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HomeMy WebLinkAbout09-19-11 (2)IN RE: ESTATE OF : IN THE COURT OF COMMON PLEAS OF LOTTIE IVY DIXOl~fi, :CUMBERLAND COUNTY, PENNSYLVANIA Deceased :ORPHANS' COURT DIVISION N0.21-07-0686 / 1N RE: ESTATE OF : IN THE COURT OF COMMON PLEAS OF GEORGE F. DIXON, JR., :CUMBERLAND COUNTY, PENNSYLVANIA Deceased :ORPHANS' COURT DIVISION QTIP -Trust : N0.21-1994-0754 AUDITOR' S REPORT AND RECOMMENDATIONS STATEMENT OF QUESTIONS INVOLVED 1. Has Marshall proven by clear, convincing, and independent evidence that Lottie intended that Marshall have unrestricted access to the jointly-owned checking account during Lottie's lifetime? Answer: Yes. 2. Does the counseled concession of the Brothers that Lottie was not subject to undue influence establish, as a matter of law, the absence of evidence that Marshall was taking advantage of a confidential relationship with Lottie? Answer: Yes. WAYNE F. SHADE Attomry at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 3. Should the testimony of Marshall as to gifts from Lottie have been excluded by the Dead Man's Rule? ~--~ ~--~ - o Answer: No ~~c-> -~: Sr" i ~' ~-, ~_ ; •, j~l l -l - ~== . ~ ~ ~' = _ z» ~,.. ~~L:7 ©O -rt -n t:;:~':~c _ -T... $ --- cn ~._ 4. Have the Brothers proven that Marshall breached his fiduciary duties by defrauding Lottie by using Lottie's funds for his own benefit through theft, deception, fraud or misrepresentation, without the knowledge or permission of Lottie? Answer: No. 5. Does the evidence require that Marshall be removed as Executor of the Estate on the basis of conflict of interest? Answer: No. 6. Dces the evidence establish that the costs of the audit should be paid other than in accordance with the general rule that the costs of the audit be paid by the Estate? Answer: No. FINDINGS OF FACT AND NOW, this 19th day of September, 2011, after hearing, the auditor finds and recommends, as follows: 1. George F. Dixon, Jr. died, testate, on August 28, 1993. 2. Lottie Ivy Dixon (hereinafter "Lottie"), the surviving spouse of George F. Dixon, Jr., died on June 28, 2007. 3. George F. Dixon, Jr. and Lottie were the parents of Richard E. Dixon and George F. Dixon, III (hereinafter "the Brothers") as well as Marshall L. Dixon (hereinafter "Marshall" or the "Executor"). WAYNE F. SHADE Attorney at Law 53 West Pomfrot Strcet Carlisle, Pennsylvania 17013 -2- 4. The only other sibling of Marshall and the Brothers is their sister, Charlotte Dixon, vtjho has not involved herself in the disputes among the parties hereto. 5. Under the Will of George F. Dixon, Jr., part of his estate was given to his QTIP Trust. 6. The Co-Trustees of the QTIP Trust are the Brothers and Manufacturers and Traders Trust Company (hereinafter "the Bank"). 7. Marshall is the Executor of the Estate of Lottie (hereinafter "the Estate"). 8. The total assets in the QTIP Trust and the Estate were in excess of $12,000,000 and the total net assets for distribution after taxes and other expenses of administration were in excess of $6,000,000. 9. On July 25, 2008, Marshall, as Executor of the Estate, filed his First Intermediate Accounting, Petition for Adjudication, and Proposed Schedule of Distribution. 10. On August 22, 2008, the brothers filed objections to the First Intermediate Accounting of Marshall as executor of the Estate, both individually and as beneficiazies of the QTIP Trust. 11. On August 26, 2008, the issues in the Estate were referred to the auditor for a hearing and disposition. WAYNE F. SHADE Attorney at Law 53 West Pomfre[ Strcet Carlisle, Pennsylvania 17013 -3- 12. On January 30, 2009, the Trustees filed their First and Final Account and Statement of Proposed Distribution as Trustee of the QTIP Trust. 13. On February 27, 2009, Marshall, individually as a beneficiary of the QTIP Trust, through separate counsel, and in his capacity as Executor, filed objections to the First and Final Account and Statement of Proposed Distribution of Trustees of the QTIP Trust. 14. On February 27, 2009, the Brothers, as beneficiaries of the QTIP Trust, filed objections to the First and Final Account and Statement of Proposed Distribution of the Trustees of the QTIP Trust. 15. On March 3, 2009, the issues involving the QTIP Trust were referred to the auditor for a hearing and disposition. 16. On June 17, 2009, the two cases were consolidated with agreement of the parties. 17. On June 17, 2009, the auditor's directive for scheduling was endorsed as an order of court. 18. Within three months of Lottie's death, the Brothers' then counsel requested that Marshall provide documents related to Lottie's financial affairs. 19. There is no evidence that Marshall did not fully and timely respond to that WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 request. -4- 20. In June of 2008, then counsel for the Brothers requested that Marshall, as Executor of the Estate, provide written authorization for the Brothers to obtain Lottie's account statements and canceled checks directly from the financial institutions with whom Lottie had accounts during the last years of her life. 21. Marshall timely provided the authorization, and by September of 2008, the Brothers had received the monthly account statements and canceled checks for the checking account that Lottie had held at the Bank and its predecessor banks. 22. The order of June 17, 2009, required the completion of discovery by August 31, 2009. 23. On June 18, 2009, the Brothers served interrogatories upon Marshall as Executor of the Estate. 24. There is no evidence that Marshall did not fully and timely respond to those interrogatories or that any of the objections asserted by the Estate were improper. 25. Then counsel for the Bank withdrew as counsel on August 24, 2009, after identifying a conflict. 