Rev. Trust of Rothstein, D.,Appeal of: Polekoff, M ( 2022 )


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  • J-S28020-21
    NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
    IN RE: REVOCABLE TRUST OF DAVID              :   IN THE SUPERIOR COURT OF
    ROTHSTEIN IN RE: DAVID ROTHSTEIN             :        PENNSYLVANIA
    INSURANCE TRUST                              :
    :
    :
    APPEAL OF: MARCI POLEKOFF                    :
    :
    :
    :   No. 763 EDA 2021
    Appeal from the Order Entered March 2, 2021
    In the Court of Common Pleas of Bucks County Orphans' Court at No(s): No.
    2018-E0580
    BEFORE:       BOWES, J., DUBOW, J., and PELLEGRINI, J.*
    MEMORANDUM BY DUBOW, J.:                                 FILED JANUARY 12, 2022
    Appellant, Marci Polekoff, appeals from the March 2, 2021 Order
    entered in the Court of Common Pleas denying her “Petition for Citation to
    Show Cause Why Robert Mand, Esquire Should Not be Compelled to Account
    and Related Relief.” The order denied and dismissed Appellant’s requests to
    return insurance policy proceeds to an insurance trust of which she was a
    beneficiary and to impose a constructive trust.             After careful review, we
    affirm.
    Background
    This appeal pertains to a revocable trust and an irrevocable life
    insurance trust created by David H. Rothstein, (“Decedent”).            Appellant is
    one of Decedent’s three children.              Following Decedent’s August 15, 2015
    ____________________________________________
    *   Retired Senior Judge assigned to the Superior Court.
    J-S28020-21
    death, Appellant learned that she was not a beneficiary of Decedent’s estate
    or of any life insurance policy purchased by Decedent.
    Believing that Decedent had procured an insurance policy for her
    benefit, Appellant contacted Decedent’s long-time attorney Robert Mand,
    Esquire (“Attorney Mand”) and his associate, Craig LaRocca, Esquire
    (“Attorney LaRocca”), for information.
    On April 13, 2017, Attorney LaRocca replied by letter to Appellant and
    her siblings, Jeffery Rothstein (“Mr. Rothstein”) and Nancy Rothstein Levitt
    (“Ms. Levitt”), explaining that, in 2010, Decedent had created a revocable
    trust (“Revocable Trust”) naming his wife, Michelle Rothstein (“Wife”), the
    sole income beneficiary. The letter also indicated that Decedent had
    purchased an insurance policy for the benefit of the Revocable Trust.
    Attorney LaRocca did not disclose the existence of any other trusts created
    or insurance policies purchased by Decedent.
    After receiving this information, on October 23, 2018, Appellant filed a
    petition for accounting of the Revocable Trust, seeking a preliminary
    injunction and other related relief.     On February 26, 2019, the orphans’
    court held a hearing on Appellant’s petition at which Attorney Mand, trustee
    of the Revocable Trust, explained that the Revocable Trust held as an asset
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    the proceeds of a life insurance policy purchased by Decedent (the “Policy”)
    from Lincoln Benefit Life (“LBL”).1
    Relevant to the issues raised in the instant appeal, Attorney Mand also
    testified that, in 2009, Decedent had created an insurance trust (“Insurance
    Trust”) which initially owned the Policy for the benefit of, inter alia,
    Appellant.    Due to a change in family circumstances, however, Decedent
    subsequently wished to change the owner of the Policy from the Insurance
    Trust to himself and the beneficiary from the Insurance Trust to the
    Revocable Trust. Attorney Mand testified that, notwithstanding efforts made
    by Decedent to effectuate the desired changes, LBL failed to make the
    changes in ownership and beneficiary as requested by Decedent; thus, upon
    Decedent’s death, LBL paid the Policy benefits to the Insurance Trust. Then
    Attorney Mand, as trustee of the Insurance Trust, transferred the insurance
    funds from the Insurance Trust to the Revocable Trust in accordance with his
    fiduciary responsibility as trustee.
    The Instant Litigation
    On March 25, 2019, in light of Attorney Mand’s disclosures regarding
    Decedent’s creation of an Insurance Trust for, at least initially, Appellant’s
    benefit, Appellant filed a “Petition for Citation to Show Cause why [Attorney
    Mand] Should Not be Compelled to Account and Related Relief.”          In the
    ____________________________________________
    1Attorney Mand also explained that the Revocable Trust was a beneficiary of
    Decedent’s individual retirement account.
