In Re:Trust of Trust of Scaife, S. Appeal of: Trib ( 2017 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
IN RE: TRUST UNDER DEED OF TRUST : IN THE SUPERIOR COURT OF
OF SARAH MELLON SCAIFE, SETTLOR : PENNSYLVANIA
DATED DECEMBER 30, 1935 :
:
:
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APPEAL OF: TRIB TOTAL MEDIA, INC. : No. 243 WDA 2016
Appeal from the Order January 14, 2016
in the Court of Common Pleas of Allegheny County,
Orphans’ Court Division, No(s): 6469 of 2014
BEFORE: BENDER, P.J.E., RANSOM and MUSMANNO, JJ.
MEMORANDUM BY MUSMANNO, J.: FILED FEBRUARY 28, 2017
Trib Total Media, Inc. (“TTM”) appeals from the Order of the Orphans’
Court, which denied TTM’s Motion to reconsider the court’s Order denying
TTM’s Motion to Quash Subpoena and for Protective Order (“Motion to
Quash”).1 We affirm.
In its Opinion, the Orphans’ Court set forth the relevant history of the
instant appeal as follows:
Jennie Scaife and David Scaife (Petitioners) brought an
action [in 2014] for an accounting of the Trust Under Deed of
Trust of Sarah Mellon Scaife, Settlor, dated December 30, 1935.
Petitioners allege that Trustees H. Yale Gutnick, James N.
Walton, and PNC Bank [“Trustees”], inter alia, improperly
1
“[D]iscovery orders rejecting claims of privilege and requiring disclosure
constitute collateral orders that are immediately appealable under
[Pa.R.A.P.] 313.” Commonwealth v. Flor, 136 A.3d 150, 155 (Pa. 2016);
see also Dodson v. Deleo, 872 A.2d 1237, 1240 (Pa. Super. 2005)
(recognizing the appealability of an order requiring the disclosure of
privileged information because, “once disclosed, the confidentiality of
potentially privileged information is irreparably lost.”).
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distributed Trust corpus to fund [TTM’s] operations. Following
the filing of an accounting, Petitioners filed objections to the
funding of TTM.
[On November 4, 2015, Petitioners served Notice of their
intent to subpoena TTM, and compel the production of certain
records. Trustees filed no objections to Petitioners’ Notice.] On
December 3, 2015, Jennie Scaife served a subpoena on TTM for
the production of documents. On December 18, 2015, TTM filed
a Motion to Quash []. A supporting brief filed that same day
argued that the documents and information sought via subpoena
were not relevant to the claims and defenses of the case, and
the production of documents would subject TTM to unreasonable
annoyance, embarrassment, burden, and expense.
On December 21, 2015, [the Orphans’] Court issued an
Order that Jennie Scaife file a response to TTM’s pleadings on or
before January 6, 2016,2 and setting argument for January 14,
2016. On January 6, 2016, both Petitioners filed a Response in
Opposition to [TTM’s] Motion to Quash [].
On January 12, 2016, TTM filed a Reply to Petitioners’
response in Opposition to Motion to Quash ….3 Within this
[R]eply, in argument 2(b) located on page 11 of TTM’s filing,
TTM for the first time raised the issue that Petitioner’s subpoena
would cause the disclosure of confidential and proprietary
information. On January 14, 2016[,] this Court heard argument
on the matter and subsequently issued an Order denying the
requested relief.
On January 15, 2016, TTM filed a Motion for Partial
Reconsideration of the January 14, 2016 Order with Respect to
Records after October 2011.4 On January 19, 2016, both
2
David N. Scaife had not served a subpoena on TTM for the production of
documents.
3
The filing occurred twenty-five (25) days after TTM filed its initial [M]otion
and supporting brief. The Orphans’ Court had not granted leave permitting
the filing.
4
This [M]otion for partial reconsideration added a new argument into the
mix[,] not previously raised[,] concerning records generated after October
2011.
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Petitioners filed a Response. On January 21, 2016, the Court
denied the [M]otion to reconsider. On February 16, 2016, TTM
filed a Notice of Appeal.
Orphans’ Court Opinion, 4/8/16, at 1-2 (footnotes in original).
