In Re: The Estate of Wierzbicki, A. v. Korenoski ( 2017 )

J-A18025-17
2017 PA Super 346IN RE: THE ESTATE OF ANNA S. IN THE SUPERIOR COURT
WIERZBICKI A/K/A ANNA WIERZBICKI, OF
DECEASED PENNSYLVANIA
JOAN AND CHRISTOPHER CLARK,
APPELLANTS
v.
WANDA KORENOSKI, EXECUTRIX
No. 1959 WDA 2016
Appeal from the Order December 12, 2016
In the Court of Common Pleas of Allegheny County
Orphans' Court at No(s): NO. 021102276
BEFORE: BOWES, J., LAZARUS, J., and OTT, J.
OPINION BY LAZARUS, J.: FILED NOVEMBER 6, 2017
Joan and Christopher Clark (“the Clarks”) appeal from the order entered
in the Court of Common Pleas of Allegheny County, Orphans’ Court Division,
denying their motion for summary judgment seeking a determination that a
certain Wells Fargo account belonging to Anna S. Wierzbicki, Deceased
(“Decedent”), was a testamentary asset and determining, sua sponte, that
the account is a non-probate asset. Upon careful review, we affirm in part
and reverse in part.
Decedent died on February 25, 2011, leaving a will dated September 2,
2008. Decedent gave her estate, in three equal parts, to: (1) her niece, Joan
Clark, and her husband, Christopher Clark, or the survivor of them; (2) her
niece, Wanda Korenoski, and her husband, Allen Korenoski, or the survivor of
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them; and (3) her niece, Florence Eileen Zalewski, and her husband, Chester
Zalewski, or the survivor of them. Decedent appointed Florence Zalewski and
Wanda Korenoski as co-executrices. However, Florence renounced her right
to serve and died thereafter, leaving Wanda Korenoski (“Executrix”) as sole
executrix.
At issue in this case is the ownership of a Wells Fargo account ending in
the number 6428 (“Account”). Decedent opened the Account in January 2008.
At the time, the Decedent did not execute a transfer on death designation.
On September 19, 2008, Decedent gave Executrix power of attorney over the
Account.
At some point in January 2011, Executrix went to Decedent’s apartment,
at which time Decedent asked her to complete the beneficiary designation
page of a Transfer on Death (“TOD”) Application for the Account. Executrix
hand-wrote the names, addresses, social security numbers, telephone
numbers, birth dates and percentage interests of the beneficiaries on page
two of the application. On January 29, 2011, Decedent signed and dated the
beneficiary designation, which gave Executrix 60% of the account proceeds
and 40% to Florence Eileen Zalewski. The TOD application was date-stamped
upon receipt by Wells Fargo on February 3, 2011. Decedent died on February
25, 2011. On March 3, 2011, Wells Fargo preliminarily rejected the TOD
application for failure to designate a contingent TOD beneficiary. The rejection
was ultimately reversed and the TOD application was approved on April 6,
2011.
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On December 5, 2014, the Executrix filed an account of her
administration. The Clarks filed objections asserting, inter alia, that the
Executrix breached her fiduciary duties by failing to pursue, for the benefit of
the estate, recovery of the funds contained in the Account and, instead,
retained a percentage of them for her own benefit. Specifically, the Clarks
asserted that the TOD beneficiary designation was invalid because: (1) Wells
Fargo failed to accept it prior to Decedent’s death; (2) the beneficiary
designations were completed by Executrix, who held power of attorney on the
account, in contravention of 20 Pa.C.S.A. §§ 6407 and 6410; and (3) Wells
Fargo rejected the TOD application after Decedent’s death, rendering it
unenforceable under 20 Pa.C.S.A. §§ 6407, 6409 and 6410. The Clarks also
alleged that Executrix exercised undue influence upon the Decedent.
Accordingly, the Clarks claim that the beneficiary designation is invalid and
the Account is the property of the estate.
The Executrix filed an answer to the Clarks’ objections, in which she
denied that the failure to designate a contingent beneficiary invalidated the
TOD designation. The Executrix also asserted that Wells Fargo followed its
own procedures in screening and ultimately accepting Decedent’s TOD
designation and that the legal bases for the Clarks’ claims are unsound.
On March 23, 2016, the Clarks filed a motion for partial summary
judgment asking that the Account be deemed a testamentary asset because
the TOD designation was facially invalid under the Transfer on Death Security
Registration Act (“the Act”), 20 Pa.C.S.A §§ 6401-6413, and the common law
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of contracts.1 The motion did not, however, address the undue influence
claim. On December 12, 2016, the court denied the motion and further
concluded, as a matter of law, that the Account was a non-probate asset. This
appeal follows, in which the Clarks raise the following issues for our review:
1. Did the [Orphans’ Court] commit an error of law by failing to
conclude that the Wells Fargo account is a testamentary asset?
