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HomeMy WebLinkAbout03-15-10IN RE: :IN THE COURT OF COMMON PLEAS OF ESTATE OF LOTTIE IVY DIXON :CUMBERLAND COUNTY, PENNSYLVANIA Deceased :ORPHANS' COURT DIVISION :NO. 21-07-0686 IN RE: :IN THE COURT OF COMMON PLEAS OF ESTATE OF GEORGE F. DIXON, JR. :CUMBERLAND COUNTY, PENNSYLVANIA Deceased :ORPHANS' COURT DIVISION :NO. 21-1994-0754 EXCEPTIONS TO ORDER OF COURT DATED FEBRUARY 23, 201 N 0~HENYIN+~ PETITIONERS' PETITION FOR APPOINTMENT OF ~ ~ ~ r~ ~ ~ AN ADMINISTRATOR PRO TEM ' '' ~ n ~ °' ` ``J cn~ Cl7 -:7 THE JUDGES OF SAID COURT: TO THE HONORABLE COURT f ;;` _ , --~ tv `~ +~ri hans' Court Rule 7.1 and Cumberland-County lvania Or t to Penns P ~ `~' p y ursuan Orphans' Court Rules 7.1-1. - 7.1-3., George F. Dixon, III and Richard E. Dixon, ("Petitioners" or "Exceptants"), by and through their undersigned counsel, Obermayer Rebmann Maxwell & Hippel LLP, hereby file exceptions to the Order of Court dated February 23, 2010 ("Order") denying their Petition for Appointment of an Administrator Pro Tem pursuant to 20 Pa. C.S. §4301 ("Petition"), in the above matter, as follows: 1. The Court erred in entering the Order before an Answer was filed and before the pleadings were closed. The Petition was filed on February 12, 2010, alleging inter alia that Marshall Dixon had wrongfully used and/or transferred assets of the decedent during her lifetime to or for his benefit without the decedent's full knowledge and permission. The Petition was based on Marshall Dixon's conflict of interest as Executor 1 4452090 and the need for an objective third party to investigate and determine what assets were wrongfully obtained from the decedent by Marshall Dixon in his individual capacity and, if necessary, to recover those assets from Marshall Dixon. Under the Pennsylvania Rules of Civil Procedure and Pennsylvania Orphans' Court Rules, an answer admitting or denying the averments of the Petition was due within 20 days. See Pa. O.C. Rule 3.2 (a). Counsel for Marshall Dixon filed a "Response in Opposition to Petition to Appoint Administrator Pro Tem filed by Marshall Dixon, as Executor of the Estate of Lottie Ivy Dixon" on or about February 12, 2010. ("Response in Opposition" or "Response"). The Response in Opposition was not styled as an Answer, did not specifically answer the paragraphs of the Petition as it was required to do and was not verified. Exceptants who intended to file a Reply or Preliminary Objections to the Response, including a motion to strike the Response, and had 20 days or until March 4, 2010 to do so were deprived of that right. See Pa. O.C. Rule 3.2 (b). The Court entered its Order on February 23, 2010, prior to the time that the Reply or Preliminary Objections were due to be filed. 'Therefore, the Order was entered before the pleadings were closed to the great harm and prejudice of the Exceptants. 2. The Court erred in entering its Order relying upon the Directive submitted by the Auditor, Wayne F. Shade, Esquire, on February 22, 2010. In his directive, the Auditor relied upon the Response in Opposition, an improper pleading filed by Estate counsel, in making his recommendation to the Court to dismiss the Petition. a. Pennsylvania Orphans' Court Rule 3.2 (a) states that within twenty days "a party opposing the granting of the prayer of the petition shall file an answer admitting or den 'n the averments of fact of the petition and specifically stating his objections thereto and averring the facts relied upon by him." (emphasis added. Estate 2 4452090 Counsel for Marshall Dixon as Executor failed to comply with Rule 3.2 (a) as the Response is not an answer as required. The Response does not admit or deny any of the allegations in the Petition. In fact, the pleading itself states that it is not an answer, noting in a footnote "the Executor files this preliminary response without specifically admitting and denying averments therein...If the Court does not summarily deny the Petition, the Executor will, within twenty days of the date of service, file a detailed answer to the Petition, as required by Orphans' Court Rule 3.2." (Response at p.2, footnote 1). The Court erred in relying upon the Response. Since a proper answer was not filed, all averments of fact in the Petition should be deemed admitted. b. The Response is further defective in that it is not verified. Pennsylvania Rule of Civil Procedure 1024(a) requires that "every pleading containing an averment of fact not appearing of record in the action or containing a denial of fact shall state that the averment or denial is true upon the signer's personal knowledge or information and belief and shall be verified." The Response contained averments that required verification. Thus, the Court erred in relying upon an improper pleading, the Response, in ruling upon the Petition. The Response is improper as it blatantly lacks conformity to the Orphans' Court Rules and the Pennsylvania Rules of Civil Procedure - it was not an answer, and it was not verified. The Court's reliance on such Response was prejudicial to Petitioners. 