On appeal, TTM presents the following claims for our review:
1. TTM argued that the Court should not compel TTM to produce
its confidential and proprietary information in a litigation to
which it is not a party in its Brief in Support of its [M]otion to
Quash, its Reply Brief in Support of its Motion to Quash, and at
Oral Argument regarding its Motion to Quash. It has also
included that position in its Concise Statement of Errors. Has
TTM preserved this issue for appeal?
2. The [s]ubpoena seeks TTM’s trade secret, proprietary and
confidential information[,] such that its competitors could take
advantage of such information and significantly harm TTM in the
marketplace. … Under [the Superior] Court’s reasoning in
Berkeyheiser,[5] does the sensitive, confidential and proprietary
nature of the subpoenaed documents outweigh the limited value
of the information sought from non-party TTM[,] such that the
[s]ubpoena should have been quashed?
3. Petitioners advance objections to the Account[,] which all
relate to the state of mind of the [T]ustees. TTM does not
possess documents which could possibly show the state of mind
of the [T]rustees. Should discovery of TTM’s irrelevant
documents have been precluded?
4. Petitioners advance objections to trust distributions made
prior to October 2011. All distributions of trust principal and
income were complete by July 2014. Should discovery of TTM’s
documents that post-date all relevant events have been
precluded?
Brief for Appellant at 3-4 (issues renumbered, some extraneous argument
omitted, footnote added).
5
Berkeyheiser v. A-Plus Investigations, Inc., 936 A.2d 1117 (Pa.
Super. 2007).
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TTM first claims that it properly preserved its challenge to the
subpoena based upon its claim that the subpoena would require the
production of TTM’s “confidential” and “proprietary” information. Id. at 22.
According to TTM, it “raised this argument on multiple occasions in
connection with its Motion to Quash before the [Orphans’ Court].” Id. TTM
takes issue with the Orphans’ Court’s statement that TTM had waived its
claim because it was not asserted in TTM’s Motion to Quash Subpoena and
for Protective Order, or in TTM’s Opening Brief in support of its Motion. Id.
at 23.
“Generally, on review of an order concerning discovery, an appellate
court applies an abuse of discretion standard.” Berkeyheiser, 936 A.2d at
1125 (citations omitted). “To the extent that the question involves a pure
issue of law, our scope … of review [is] plenary.” Id.
Similarly, “the standard of review regarding a motion to quash a
subpoena is whether the [Orphans’ Court] abused its discretion.” Leber v.
Stretton, 928 A.2d 262, 266 (Pa. Super. 2007). Regarding requests for
protective orders,
[t]here are no hard-and-fast rules as to how a motion for a
protective order is to be determined by the court. Whether to
grant or deny the motion, and what kind or kinds of protective
orders to issue are matters that lie within the sound judicial
discretion of the court, and the court’s determination as to these
matters will not be disturbed unless that discretion has been
abused.
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Hutchison v. Luddy, 606 A.2d 905, 908 (Pa. Super. 1992) (internal
citations and quotations omitted). An abuse of discretion is not merely an
error of judgment; it is judgment which is manifestly unreasonable, or the
result of partiality, prejudice, bias or ill-will as shown by evidence of record.
Fanning v. Davne, 795 A.2d 388, 393 (Pa. Super. 2002).
Under Pa.R.C.P. 4003.1,6 “discovery is liberally allowed with respect to
any matter, not privileged, which is relevant to the cause being tried.” Berg
v. Nationwide Mutual Ins. Co., Inc., 44 A.3d 1164, 1178 n.8 (Pa. Super.
2012).
Any party may serve … a subpoena upon a person not a party
pursuant to Rules 4009.21 through 4009.27 to produce and
permit the requesting party, or someone acting on the party’s
behalf, to inspect and copy any designated documents (including
writings, drawings, graphs, charts, photographs, and
electronically stored information), or to inspect, copy, test or
sample any tangible things or electronically stored information,
which constitute or contain matters within the scope of Rules
4003.1 through 4003.6 inclusive and which are in the
possession, custody or control of the party or person upon whom
the request or subpoena is served, and may do so one or more
times.