26. The Brothers had not conducted the deposition of Marshall by the time that previous counsel for the Bank withdrew as counsel on August 24, 2009. WAYNE F. SHADE Attorney at Law 53 West Pomfret strcet Carlisle, Pennsylvania 17013 'S- 27. The August 31, 2009, deadline for the completion of discovery was extended by thirty'days by agreement of the parties as a result of the withdrawal of then counsel for the Bank. 28. New counsel for the Bank entered their appearance on August 27, 2009. 29. The Brothers conducted the deposition of Marshall on September 23, 2009, seven days prior to expiration of the extended deadline. 30. In June of 2003, Lottie made Marshall a joint owner, with her, of her checking account at the Bank (formerly Allfirst Bank). (N. T. 59, 73) 31. During the deposition, Marshall testified that some of the payments from the joint account were for Lottie's expenses, some were gifts to him, and some were in reimbursement for items that he had purchased for Lottie. 32. In his deposition, Marshall was unable to specify the extent to which any given check was a gib or a reimbursement or a combination of both. 33. On October 9, 2009, the Brothers filed a motion to extend the discovery deadline beyond the agreed September 30, 2009, to enable them to further investigate Marshall's finances on the basis of their assertion that Marshall's answers in his deposition were incomplete. 34. The Orphans' Court issued a rule to show cause on October 15, 2011, and WAYNE F. SHADE Attorney at law 53 West Pomfret Street Cazlisle, Prnnsylvania 17013 referred the request for extension of the discovery to the auditor for disposition. -6- 35. The auditor held a discovery conference on November 11, 2009. 36. In his report of November 20, 2009, on the discovery issues, the auditor rejected the request for extension of the discovery deadline for the reasons that Marshall could be asked at the hearing, as to each disbursement from the checking account that he owned jointly with Lottie, whether it represented a gift to him or an expense of his mother or a reimbursement of an expense that he paid for his mother or some combination thereof. 37. In the report of November 20, 2009, on the discovery issues, the auditor concluded that, if Marshall would be unable to specify whether a disbursement represented a gift to him, the brothers would be entitled to an adverse inference that it was a gift to him where he was a joint owner of the checking account from which the payments were made. 38. Such an adverse inference would have been favorable to the Brothers' contention that the Estate had improperly allocated the federal estate tax unified credit. 39. By the date of the discovery conference on November 11, 2009, the Brothers had never advanced any allegations that there was anything improper about any distributions from the jointly-owned checking account for the benefit of Marshall. WAYNE F. SHADE Attorney et Law 53 West Pomfret Street Carlisle, Prnnsylvania 17013 -7- 40. At the discovery conference on November 11, 2009, apre-hearing conference was scheduled for December 9, 2009, and auditor's hearings were scheduled for December 16, 17, and 18, 2009. 41. In the report of November 20, 2009, on the discovery issues, the auditor reserved reconsideration of the request of the Brothers for an extension of the discovery deadline at the pre-hearing conference that was scheduled for December 9, 2009, in the event that Marshall would fail to disclose his brokerage account statements from January 1, 2003, to the date of death of Lottie by the date of that pre-hearing conference. 42. There is no evidence that Marshall did not disclose his brokerage account statements from January 1, 2003, to the date of death of Lottie by the date of the pre- hearing conference on December 9, 2009. 43. In their pre-hearing memoranda that they submitted for the pre-hearing conference on December 9, 2009, the Brothers did not itemize the assets that they contended were not included in the Estate that should have been included in the Estate as they were directed to do in the auditor's directive of June 12, 2009, and the order of June 17, 2009. 44. In their pre-hearing memoranda that they submitted for the pre-hearing conference on December 9, 2009, the Brothers did not provide any supporting rationale WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 -8- and legal authority for their contentions as they were directed to do in the auditor's directive of June 12, 2009, and the order of June i 7, 2009. 45. The Brothers failed to identify their exhibits and witnesses by December 5, 2009, as they were directed to do in the auditor's directive of June 12, 2009, and the order of June 17, 2009. 46. At the pre-hearing conference on December 9, 2009, hearings on the various objections of the parties were scheduled for February 24, 25, and 26, 2010. 47. At the pre-hearing conference on December 9, 2009, then counsel for the Brothers indicated that they would be filing a petition to withdraw as counsel. 48. Then counsel for the Brothers filed their petition to withdraw as counsel the next day, December 10, 2009. 49. On December 14, 2009, the order of the Orphans' Court of December 11, 2009, was docketed. 50. The order of December 11, 2009, permitted then counsel for the Brothers to withdraw as counsel, continued, generally, the hearings that had been scheduled for December 16, 17, and 18, 2009, ordered the Brothers to retain new counsel within 30 days, and scheduled apre-hearing conference for February 12, 2010. 51. On January 25, 2010, present counsel for the Brothers entered their WAYNE F. SHADE Attorney at Law 53 West Pomfret street Carlisle, Pennsylvania 17013 appearance. -9- 52. On the February 12, 2010, date of the pre-hearing conference, the Brothers filed a petition for appointment of an administrator pro tem, pursuant to the provisions of 20 Pa. C. S. § 4301, to replace Marshall as the Executor of the Estate on the basis of an alleged conflict of interest between Marshall and Lottie. 