3. The Court erred in failing to give Petitioners a full and fair opportunity to be heard. The Petitioners were denied the right to see a proper answer to the Petition by Marshall Dixon in both his individual and executor capacities and were further denied the 4452090 right to file a pleading in reply. The prejudice to Petitioners upon denial of the Petition, by the Court's reliance on the improper Response and essentially denying Petitioners of a full and fair opportunity to be heard, far outweighs the relatively slight delay that would be occasioned by granting the petition. Further, where there is sufficient indication of potential harm that needs to be redressed - here, a complete and proper accounting of transfers of decedent's assets -equitable principles call for additional time to allow for a full, just and unbiased investigation such as could be conducted by an administrator pro tem. 4. The Court erred in relying upon the Auditor's Directive which failed to address the substance of the Petition, suggesting instead that granting the Petition would cause delay and expense. As the Petition recited, there are four interested parties here -the Petitioners, their brother, Marshall, and their sister, Charlotte, who would be affected monetarily and who are directly involved in this controversy. See, Petition, paragraph 53. They are not entitled to an immediate distribution of the residue of the Estate in any event. There is no prejudice to the parties to determine whether all of the decedent's assets were collected and accounted for. The alleged prejudice of delay that would be caused by appointing an administrator pro tem is far outweighed by the prejudice to Petitioners and the estate if a full examination and accounting of assets transferred to or taken by Marshall Dixon is not ordered. The need for an additional period of time for such an accounting should not be reason enough to defeat the Petition. 5. The Court erred in adopting the Auditor's Directive in which the Auditor recommended that the Petition be dismissed on the basis of delay "where the Auditor sees nothing in the Petition that [Petitioners] could not have raised at the time of the filing of 4 4452090 their objections to the first intermediate accounting in the Estate." (Directive at Paragraph 9). The Auditor, however, failed to acknowledge allegations of the Petition that demonstrate that Petitioners did not have all facts and information sufficient to raise all allegations of misappropriation of assets at the time of the objections filed in August 2008. See, e.g., Petition, paragraphs 26-27. Formal discovery had not yet commenced. There were additional documents, records and areas of inquiry that Petitioners could not have known "at the time of the filing of their objections to the first intermediate accounting in the Estate." Petitioners only discovered upon production of documents and, further, at the deposition of Marshall Dixon of September 2009 that discovery was still not complete - certain records or categories of documents were not complete and additional financial records of Lottie Ivy Dixon and Marshall Dixon and his business ventures were required in order to trace and track substantial and numerous transfers of funds and assets. There were also numerous additional areas of examination of Marshall Dixon that surfaced. However, the discovery deadline was September 30, 2009 and Petitioners' motion to extend the discovery deadline was ultimately denied. Petitioners did not have sufficient opportunity to secure the additional records or complete the missing information that included credit card statements and brokerage account statements for both Lottie Ivy Dixon and Marshall Dixon and his business ventures and cancelled checks for each from both banking and brokerage accounts. All of this information is essential for a proper, complete and objective examination of decedent's assets and the extent to which there was misappropriation of those assets. A just and equitable determination would favor additional time and the appointment of an administrator pro tem over an arbitrary discovery deadline. 