6
Orphans’ Court Rule 3.6 provides that
[t]he local Orphans’ Court … may prescribe the practice relating
to … discovery [and the] production of documents …. To the
extent not provided for by such general rule or special order, the
practice relating to such matters shall conform to the practice in
the Trial or Civil Division of the local Court of Common Pleas.
Pa.O.C.R. 3.6.
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Pa.R.C.P. 4009.1(a). A party may object to a notice to serve a non-party
with a subpoena for the production of documents, “by filing of record and
serving a copy of the objections upon every other party to the action.”
Pa.R.C.P. 4009.21(c). If objections are not received, “the subpoena may be
served subject to the right of any party or interested person to seek a
protective order.” Pa.R.C.P. 4009.21(c)(2).
Rule 234.4 provides that
a motion to quash a subpoena ... or notice to produce may be
filed by … the person served or by any other person with
sufficient interest. After [a] hearing, the court may make an
order to protect a party, witness or other person from
unreasonable annoyance, embarrassment, oppression, burden or
expense.
Pa.R.C.P. 234.4(b); see also Pa.R.C.P. 4012(a) (stating that, “[u]pon
motion by … the person from whom discovery or deposition is sought, and
for good cause shown, the court may make any order which justice requires
to protect a party or person from unreasonable annoyance, embarrassment,
oppression, burden or expense ….”). Nevertheless, “evidentiary privileges
have been viewed by [the Pennsylvania Supreme] Court to be in derogation
of the search for truth, and are generally disfavored for this reason.”
Octave v. Walker, 103 A.3d 1255, 1262 (Pa. 2014). As such, “evidentiary
privileges are to be narrowly construed[.]” Id.
Here, no party filed objections to Petitioners’ Notice of their intention
to serve TTM with a subpoena. TTM responded to the subpoena by filing its
Motion to Quash, which asserted two bases for relief: (1) the documents
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sought by the subpoena were irrelevant; and (2) production of the requested
documents would subject TTM “to unreasonable annoyance, embarrassment,
burden, and expense.” Motion to Quash Subpoena, 12/21/16. In its Brief
supporting the Motion to Quash, TTM argued that the documents sought
were not relevant to the pending action, and not reasonably calculated to
lead to the discovery of admissible evidence. Brief in Support of Motion to
Quash, 12/21/15, at 3. TTM generally asserted that the discovery sought by
the subpoena “would cause unreasonable annoyance, embarrassment,
burden and expense to TTM.” Id. at 6 (initial capitalization omitted). TTM
described the information sought as private, highly sensitive financial
business records and information, dating back 24 years. Id. at 6-7. TTM
further argued that
[p]roducing these documents and information, if even possible,
would cause extreme burden, expense, and annoyance to TTM—
to say nothing of the embarrassment of having the entirety of its
financial and business records, including documents relating to
losses to TTM, spanning more than two decades[,] made
available to the parties of a civil action to which TTM itself is not
even a party. There is also a concern that such private internal
and highly sensitive information would be made public….
Id. at 7. Petitioners filed a Response to TTM’s Motion to Quash and
supporting brief, addressing TTM’s challenge to the relevance of the
documents requested, and TTM’s claim of undue burden, hardship and
embarrassment.
On January 14, 2016, TTM filed a Reply to the Petitioners’ Response
(“TTM’s Reply”). On page 11 of TTM’s Reply, TTM, for the first time, claimed
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that the subpoena sought confidential and proprietary information. TTM’s
Reply at 11.
In its Opinion, the Orphans’ Court declined to consider TTM’s claim
that the subpoenaed records contained confidential and proprietary
information:
[T]his issue was not raised in TTM’s initial [M]otion and
supporting brief. In fact, said issue was only brought before [the
Orphans’] Court in TTM’s [R]eply [], which was filed less than 48
hours before the scheduled argument. The [c]ourt considers this
argument waived because it was untimely raised in a reply
pleading, which was not authorized by the [c]ourt, and because
the Petitioners were not afforded ample opportunity to address
the issue. Further, had the issue been properly raised, a hearing
would have been held with respect to the alleged confidentiality
of said information. Since this particular objection filed by TTM
was not timely raised before this [c]ourt, it is waived for appeal
purposes.