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    petition, Appellant asserted that the Insurance Trust was the rightful owner
    of the Policy proceeds and that Attorney Mand had improperly transferred
    them from the Insurance Trust to the Revocable Trust to Appellant’s
    detriment.
    Among other things, Appellant sought: (1) the removal of Attorney
    Mand as trustee for the Insurance Trust; (2) a declaratory judgment that
    Decedent had not validly changed the beneficiary designation on the Policy
    and that LBL had validly paid the death benefit on the policy to the
    Insurance Trust; (3) the imposition of a constructive trust on the Revocable
    Trust sufficient to return the Policy proceeds to the Insurance Trust; and (4)
    the return of the Policy proceeds to the Insurance Trust.
    On November 10, 2020, and December 22, 2020, the orphans’ court
    held hearings on Appellant’s petition.   The court considered testimony and
    evidence limited to the above issues raised in Appellant’s petition. Attorney
    Mand; Attorney LaRocca; Steven Katz (“Mr. Katz”), the independent LBL
    sales agent from whom Decedent had purchased the Policy; Connie Heinrich
    (“Ms. Heinrich”), LBL’s Director of Customer Services; and Appellant testified
    at the hearing.
    Appellant testified that Decedent told her that she was to receive
    proceeds of a life insurance policy following his death. Both Attorney Mand
    and Mr. Katz testified, however, that Decedent had expressed his intent to
    change the beneficiary of the Policy from the Insurance Trust from which
    Appellant would have benefitted to the Revocable Trust so that Wife, as the
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    sole beneficiary of the Revocable Trust, would receive all the Policy
    proceeds.2
    Attorney Mand and Mr. Katz each testified regarding the specific steps
    undertaken to effectuate Decedent’s expressed intent.             Specifically, they
    explained that Attorney Mand and Decedent had engaged in a two-step
    process, through letters to LBL. First, on January 26, 2010, Attorney Mand
    sent a letter to LBL requesting that LBL change the owner of the Policy from
    the Insurance Trust to Decedent.3              Then, on January 28, 2010, Decedent
    sent a letter to LBL requesting that LBL change the Policy beneficiary from
    the Insurance Trust to the Revocable Trust.4
    Neither Attorney Mand nor Mr. Katz had any further discussions with
    Decedent about changing the owner of Decedent’s Policy. Similarly, neither
    ____________________________________________
    2 Attorney Mand testified, for example, that Decedent wanted Wife, as
    beneficiary of the Revocable Trust, to receive the Policy proceeds and stated
    that Decedent was “very clear as to how he wanted his assets distributed at
    the time of his death. There was no question as to what he wanted to do,
    and I did what he wanted done.” N.T, 12/22/20, at 77-78.
    3 The evidence included a February 4, 2010 letter from LBL to Attorney Mand
    and carbon copied to Mr. Katz in which LBL informed Attorney Mand that it
    was unable to change the Policy owner without Attorney Mand completing
    the request on an LBL form. Attorney Mand testified that he never received
    this letter.
    4  In this letter, Decedent also requested that LBL acknowledge the
    beneficiary change in writing and inform decedent if LBL required him to
    complete a specific form to effectuate the beneficiary change.     If so,
    Decedent requested that LBL send the form to Attorney Mand for completion
    and submission. Neither Decedent nor Attorney Mand received, completed,
    or submitted any beneficiary change forms.
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    Mr. Katz nor Attorney Mand received a confirmation letter or any indication
    that LBL had effectuated the requested ownership change of Decedent’s
    Policy.   Mr. Katz testified that, in his experience, a letter requesting a
    change in policy is typically satisfactory to policy issuers to effectuate
    requests to change ownership of a policy and that the need for the request
    to be restated on a company form is solely for administrative purposes.
    Ms. Heinrich, LBL’s Director of Customer Services, testified that the
    January 28, 2010 letter from Decedent to LBL requesting a change of
    beneficiary of the Policy was not in LBL’s electronic file. She also testified
    that LBL would have sent Decedent a letter confirming any change in the
    Policy’s beneficiary designation; however, Decedent’s file contained no such
    letter.
    The testimony and evidence also demonstrated that Decedent made
    no further changes to the Policy until 2014. Pursuant to Decedent’s wishes,
    on September 4, 2014, Attorney Mand, acting as trustee of the Insurance
    Trust, and Mr. Katz executed an “Application for Contract Change,”
    requesting that LBL decrease the value of the Policy by half from $1,000,000
    to $500,000.5      On September 10, 2014, LBL responded by letter to the
    ____________________________________________
    5 “Robert Mand, Trustee” signed the application to decrease the Policy’s
    value. It is not clear from the record why Attorney Mand was involved in
    reducing the policy’s value.