5 4452090 6. The Court erred in adopting the Auditor's Directive which failed to address serious allegations made in the Petition against Marshall Dixon. Those allegations include that Marshall Dixon may have defrauded the decedent of approximately $1.5 million between 1994 and the date of her death in June 2007 (See, Petition, paragraph 9), and that Marshall Dixon used decedent's charge cards and funds in decedent's brokerage and bank accounts to or for his benefit without the decedent's knowledge and permission (See, Petition, paragraphs 19-22). These allegations were apparently dismissed on the basis that granting the Petition would cause delay and expense. The "delay and expense" involved in appointing an administrator pro tem, however, pales in comparison to the amount of decedent's assets that may have been wrongfully transferred and withheld from the estate. 7. The Court erred in adopting the Auditor's Directive in which the Auditor failed to acknowledge or opine regarding Marshall Dixon's inherent conflict of interest position as Executor of the Estate while allegations were made against him individually of misappropriating assets of the decedent during her lifetime. It was an obvious conflict of interest for Marshall Dixon as executor to investigate and pursue allegations against himself of misappropriating or failing to account for assets of the decedent. See, Petition, paragraph 46. An administrator pro tem would act and take all necessary steps without the constraints of a conflict of interest but with greater power to insure full compliance with requests for information and records. The appointment of an administrator pro tem pursuant to 20 Pa. C.S. § 4301 has been recognized and ordered as appropriate and necessary for the limited purpose of discharging an executor's duties, or a portion thereof, when and to the extent the executor is in a conflict of interest position. See, Smith Estate, 6 4452090 29 Fiduc. Rep. 175 (O.C. Div. Montg. 1979); Francis Estate, 11 Fiduc. Rep. 2d 52 (O.C. Div. Allegh. 1985). WHEREFORE, George F. Dixon, III and Richard E. Dixon request this Honorable Court to vacate and withdraw the Final Order dated February 23, 2010 and grant the Petition or, in the alternative, require Marshall Dixon in both his individual and executor capacities to properly respond with an answer to the Petition as defined in Orphans' Court Rule 3.2, and provide time for a reply by Petitioners. Respectfully submitted, Date: March 15, 2010 OBERMAYER REBMANN MAXWELL & HIPPEL LLP gy; 4~~2.~ Walter W. Cohen, Esq. Attorney ID #12097 Kevin J. Kehner, Esq. Attorney ID # 33539 200 Locust Street, Suite 400 Harrisburg, PA 17101 717-234-9730 717-234-9734 (fax) Paul C. Heintz, Esq. Attorney ID #02906 Nina B. Stryker, Esq. Attorney ID #36531 Erin E. McQuiggan, Esq. Attorney ID #205673 One Penn Center, 19th Floor 1617 JFK Boulevard Philadelphia, PA 19103 215-665-3212 215-665-3165 (fax) 7 4452090 ~ ~~~~ .~ I, Rich' ~ verify that I atn one of the above-named Petitioners and that the averments of fact contained in the foregoing Exceptions are true and correct to the best of my knowledge, information and belieF and that this verification is made subject to the penalties of 18 Pa. C.S.A. Section 4904 relating to unsworn falsification to authorities. --... s Dated: ~i 6t l~ George ,Dixon;; lu- 6F aas2o9o VERIFICATION I, Richard E. Dixon, verify that I am one of the above-named Petitioners and that the averments of fact contained in the foregoing Exceptions are true and correct to the best of my knowledge, information and belief; and that this verification is made subject to the penalties of 18 Pa. C.S.A. Section 4904 relating to unsworn falsification to authorities. 3 J Flo ~'-~~ Dated: ~ Z Richard E. Dixon CERTIFICATE OF SERVICE I, KEVIN J. KEHNER, ESQUIRE, certify that on this date, I have served a true and correct copy of the foregoing Exceptions on behalf of George F. Dixon, III and Richard E. Dixon upon the following, by first class mail, addressed as follows: Daniel L. Sullivan, Esq. Saidis Flower & Lindsay 2109 Market Street Camp Hill, PA 17011 Elizabeth P. Mullaugh, Esq. Kimberly M. Colonna, Esq. McNees Wallace & Nurick 100 Pine Street, P.O. Box 1166 Harrisburg, PA 17108 Mark D. Bradshaw, Esq. Stevens & Lee Harrisburg Market Square 17 North Second Street, 16t" Floor Harrisburg, PA 17101 Charlotte Dixon 323 Bayview Street Camden, ME 04843 Date: March 15, 2010 Wayne F. Shade, Esq. 53 West Pomfret Street Carlisle, PA 17013 Kevin J. Kehner, Esq?.~~~''~''' 4452613