Orphans’ Court Opinion, 4/8/16, at 2-3. The record supports the Orphans’
Court’s determination, and we discern no abuse of discretion in this regard.
We therefore adopt the Orphans’ Court’s reasoning, and affirm its resolution
of TTM’s claim on the basis of this reasoning, as set forth above. See id.
In its second claim, TTM argues that the Orphans’ Court improperly
failed to engage in the “required analysis under Berkeyheiser[,]” in
denying its Motion to Quash. Brief for Appellant at 14. Under
Berkeyheiser, TTM asserts, the relevancy of the requested information is
not assumed. Id. at 15. Rather, TTM argues that the court addressing a
motion to quash must “(1) require the subpoenaing party to establish that
the information sought is likely to lead to the discovery of admissible
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information, and (2) balance the privacy interests of the moving party
against the subpoenaing party’s asserted need for the requested
documents.” Id. at 14. According to TTM, under Berkeyheiser, the
discovery sought from TTM should have been disallowed. Id. at 16.
TTM contends that the subpoena “seeks a vast amount of confidential,
proprietary and trade secret information from TTM.” Id. at 17. TTM argues
that the risk to TTM is particularly strong, in that the subpoena did not limit
the requested documents to the period relevant to the objections, thereby
requiring TTM to produce its current proprietary information. Id. TTM
further argues that the Protective Order, put in place three months prior to
the subpoena, is not adequate to protect TTM’s interests. Id. at 18. TTM
points out, as support, a statement by Petitioners’ counsel at argument that,
“if [the prior Protective Order] is not satisfactory to [TTM’s counsel], we
could do other aspects of a confidential agreement, but there are ways to
address that as well.” Id. at 19 (citation omitted). TTM asserts that it was
not involved in the drafting of the Protective Order, and that the Order does
not include the ability to designate certain documents as “attorneys-eyes
only, which is the level of protection necessary for TTM to protect the
confidentiality of its most sensitive documents[,] specifically as it relates to
TTM’s competitors.” Id. TTM further discusses the burden it would face in
protecting the information sought in future court proceedings and filings.
Id. at 19-21.
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“The trial court is responsible for [overseeing] discovery between the
parties and[,] therefore[,] it is within that court’s discretion to determine the
appropriate measure necessary to insure adequate and prompt discover[y]
of matters allowed by the Rules of Civil Procedure.” PECO Energy Co. v.
Ins. Co. of N. Am., 852 A.2d 1230, 1233 (Pa. Super. 2004) (citation
omitted); accord Berkeyheiser, 936 A.2d at 1125. Regarding the scope of
discovery, Pennsylvania Rule of Civil Procedure 4003.1 provides that,
(a) Subject to the provisions of Rules 4003.2 to 4003.5 inclusive
and Rule 4011, a party may obtain discovery regarding any
matter, not privileged, which is relevant to the subject matter
involved in the pending action, whether it relates to the claim or
defense of the party seeking discovery or to the claim or defense
of any other party ….
(b) It is not ground for objection that the information sought will
be inadmissible at trial if the information sought appears
reasonably calculated to lead to the discovery of admissible
evidence.
Pa.R.C.P. 4003.1(a), (b). Thus, discovery “is liberally allowed with respect
to any matter, not privileged, which is relevant to the cause being tried.”
George v. Schirra, 814 A.2d 202, 205 (Pa. Super. 2002) (citations
omitted). However, no discovery or deposition shall be permitted which
“would cause unreasonable annoyance, embarrassment, oppression, burden
or expense to the deponent or any person or party;” “is beyond the scope of
discovery as set forth in Rules 4003.1 through 4003.6;” or “would require
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the making of an unreasonable investigation by the deponent or any party or
witness.” Pa.R.C.P. 4011(b), (c), (e).
Upon review, we conclude that TTM’s reliance upon Berkeyheiser is
misplaced. In Berkeyheiser, this Court held that the trial court had erred
in allowing the plaintiffs’ broad discovery requests, when the information
requested purportedly would include “privileged materials and private
information” relating to the defendants’ clients.7 Berkeyheiser, 936 A.2d at
1119. This Court further reasoned that
privacy interests protected by the federal Constitution receive
the same protections from Pennsylvania’s Constitution. Cases
concerning the constitutional right to privacy involve two
separate interests: (1) the individual interest in avoiding
disclosure of personal matters; and (2) the interest in making
certain kinds of important decisions. However, the right [to
privacy] is not an unqualified one; it must be balanced against
weighty competing private and state interests.
