In Re: Estate of Scutchall, A.M. ( 2016 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
IN RE: ESTATE OF ANNA M. SCUTCHALL IN THE SUPERIOR COURT OF
PENNSYLVANIA
APPEAL OF: GEORGE E. WENGER, JR.
No. 1271 MDA 2015
Appeal from the Order Entered June 30, 2015
In the Court of Common Pleas of Franklin County
Orphans' Court at No(s): 89-OC-2012
BEFORE: LAZARUS, J., STABILE, J., and DUBOW, J.
MEMORANDUM BY LAZARUS, J.: FILED SEPTEMBER 27, 2016
George E. Wenger, Jr. (“Appellant”), as Administrator Pro Tem of the
Estate of Anna M. Scutchall, Deceased (the “Estate”), appeals from the order
entered in the Court of Common Pleas of Franklin County, Orphans’ Court
Division, granting preliminary objections filed by the Commonwealth of
Pennsylvania, as parens patriae for charities, and dismissing the Amended
Petition to Void Action By Decedent’s Former Power of Attorney, filed on
behalf of the Estate. Upon careful review, we affirm.
The Orphans’ Court set forth the salient facts of this case as follows:
This [case] revolves around actions taken by Chester Grove,
Jr.[,] in his capacity as agent under a durable power of attorney
executed by Anna M. Scutchall during the brief period between
her husband[] Merrill’s death on January 15, 2012, but prior to
her death on March 29, 2012.
The matter at issue is the distribution of Allianz Annuity [92] and
Allianz Annuity [90]. Annuity [92] was possessed by Merrill and
named Anna as sole beneficiary. If Anna failed to survive
[Merrill] by 30 days, the American Cancer Society and the
American Arthritis Foundation [(“Charities”)] each were to
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receive 50% of the value of the annuity. The total value of the
annuity was $479,600.00. Chester Grove, Jr.[,] served as agent
under [the] respective durable power[s] of attorney[] for both
Merrill and Anna as they did not have family in the area who
could assist them, and they trusted Chester Grove, Jr.[,] to act
on their behal[ves]. According to the Amended Petition, Anna
has two adult children who reside outside of Pennsylvania, and
Merrill was their stepfather. Accepting the Petitioner’s
averments as true, Annuity [92] was the only asset owned solely
by Merrill, as all other annuities were owned solely by Anna, and
the remaining real and personal property was jointly owned by
Anna and Merrill, and presumptively was distributed to Anna
subsequent to Merrill’s death.
After Merrill’s death, [Grove] received written notice that Annuity
[92] could be claimed by Anna. [Grove] executed a fixed
annuity claim form issued by Allianz as agent for Anna M.
Scutchall[,] electing the spousal option to continue the contract
under her name. The options for either a five[-]year deferral,
receipt of a lump sum, to receive payment over her life
expectancy, or other annuity options were not exercised. As
part of electing . . . to continue distribution under Merrill’s
spousal option, [Grove] designated the American Cancer Society
and [the] Arthritis Foundation to each receive 50% of the
balance upon Anna’s death. [Grove] signed the claim form and
submitted it on February 25, 2012, indicating he was executing
the form as attorney-in-fact for Anna M. Scutchall.
In addition, at or about the same time that [Grove] submitted
the final annuity claim form for Annuity [92], he also issued a
service request on behalf of Anna Scutchall as to Annuity 90, in
which he designated the American Cancer Society as the 100%
beneficiary[.] Upon the death of Anna M. Scutchall on March 29,
2012, [Grove] presented the will of Anna M. Scutchall dated
October 12, 2011 for probate with the Franklin County Register
of Wills, in which within its body it indicates that the
beneficiaries of her will were to be her husband, if he survived
her, and if not, then her children, Mary Catherine Miller and
Robert R. Norris. There were no provisions for charitable gifts
within her last will and testament. The Allianz [92] annuity was
paid out equally to the American Cancer Society and the Arthritis
Foundation. [Grove], presumably having been made aware that
his prior activities with the designations of the annuities may not
have been consistent with [Anna’s] intent, and accepting the
Petitioners’ averments that as of the time that [Grove] took such
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actions, he could not consult with Anna due to her alleged
incapacity, commenced litigation within the Orphans’ Court to
set aside the designations that he had previously entered as
agent under [Anna’s] durable power of attorney [(“Petition to
Void”). Grove did so in his capacity as executor of Anna’s will.]
[Grove] also issued a notice to Allianz to not disburse Annuity
[90] as he would be taking action to set aside the designations
he previously made for Anna as her agent.
Orphans’ Court Opinion, 6/30/15, at 2-4.
Grove sent notice of his original Petition to Void to Allianz and the
Charities; however, he failed to provide the required notice to the
Commonwealth in its capacity as parens patriae for charities1 until June 25,
2013, nearly one year after the petition was filed. On June 11, 2013, Grove,
joined by intervenors Miller and Norris, filed a petition for leave to amend
the original Petition to Void to include a request to void the beneficiary
designation for Allianz Annuity 90, as the original petition had referenced
only Annuity 92. On July 3, 2013, the Charities filed a response in
opposition to the petition for leave to amend. On July 24, 2013, the
Commonwealth filed an answer with new matter and counterclaim to the
Petition to Void, as well as an answer in opposition to the petition to amend.