2. Did the [Orphans’ Court] commit an error of law and/or abuse
its discretion when concluding – sua sponte and as a matter of law
– that the Wells Fargo account is not a testamentary asset?
Brief of Appellants, at 4-5.
We begin by briefly noting that this Court has jurisdiction to decide the
instant matter pursuant to Pa.R.A.P. 342(a)(6). Rule 342(a)(6) provides that
an appeal may be taken as of right from an order of the Orphans’ Court
Division that determines an interest in real or personal property. In this case,
the Orphans’ Court held, as a matter of law, that the Account was a non-
probate asset belonging to the beneficiaries named in the TOD designation.
As the order “determines an interest in . . . personal property,” we may
proceed with our review.
In reviewing a ruling on a summary judgment motion,
[a] reviewing court may disturb the order of the trial court only
where it is established that the court committed an error of law or
abused its discretion. Upon appellate review, we are not bound
by the trial court’s conclusions of law, but may reach our own
conclusions. As with all questions of law, our review is plenary.
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1 The summary judgment motion addressed only the Clarks’ claims with
respect to the nature of the Account and not any other issues raised in their
objections to the Executrix’s account of her administration of the estate.
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Furthermore, in deciding a motion for summary judgment, we will
view the record in the light most favorable to the nonmoving
party, and accept as true all well-pleaded allegations, giving that
party the benefit of all reasonable inferences that can be drawn
from those allegations. In evaluating the trial court’s decision to
enter summary judgment, we focus on the legal standard
articulated in the summary judgment rule. See Pa.R.C.P. 1035.2.
The rule states that where there is no genuine issue of material
fact as to a necessary element of the cause of action and the
moving party is entitled to relief as a matter of law, summary
judgment may be entered. See Pa.R.C.P. 1035.2(1).
In re Estate of Scharlach, 809 A.2d 376, 380–81 (Pa. Super. 2002), quoting
Kenner v. Kappa Alpha Psi Fraternity, 808 A.2d 178 (some citations
omitted).
The Clarks first assert that the Orphans’ Court erred in failing to
conclude that the Account is a testamentary asset. They argue that the TOD
designation executed by the Decedent was invalid and unenforceable under
various provisions of the Act and black letter contract law. First, the Clarks
assert that the court’s ruling violates the requirements of section 6407, which
provides as follows:
On death of a sole owner or the last to die of all multiple owners,
ownership of securities registered in beneficiary form passes to
the beneficiary or beneficiaries who survive all owners. On proof
of death of all owners and compliance with any applicable
requirements of the registering entity, a security registered
in beneficiary form may be reregistered in the name of the
beneficiary or beneficiaries who survived the death of all owners.
Until division of the security after the death of all owners, multiple
beneficiaries surviving the death of all owners hold their interests
as tenants in common. If no beneficiary survives the death of all
owners, the security belongs to the estate of the deceased sole
owner or the estate of the last to die of all multiple owners.
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20 Pa.C.S.A. § 6407 (emphasis added). In particular, the Clarks argue that
the Decedent’s failure to check the contingent beneficiary box renders the
entire TOD designation invalid under the highlighted language. Our reading
of the statute does not comport with that of the Clarks. Contrary to their
interpretation, it is clear that the highlighted portion of section 6407 refers to
any requirements of the registering entity with respect to reregistration of the
account in the name of the beneficiaries following the death of the owner.
Thus, the cited language is inapplicable.
Likewise, section 6410(a) garners the Clarks no relief. The Clarks rely
upon the following language to assert that the TOD designation is invalid:
(a) Terms and conditions.--A registering entity offering to accept
registrations in beneficiary form may establish the terms and
conditions under which it will receive requests for registrations in
beneficiary form and for implementation of registrations in
beneficiary form, including requests for cancellation of previously
registered TOD beneficiary designations and requests for
reregistration to effect a change of beneficiary. . . .
20 Pa.C.S.A. § 6410(a).
Wells Fargo’s internal Document Rejection Policy states that, “[t]o
comply with regulatory requirements, all documents must be completed in
their entirety.” Motion for Partial Summary Judgment, Exhibit F. The Clarks
again argue that, because Decedent did not check the contingent beneficiary
box, her registration did not comply with the registering entity’s “terms and
conditions” and is, therefore, invalid. We disagree. Section 6410 merely
provides protection for registering entities by authorizing such entities to, in
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their discretion, establish the terms and conditions under which it will accept
requests for registration in beneficiary form. It does not mandate that any
request for registration be deemed invalid for failure to conform exactly to the
entity’s terms and conditions. Under the circumstances of this case, in which
both primary beneficiaries were alive at the time of the owner’s death, nothing
in section 6410 precluded Wells Fargo from exercising its discretion and
disregarding Decedent’s irrelevant failure to designate unnecessary
contingent beneficiaries. Moreover, the purpose of the Act is to provide a
mechanism by which account owners can provide for the non-probate transfer
of their assets upon their death. It also provides protections for the financial
institutions offering registration in beneficiary form. Section 6412 of the Act
provides that its provisions “shall be liberally construed and applied to
promote [its] underlying purposes” and that “the principles of law and equity
supplement its provisions.” 20 Pa.C.S.A. § 6412. The purposes of the Act are
not served by applying its provisions narrowly to thwart the clear intent of
account owners based on an irrelevant technicality.