53. The Brothers alleged in their petition for appointment of an administrator pro tem that Lottie's mental health began to deteriorate in 1999. 54. The Brothers alleged in their petition for appointment of an administrator pro tem that Marshall may have defrauded Lottie of at least $1,500,000 between 1994 and her date of death by spending her money for his personal benefit. 55. The Brothers requested that the Orphans' Court appoint an administrator pro tem to determine what, if any, assets were wrongfully obtained by Marshall from the Estate between 1994 and Lottie's date of death. 56. When the Brothers filed their objections to the First Intermediate Accounting of Marshall as Executor of the Estate on August 22, 2008, they did not object to Marshall's continuing to serve as the Executor of the Estate. 57. For more than eighteen months between the July 25, 2008, filing of the First Intermediate Accounting and Petition for Adjudication in the Estate of Lottie and the WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 -10- February 12, 2010, filing of the petition for appointment of an administrator pro tam by the Brothers, the Brothers never suggested that Marshall engaged in any improper transactions with Lottie during her lifetime. 58. Prior to the filing of the petition for appointment of an administrator pro tam by the Brothers, the Brothers alleged that any application of the funds of Lottie during her lifetime for the benefit of Marshall were gifts that required an adjustment of the application of the federal estate tax unified credit in the Estate of Lottie. 59. At the pre-hearing conference on February 12, 2010, the parties argued the issue of the Brothers' request for appointment of an administrator pro tem. 60. On February 16, 2010, the order confirming referral, of the issue of the Brothers' request for appointment of an administrator pro tam, to the auditor was entered. 61. On February 19, 2010, the Brothers filed a petition requesting a sixty day continuance of the auditor's hearings that had been scheduled on December 9, 2009, for February 24, 25, and 26, 2010. 62. The auditor recommended that the petition for appointment of an administrator pro tam and the intervening petition requesting a sixty day continuance of the auditor's hearings be denied on the basis that the delay of the Brothers in advancing the requests would prejudice the other parties in terms of delay and expense where the WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 -11- auditor saw nothing in the petition that the Brothers could not have raised at the time of the filing of their objections to the First and Intermediate Accounting in the Estate. 63. The recommendations of the auditor were endorsed by the Orphans' Court in the order of February 23, 2010. 64. The auditor's directive of February 22, 2010, documented various agreements among the parties that were confirmed at apre-hearing conference on February 12, 2010. 65. The objections of the Brothers to the allocation of the federal estate tax unified credit in the Estate were withdrawn. 66. The objections of the Brothers to the retention of a portion of the federal estate tax refund by the Estate were withdrawn. 67. The objections of the Brothers to the Estate's valuation of jewelry and other property were withdrawn. 68. The objections of the Brothers that the Estate failed to include a stock brokerage account with an approximate value of $500,000 were withdrawn. 69. The objections of the Brothers to the Estate's payment of $8,553.52 for the maintenance of Lottie's residence, Rose Balcony, after Lottie's death were withdrawn on the basis of the Estate's explanation that that sum was offset by funds that Marshall advanced to the Estate for administration. WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 -12- 70. The Estate acknowledged, and the parties agreed that Charlotte Dixon does not dispute, that the Estate would obtain, from Charlotte, reimbursement for disbursements in the amount of $5,402.26 for Charlotte's Florida condominium and, from Marshall reimbursement for disbursements in the amount of $5,402.27 for Marshall's Florida condominium. 71. Marshall would reimburse the Estate in the amount of $9,933.96 for loss of value of mazketable securities during administration of the Estate. 72. Marshall would withdraw the claim for unpaid expense of interest for funds loaned to the Estate by Marshall as stated on page 26 of the First Intermediate Accounting. 73. All objections to the proposed schedule of distribution of the QTIP Trust by all parties were withdrawn, and all parties agreed with termination of the trust and distribution in accordance with the provisions of the trust agreement. 74. All parties agreed that the Bank would file a revised schedule of distribution, including distribution of the real estate in kind. 75. Marshall's objections to the fees of the corporate and individual trustees of the QTIP Trust were withdrawn. 76. With the exception of contentions with respect to counsel fees and the fees of WAYNE F. SHADE Attorney at Law 53 West Pomfret street Carlisle, Pennsylvania 17013 the auditor, the Bank withdrew all of its objections. -13- 77. The Brothers would proceed at the hearing with their evidence as to the allegations in their addendum to their supplemental pre-hearing memorandum that Marshall defrauded Lottie by using Lottie's funds for his own benefit through theft, deception, fraud, and misrepresentation, without the knowledge or permission of Lottie. 78. The Estate would then present its response. 