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HomeMy WebLinkAbout11-01-04 JOSEPH D. BREI ~NER, SR., JOSEPH D. IN THE COURT OF COMMON PLEAS OF BRENNER, JR. id MARGARET B. CUMBERLAND COUNTY, PENNSYLVANIA BUSHEY, Petitioners ORPHANS' COURT DIVIS1ON v. No. 21-04-087 MANUFACTUPd ~RS AND TRADERS ., TRUST COMPA] 4Y, a New York (Judge Bayley) Corporation, DA~ 'ID C. GORiTY, an Individual, and C1 JRT R. STAUFFER, an Individual, ~- Respondents. RESPONDENTS' MEMORANDUM OF LAW IN SUPPORT OF RESOLUTION OF ALL ,AIMS AND ACCOUNTS BY COURT APPOINTED AUDITOR R ,~spondents, Manufacturers and Traders Trust Company, David C. Gority, and Curt R. Stauffer collectively, "M&T"), submit this memorandum of law in response to the issues that the ( art posed to the parties in its Order dated September 27, 2004: a) Whether plaintiffs should be granted a trial with an advisory jury on their breach of fiduciary claims, with the court deciding the claims and any issue of damages. b) Whether the court should decide said claims ~vithout empanelling an advisory jury. c) Whether all of the claims raised by plaintiffs should be decided by the appointed auditor. Brermer v. Ma~, ~cturers and Traders Trust Co., Civil No. 03-4125 (Sept. 27, 2004, Bayley, J.). Ir summary, Respondents contend that, in the interest of judicial economy, all claims should be decided by the auditor appointed by the Court last December, 2003. If, upon review of the am litor's recommendation, the Court determines that it needs to hear certain 1 10/01/04/S[.1 480600v 1/66255.037 supplementary e' 'idence, the Court could schedule an evidentiary hearing limited to any narrow issues not entirel resolved by the auditor. DISCUSSION P~ :itioners have offered n~o reason, much less any compelling reason, to deviate from the ordinar', procedure utilized in resolving surcharge and trust accounting claims in the Orphans' Court. Therefore, "all of the claims raised by plaintiffs should be decided by the appointed audito '." (Option "C' as identified in this Court's Order of September 27, 2004.) P~ trsuant to Pennsylvania's Probate, Estates and Fiduciary Code, claims concerning the lministration of inter vivos trusts are subject to the mandatory and exclusive jurisdiction oft Orphans' Court. See 20 PA.C.S.A. § 711(3). Consequently, this Court previously deten ined that the instant surcharge action "is directly.., related to the[ ] administration o] 'the inter vivos trusts" and, thus, falls squarely within the ambit of the Orphans' Court's mandato ' and exclusive jurisdiction pursuant to § 711 (3). See Brenner v. Manufacturers m [ Traders Trust Co., Civil No. 03-4125, slip op. at 7 (Jan. 21, 2004, Bayley, J.). Accordingly, the ~ourt transferred Petitioners' surcharge action to the Orphans' Court. ld~. at 9 ¶2. Ti : instant surcharge action is virtually identical to Petitioners' objection to re~pg_nd_.e.r~t~i pre i0usly_fi!~d~_t~ms[ .ggc_o_~u~.[ing. Pursuant to the Local Rules of the Cumberland County Orphans Court: If Objections are filed to an account or the statement of proposed di 3tribution, or both, upon the motion or petition of the accountant o~ any party in interest, an auditor shall be appointed to pass upon the Objections, unless the question raised by the Objection is 2 10/01/04/S[.I 480600vl/66255 037 er tirely a question of law, in which case the matter may be placed o~t the next argument list for decision by the Court; the Court may, in any case, appoint an auditor in its discrction. If the Objection raises questions of fact, an auditor may be appointed unless all p~ rties interested join in an agreed statement or stipulation of facts. CUMBERLAND C' 'Y. ORPHANS' CT. R. 6.10-2 (emphasis added). Moreover, the Pennsylvania Orphans' Court ] ',ules (the "OCRs") specifically contemplate the use of an auditor in the disposition ofcl~ ims related to the accounting and administration of trusts. See PA. ORPHANS' CT. R. 8.1 - 8.8. Even more specifically, OCR 8.3 details the form and method that an auditor shall employ wh, ~n assessing a trust: A~ auditor's report shall include a statement of the questions i~ volved, findings of fact, conclusions of law, and, if the account is at proved by the auditor, it shall also expressly confirm the account m d shall specify, or indicate by reference to thc statement of p~oposed distribution, the names of the persons to whom the