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HomeMy WebLinkAbout01-0013 OrphansIN RE: ESTATE OF ROBERT W. FAILER a/k/a ROBERT W. FAILER, SR. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION NO. 21-01-0013 IN RE: PETITION TO REMOVE CO-EXECUTOR AND PETITION TO RESOLVE DISPUTE BETWEEN PERSONAL REPRESENTATIVES BEFORE HESS, J. OPINION AND ORDER This litigation involves a dispute over the administration of the estate of Robert W. Failor, Sr. Letters Testamentary were granted to two of the decedent's children named as co- executors in his Will; namely, Robert Failor, Jr. and Gwen Hippensteel. Mr. Failor's heirs are his seven children. They met on January 3,2001, to discuss the disposition of their father's estate which included a salvage business and associated real estate on Crossroads School Road in West Pennsboro Township, Cumberland County. At the meeting, it was decided that the business and property would be conveyed to Steven Failor who would pay his siblings their share of the value of the estate. These monies were tendered almost immediately. On April 17, 2001, Robert W. Failor, Jr., one of the co-executors, along with his brother Ross, brought an action in equity at Cumberland County docket number 01-2239 Equity seeking to enjoin their brother Steven from entering on to the decedent's real property to operate the family salvage business and to enjoin him from constructing a home on the premises. A hearing was held on the matter of preliminary injunctive relief in May of 2001 and the petition was denied. Subsequently, Gwen Hippensteel filed a petition to remove Robert Failor, Jr., as co- executor. Robert and Ross Failor, in turn, have filed a petition to resolve the disagreement NO. 21-01-0013 between the co-executors over disposition of decedent's real estate and business assets. Both matters were joined for hearing. Following hearings in April of 2002, post-trial memoranda were filed by the parties. We are satisfied that the findings of fact proposed by petitioner Hippensteel are amply supported by the record and we adopt them in pertinent part as follows: 1. Robert W. Failor a/k/a Robert W. Failor, Sr. ("Decedent") died November 6, 2000, survived by his seven children, Robert W. Failor, Jr., Gwen A. Hippensteel, Gary M. Failor, Sr., Steven A. Failor, Ross H. Failor, Sr., Darla J. Frye, and Vincent S. Failor. 2. Letters Testamentary were granted on January 4, 2001, to two of decedent's children, Robert W. Failor, Jr. and Gwen A. Hippensteel, by the Register of Wills of Cumberland County, Pennsylvania, in accordance with Paragraph Five of decedent's Last Will and Testament. 3. On January 3,2001, decedent's seven children met at the law offices of Irwin, McKnight & Hughes to discuss and agree upon the disposition of the estate assets and payment of the estate obligations. 4. In addition to decedent's seven children, attorneys Roger B. Irwin and H. Kay Dailey were present. 5. Steven W. Barrett Real Estate & Appraisal Services had performed an appraisal of the decedent's real estate as of the date of death and determined the value to be $133,000.00. 6. At the said meeting on January 3,2001, decedent's seven children agreed that, among other things, Steven A. Failor would purchase the decedent's real estate, and that Vincent S. Failor would join in the purchase of that portion of the real estate on which the decedent's salvage yard business is located. 2 NO. 21-01-0013 7. After negotiations, the seven beneficiaries agreed that they would either receive payment in the amount of $25,000.00 or life estates in the real estate in full satisfaction of their respective interests as decedent's beneficiaries. 8. In addition, the parties agreed that Steven A. Failor would pay the estate's inheritance taxes, costs of administration, and all outstanding taxes and other bills. 9. Attorney H. Kay Dailey specifically asked each of the seven children if they agreed with the terms of the family settlement agreement and each beneficiary responded affirmatively. 10. Following the meeting on January 3, 2001, Steven A. Failor paid the principal sum of $35,500.00 towards the existing inheritance taxes, costs of administration, outstanding taxes and other bills of decedent's estate, which sums have in fact been used to pay the existing and continuing inheritance taxes, costs of administration, and outstanding bills. 11. Following the meeting on January 3,2001, Steven A. Failor delivered checks, each in the amount of $25,000.00, to respondent Robert W. Failor, Jr. and Ross H. Failor. 12. Respondents subsequently refused acceptance of the checks from Steven A. Failor. 13. On January 20, 2001, Attorney H. Kay Dailey sent correspondence on behalf of the co-executor, Robert W. Failor, Jr., to Attorney Irwin in order to memorialize the agreements reached at the meeting of the beneficiaries on January 3, 2001. 14. Attorney Irwin subsequently prepared both the Pennsylvania Inheritance Tax Return and the applicable deeds to transfer the decedent's real estate in accordance with the family settlement agreement, and forwarded the same to Attorney Dailey for her review. 