79. All evidence and all authorities regarding liability for the fees and expenses of the auditor would be addressed at the hearing. 80. All issues and all evidence regarding liability for attorney fees incurred by the parties in addressing the various objections would be deferred and preserved for later disposition. 81. The bank would advance the expenses for the court stenographer from the corpus of the QTIP Trust, subject to recommendations of the auditor for reimbursement. 82. On February 13, 2010, the Brothers submitted to the auditor an addendum to their supplemental pre-hearing memorandum in which they confirmed that their sole remaining objection to the First Intermediate Accounting of the Estate was that Marshall defrauded Lottie by using Lottie's funds for his own benefit through theft, deception, fraud, and misrepresentation, without the knowledge or permission of Lottie. 83. The auditor's hearing was held on February 24, 2010. WAYNE F. SHADE Attorney at law 53 West Pomfret Street Carlisle, Pennsylvania 17013 -14- 84. Before the auditor could file his report, the Brothers, on March 15, 2010, filed exceptions to the denial of their petition for appointment of an administrator pro tem. 85. By order dated April 7, 2010, and filed April 12, 2010, the court adopted the recommendations of the auditor that the exceptions of the Brothers be denied. 86. On May 13, 2010, the Brothers filed their notice of appeal and statement of errors complained of on appeal. 87. On August 19, 2010, the Orphans' Court issued an opinion, pursuant to Pa. R. Civ. P. 1925 (a), in support of the denial of the exceptions of the Brothers to the denial of their petition for appointment of an administrator pro tem. 88. On Apri15, 2011, the Superior Court quashed the appeal as being from an interlocutory order that was not appealable as of right and for which permission to appeal had not been granted. 89. On Apri120, 2011, the Brothers filed an application for reconsideration in the Superior Court on the asserted basis that the Superior Court erroneously stated in its opinion quashing the appeal that the Brothers did not claim that the order from which the appeal was taken was a collateral order. 90. On May 26, 2011, the Brothers' application for reconsideration was denied, WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 per curiam, and the record was remitted to the Orphans' Court on July 5, 2011. 91. The objections of the Brothers are now ready for disposition. -15- 92. For many years prior to Lottie's death on June 28, 2007, Marshall lived with Lottie. 93. Marshall was never an agent for Lottie under a financial power of attorney. 94. The Brothers specify various respects in which they suggest that Marshall was a dependent spendthrift. 95. There is no evidence that Lottie did not know all of the facts, upon which the Brothers base that assessment, at the time that she put her checking account into joint names with Marshall or at the time that she executed her Last Will and Testament. 96. Among their objections, the Brothers questioned dozens of checks in the total amount of approximately $220,000 that were drawn against the joint account to pay various credit card statements or otherwise either to or for the benefit of Marshall. 97. The allegations of the Brothers of improper conduct on the part of Marshall toward Lottie went back as far as 1999. 98. The Brothers have neither alleged nor proven that they were not aware, in 1999, of the facts that underlie their allegations against Marshall. 99. The Brothers have neither alleged nor proven that they took any action to address their concerns in those respects during the lifetime of Lottie. 100. The evidence in the allegations of the Brothers would have been available to WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Pennsylvania 1'7013 them at the time that they filed their objections to the First Intermediate Accounting of -16- Marshall as Executor of the Estate on August 22, 2008, more than a year after the date of death of Lottie on June 28, 2007, and more than eighteen months prior to the hearing on February 24, 2010. 101. The Brothers could have and should have advanced those allegations at that time. 102. The Brothers did not advance any allegations of misconduct of Marshall until after the death of Lottie. 103. In the directive of February 22, 2010, the auditor directed that, at the hearing, the Brothers would need to establish the relevance of the evidence of checks drawn against the joint checking account where Marshall was a joint owner of the account, where there was no suggestion that the Brothers will be able to prove that Lottie was subject to incapacity or undue influence during her lifetime, and where the Brothers had withdrawn their objection to the allocation of death taxes among the beneficiaries. 104. At the hearing on the merits of the objections of the Brothers that was held on February 24, 2010, the Brothers were unable to establish the relevance of checks that were drawn on the joint checking account, so the auditor precluded the Brothers from introducing any evidence regarding the checks drawn on the joint checking account. WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Prnnsylvania 17013 -17- 105. The Brothers made no offer of proof regarding what they would have attempted to prove through the introduction of evidence regarding the checks drawn on the joint checking account. 106. Marshall and Lottie continued in joint ownership of the jointly-owned checking account at the Bank until Lottie's death. 