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    Insurance Trust confirming the reduction of the death benefit and the
    premium quarterly payment.6
    LBL sent all Policy premium payment notices from April 2010 to July
    2015 to the Insurance Trust at Attorney Mand’s address. Mr. Mand paid all
    premiums after Decedent forwarded the funds to him for payment.
    Orphans’ Court’s Decision
    On March 2, 2021, the              orphans’ court denied and        dismissed
    Appellant’s claims The orphans’ court weighed the totality of the evidence
    and found that: (1) Attorney Mand effectively changed the owner of the
    Policy; (2) Decedent intended Wife to be the sole beneficiary of the Policy
    proceeds; and (3) Decedent effectively changed the Policy beneficiary from
    the Insurance Trust to Wife when he “took substantial steps” and “made
    every reasonable effort to effectuate the change of beneficiary.”           Opinion,
    3/2/20, at ¶¶ 1-2, 4.
    This timely appeal followed.            Both Appellant and the orphans’ court
    have complied with Pa.R.A.P. 1925.
    Appellant raises the following issues on appeal:
    A. Did the orphans’ court err as a matter of law by holding that
    the [Policy] between [LBL] and the David Rothstein
    ____________________________________________
    6 Ms. Heinrich explained that only a life insurance policyowner can change
    the death benefit. Therefore, because LBL considered the Insurance Trust to
    be the owner of the Policy, only a representative of the Insurance Trust, i.e.,
    Attorney Mand, was able to reduce the Policy death benefit to $500,000.
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    Irrevocable Insurance Trust was changed in January of 2010
    so that the owner of the policy became the decedent, David
    Rothstein?
    B. Did the orphans’ court err as a matter of law by concluding it
    would recognize a change in the beneficiary designation of
    the [Policy] from the Irrevocable Life Insurance Trust to the
    Revocable Trust of David Rothstein and upholding the
    trustee’s transfer of $500,000.00 from the Insurance Trust to
    the Revocable Trust where no legal justification existed for
    such transfer of the funds?
    C. Did the orphans’ court abuse its discretion by concluding that
    the Decedent intended at the time of his death that the
    Revocable Trust of David Rothstein would be the Beneficiary
    of the [Policy] so that his wife would receive the benefit of it
    to the exclusion of his children?
    D. Did the orphans’ court err by not finding that [Attorney
    Mand], as trustee of the Irrevocable Insurance Trust and
    attorney for both the Decedent and his wife, breached his
    fiduciary duties to all parties, and was liable for transferring
    the insurance proceeds to the Revocable Trust?
    E. Did the orphans’ court err as a matter of law by failing to
    award [] Appellant interest as required by statute on the
    $300,000.00 of the [Policy] proceeds, which should have
    been distributed to her and the two other trust beneficiaries
    upon the Decedent’s death more than five years ago under
    the terms of the Irrevocable Life Insurance Trust?
    Appellant’s Brief at 4-5 (reordered for ease of disposition, unnecessary
    capitalization omitted).
    Standard of Review
    Each of Appellant’s issues challenges the findings of the orphans’
    court. Thus, our standard of review of is deferential. In re Ware, 
    814 A.2d 725
    , 731 (Pa. Super. 2002).      “When reviewing a decree entered by the
    [o]rphans’ [c]ourt, this Court must determine whether the record is free
    from legal error and the court’s factual findings are supported by the
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    evidence.” In re Estate of Rosser, 
    821 A.2d 615
    , 618 (Pa. Super. 2003)
    (citation omitted). “Because the [o]rphans’ [c]ourt sits as the fact-finder, it
    determines the credibility of the witnesses and, on review, we will not
    reverse its credibility determinations absent an abuse of that discretion.”
    Ware, 
    814 A.2d at 731
     (citation omitted).       An abuse of discretion exists
    when a finding by the lower court is not based upon the evidence of record.
    In re Paxson Trust I, 
    893 A.2d 99
    , 112 (Pa. Super. 2006). “The test to be
    applied is not whether we, the reviewing court, would have reached the
    same result, but whether a judicial mind, after considering the evidence as a
    whole, could reasonably have reached the same conclusion.”              In re
    Gumpher, 
    840 A.2d 318
    , 321 (Pa. Super. 2003) (citations omitted).         This
    Court is not, however, constrained to defer to the legal conclusions of the
    orphans’ court. Ware, 
    814 A.2d at 731
    .