15. Attorney Dailey requested that certain minor changes be made to the documents. Those changes were prepared by Attorney Irwin. NO. 21-01-0013 16. Following the meeting on January 3,2001, and in reliance on the family settlement agreement, Steven A. Failor and Vincent S. Failor expended significant sums in order to accomplish the following: a. Remove numerous salvage vehicles and other debris from the real estate in order to clean the property and bring it into compliance with its salvage license; b. Remove numerous tires and other debris from the real estate in order to bring it into compliance with applicable environmental regulations; and c. Improve, modernize and expand the salvage yard's office building and garage. 17. Following the meeting on January 3,2001, and in reliance on the family settlement agreement, Steven A. Failor expended significant sums to construct a residence on the real estate. 18. In reliance on the contract and family settlement agreement, beneficiary Darla J. Frye and her family moved into the decedent's residence on the salvage yard property. 19. On April 17, 2001, respondent Robert W. Failor, Jr. and Ross H. Failor, as a co- executor and as a beneficiary respectively, filed a "Complaint/Petition for Injunction" against petitioner and Steven A. Failor in the Court of Common Pleas of Cumberland County at Civil Docket No. 2001-2239. 20. The "Complaint/Petition for Injunction" sought, among other things, a new family settlement agreement with the real estate to be transferred to the new highest bidder, an injunction against Steven A. Failor and his agents and employees, enjoining their entry onto the 4 NO. 21-01-0013 real estate, and a direction to petitioner "to cooperate with Robert W. Failor, Jr. to obtain the best results financially from the estate of her father." 21. Following a lengthy hearing on May 30, 2001, this court issued an Opinion and Order on August 2, 2001, denying the request for a preliminary injunction. 22. Only after the denial of the request for a preliminary injunction did respondent Robert W. Failor, Jr. and Ross H. Failor obtain the services of Leon D. Gerlach to perform a subsequent appraisal of the decedent's real estate. 23. The appraisal was performed by Mr. Gerlach on September 18, 2001, ten months after the decedent's death, and subsequent to the significant clean-up and improvement of the salvage yard, the office and the garage. 24. The appraisal performed by Mr. Gerlach is only $92,000.00 more than the initial appraisal performed by Steven W. Barrett Real Estate & Appraisal Services and $63,720.00 less than the Cumberland County tax assessment relied upon by respondent and Ross H. Failor at their preliminary injunction hearing. 25. Following the denial of the preliminary injunction by this court, the gross and net income of the salvage yard has steadily declined. 26. Following the denial of the preliminary injunction by this court, the Pennsylvania State Police have responded on several occasions to anonymous complaints involving the operation of the salvage yard. 27. Following the denial of the preliminary injunction by this court, the Pennsylvania Department of Transportation withdrew the salvage yard's dealership license, following telephone calls from respondent's wife, Kaye N. Failor. NO. 21-01-0013 28. Following the denial of the preliminary injunction by this court, the Pennsylvania Department of Environmental Protection visited the salvage yard in response to an anonymous complaint of tires being burned at the property. 29. Although no evidence of tire burning was discovered, the Pennsylvania DEP has issued a directive to the co-executors and to Steven A. Failor to remove at least 300 tires per month until all waste tires have been removed. 30. Respondent has refused and continues to refuse to sign deeds transferring the decedent's real estate to Steven A. Failor and Vincent S. Failor. 31. Respondent has refused and continues to refuse to sign the required Pennsylvania Inheritance Tax Return for decedent's estate, even though it has been prepared in accordance with the suggested changes of his initial legal counsel. 32. The Pennsylvania Department of Revenue may assess interest and penalties for the inability to file an Inheritance Tax Return. 33. Respondent Robert W. Failor, Jr., has admitted both in testimony and in his own "Complaint/Petition for Injunction" that he and the petitioner have been unable to cooperate in finalizing the estate of the decedent. DISCUSSION Even though a family settlement agreement is entirely oral, it is valid if properly proven. In re Estate of Brojack, 321 Pa. Super. 