107. Lottie customarily kept the checkbook in her pocketbook, and she kept her pocketbook by her side. (Tr. 79-80) 108. At the hearing on February 24, 2010, the undisputed evidence, developed by the Brothers as on cross-examination of Marshall, was that, on September 23, 2005, nearly two years prior to her date of death, Lottie drafted and signed a check against the jointly-owned account in the amount of $4,629.76 to pay off Marshall's credit card account. (Tr. 95-96, 103-04; Executor's Ex. 6 at p. 422) 109. Lottie drafted and signed other checks against the jointly-owned account directly to Marshall. (Executor's Ex. 6 at p. 455, 502) 110. Marshall wrote checks from the joint checking account primarily during the last year or so of Lottie's life when writing checks became too difficult for her. (Tr. 62, 66, 74) 111. When Marshall wrote checks from the joint checking account, he recorded WAYNE F. SHADE Attorney at law 53 West Pomfret Street Carlisle, Pennsylvania 17013 them in the check ledger. (Tr. 103) -18- 112. Payments made to or on behalf of Marshall by Lottie and Marshall during Lottie's lifetime were part of a consistent pattern thereof and represented either gifts to Marshall or reimbursements for expenses that Marshall had paid for Lottie using his credit cards. (Tr. 61-62) 113. The pattern of gifts from Lottie to Marshall is confirmed by the fact that, in her Last Will and Testament that was written more than eighteen months prior to the death of Lottie by her well-respected legal counsel, gave nearly all of her net estate of more than $900,000 to Marshall. 114. The majority of the checks that Marshall wrote from the joint checking account were written when Lottie was sitting beside him at a table. (Tr. 62) 115. Marshall executed charges against the joint checking account, electronically, with Lottie's knowledge and participation. (Tr. 85-86) 116. The Brothers did not produce any evidence that Marshall executed any charges against the joint checking account without Lottie's knowledge or permission. 117. Marshall and Lottie regularly reviewed the account statements for the joint checking account together. (Tr. 103) 118. There is no evidence that Marshall ever wrote checks against the joint checking account and had Lottie sign them. (Tr. 65) WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 -19- 119. There is no evidence that Marshall -ever signed Lottie's name on any checks that were written against the joint checking account. (Tr. 65) 120. There is no evidence that Marshall ever wrote checks against the joint checking account for his own benefit without telling Lottie that he was doing so. (Tr. 87) 121. There is no evidence that Marshall used assets of Lottie without her knowledge or permission. 122. There is no evidence that Marshall had procured gifts from Lottie through theft, deception, fraud, or misrepresentation. 123. There is no evidence that Lottie either objected to Marshall's writing checks against the joint checking account or that she ever took any action to remove him as a signatory on that account. 124. Where the Brothers conceded at the discovery conference on November 11, 2009, with the benefit of counsel, that the Brothers would not be able to prove that Lottie was subject to incapacity or undue influence during her lifetime, the suggestion in the Brothers' requested fmding of fact 42 that Lottie was drafting and signing the majority of her checks during November and December of 2005 when Marshall drafted and signed ten checks in the total amount of $9,475.09 establishes that Lottie knew what Marshall was doing in the joint checking account rather than that Marshall was defrauding Lottie WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 -20- by using the jointly-owned funds for his own benefit through theft, deception, fraud, and misrepresentation, without the knowledge or permission of Lottie. 125. There is no evidence that Marshall misappropriated any assets in which Lottie had an interest. 126. There is no evidence that any assets that should have been included in the Estate were improperly excluded or omitted from the administration of the Estate. 127. The great majority of the time spent by the auditor in the resolution of the issues presented in this case has been in connection with the Estate. 128. The time spent by the auditor in connection with the QTIP Trust has been only a modest fraction of the total time expended. CONCLUSIONS OF LAW 1. Ownership and control of a joint account as an immediate gift on one hand and access to the funds in a joint account during the lifetimes of the joint owners on the other hand are separate issues. 2. The statutory definition of a joint account is one with respect to which any joint owner has the right to request the funds in the account during the lifetimes of the joint owners, whether or not mention is made of any right of survivorship. 20 Pa.C.S. § 6301. 3. There is no evidence that, by placing her checking account in joint names with WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 '.Marshall, Lottie intended to make an immediate gift of the entire account to Marshall; -21- thus by placing her checking account in joint names with Marshall, Lottie did not give up her right to withdraw the funds and place them into an account in her name, alone, or to restrict Marshall, during her lifetime, from accessing funds that were deposited in the account by her. Canning v. West, 803 A2d 753 (Pa. Super. 2002). 4. On the other hand, there is clear and convincing evidence that, in placing her checking account into joint names with Marshall, Lottie did not intend to place any restrictions upon Marshall's access to the funds. 