    Furthermore, “[w]hen reviewing the decision of the trial court in a
    declaratory judgment action we are limited to determining whether the trial
    court’s findings are supported by substantial evidence, whether an error of
    law was committed or whether the trial court abused its discretion.” Forest
    Glen Condo Ass’n v. Forest Green Commons Ltd. P’ship, 
    900 A.2d 859
    ,
    861 (Pa. Super. 2006).
    Issues
    In her first three issues, Appellant asserts she is the rightful
    beneficiary of the proceeds of the Policy.    Specifically, she challenges the
    orphans’ court’s determination that Attorney Mand validly changed the
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    owner of the Policy from the Insurance Trust to the Decedent and that
    Decedent validly changed the beneficiary of the Policy from the Insurance
    Trust to the Revocable Trust. Appellant’s Brief at 22-29, 30-32.
    The Validity of the Change in Policy Ownership
    In her first issue, Appellant claims that the orphans’ court erred by
    overlooking Attorney Mand’s undisputed failure to strictly comply with LBL’s
    ownership change requirements. Appellant’s Brief at 22. She asserts that
    Attorney Mand’s effort in merely sending a letter to LBL was insufficient to
    effectuate the ownership change.    Id. at 23-24.   Without citation to legal
    authority, Appellant avers that the court “diluted the standard of substantial
    compliance” to reach an erroneous conclusion that Attorney Mand effectively
    changed the Policy’s owner from the Insurance Trust to Decedent.       Id. at
    22.
    “The Rules of Appellate Procedure state unequivocally that each
    question an appellant raises is to be supported by discussion and analysis of
    pertinent authority.” Eichman v. McKeon, 
    824 A.2d 305
    , 319 (Pa. Super.
    2003) (citations omitted). See Pa.R.A.P. 2111 and Pa.R.A.P. 2119 (listing
    argument requirements for appellate briefs). “When issues are not properly
    raised and developed in briefs, when the briefs are wholly inadequate to
    present specific issues for review, a Court will not consider the merits
    thereof.”   Branch Banking and Tr. v. Gesiorski, 
    904 A.2d 939
    , 942-43
    (Pa. Super. 2006) (citation and brackets omitted). See Pa.R.A.P. 2101
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    (explaining that substantial briefing defects may result in dismissal of
    appeal).
    Here, Appellant has not developed any argument with citation to
    controlling authority and discussion of that authority vis-à-vis the facts of
    this case.   Instead, she has merely baldly asserted that Attorney Mand’s
    actions failed to meet the legal threshold of substantial compliance.
    Appellant’s failure to develop this issue has precluded our ability to
    meaningfully review it. Thus, it is waived.
    Validity in the Change of Policy Beneficiary
    In her second issue, Appellant avers that the court erred in concluding
    that Decedent validly changed the Policy’s beneficiary from the Insurance
    Trust to the Revocable Trust. Appellant’s Brief at 25-29. She presents three
    distinct arguments, which we address seriatim.
    In an argument predicated on the success of the issue presented
    supra, Appellant first contends that Decedent lacked the authority to change
    the beneficiary on the Policy because the Insurance Trust and not Decedent
    owned the Policy and only the owner of an insurance policy can change a
    beneficiary designation. Id. at 26. As noted above, Appellant waived her
    challenge to the court’s finding that Attorney Mand effectively changed the
    Policy owner from the Insurance Trust to Decedent by failing to develop it;
    accordingly, this bootstrapped argument fails.
    Appellant next avers, in the alternative, that the orphans’ court “erred
    as a matter of law by misconstruing the legal standard of substantial
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    compliance[]” when it found that Decedent “took reasonable steps” to
    change the Policy’s beneficiary designation.     Id. at 27.   She asserts that
    Decedent’s merely discussing his desire to change the Policy beneficiary with
    Attorney Mand and Mr. Katz and then sending a letter to LBL expressing his
    intent “do[es] not constitute everything the decedent could have reasonably
    done under the circumstances[]” to effectuate the beneficiary change. Id.
    at 28. We disagree.
    Generally, to make a valid change to the beneficiary of an insurance
    policy, an insured must comply with requirements specified by the policy.
    Carruthers v. $21,000, 
    434 A.2d 125
    , 127 (Pa. Super. 1981). See also
    Sproat v. Travelers’ Ins. Co., 
    137 A. 621
    , 622 (Pa. 1927) (“In order to
    [e]ffect a change of beneficiary the mode prescribed by the policy must be
    followed[.]).
