Pennsylvania Trust Company v. Leiden, M. ( 2017 )

J-A10022-17
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
PENNSYLVANIA TRUST COMPANY, IN THE SUPERIOR COURT OF
CAROL LADEN KAUFMAN AND STEPHEN PENNSYLVANIA
JOHN KAUFMAN
v.
MICHAEL JOHN LEIDEN
Appellant No. 2079 EDA 2016
Appeal from the Order Dated June 3, 2016
In the Court of Common Pleas of Montgomery County
Orphans' Court at No(s): 2016-0347
BEFORE: DUBOW, J., SOLANO, J., and FORD ELLIOTT, P.J.E.
MEMORANDUM BY SOLANO, J.: FILED AUGUST 18, 2017
Appellant Michael John Leiden appeals pro se from the order of June 3,
2016, dismissing his exceptions to the decree dated April 19, 2016, that
declared the interests of beneficiaries under a trust established by Helen T.
Kaufman (“Settlor”). We affirm.
On August 13, 1981, Settlor created a revocable trust. On May 28,
2009, she executed a “Complete Amendment and Restatement of Revocable
Deed of Trust” (“the 2009 Deed”) that revoked all articles of the 1981 trust
document and substituted new provisions. The 2009 Deed named Settlor’s
three children, Carol Laden Kaufman (“Carol”),1 Stephen John Kaufman
(“Stephen”), and Susan Carpenter (collectively, “the Children”) as
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1
At some places in the record, this party is identified as “Carol K. Laden.”
The trial court referred to her as “Carol Layden.”
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beneficiaries of the Trust upon Settlor’s death. Item III of the 2009 Deed
stated:
[M]y trustee shall pay a fraction of $1,000,000 to each of my
children who survives me, the numerator of which shall be the
number of children (who survive me) of such child, and the
denominator of which shall be the total number of my
grandchildren who survive me; provided that if a child of mine
does not survive me, but leaves descendants who survive me,
such descendants shall receive, per stirpes, the share such child
would have received had he or she survived me; and provided
further that any amounts passing to my daughter Carol under
this article shall be paid to the trustees of the Trust for Carol
hereunder to be held in accordance with the terms therein (this
shall not apply to any amounts passing to Carol’s descendants if
she does not survive me).
2009 Deed at 2-3 (parentheticals in original). Item V of the 2009 Deed
established the “Trust for Carol” that is referenced in Item III. See id. at
3-4. Item XX named the Pennsylvania Trust Company, Carol, and Stephen
(collectively, “Trustees”) as her trustees. Id. at 7. When Settlor died, all
three of Settlor’s Children survived her.
Appellant is Carol’s son. He contends that through Item III of the
2009 Deed, Settlor intended to provide for Appellant and Settlor’s other
grandchildren by requiring Settlor’s Children (the direct beneficiaries under
Item III) to hold their gifts under Item III for the benefit of their own
children. In light of this claim, on January 29, 2016, the Trustees filed a
petition for declaratory judgment that asked the orphans’ court to determine
whether Settlor had gifted the $1,000,000 to the Children, as maintained by
the Trustees, or whether the Children were to retain their respective shares
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in further trust for the benefit of the Children’s respective children – that is,
Settlor’s grandchildren.
On February 1, 2016, the orphans’ court entered a preliminary decree
setting a date of March 1, 2016, to show cause “why a judgment should not
be entered by the [orphans’ c]ourt declaring that [Settlor’s] grandchildren
have no beneficial interest in the Trust.” Prelim. Decree, 2/1/16; see also
Trial Ct. Op., 10/7/16, at 1. On February 17, 2016, Appellant filed
“objections” that sought a contrary interpretation of the 2009 Deed and a
ruling that “[a]ny trustee who is also a beneficiary must not or may not
exercise discretion over the trust in relation to other beneficiaries, heirs or
assigns.” Objections at 6. On February 29, 2016, Trustees filed preliminary
objections to Appellant’s “objections,” asserting various procedural grounds
for the “objections” to be stricken or dismissed.
The orphans’ court held a hearing on April 19, 2016, at which it heard
argument but did not receive evidence. At the conclusion of the hearing,
Appellant claimed that the Trustees lacked standing “to pursue a particular
theory of beneficiary.” N.T., 4/19/16, at 26. After the hearing, by an order
of the same date, the orphans’ court sustained the Trustees’ preliminary
objections and dismissed Appellant’s “objections.” By a separate order, also
dated April 19, 2016, the orphans’ court granted Trustees’ petition for a
declaratory judgment and declared:
Helen T. Kaufman’s grandchildren have no beneficial interest in
the . . . Trust, but rather the $1 million gift under Item III of the
. . . Trust vested in, and shall be paid as follows: 1/7 to Susan
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Carpenter, 2/7 to Stephen Kaufman and 4/7 to the Trust
established for the benefit of Carol K. Laden.