5. Where Lottie placed her checking account into joint names with Marshall, and WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Cazlisle, Pennsylvania 17013 where Lottie engaged, for the last four years of her life, in an ongoing pattern of gifts to Marshall from the joint checking account and of consenting to Marshall's unrestricted access to the joint checking account, where the Brothers conceded at the discovery conference on November 1 1, 2009, with the benefit of counsel, that the Brothers would not be able to prove that Lottie was subject to incapacity or undue influence during her lifetime, where that concession was confirmed in the auditor's report, on discovery issues, of November 20, 2009, and where there is no evidence that the Brothers took any action to address any concerns regarding Marshall's access to the joint checking account during the lifetime of Lottie, Lottie's permitting Marshall to have access to the joint account, including a substantial gift of $4,629.76 to Marshall, in the form of a check that was signed by Lottie (N. T. 96), to pay off Marshall's credit card established a general -22- donative intent on the part of Lottie, with respect to the joint checking account, by clear and convincing, independent evidence. 20 Pa.C.S. § 6303, official comment. 6. Official comments are to be given weight in the construction of statutes. Lessner v. Rubinson, 527 Pa. 393, 592 A2d 678, n. 4 (1991). 7. The Brothers had more than eighteen months between the date of filing of the First Intermediate Accounting and Proposed Schedule of Distribution and the date of the hearing on February 24, 2010, to counter the evidence of Lottie's intention that Marshall have unrestricted access to the jointly-owned checking account, during her lifetime, by pursuing evidence that Lottie intended to restrict Marshall's access to the jointly-owned checking account, such as by giving Marshall signature authority, only; but the Brothers did not produce any such evidence. 8. Although Marshall was never an agent for Lottie under a financial power of attorney, the evidence establishes that a confidential relationship existed between Lottie and Marshall. Estate of Meyers, 434 Pa. Super. 165, 642 A2d 525 (1994). 9. Where the Brothers conceded at the discovery conference on November 11, WAYNE F. SHADE Attorney at Law 53 West Pomket Street Carlisle, Pennsylvania 17013 2009, with the benefit of counsel, that the Brothers would not be able to prove that Lottie was subject to incapacity or undue influence during her lifetime and where that concession was confirmed in the auditor's report, on discovery issues, of November 20, 2009, the fact, that the check for the largest single gift to Marshall of $4,629.76 was -23- signed by Lottie, completely negates any suggestion that Marshall was taking advantage of a confidential relationship with Lottie. Estate of Meyers, 434 Pa. Super. 165, 169-170, 642 A2d 525, 527 (1994). 10. The counseled concession of the Brothers that Lottie was not subject to undue influence, alone, establishes, as a matter of law, the absence of evidence that Marshall was taking advantage of a confidential relationship with Lottie. Estate of Meyers, 434 Pa. Super. 165, 169-170, 642 A2d 525, 527 (1994). 11. As objectors, the Brothers have the burden of proving that Marshall breached his fiduciary duties. Lohm Estate, 440 Pa. 268, 274, 269 A2d 451, 454 (1970); Maurice Estate, 433 Pa. 103, 107, 249 A2d 334, 336 (1969). 12. Where Lottie engaged, for the last four years of her life, in an ongoing pattern WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 of gifts to Marshall from the joint checking account and of consenting to Mazshall's unrestricted access to the joint checking account, where the Brothers conceded at the discovery conference on November 11, 2009, with the benefit of counsel, that the Brothers would not be able to prove that Lottie was subject to incapacity or undue influence during her lifetime, and where there is no evidence that the Brothers took any action to address any concerns regarding Marshall's access to the joint checking account during the lifetime of Lottie, Lottie's permitting Marshall to have access to the joint account, including a substantial gift of $4,629.76 to Marshall to pay off his credit card, -24- established a general lack of evidence of improper conduct on the part of Marshall in accessing the joint checking account for his personal benefit. 13. Lottie's permitting Marshall to have unrestricted access to the joint checking account established her intention, by clear and convincing evidence, to invest in Marshall so much dominion and control over the account as to be consonant with joint ownership thereof during Lottie's lifetime. Hosfeld Estate, 414 Pa. 602, 605, 202 A2d 69, 71 (1964). 14. Where Lottie engaged, for the last four years of her life, in an ongoing pattern of gifts to Marshall from the joint checking account and of consenting to Marshall's unrestricted access to the joint checking account and where the Brothers conceded, with the benefit of counsel, that they could not prove that Lottie was subject to incapacity or undue influence during her lifetime, the evidence is clear and convincing that Marshall did not defraud Lottie by using Lottie's funds for his own benefit through theft, deception, fraud, and misrepresentation, without the knowledge or permission of Lottie. 20 Pa. C.S. § 6303; Lessner v. Rubinson, 527 Pa. 393, 592 A2d 678 (1991). 15. Where the Brothers conceded, with the benefit of counsel, that they could not WAYNE F. SHADE Atwmey at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 prove that Lottie was subject to incapacity or undue influence during her lifetime, and where the Brothers offered no evidence that Lottie did not intend that Marshall would nave unrestricted access to the funds in that account, during her lifetime, the details of -25- any charges that Marshall may have made against that account for his benefit during Lottie's lifetime were legally irrelevant. 16. The Brothers waived any application of the Dead Man's Rule when they called Marshall as their witness as on cross-examination and when they did not raise the issue of the Dead Man's Rule at the hearing. 