S-20). 56. Frederick E. Gerber II testified that he also wrote checks from Mildred J. Gerber's checking accounts at PNC after PNC was appointed as Guardian, and that he did recall PNC asking him to stop writing such checks, although he did not initially understand he was to stop writing checks. (Tr. p. 314-316). - 11 - 57. Frederick E. Gerber II testified that he sent PNC several checks for rent from a property located in Baltimore MD but stopped when he understood that these checks should not be sent to PNC because the Baltimore property was part of the Frederick E. Gerber Sr. Trust. (Tr. 346-349). 58. Frederick E. Gerber II testified that to prior to PNC's appointment as Guardian of the Estate, he served as Agent for his mother under financial Power of Attorney, and prior to his appointment as Guardian of the Person, he and his sister Jane Heflin served as Agents under medical Power of Attorney. (Tr. p. 354-355, Exhibit PNC-6). 59. Frederick E. Gerber II further testified that to his knowledge, Marilyn J. Gerber was never an agent under power of attorney for Mildred J. Gerber. (Tr. p. 355). 60. Marilyn J. Gerber's testimony was replete with hearsay and unsubstantiated allegations. 61. Marilyn J. Gerber stated that she informed PNC of various matters relating to the estate of Mildred J. Gerber, including that she was entitled to or the owner of tangible personal property in the residence; that she was the rightful owner of the residence; and that there were assets other than those in the Trust Account and Guardianship Account belonging to Mildred J. Gerber; however, Marilyn J. Gerber produced no documentation or records to substantiate any of those assertions. (Tr. 360-367). 62. Despite Mr. Brown's previous testimony of the difficulties he had with Frederick E. Gerber II, his counsel, and Jane Heflin concerning various matters, Marilyn J. Gerber accused PNC of conspiring with Frederick E. Gerber II and his counsel, and Jane Heflin, with regard to various matters to the exclusion and detriment of Marilyn J. Gerber. (Tr. p. 367). - 12 - 63. Finally, despite the fact that PNC was appointed as the Guardian of Estate of Mildred J. Gerber and thus had no fiduciary power over her medical care or living arrangements, Marilyn J. Gerber alleged that PNC should have made other arrangements for the personal and medical care of Mildred J. Gerber. (Tr. p. 381-383). IV. Conclusions of Law 64. Based on the evidence and testimony presented at the Hearing, Marilyn J. Gerber failed to establish that PNC should be surcharged for any transaction reported in the Guardianship Account or Trust Accounts, or for its actions as Guardian and Trustee. 65. In her testimony and the cross-examination of the witnesses, Marilyn J. Gerber failed to point to any individual line item in the Account and establish either a breach of duty or a loss by PNC. 66. The only losses that Marilyn J. Gerber established during the entire Hearing were a charge for $60 in insufficient funds charges and a penalty of $128 for late income tax filing, both of which Mr. Brown testified to and explained occurred during the initial transfer of Mildred J. Gerber's assets from Frederick E. Gerber II to PNC, and were caused by the difficulties PNC experienced due to Frederick E. Gerber II's refusal to stop writing checks in Mildred J. Gerber's personal checking account, PNC's difficulties in obtaining information and control over Mildred J. Gerber's assets, and PNC's difficulties in obtaining uninterrupted mail delivery for Mildred J. Gerber. Although the losses were established, Marilyn J. Gerber failed to establish that these losses were due to any breach of duty by PNC and thus these losses cannot be the basis of any recovery 67. Surcharge is defined as the penalty for failure to exercise common prudence, common skill and common caution in the performance of fiduciary duties. In re Estate of - 13 - Dobson, 490 Pa. 476, 417 A.2d 138 (1980); In re Estate of Campbell, 692 A.2d 1098 (Pa. Super. 1997). Surcharge is awarded to compensation beneficiaries for loss occasioned by a fiduciary's breach of one or more of the duties owed to them. Restatement (Second) of Trusts, ~204. 68. The general standard of care to which a fiduciary is held in Pennsylvania is such common skill, judgment and caution as persons of ordinary prudence, discretion and intelligence under similar circumstances, would exercise in the management of their own estate. See Campbell, 692 A.2d at 1103. However, where a fiduciary has greater skill than that of a man of ordinary prudence, the fiduciary is required to exercise that greater skill. Estate of Pew, 440 Pa. Super. 195,655 A.2d 521 (1994). 69. Generally, those seeking surcharge bear the burden of proving, by a fair preponderance of the evidence, the breach and the loss. Estate of Pew, 440 Pa. Super. 195,655 A.2d 521 (1994). 70. With regard to the general management of the Guardianship Estate and Trust, Marilyn J. Gerber failed to establish either a breach of fiduciary duty or any loss relating to an alleged breach. 71. The testimony of Mr. Brown, which is substantiated by significant evidence of record including memoranda and documents introduced by Marilyn J. Gerber, establishes that PNC administered the Guardianship Estate and Trust in the best interest of Mildred J. Gerber at all times, and that the management and investment of the Guardianship Estate and Trust were reasonable and prudent under the circumstances at the time. This is the case despite the significant interference that PNC received from the family during the administration of the Guardianship Estate and Trust. - 14 - 72. The record establishes that PNC took timely and appropriate actions to marshal and administer all assets of Mildred J. Gerber, including her real property, tangible personal property, bank accounts, and Trust, again despite significant interference and lack of cooperation from the family of Mildred J. Gerber. . 73. The form and contents of the Guardianship Account and Trust Account complied with Rule 6.1 of the Pennsylvania Supreme Court Orphans' Court Rules. Thus, Marilyn J. Gerber's objection that PNC failed to provide documentation supporting each transaction in the Accounts is without merit. This issue is also now moot because PNC provided Marilyn J. Gerber with all non-privileged documents supporting the transactions in the Accounts in discovery. 