b~ lance available for distribution is awarded and the amount or st are awarded to each of such persons. PA. ORPHANS' ~ F.R. 8.3. ~e Court long ago determined that the appointment of an auditor was appropriate in the instant act on. On December 19, 2003, this Court appointed James Bogar, Esquire ("Auditor Bogar '), as auditor of the trusts subjudice. See Brenner v. Manufacturers & Traders Trust Co., Orph~ ns' Ct. No. 21-04-087 (Pa. Cumberland Cty. Orphans' Ct. Dec. 19, 2003, O[er, J.). The ur dersigned has kept Auditor Bogar apprized of all actions taken in the instant matter to date, m d Auditor Bogar, following consultation with Judge Oler, who appointed him, has already sche, luled a hearing on all claims to take place on November 2, 2004. By demanding trial by jury, Peti tioners attempt to displace the Orphans' Court's ordinary method of resolving 3 10/01/04/SLi 480600v 1/66255 037 claims related to lhe administration of a trust as provided in both the local and statewide Orphan's Court :ules, but have yet offer an explanation as to why the Court should allow same. ; this Court has already recognized in two (2) prior opinions, petitioners have no right to try their ~ urcharge action to ajury. Section 777 of Title 20 of the PEF Code governs the empanelling and authority ora jury in the Orphans' Court. See 20 C.F.R. § 777. In pertinent part, § 777 provi, les: 3) Title to property.--When a substantial dispute of fact shall arise concerning the decedent's title to property, real or personal, any party in interest shall be entitled to a trial of such issue by a jury. The verdict of the jury shall have the same effect as the verdict of a jury in a case at law. >) Determination of incapacity.--Any person against whom proceedings have been instituted to establish his incapacity shall be entitled to a trial of such issue by a jury. The verdict of the jury shall have the same effect as the verdict of a jury in a case at law. :) Will contest and other matters.--When a contest shall arise concerning the validity of a writing alleged to be testamentary, or concerning any matter other than as provided in subsections (a) and (b) of this section, the orphans' court division, in its discretion at any stage of the proceedings, may impanel a jury to decide any question of fact, but the verdict of the jury shall be advisory only. 20 P^.C.S.A. § ' 77 (emphases added); accord PA. R. CIV. P. 1038.3 (providing for advisory jury in cases seeking :quitable relief); PA. ORPHANS' CT. R. 3.1 (providing that pleading and practice in the Orphans' :ourt "shall confoma to the pleading and practice in equity in the local Court of Common Pleas.' The official co anent to § 777(c) provides that the subsection "is intended to re-introduce the mle of Stewart Will, [47 A.2d 204, 207-8 (Pa. 1946)]; Williams v. McCarrol!, [97 A.2d 14, 22 (Pa. 1953)]; and Flemin~'s Est., [109 A. 265, 2 i7 (Pa. 1919)], and make it clear that the orphans' court has control over the verdict." 20 PA.C.S.A. § 7~ 7 Official Note; see also Estate of Duross, 150 A.2d 710, 719~20 (Pa. 1959) (same). 4 10/01/04/SL1 480600vl/66255.037 Ti ~ere is "no Statutorily-mandatcd right to trial by jury" for claims falling under 20 P^.C.S.A. § ~ 77(c). In re Estate of Holtz, 222 A.2d 885,888 (Pa. 1966) (interpreting prior version of § 7771 c)). Furthermore, because a jury verdict under § 777(c) is purely advisory, the Orphans' Court',, discretion to deny a request to cmpanel a jury is unfettered. Id~; see also In re Estate of Hunter. 205 A.2d 97, 103 (Pa. 1964) (holding that pursuant to fonncr 20 P.S. § 2080.745(c), no*, codified as 20 P^.C.S.A. § 777(c), "[a] court's unwillingness to avail itself of the assistance of an advisory jury opinion does not constitute an abuse of discretion."); cf. PA. R. CW. P. 1038.3, I' [ote ("Rule 1038.3 does not confer a right to trial by jury .... "). Ir its Order dated June 18, 2004, the Court determined that plaintiffs' surcharge action is within ae ambit of 20 Pa.C.S.A. § 777(c). Brenner v. Manufacturers & Traders Trust Co., Orphans' No. 21-04-087, slip op. at 5 (Jun. 18, 2004, Hess, J.). Thus, although petitioners dema ded a jury trial pursuant to § 777(d), "their 'demand' for a jury trial does not entitle them to a iury trial." Id. T 'ial by jury is time consuming and cumbersome, increases the cost of litigation to the parties an( to the