42 Pa. C.S. § 5932; Hosfeld Estate, 414 Pa. 602, 202 A2d 69 (Pa. 1964). 17. Even if the Brothers had raised the issue of the Dead Man's Rule in objection to the testimony of Marshall, the evidence,' of the substantial gift of $4,629.76 to Marshall, in the form of a check signed by Lottie, to pay off his credit card, established the independent evidence of a valid inter vivos transfer from Lottie to Marshall that would have been necessary to have permitted Marshall to testify about Lottie's intentions with regard to the other gifts to Marshall from the jointly-owned checking account. Friedeman v. Kronen, 452 Pa. 365, 305 A2d 3 (1973). 18. The Brothers have failed to sustain their burden of proof in all respects. 19. Where the Brothers have failed to prove, even prima facie, any misconduct on the part of Marshall, Marshall has no conflict of interest in acting as Executor of the Estate. WAYNE F. SHADE Attorney at Law 53 West Pomfret Stmt Carlisle, Pennsylvania 17013 -26- 20. Marshall's counsel in his individual capacity are representing him only with respect to the issues regarding the QTIP Trust, all of which have been resolved by agreement of the parties. (N. T. 24-26) 21. Marshall has never been joined in his individual capacity, in the proceedings with respect to the Estate, by the Brothers or anyone else, and he has not appeared in the proceedings with respect to the Estate in his individual capacity. 22. Counsel for Marshall as Executor of the Estate aze not representing Marshall in any capacity other than as Executor of the Estate. 23. Even if Marshall were a party to the proceedings with respect to the Estate in his individual capacity, he would have the right to waive the right to counsel and proceed in his individual capacity without separate counsel. 24. Although the Brothers have wholly failed to sustain their burden of proof of misconduct on the part of Mazshall, the auditor does not see any persuasive authority, upon similar facts, that the nature and manner of the Brothers' pursuit of their contentions has risen to the level of vexatiousness onto the level of bad faith that would equate with gross negligence, concealment of assets, and misuse of assets that would be necessary to contravene the general rule that the costs of the audit be paid by the Estate. In re Estate of Vaughn, 315 Pa. Super. 354, 461 A2d 1318 (1983). WAYNE F. SHADE Attorney e[ Law 53 West Pomfre[ Street Cazlisle. Pennsylvania 17013 -27- 25. Certain of the objections of the Brothers to the First Intermediate Accounting and the Proposed Schedule of Distribution were resolved by agreement of the parties to the benefit of the Estate: 26. The residuary beneficiary of the Estate is The Lottie Ivy Dixon Revocable Trust. 27. The beneficiaries of The Lottie Ivy Dixon Revocable Trust are the same beneficiaries in the same shares as the beneficiaries of the QTIP Trust. 28. With the required reimbursements to the Estate, payment of the costs of the audit by the Estate will not be materially different than payment of a portion of the costs of the audit by the Estate and a portion by the QTIP Trust, particularly where the great majority of the costs of the audit are attributable to the issues that are contested in the Estate. RECOMMENDATIONS 1. The auditor recommends that the objections of the Brothers to the First Intermediate Accounting and Proposed Schedule of Distribution of the Executor of the Estate be dismissed. 2. The auditor recommends that, within thirty days from the date of this report, Charlotte Dixon reimburse the Estate for disbursements in the amount of $5,402.26 for WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 -28- her Florida condominium and that the reimbursement be added to the balance held for future accounting. 3. The auditor recommends that, within thirty days from the date of this report, Marshall reimburse the Estate for disbursements in the amount of $5,402.27 for his Florida condominium and that the reimbursement be added to the balance held for future accounting. 4. The auditor recommends that, within thirty days from the date of this report, Marshall reimburse the Estate in the amount of $9,933.96 for loss of value of marketable securities during administration of the Estate and that the reimbursement be added to the balance held .for future accounting. 5. The auditor recommends that the $4,512.29 of unpaid expenses be reduced by $773.50 to $3,738.79 as the result of Marshall's withdrawal of his claim of interest on funds loaned to the Estate as stated on page 26 of the First Intermediate Accounting and that the $773.50 be added to the balance held for future accounting. 6. The auditor recommends that the First Intermediate Accounting and Proposed Schedule of Distribution be confirmed in all other respects. 7. The auditor recommends that all issues regarding liability for attorney fees WAYNE F. SHADE Attorney at Law 53 West Pomfret Street Carlisle, Pennsylvania 17013 incurred by the parties in addressing their vazious objections are defer ed and preserved, in accordance with the agreement of the parties, for later disposition. (N. T. 28-29) -29- 8. The auditor recommends that the claims of any party for attorney fees incurred in addressing the various objections be filed with the Clerk of the Orphans' Court within twenty days from the date of this report or be deemed waived. 9. The auditor recommends that, within forty days from the date of this report, the fees of the auditor be paid to the auditor by the Estate in accordance with the attached, itemized statement therefor. 10. The auditor recommends that, within forty days from the date of this report, the court reporter fees for the appearance and original transcript in the amount of $567.00 by reimbursed to the Bank by the Estate. 