74. The test for determining the appropriateness of the fees charged by fiduciaries and other professionals for services rendered in the administration of a fiduciary estate is whether the fee is reasonable and just under the circumstances. 20 Pa. C.S.A. ~3537, 7185. 75. PNC's fees, based on its standard fee schedule, and its fees for extraordinary services, are reasonable and substantiated by the record. As the testimony of Mr. Brown described, extraordinary amounts of time were incurred and extraordinary services were performed due to various factors including the continuous litigation that was ongoing in these matters, requiring the presence and testimony of PNC personnel, and the interference PNC experienced from the family of Mildred J. Gerber. Thus, the standard fees and fees for extraordinary services charged by PNC are reasonable and just under the circumstances. 76. The reasonableness of attorneys fees is within the discretion of the auditing judge, and is determined by examining the amount of work; the character of the services; the difficulty of the problems involved; the importance of the litigation; the amount of money or value of the property in question; the degree of responsibility incurred; whether the fund was "created" by the - 15 - attorney; the professional skill and standing of the attorney; the results the attorney was able to obtain; and the ability of the client to pay a reasonable fee for services rendered. LaRocca Estate, 431 Pa. 542, 246 A.2d 337 (1968); Bruner Estate, 456 Pa. Super. 705, 691 A.2d 530 (1997). 77. The attorneys' fees of Rhoads & Sinon LLP are reasonable and supported by the record, including the testimony of Mr. Brown and Ms. Christine, and the actual invoices admitted as evidence at the Hearing. The evidence establishes that the time expended was necessary due to the continuous litigation and correspondence with family that occurred throughout the administration of the Guardianship Estate and Trust, the various contested matters involving Mildred J. Gerber's property, and the overall interference that PNC faced during the administration of the Guardianship Estate and Trust which required the assistance of counsel. Moreover, the hourly billing rate charged by Rhoads & Sinon LLP was reasonable, recognizing the substantial discounts that were reflected in the invoices. 78. Pennsylvania trustees and guardians are governed by the Prudent Investor Rule found in 20 Pa. C.s.A. ~7203, which states that: "A fiduciary shall invest and manage property held in a trust as a prudent investor would, by considering the purposes, terms and other circumstances of the trust and by pursuing an overall investment strategy reasonably suited to the trust." The degree of care is set forth in 20 Pa. C.S.A. 97212, which provides that the fiduciary shall exercise reasonable care, skill and caution in making and implementing investment and management decisions, and a fiduciary which represents that it has special investment skills must exercise those skills. The judgment of a fiduciary's decisions is set forth in 20 Pa. C.S.A. 97213, which provides that compliance with the Prudent Investors Rules must be determined in light of the facts and circumstances prevailing at the time of the fiduciary's conduct, not hindsight. - 16- 79. Mr. Brown's testimony concerning the investment of the Guardianship and Trust assets established that PNC's investment and management of the property of the Guardianship Estate and Trust were consistent with the Prudent Investor Rule. At all times, PNC exercised reasonable care, skill and caution, and its actions were reasonable in light of the facts and circumstances at the time ofthe conduct in question, and the needs of Mildred J. Gerber. 80. Although the Trust Account suffered a small amount of principal losses during a time period in which the general securities market declined by 10-15%, these losses were offset by gains in both the Trust Account and Guardianship Account, and minimized by the conservative investment portfolio maintained by PNC which was appropriate for Mildred J. Gerber's age and needs. 81. Thus, the investment and management of the assets of the Trust and Guardianship Estate were prudent and reasonable under the circumstances. 82. Other than Marilyn J. Gerber's unsubstantiated allegations, which are not found credible, there is no evidence that PNC conspired with any other beneficiary or individual in the administration of the Guardianship Estate and Trust. On the contrary, the evidence shows that PNC at all times administered the Guardianship Estate and Trust in the best interests of Mildred J. Gerber, and at various times encountered difficulties with each of her children. 83. Based on the evidence and the record presented at the Hearing, Marilyn J. Gerber has failed her burden of proof, thus failing to establish any breach of duty by PNC or any matter for which PNC should be surcharged. V. Confirmation of Accounts 84. Based on the foregoing, the Auditor should recommend that the First and Final Account of PNC as Guardian of the Estate of Mildred J. Gerber, as filed on October 24, 2003, - 17 - shall be confirmed absolute, with no exceptions. PNC should be directed to file a Statement of Additional Receipts and Disbursements as to the transactions that have occurred since the Guardianship Account was filed, and propose distribution of the remaining assets in the Guardianship Account to the Executor of the Estate of Mildred J. Gerber. 85. Based on the foregoing, the Auditor should recommend that the First and Partial Account ofPNC as Trustee ofthe Mildred J. Gerber Trust, as filed on October 24,2003, shall be confirmed absolute, with no exceptions. The remaining assets in the Trust should be held by the Trustee for continued administration according to the terms of the Trust. Respectfully submitted, RHOADS & SINON LLP By: e E. Book eather Zink Kelly ne South Market Square P. O. Box 1146 Harrisburg, P A 17108-1146 (717) 233-5731 Attorneys for PNC BANK, N.A. - 18 - CERTIFICATE OF SERVICE I hereby certify that on January 10, 2005, a true and correct copy of the foregoing document was served by U.S. mail, certified, return receipt requested, upon the following: Marilyn J. Gerber 717 Market Street, #317 Lemoyne, P A 17043 and by U.S. mail, first class, postage pre-paid, upon the following: Richard C. Rupp, Esquire Rupp and Meikle 335 North 21st Street, Suite 205 Camp Hill, P A 17011 William A. Duncan, Esquire Duncan, Hartman & Douglas, P.e. One Irvine Row Carlisle, P A 17013 516513.1 l.