154, 164-165, 467 A.2d 1175, 1181 (1983). The existence of a family settlement agreement must be shown by clear and unambiguous evidence; the agreement must be binding on all parties. Id~. at 160-61,467 A.2d at 1179. Furthermore, family settlement agreements are favored in this Commonwealth because they are an attempt to avoid NO. 21-01-0013 potentially divisive litigation. Id. at 160, 467 A.2d at 1179. We are satisfied that a valid family agreement exists in this case. The agreement was described in our foregoing findings of fact. It should be noted that the heirs, who now object to the agreement, were represented by separate counsel, Kay Dailey, at the family meeting. At the hearing of this case, Attorney Roger B. Irwin, Esquire, described the agreement in considerable detail. Robert and Ross Failor now object to the agreement because the most recent appraisal valued the estate at $225,000. This, of course, is only after Steven Failor has expended considerable effort in clean-up and improvement. When questioned by the court, Mr. Irwin gave the following answers with respect to the valuation of the estate and to the wisdom of the family agreement. Q ..... [Y]ou arrived at the expenses of the estate at $35,500, am ! correct? A That's correct. Q And am I right under the law ... that if the property had not been sold to one of these children but had been sold on the open market, the child would receive the value of the estate, minus $35,500, divided by seven, right? A That's correct. Q Okay. So my math indicates that in order for them each to receive $25,000.00, the value of the estate has to be at least $210,500.00. A That's correct. And may I just make one explanation? The problem that was the [sic] big scare was the environmental problem. When ! discovered that NO. 21-01-0013 they had all these hundreds of vehicles and motors and things like that, the whole question of putting this up on the open market was an impossibility. And when they told me the family is going to -- somebody in the family will take this, that was a big relief to me, because there was no way possible we could have sold this property on the open market and gotten any kind of money for it. It couldn't be done today even with what's been done. Q Even today? A Even today. It is an environmental problem. As DEP is already saying with all these tires. So that's why I thought in my experience this was a wonderful way to settle it. And I thought everybody was satisfied and happy. So we proceeded on that basis. We see nothing in the current proposals of Robert and Ross Failor which put the heirs any further ahead than they would be under the terms of the family agreement. In the meantime, as co-executor, Robert Failor, Jr. has been unwilling to perform his fiduciary duty. He has refused to sign the Pennsylvania Inheritance Tax Return form which has since passed a nine- month filing deadline. The grounds for removing an executor are governed by 20 Pa.C.S.A. Section 3182. Pertinent to this case are the grounds which appear at Section 3182(1) and (5). Specifically, the court shall have exclusive power to remove a personal representative when he: (1) is wasting or mismanaging the estate, is or is likely to become insolvent, or has failed to perform any duty imposed by law; or (5) when, for any other reason, the interests of the estate are likely to be jeopardized by his continuance in office. NO. 21-01-0013 The removal of a personal representative chosen by a testator is, of course, a drastic action which should be taken only when the estate within the control of such a personal representative is endangered. In re Beichner's Estate, 432 Pa. 150, 156, 247 A.2d 779, 782 (1968). To justify the removal of a testamentary personal representative, the proof of the cause for such removal must be clear. Id. The mere existence of animosity between Robert Failor and Gwen Hippensteel is not enough, of course, to justify the removal of an executor. However, when animosity has an adverse affect on the estate or the rights of any beneficiaries, removal is justified. Id. at 157, 247 A.2d at 782. There is clearly more than mere animosity in this case. Mr. Failor has his own, although at best unclear, proposal for the disposition of the estate. He has enmeshed the estate in substantial litigation in an attempt to upset a disposition of the estate to which he had earlier agreed. He has failed to sign tax returns, all to the detriment of the remaining beneficiaries. He has tied the administration of this estate into something of a Gordian knot, which can be cut only by his removal. ORDER AND NOW, this day of July, 2002, Robert W. Failor, Jr., is herewith removed as co-executor of the estate of Robert W. Failor, Sr., deceased, and Gwen A. Hippensteel is appointed as sole executor. The petition of Robert W. Failor, Jr., and Ross H. Failor, to resolve disagreement between co-executors is DISMISSED as moot. BY THE COURT, Kevin A. Hess, J. NO. 21-01-0013 Mark Halbruner, Esquire For the Petitioners Roger B. Irwin, Esquire Douglas G. Miller, Esquire For the Respondents :rlm 10 IN RE: ESTATE OF ROBERT W. FAILER a/k/a ROBERT W. FAILER, SR. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION NO. 21-01-0013 IN RE: PETITION TO REMOVE CO-EXECUTOR AND PETITION TO RESOLVE DISPUTE BETWEEN PERSONAL REPRESENTATIVES BEFORE HESS, J. ORDER AND NOW, this day of July, 2002, Robert W. Failor, Jr., is herewith removed as co-executor of the estate of Robert W. Failor, Sr., deceased, and Gwen A. Hippensteel is appointed as sole executor. The petition of Robert W. Failor, Jr., and Ross H. Failor, to resolve disagreement between co-executors is DISMISSED as moot. BY THE COURT, Mark Halbruner, Esquire For the Petitioners Roger B. Irwin, Esquire Douglas G. Miller, Esquire For the Respondents :rlm Kevin A. Hess, J.