On May 2, 2016, Appellant filed exceptions to the orphans’ court’s decree.
The orphans’ court dismissed the exceptions on June 3, 2016.
On June 22, 2016, Appellant filed a notice of appeal to this Court. He
raises the following issues on appeal:
[1.] Did the [orphans’] court err as a matter of law by allowing
the Trustees to seek any theory of beneficiaries?
[2.] Did the [orphans’] court err as a matter of law in failing to
respect the four corners of the document as written?
3. Did the [orphans’] court err as a matter of law by allowing
the Trustees to present a petition to impose a constructive trust
masked as a plea for declaratory judgment?
4. Did the [orphans’] court commit a manifest abuse of
discretion by refusing to allow a full and uninterrupted
evidentiary hearing including discovery process?
5. Did the [orphans’] court err[] as a matter of law by
refusing to allow a full and uninterrupted evidentiary hearing
including discovery process?
6. Did the [orphans’] court commit an abuse of discretion by
failing to disenfranchise heirs and beneficiaries Steven John
Kaufman and his sister Carol Layden Kaufman under the anti-
challenge provision at Settlor[’]s Article 18?
7. Did the [orphans’] court commit an abuse of discretion by
refusing to impose a constructive trust in the interest of justice
and to see the actual intent of the late settlor[’]s wishes?
8. Did the [orphans’] court misconstrue and misunderstand
the purpose and context of the process?
Appellant’s Brief at 7-8 (suggested answers and unnecessary capitalization
omitted; first two issues re-numbered).
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Appellant’s first issue challenges Trustees’ standing to bring their
petition for declaratory judgment. In his brief to this Court, Appellant
asserts:
The [Trustees] had no stake in the outcome with respect to any
theory of beneficiary and their entire claim should have been
struck for lack of standing; which was plead in Court at the
[April 19, 2016] hearing on the record — I specifically said “they
have no standing as trustees here to seek a beneficiary”. If finer
legal minds dispute the use of this term “standing”, then the
liberal construction due to any pro se applicant will bear in view
the intent and purpose of the word.
Appellant’s Brief at 24 (emphasis in original).
The Supreme Court has explained:
Standing requires that an aggrieved party have an interest which
is substantial, direct, and immediate. That is, the interest must
have substance — there must be some discernible adverse effect
to some interest other than the abstract interest of all citizens in
having others comply with the law. That an interest be direct
requires that an aggrieved party must show causation of the
harm to his interest by the matter of which he complains. To
find an immediate interest, we examine the nature of the causal
connection between the action complained of and the injury to
the person challenging it.
In re Francis Edward McGillick Found., 642 A.2d 467, 469 (Pa. 1994)
(citations and internal quotation marks omitted). However, lack of capacity
to sue and standing are waived if not objected to at the earliest possible
time. See Hall v. Episcopal Long Term Care, 54 A.3d 381, 399 (Pa.
Super. 2012) (standing and lack of capacity to sue are related concepts and
must be raised at earliest possible opportunity), appeal denied, 69 A.3d
243 (Pa. 2013); see also Kuwait & Gulf Link Transport Co. v. Doe, 92
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A.3d 41, 45 (Pa. Super. 2014) (an issue of standing is waived if not raised at
first opportunity).
In Huddleston v. Infertility Ctr. of Am., Inc., 700 A.2d 453, 457
(Pa. Super. 1997), we held that a defendant waived the issue of standing
when she did not raise it in preliminary objections. See Pa.R.C.P.
1028(a)(5) (“Preliminary objections may be filed by any party to any
pleading and are limited to the following grounds: . . . lack of capacity to
sue”). Here, Appellant did not raise the issue of standing in preliminary
objections. Nor did he include it in the “objections” he filed on February 17,
2016. Appellant acknowledges that he raised the issue for the first time “in
Court at the [April 19, 2016] hearing on the record.” Appellant’s Brief at 24.
Because Appellant did not raise the issue of standing in preliminary
objections, we may consider this issue waived. See Huddleston, 700 A.2d
at 457; see also Kuwait & Gulf Link, 92 A.3d at 45; Hall, 54 A.3d at 399.
Apart from waiver, Appellant’s standing contention is without merit.
This is an action for a declaratory judgment regarding the proper
interpretation of a trust. The Declaratory Judgments Act2 provides:
Any person interested, as or through an executor, administrator,
trustee, guardian, or other fiduciary . . . in the administration of
a trust . . . may have a declaration of rights or legal relations in
respect thereto:
* * *
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2
42 Pa.C.S. §§ 7531-7541.
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(3) To determine any question arising in the administration
of the estate or trust, including questions of construction of
wills and other writings.