    “An exception to this general principle permits a change of beneficiary
    to be effective if, under the circumstances, the policyholder substantially
    complied with the provisions of the policy.” State Farm Ins. Co. v. Kitko,
    
    241 A.3d 648
    , 653 (Pa. Super. 2020).         “The intent of the insured will be
    given effect if he does all that he reasonably can under the circumstances to
    comply with the terms of the policy which permit a change of beneficiary.”
    
    Id.
     (citation omitted).   Substantial compliance requires the policyholder to
    make “every reasonable effort to effect a change of beneficiary.”      Sproat,
    137 A. at 622; Kitko, 241 A.3d at 653.
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    Here, the orphans’ court found that Decedent signed and sent a letter
    to LBL, dated January 28, 2010, requesting that LBL change the Policy
    beneficiary, but that LBL did not receive the letter, as evidenced by LBL
    continuing to send Policy premium notices to Attorney Mand as trustee of
    the Insurance Trust.    It further found that the January 28, 2010 letter
    “clearly indicated Decedent’s intent to change the beneficiary of his life
    insurance policy to [Wife], as trustee of the [R]evocable [T]rust.” Opinion,
    5/3/21, at 11.    Given these facts, the court concluded that Decedent’s
    actions constituted “every reasonable effort to effectuate his intent to
    change the Policy beneficiary.” As the court explained:
    Decedent, with the assistance of counsel and guidance of his
    insurance agent, prepared a letter, which he signed, clearly
    stating his desire to change the beneficiary of his life insurance
    policy.    The testimony presented established that although
    specific company forms were available to request a change of
    beneficiary, Decedent never received any form or instruction
    from LBL or further direction from his advisors, [Attorney] Mand
    or Mr. Katz after 2010 regarding the ownership and beneficiary
    of the life insurance policy.
    Id.
    Our review confirms that the record supports the orphans’ court’s
    factual findings. With respect to the court’s legal conclusions, we agree that
    the evidence clearly established Decedent’s intent to change the Policy’s
    beneficiary and that he made every reasonable effort to change the
    beneficiary to the Revocable Trust.     These efforts included seeking the
    advice of trusted professionals and executing a letter to LBL informing it of
    the desired changes.
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    Last, Appellant argues that the orphans’ court erred by affirming
    Attorney Mand’s purportedly improper transfer of the Policy proceeds from
    the bank account associated with the Insurance Trust to that associated with
    the Revocable Trust. Appellant’s Brief at 28-29. She argues that because
    Decedent did not validly change the Policy beneficiary from the Insurance
    Trust to the Revocable Trust, the Policy proceeds belonged to the Insurance
    Trust. Because we have found that the trial court correctly concluded that
    Decedent validly changed the Policy’s beneficiary to the Revocable Trust, this
    claim fails.
    Decedent’s Intent
    In her third issue, Appellant claims that the orphans’ court erred in
    concluding that Decedent intended the Revocable Trust to be the beneficiary
    of the Policy. Id. at 31. In particular, Appellant asserts that the court (1)
    failed to consider that Decedent did not take any action to ensure that he
    had effectively changed the Policy’s beneficiary after 2010; and (2)
    disregarded Appellant’s testimony that the Decedent told her, sometime in
    the year prior to his death, that she was a beneficiary of an insurance policy
    owned by him. Id. Last, she claims that the court erred in neglecting to
    consider that in the five years preceding the Decedent’s death, Decedent
    and Attorney Mand acted in ways that demonstrated Decedent’s intent and
    knowledge that the Insurance Trust was still the owner and beneficiary of
    the Policy. Id.
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    Appellant has failed to develop this issue with citation to the record or
    any case law as required by our rules of appellate procedure. See Pa.R.A.P.
    2119. In light of this failure, we are unable to conduct meaningful appellate
    review of this claim. Accordingly, Appellant has waived it. See id. at 2101.
    Attorney Mand’s Conduct and Statutory Interest
    In her fourth and fifth issues, Appellant asserts that the orphans’ court
    erred when it declined to find that Attorney Mand breached his fiduciary duty
    to all parties and declined to award Appellant statutory interest on the Policy
    proceeds Attorney Mand improperly transferred to the Revocable Trust.
    Appellant’s Brief at 29-30, 32-33. Appellant has again failed to support her
    arguments with citation to the record or any controlling authority. She has,
    thus, fatally hampered our ability to conduct meaningful appellate review,
    resulting in their waiver.
    Order affirmed.
    Judgment Entered.
    Joseph D. Seletyn, Esq.
    Prothonotary
    Date: 1/12/2022
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