The Clarks also argue that the Executrix executed the TOD designation
form in her capacity as power of attorney and, in doing so, rendered the
application invalid under sections 6407 and 6410. This argument fails for two
reasons. First, it is undisputed that the Decedent herself executed the
document. The Clarks do not dispute that the signature on page three of the
document is that of the Decedent. The fact that the Executrix assisted the
Decedent by handwriting the names and other information of the Decedent’s
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chosen beneficiaries is of no moment. Second, nothing in section 6407 or
6410 invalidates a TOD designation executed by an agent under a power of
attorney or precludes an agent from validly executing a TOD designation. This
argument is patently meritless.
The Clarks further assert that section 6409 and black letter contract law
render the designation ineffective because there was no “acceptance” of the
Decedent’s “offer.” Section 6409 provides, in relevant part, as follows:
(a) General rule. – A transfer on death resulting from a
registration in beneficiary form is effective by reason of the
contract regarding the registration between the owner and the
registering entity and this chapter and is not testamentary.
20 Pa.C.S.A. § 6409.
“It is black letter law that in order to form an enforceable contract,
there must be an offer, acceptance, consideration or mutual meeting of the
minds.” Jenkins v. Cty. of Schuylkill, 658 A.2d 380, 383 (Pa. Super. 1995).
The Clarks argue that the “offer” in this case was made by the Decedent
when she submitted her TOD registration application to Wells Fargo. Wells
Fargo did not “accept” her application until after her death. Because an
offeree’s power of acceptance “is terminated when the offeree or offeror dies,”
no contract was formed. Brief of Appellant, at 19, citing Restatement
(Second) of Contracts, § 48. We disagree.
The very section of the Act upon which the Clarks base many of their
claims undermines their argument by framing the registration process in
terms of the registering entity being the offeror. Section 6410(a) begins by
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stating: “A registering entity offering to accept registrations in beneficiary
form may establish the terms and conditions . . .” 20 Pa.C.S.A. § 6410(a)
(emphasis added). In addition, section 6408(a) of the Act provides as
follows: “A registering entity is not required to offer or to accept a
request for security registration in beneficiary form. If a registration in
beneficiary form is offered by a registering entity, the owner requesting
registration in beneficiary form assents to the protections given to the
registering entity by this chapter.” 20 Pa.C.S.A. § 6408(a) (emphasis added).
In short, Wells Fargo offered TOD registration and Decedent accepted by
executing the application, which was delivered to Wells Fargo on February 3,
2011, prior to Decedent’s death. The Clarks can cite no authority for the
proposition that Wells Fargo’s internal administrative delay in approving
Decedent’s application renders the TOD designation invalid. Formal
procedures required by an institution in order to effect a change of beneficiary
are in place to protect the institution. See In re Estate of Golas, 751 A.2d
229, 231 (Pa. Super. 2000). Thus, an original beneficiary is without the right
to insist upon strict compliance with those requirements in an effort to
invalidate a subsequent beneficiary designation. Id.For the foregoing reasons, we find that the Clarks have failed to
demonstrate that the Orphans’ Court committed an error of law in concluding
that, on its face, the TOD beneficiary designation was valid. Accordingly, we
affirm the court’s denial of the Clarks’ motion for partial summary judgment.
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Nevertheless, we are constrained to agree with the Clarks that the court
went a step too far when it held conclusively and as a matter of law that the
Account is a non-probate asset. The sole issue before the court on partial
summary judgment was whether the TOD designation was unenforceable, on
its face and as a matter of law, pursuant to the Act and the common law of
contracts. The motion did not address the Clarks’ alternative contention –
that, regardless of its facial validity, the designation was the product of undue
influence exercised upon the Decedent by the Executrix. See Amended
Objections to Account, 11/20/15, at ¶ 64. Because the issue of undue
influence was not raised in the motion for partial summary judgment, it was
premature for the court to rule, as a matter of law, that the Account is a non-
probate asset where evidence regarding the Clarks’ undue influence claim was
not yet before the court. Accordingly, to the extent that the court conclusively
determined the non-probate nature of the Account, we reverse and remand
for further proceeding consistent with the dictates of this opinion.
Affirmed in part and reversed in part. Remanded for further proceedings
consistent with the dictates of this opinion. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/6/2017
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