taxpayers, and requires the expenditure of additional judicial resources.2 Indeed, even wit ~out the use of an advisory jury, there is no pressing need (and petitioners have certainly failed t, identify one) for the Court to set aside a full week for a bench trial. A discussed above, the Orphans' Court has established a standard procedure for resolving trust a~ ministration claims in the most cost effective and efficient manner. The interests ofj udic [al economy favor employing the ordinary course of dispute resolution in trust 2 Certainly, Jur3 instructions and deliberations, not to mention evidentiary objections at sidebar and the like, could add da to the week which has already been set aside for hearings before Auditor Bogar. 5 I 0,'01/04/S L I 480600v I/66255 administration czses - i.e., submission of all claims to the court appointed auditor. See Dewey Electronics Cor v. Montage, Inc., 117 F.R.D. 73, 75 (M.D. Pa. 1987) (declining to empanel an advisory jury m .er Federal Rule of Civil Procedure 39(c) after "[w]eighing carefully the interests ofjustic e and the interests of judicial economy."). It bears repetition that Auditor Bogar is already familiar with this matter and has scheduled hearings to commence in the immediate future to suit the schedules of all concerned after consultatio~ Not until the conclusion of Auditor Bogar's work will it become clear whether the Cou] need involve itself further at all in this matter. It is entirely possible that the auditors' proceet ng (the ordinary procedure for trust administration claims) could resolve this surcharge action with only the limited expenditure of judicial resources incurred to date. If on the other hand, either party is dissatisfied xvith the disposition of Auditor Bogar, our Local Rules of the Cumberland County Orphans' Court establish a procedure for final resolution of the claims by the Orphans' Court: "If Objections are filed, the Court shall, after argument, make ;uch disposition as the Court shall determine." P^. R. CUMBERLAND CTY. ORPHANS' CT. 8 7-3 (emphasis added). If either party eventually resorts to Rule 8.7-3, the Court could, at that tim ~, determine whether empanelling an advisory jury under 20 Pa.C.S.A. § 777(c) would be helpful in the final resolution of the narro~v issues left unresolved by Auditor Bogar's report. See 20 P k.C.S.A. § 777(c) (authorizing Orphans' Court to empanel an advisoryjury "in its discretion at ny stage of the proceedings."); see also PA. R. Civ. P. Equitable Relief Explanatory Cor ~ment Pt. I(d) ("Rules cannot dictate the procedure for a particular case. The course of the prcceedings will depend upon the 'good judgment' of the court in viewing the 6 10/01/04/SL1 480600vl/66255.037~ totality of the ca: e."). In the event that further Court involvement is necessary, the expenditure of the Court's re ;ources will be limited to issues truly requiring the court's involvement, and the Court will benef from the inevitable "wiimowing" of the issues which is sure to result from the auditor's procee~ ings. F. Dr all of these reasons, respondents request that the Court employ the ordinary method used in esolving surcharge and trust administration claims and submit all pending claims for resoh Iion by Auditor Bogar.3 Mark D. Bradshaw, Esquire Supreme Court I.D. #61975 4750 Lindle Road P.O. Box 11670 Harrisburg, PA 17108-1670 Attorney for Respondents Date: October 1 2004 In response to Respondents' Motion to Strike Praecipe for Trial, Petitioners suggested that Respondents had advanced the I osition that the issues in this dispute need to be tried twice (both before the Court an~d before the Auditor). Nor sense. One hearing, before the one fact finder, is all that is required. The issue, as the Court recognizes, is vho that fact finder will be. 7 480600vl/66255 037 JOSEPH D. BRE~ ,!NER, SR., JOSEPH D. IN THE COURT OF COMMON PLEAS OF BRENNER, JR. id MARGARET B. CUMBERLAND COUNTY, PENNSYLVANIA BUSHEY, Petitioners ORPHANS' COURT DIVISION MANUFACTUR] !RS AND TRADERS No. 21-04-087 TRUST COMPA14Y, a New York Corporation, DA-X ID C. GORITY, an Individual, and C! JRT R. STAUFFER, an Individual, Respondents CERTIFICATE OF SERVICE I, MARK D. BRADSHAW, hereby certify that I have served the foregoing Memorandum u' on opposing counsel this day, October 1, 2004, by hand. Mark D. Bradshaw 10/01/04/SL1 480600vl/66255 037 ;