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HomeMy WebLinkAbout06-12-12 ~,, n Q ^? ,.~; ~.~ ; ~ ~ ( ~ N . i i C`,- -, - c.r IN RE: IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ESTATE OF GEORGE F. DIXON, JR. :ORPHANS' COURT DIVISION DECEASED No.21-1994-0754 IN RE: : IN THE COURT OF COMMON PLEAS OF :CUMBERLAND COUNTY, PENNSYLVANIA ESTATE OF LOTTIE IVY DIXON :ORPHANS' COURT DIVISION DECEASED No.21-07-0686 OBJECTIONS OF MARSHALL DIXON, EXECUTOR OF THE ESTATE OF LOTTIE IVY DIXON TO THE AUDITOR'S REPORT AND RECOMMENDATIONS TO THE HONORABLE JUDGES OF THE CUMBERLAND COUNTY COURT OF COMMON PLEAS, ORPHANS' COURT DIVISION: Pursuant to C.C.O.C.R. 8.7-2, Marshall Dixon, in his capacity as Executor of the Estate of Lottie Ivy Dixon (the "Executor" or "Marshall"), files the following objections to the Auditor's Report and Recommendations dated May 23, 2012 (the "Auditor's Report"). First Objection The Executor objects to the Auditor's Report to the extent that it did not award attorneys' fees for the Brothers' vexatious conduct in asserting and pursuing meritless objections to the Estate Accounting, including the objection to the valuation of the Decedent's personal property and jewelry, the objection to the allocation of the Unified Tax Credit, and the objection to the Estate's retention of a portion of a federal tax refund. As to these objections, the Auditor found as follows: • that the valuation of the personal property and jewelry would have had no effect on the distribution of the Estate assets, that the Brothers never gave any basis for questioning the professional appraisal of those items that the Executor obtained, and that the Brothers never obtained their own appraisal despite representing to the Auditor that they would do so. (Auditor's Report, Findings of Fact, ¶ 20-23). • that the Brothers never explained a factual or legal basis for their objection to the allocation of the Unified Tax Credit and that the Unified Tax Credit was allocated as required by the Internal Revenue Code, state law, and as set forth in the Decedent's Will. (Auditor's Report, Findings of Fact, ¶ 24-25). • that the Estate retained a portion of the federal tax refund due to the QTIP as a set off against the income that the QTIP owed to the Estate and that the Brothers had refused to pay from the QTIP to the Estate and that the Brothers never provided any factual or legal basis for the objection to this set-off. (Auditor's Report, Findings of Fact, ¶ 26-29). The Auditor also found that these objections increased the attorneys' fees incurred by the Executor. (Auditor's Report, Findings of Fact, ~ 132). These findings by the Auditor support an award of fees to the Executor as a sanction for the Brothers' vexatious conduct. The Auditor, however, stated as follows: The auditor concludes that it was not unreasonable for the Brothers to raise the 2 questions that they raised in their objections to Estate Accounting at the time that they raised them and to pursue discovery with respect to those issues. ...the auditor does not find that there was anything about their pursuit of those claims that reflected a determination to stubbornly ignore reality, to pursue a sole purpose of causing annoyance or to cause additional legal work. (case citations omitted). (Auditor's Report, p. 26). In drawing this conclusion, the Auditor erred as to the facts and the law. At the time that the Brothers asserted these three objections, they already had sufficient facts to know that these objections had no merit and would not alter the distribution of the Estate. The Brothers' pursuit of these frivolous objections increased the attorneys' fees incurred by the Executor because his counsel sought discovery related to those objections, conducted legal research on the objections, prepared to defend those objections, and addressed the objections in pre-hearing memoranda. Therefore, the facts warranted an award of attorneys' fees to the Executor as a sanction for the additional work that was necessitated by the Brothers' vexatious conduct in asserting and pursuing those meritless objections. Second Objection Marshall objects to the