42 Pa.C.S. § 7535 (emphasis added). The Trustees brought their action
pursuant to this provision, and they have standing under it.3
All of Appellant’s remaining claims challenge the orphans’ court’s
interpretation of the Trust and its failure to hold a factual hearing in making
that interpretation. “[T]he interpretation of a trust or a will presents a
question of law. As such, our standard of review is de novo, and our scope
of review is plenary. Our analysis therefore is not confined by the decision
of the orphans’ court.” In re McFadden, 100 A.3d 645, 650 (Pa. Super.
2014) (en banc) (citations omitted).
Certain principles guide trust interpretation. The testator’s
intent is the cornerstone of such an endeavor. As we articulated
in Estate of Pew, 440 Pa. Super. 195, 655 A.2d 521, 533
(1994), it is “hornbook law that the pole star in every trust . . .
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3
Appellant’s sixth issue suggests that by bringing the declaratory judgment
action, Carol and Stephen should be penalized under Item XVIII of the 2009
Deed, which states that any person who “challenges the validity of this
deed” or any provision of the deed “shall not be entitled to benefits under
this deed during such time as that challenge is pending. Item XVIII permits
the trustees to determine, in their “sole judgement,” whether an action
constitutes a “challenge” under this provision, and it says that a “challenge”
includes an action that “seeks to render any of the provisions of this
instrument invalid or ineffective, in whole in in part, which seeks the removal
of my trustee appointed hereunder, or which seeks to compel a discretionary
distribution of funds to him or her.” 2009 Deed at 7. Because the Trustees’
action sought an interpretation of the 2009 Deed and did not challenge its
validity or effectiveness, there is no basis to hold that it falls within this
provision. Indeed, Appellant’s action to obtain an interpretation of the deed
favorable to him and to preclude action by the trustees with respect to him
or other beneficiaries would appear to more closely implicate this provision.
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is the settlor’s . . . intent and that intent must prevail.” See
also Estate of McFadden, supra. We are not permitted to
construe a provision in a trust so as “to destroy or effectually
nullify what has always been considered the inherent basic
fundamental right of every owner of property to dispose of his
own property as he desires, so long as it is not unlawful.”
Estate of Pew, supra at 533. Critically, the settlor’s intent
must be ascertained from the language of the trust, and we give
effect, to the extent possible, to all words and clauses in the
trust document. See In re Estate of McFadden, supra;
accord Farmers Trust Co. v. Bashore, 498 Pa. 146, 445 A.2d
492, 494 (1982) (“A settlor’s intent is to be determined from all
the language within the four corners of the trust instrument, the
scheme of distribution and the circumstances surrounding the
execution of the instrument.”).
Only when the language of the trust is ambiguous or conflicting
or when the settlor’s intent cannot be garnered from the trust
language do the tenets of trust construction become applicable.
Farmers Trust, supra at 494 (“Only if a settlor’s intent cannot
be ascertained with reasonable certainty will a court apply
canons of construction, to attribute a reasonable intention to the
settlor in the circumstances.”).
In re Loucks, 148 A.3d 780, 781–82 (Pa. Super. 2016); see also
McFadden, 100 A.3d 645, 649-50 (in interpreting a trust, court may rely
upon extrinsic evidence of a settlor’s intent only if the trust is ambiguous
and only to the extent that the extrinsic evidence informs the ambiguous
language in question, not in some relatively unbounded effort to glean a
settlor’s broader intent).
After a thorough review of the record, the briefs of the parties, the
applicable law, and the well-reasoned opinion of the Honorable Cheryl L.
Austin dated October 7, 2016, we conclude that Appellant’s issues merit no
relief. The trial court’s opinion comprehensively discusses and properly
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interprets the Trust, including the language of the 2009 Deed. See Trial Ct.
Op., 10/7/16, at 3-4 (finding (1) Item III is not ambiguous, clearly indicating
that Settlor intended to gift the $1,000,000 to her three children, all of
whom survived her; (2) the clause in Item III as to what happens “if a child
of [Settlor’s] does not survive [her]” is not applicable, since all of Settlor’s
children survived her; and (3) due to the lack of ambiguity in the language
of the 2009 Deed, the trial court correctly refused to accept any extrinsic
evidence of Settlor’s intent offered by Appellant). Nothing in Item III
requires Settlor’s Children to hold their gifts under that item for the benefit
of Settlor’s grandchildren, including Appellant. With the exception of the gift
to Carol, which is to be held in trust pursuant to Item V of the 2009 Deed,
the gifts need not be held in trust at all.
For the reasons stated above, we affirm the order of June 3, 2016.
Because we affirm partly on the basis of the trial court’s opinion of
October 7, 2016, the parties are instructed to attach a copy of the trial
court’s opinion of that date to all future filings that reference this decision.
Order affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/18/2017
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Circulated 07/26/2017 03:37 PM