Id.
Here, TTM waived its claim that the requested discovery should be
restricted because of its confidential and proprietary nature. See Orphans’
Court Opinion, 4/8/16, at 3. Consequently, TTM’s challenge based upon
Berkeyheiser, and the balancing test appropriate when confidential,
proprietary and/or constitutionally protected information is involved, is not
applicable.
7
Ultimately, this Court agreed with the defendant that “many of [the
plaintiff’s] discovery requests are so broad that they necessarily include
disclosure of communications between attorneys and clients,” and thus that
the information was not discoverable under the attorney-client privilege. Id.
at 1125.
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In its third claim, TTM argues that the Orphans’ Court improperly
denied its Motion to Quash, because the information sought is not relevant
to Petitioners’ claims. Brief for Appellant at 27, 28. TTM asserts that the
Trustees’ state of mind and motives can only be determined based upon
information actually considered by the Trustees. Id. at 28, 29. TTM
additionally contends that the Orphans’ Court should have directed
Petitioners first to seek the information from the Trustees. Id. at 30.
Regarding TTM’s claim, the Orphans’ Court stated the following:
The financial records of TTM are, however, relevant both to
Petitioners’ claims and the possible defenses of the Trustees.
For instance, Petitioners argue that no reasonable trustee would
distribute trust principle to fund a business such as TTM[,]
because the amounts needed to fund the business would
continue to increase year after year. Petitioners want the
financial documents, so that they can prove what the Trustees
knew or should have known, when they knew it or should have
known it, and the reasonableness of their actions[,] in light of
the information they had. The Petitioners would be hampered in
putting forth their case as to a breach of fiduciary duty or a
waste of trust assets if the information requested in the
subpoena was not turned over by TTM.
Orphans’ Court Opinion, 4/18/16, at 3. Discerning no abuse of discretion or
error, we agree with and adopt the reasoning of the Orphans’ Court, and
affirm on this basis. See id.
In its fourth and final claim, TTM argues that the Orphans’ Court
improperly denied its Motion to Quash as to documents that post-date the
challenged distributions. Brief for Appellant at 31. TTM argues that
Petitioners did not challenge distributions taking place after October 2011
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and, therefore, such documents are irrelevant. Id. TTM further asserts that
the Orphans’ Court improperly denied its Motion to Quash as to documents
dated after July 2014. Id. TTM disputes the Orphans’ Court’s conclusion
that its claims are waived, based upon TTM’s failure to raise them until its
Motion for Partial Reconsideration and its Pa.R.A.P. 1925(b) Concise
Statement of matters complained of on appeal. Id. at 32.
The Pennsylvania Rules of Appellate Procedure provide that an issue
cannot be raised for the first time on appeal. Pa.R.A.P. 302(a). Further, an
issue is not preserved when it is first raised in a motion for reconsideration
or in a Pa.R.A.P. 1925(b) concise statement. See Mason-Dixon Resorts,
L.P. v. Pa. Gaming Control Bd., 52 A.3d 1087, 1112 (Pa. 2012) (deeming
waived an issue not raised until a motion for reconsideration); Hinkal v.
Pardoe, 133 A.3d 738, 746 (Pa. Super. 2016) (en banc) (stating that an
issue is not preserved for review when it is first raised in the Pa.R.A.P.
1925(b) concise statement).
Upon review, we discern no abuse of discretion or error by the
Orphans’ Court in deeming these claims waived. See Orphans’ Court
Opinion, 4/18/16, at 3-4 (stating that because the Orphans’ Court first
became aware of TTM’s claim (regarding the records generated after October
2011) in TTM’s Motion for partial reconsideration, and of the claim regarding
the records generated after October 2014 in the Rule 1925(b) Concise
Statement, the claims are now waived).
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Accordingly, we affirm the Order of the Orphans’ Court.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/28/2017
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