Auditor's Report and Recommendations to the extent that it did not award attorneys' fees for the Brothers' dilatory conduct during the pursuit of their objections. The Auditor found various facts showing the Brothers were dilatory in conducting their investigation into the Decedent's estate. Because of the Brothers' dilatoriness, the Executor made several requests for a timeline for the resolution of the Brothers' Objections and filed a motion to establish a discovery deadline. (Auditor's Report, Findings of Fact, ¶ 10, 37). The Auditor also found that, after the close of discovery, the Brothers moved for an extension of the discovery deadline, which resulted in the Executor having to oppose that motion and participate in a discovery conference and which increased the attorneys' fees incurred by the Executor. (Auditor's Report, Findings of Fact, ¶ 53-55, 133). Despite these findings of fact, the Auditor stated the following: Moreover, when the Brothers were slow in pursuing discovery, the Estate was not incurring attorneys fees because nothing was happening in the case, in general. The Estate does not identify any particular amounts of time that were incurred, prior to February 9, 2010, as a result of the delays or that that the Estate was materially prejudiced as a result of the delays. Accordingly, the auditor does not recommend an aware of attorney fees for the fees incurred by the Estate prior to the February 9, 2010, supplemental pre-hearing memorandum of the Brothers. (Auditor's Report, p. 27). In so ruling, the Auditor erred as a matter of fact and law. While the Auditor recognized the Brothers' dilatory conduct and noted the efforts that the Executor undertook to address that conduct, the Auditor did not award fees to the Executor for the work that was necessary to address the Brothers' dilatoriness. Such fees include the time that the Executor's counsel invested in exchanging communications in an effort to get the objections on a timeline and the time that the Executor's counsel incurred in order to draft the motion requesting that the Court establish a discovery schedule, which time would have been unnecessary had the Brothers complied with the discovery timeline that they themselves had set. Additionally, the Executor had to respond to the Brothers' motion to extend the discovery period and attend a discovery conference to address that motion, which work resulted from the fact that the Brothers were dilatory in completing discovery during the discovery period. The time invested in these tasks by the Executor's counsel was reflected in the invoices submitted at the hearing as Exhibit 14. The Auditor also erred in applying the law to the facts by ruling that, despite the Brothers' dilatory conduct, the Executor was not entitled to recover the additional fees 4 that it incurred. Given the facts established in this matter, the Auditor should have awarded additional attorneys' fees to the Executor because of the Brothers' dilatory conduct. Third Objection The Executor objects to the Auditor's Conclusion of Law refusing to award Attorneys' Fees to the Executor that were incurred as a result of the Brothers' appeal of the denial of the Petition for Appointment of Administrator Pro Tem. That Conclusion of Law states as follows: Conclusion of Law, ¶ 2: The Orphans' Court division does not have the authority to award attorney fees for legal work in opposition to an appeal that was either dilatory, obdurate, or vexatious or that was frivolous for any other reason. (Auditor's Report, p. 32). The Auditor's conclusion and recommendations in this regard misapplies existing law and misapprehends the basis for the Executor's request to recover attorneys' fees related to the appeal. The Auditor ruled that the fees incurred by the Executor during the appeal of the Petition for Administrator Pro Tem could only be awarded by the Superior Court pursuant to Pa. R.A.P. 2744 citin Mellon Bank v. Druzisky, 800 A.2d 955 (Pa. Super. 2002). Under Ambrose v. Citizens Nat Bank of Evans City, 5 A.3d 413 (Pa. Super. 