11. The auditor recommends that the parties bear their own expenses for their copies of the transcript of the hearing. September 19, 2011 Respectfully submitted, Wayne .Shade, Esquire Auditor Nina B. Stryker, Esquire Erin E. McQuiggan, Esquire Kevin J. Kehner, Esquire Dbenmayer Rebmann Maxwell & Hippel, LLP Attorneys for Objectors in the Estate of Lottie Ivy Dixon WAYNE F. SHADE Attorney at Lew 53 West Pomfret Strcet Carlisle, Pennsylvania 17013 -30- Elizabeth P. Mullaugh, Esquire Kimberly M. Colonna, Esquire McNees; Wallace & Nurick, LLC Attorneys for Executor of the Estate of Lottie Ivy Dixon Daniel L. Sullivan, Esquire Saidis, Sullivan & Rogers Attorneys for Marshall L. Dixon, individually Mark D. Bradshaw, Esquire Stevens & Lee Attorneys for M&T Bank WAYNE F. SHADE Attorney at Law 53 West Pomfret Strcet Carlisle, Pemtsylvania 17013 -31- 1 IN RE: ESTATE OF : IN THE COURT OF COMMON PLEAS OF LOTTIE IVY DIXON, :CUMBERLAND COUNTY, PENNSYLVANIA Deceased :ORPHANS' COURT DIVISION N0.21-07-0686 IN RE: ESTATE OF : IN THE COURT OF COMMON PLEAS OF GEORGE F. DIXON, JR., :CUMBERLAND COUNTY, PENNSYLVANIA Deceased :ORPHANS' COURT DMSION QTIP -Trust : N0.21-1994-0754 STATEMENT FOR SERVICES 9/16/08 - 9/16/11 WAYNE F. SHADE AttomeyatLaw 53 West Pomfret Street Carlisle, Pem~sylvatua 17013 9/16/08 Review file and letter to counsel 4.0 11/25/08 Review email from Attorney Mullaugh, review file, draft Petition for confirmation and extension of commission and email to Attorney Mullaugh 1 2 2/11/09 Email to counsel 0.1 2/23/09 Review letter from Attorney Otto and letter to Atto rney Mullaugh 0.1 2/25/09 Review emails from Attorneys Otto and Mullaugh and email to Attorney Mullaugh 0.1 3/ 9/09 Review Orphans' Court file and letter to counsel 2.7 3/30/09 Review letters from Attorneys Mullaugh and Sullivan and email to counsel 0 2 4/ 3/09 Review proposed Motion for Consolidation 0.1 4/10/09 Review reply of the Executor of the Estate of Lottie Ivy Dixon to new matter of the Co-Trustees of the QTIP Trust 0.1 5/ 4/09 Review file and draft Petition for Extension of Appointment O,g 5/ 8/09 Review Co-Trustee's Response to Rule to Show Ca use - no charge 0.0 WAYNE F. SHADE Attorney at Law 53 West Pomfret Streit Carlisle, Pennsylvania 17013 5/28/09 Review Motion for Order Setting Schedule for Discovery and Hearing on Objections and Answer and Order of May 18, 2009, and email to counsel 0.6 6/ 4/09 Draft proposed Order and Directive and email to counsel 2,0 6/22/09 Review email from Attorney Mullaugh and email to counsel - no 0 0 charge . 8/21/09 Telephone from Attorney Bradshaw 0 2 9/25/09 Review letter from Attorney Sullivan, review file and email to counsel 0.4 10/16/09 Review emails from counsel and email to counsel 0.2 11/10/09 Review Motion to Extend Discovery and responses review , pre- hearing memoranda and preparation for discovery conference 3.6 11/11/09 Appearance at discovery conference 2 2 11/20/09 Preparation of Report and proposed Order concerning discovery 4.2 12/ 8/09 Review pre-hearing memoranda and preparation for pre-hearing conference 4 8 12/ 9/09 Pre-hearing conference in connection with the request of the Martson firm to withdraw as counsel, review pre-hearing memoranda and preparation for pre-hearing conference 6.0 2/ 9/10 Review filings by succeeding counsel for the brothers and preparation for pre-hearing conference 1 2 2/11/10 Telephone from Attorney Stryker - no charge 0.0 2/12/10 Pre-hearing conference 2 0 2/16/10 Review the estate's response to the brothers' Petition to Appoint an Administrator Pro Tem, review the brothers' addendum to the supplemental pre-hearing memorandum, outline the recommendations, telephone from Attorney Colonna, review Order of February 16, 2010, review emails from counsel, draft proposed Directive and email to counsel 5 2 -2- 2/19/10 Review Petition for Continuance, email to counsel, revisions to Directive, review emails from Attorneys Sullivan and Mullaugh, revisions to draft Directive and email to counsel 1.4 2/24/10 Appearance at hearing and draft Petition to Extend Commission 4.3 3/19/10 Review brothers' exceptions to the Order of February 23, 2010 0.3 4/ 6/10 Review estate's response to the brothers' exceptions to the Order of February 23, 2010, review transcript, review file, draft Second Interim Report and Recommendations 3.4 4/13/10 Review email from Attorney Mullaugh and reply with copies to all counsel of record 0.1 5/25/10 Preliminary review of catalogue filings and email to counsel 0.3 5/26/10 Telephone from Judge Oler's law clerk and review email from Attorney Sullivan 0.1 6/ 1/10 Telephone from Judge Oler's clerk - no charge 0.0 6/10/10 Review email from Attorney Sullivan and email to counsel 0.2 8/23/10 Review court opinion of August 19, 2010 0.3 4/ 6/11 Review Superior Court opinion 0.2 8/ 9/11 Review certificate of remittal and email to counsel 0.1 8/26/11 Review emails from counsel and email to counsel 0.2 9/ 9/11 Review Requested Findings of Fact and Conclusions of Law and preparation of Auditor's Report 6.0 9/13/11 Review Requested Findings of Fact and Conclusions of Law and preparation of Auditor's Report 4.5 9/14/11 Review Requested Findings of Fact and Conclusions of Law and preparation of Auditor's Report 6.6 9/15/11 Review Requested Findings of Fact and Conclusions of Law and 4.6 preparation of Auditor's Report WAYNE F. S>:IAnE At[omey at Law 53 West Pomfret Street Carlisle, Pem~sylvania 17013 -3- .' 9116/11 Review Requested Findings of Fact and Conclusions of Law and preparation of Auditor's Report §,~ 81.1 WAYNE F. SHADE Attorney at [aw 53 West Pomfret Strcet Culisle. Pem~sylvania 17013 All matters in accordance with the above itemized statement for services $20,275.00 Register of Wills, file Petition for Extension of Appointment as Auditor 15.00 TOTAL DUE $20,290.00 -4-