2010), however, the attorneys' fees incurred by the Executor as a result of the appeal did not have to be awarded by the Superior Court. In Ambrose, the Superior Court ruled that if there is a statutory basis for the award of fees, then the trial court can award fees that were incurred during an appeal In the present case, the Auditor sought fees pursuant to 42 Pa. C.S.A. § 2503 as a sanction for the Brothers' "dilatory, obdurate or vexatious conduct during the pendency of a matter" including the Brothers' pursuit of the Petition for Administrator Pro Tem. The Brothers' filing exceptions to the denial of that Petition, seeking an appeal of that denial, and requesting reconsideration of the quashing of the appeal were all part and parcel of the Brothers' obdurate conduct in stubbornly pursuing, for over 15 months, the meritless Petition for Administrator Pro Tem. Those fees can be awarded by the trial court as a sanction under § 2503. Therefore, the Auditor erred in refusing to award to the Executor the fees he incurred during the appellate proceedings on the Petition for Administrator Pro Tem. Fourth Objection Marshall objects to the Auditor's recommendation that the Estate be directed to pay the fees of the auditor and the court reporter that were incurred in connection with the Executor's Motion for Attorneys' Fees. That recommendation states as follows: Finally, it is recommended that the Estate be directed to pay the fees of the auditor and the court reporter for the same reasons as set forth in the auditor's report of September 19, 201 1, with respect to the objections of the Brothers to the Estate Account. (Auditor's Report, p. 38). The Auditor's recommendation that the Estate bear the Auditor's fees and Court Reporter's fees that were incurred as a result of the Motion for Attorneys' Fees misapplies existing law and makes a manifestly unreasonable judgment. While the costs of the audit are usually borne by the fiduciary estate, in certain circumstances, the costs can be shifted to another party. In re Estate of Vaughn, 461 A.2d 1318 (Pa. Super. 1983). The Estate should not bear the burden of increased expense resulting from the motion that was necessary to sanction the Brothers for their inappropriate conduct during the audit proceedings. The Motion for Attorneys' Fees was filed because of the Brothers' wrongful 6 conduct. Absent that wrongful conduct, the Auditor's fees and Court Reporter's fees that were incurred in addressing the Motion for Attorneys' Fees would not have been incurred. Therefore, the Brothers should bear the Auditor and Court Reporter fees that were incurred in connection with the Motion for Attorneys' Fees. Further, as noted at February 23 hearing, there are no assets in the Estate to pay those fees, other than the real estate which was devised to the Executor and Charlotte. (Transcript, p. 120). Therefore, to the extent that the Auditor has ordered his fees and the Court Reporter's fees to be paid from the Estate, he has effectively imposed those costs upon only Marshall and Charlotte, which result is entirely inequitable. McNEES WALLACE & NURICK LLc U By . ,.V,,.,.~ Elizabeth P. Mullaugh I.D. No. 76397 Kimberly M. Colonna I.D. No. 80362 100 Pine Street, P.O. Box 1166 Harrisburg, PA 17108-1166 717- 232-8000 Counsel for Marshall Dixon as Executor of the Estate of Lottie Ivy Dixon Date: June 12, 2012 7 CERTIFICATE OF SERVICE The undersigned hereby certifies that on this date a true and correct copy of the forgoing documents were served by first class mail, postage prepaid, addressed as follows: Walter W. Cohen, Esquire Kevin J. Kehner, Esquire Obermayer Rebmann Maxwell &Hippel LLP 200 Locust Street, Suite 400 Harrisburg, PA 17101 Paul C. Heintz, Esquire Nina B. Stryker, Esquire Erin E. McQuiggan, Esquire Obermayer Rebmann Maxwell &Hippel LLP One Penn Center, 19th Floor 1617 JFK Boulevard Philadelphia, PA 19103 Mark Bradshaw, Esquire Stevens & Lee, F.C: 17 N. Second St., 16th Floor Harrisburg, PA 17101 Daniel L. Sullivan, Esq. Saidis Sullivan & Rogers 26 West High Street Carlisle, PA 17013 Wayne F. Shade, Esquire 53 W. Pomfret St. Carlisle, PA 17013 Charlotte Ivy Dixon 323 Bayview Street Camden, ME 04843 J Kimberly . Colonna Dated: June 12, 2012