On December 20, 2013, Grove filed a complaint to join as an
additional defendant David Pankiw, the financial advisor to Anna and her
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1
Former Pa.O.C.R. 5.5 (now Rule 4.4) requires that “[i]n every court
proceeding involving or affecting a charitable interest . . . at least 20 days
advance written notice thereof shall be given to the Attorney General of the
Commonwealth[.]”
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husband, Merrill, whom Grove claimed was ultimately responsible for
designating the Charities as beneficiaries under the annuity policies.
After a hearing, the Orphans’ Court granted Grove leave to amend the
Petition to Void. Grove filed an amended petition on May 16, 2014, which
was substantially the same as the original petition but also included
averments relating to Annuity 90. Shortly thereafter, on May 28, 2014,
Grove died; Appellant was subsequently appointed Administrator Pro Tem of
Anna’s Estate and continued to prosecute this matter. On June 17, 2014,
the Commonwealth filed preliminary objections to the Amended Petition to
Void, asserting various objections including failure to state a claim upon
which relief can be granted and failure to join Grove, as former agent for
Anna, as an indispensable party. By order dated June 30, 2015, the
Orphans’ Court issued an order sustaining the Commonwealth’s preliminary
objections relating to legal insufficiency and failure to join an indispensable
party and stated that the action would be dismissed unless Appellant filed an
amended pleading. Appellant opted not to file an amended pleading,
choosing instead to file a notice of appeal to this Court.2
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2
In its Appellee’s brief, the Commonwealth argued that this appeal should
be quashed because the Orphans’ Court’s order was not final, as it granted
petitioner leave to file an amended pleading. See Lichtenwalner v.
Schlicting, 552 A.2d 302 (Pa. Super. 1989) (order sustaining preliminary
objections in nature of demurrer and directing plaintiffs to file amended
complaint is interlocutory and not appealable). However, on January 11,
2016, Appellant filed with the Franklin County Clerk of Courts a praecipe to
enter judgment. Accordingly, we may consider the merits of this appeal.
(Footnote Continued Next Page)
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Appellant raises the following issues for our review:
1. Whether the [O]rphans’ [C]ourt erred as a matter of law in
dismissing the case for lack of an indispensable party when the
Commonwealth previously joined the alleged indispensable
party, namely Chester Grove, on the original petition as a
counterclaim defendant.
2. Whether the [O]rphans’ [C]ourt erred as a matter of law [in
holding] that granting relief under the Amended Petition would
undermine the notion of finality of contracts when [the] Estate is
not seeking to modify the contract, but rather is seeking to
recover the assets which would have rightfully belonged to the
Estate had the agent not changed the beneficiary without
ascertaining the probable intent of the principal.
Brief of Appellant, at 2-3.
Appellant’s first claim is that the Orphans’ Court committed an error of
law in dismissing the action for failure to join Grove as an indispensable
party. Appellant asserts that Grove was, in fact, joined in the action through
the Commonwealth’s counterclaim to the original Petition to Void.3 We
disagree.
In this case, Chester Grove acted in two distinct fiduciary capacities,
the legal effect of which is no different from what it would have been had
two separate individuals acted in each representative capacity. See In re
Hamilton's Estate, 41 A.2d 567, 570 (Pa. 1945), quoting In re Mack’s
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(Footnote Continued)
See Johnston the Florist, Inc. v. TEDCO Construction, 657 A.2d 511(Pa. Super. 1995) (jurisdiction in appellate courts may be perfected after
appeal notice has been filed upon docketing of final judgment).
3
We note that Appellant does not argue that Grove is not an indispensable
party and, therefore, will proceed with our analysis accordingly.
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Estate, 169 A. 468, 469 (Pa. Super. 1933). During Anna’s life, Grove
served as her agent pursuant to a power of attorney. It was as Anna’s
agent that Grove authorized the beneficiary designations that are at issue in
this matter. Following Anna’s death, Grove served as the executor of her
will. It was during his time as executor that Grove concluded he had erred,
in his former capacity as agent, by naming the Charities as the beneficiaries
of Anna’s annuities. As former agent, Grove (now that he is deceased, his
estate) is answerable to Anna’s estate for actions he took during his tenure
as agent. However, because of his dual fiduciary roles, a conflict of interest
arose when Grove – in his capacity as executor – questioned his own actions
as agent.
When Grove filed his original Petition to Void, he did not name himself,
as former agent, as a respondent, despite his reliance on section 5603 of the
Probate, Estates and Fiduciaries Code (“PEF Code”), which provides, in
pertinent part, that: “[a]n agent . . . shall be liable as equity and justice
may require to the extent that, as determined by the court, a beneficiary
designation made by the agent is inconsistent with the known or probable
intent of the principal.” 20 Pa.C.S.A. § 5603. The Commonwealth also
cited section 5603 and, in the prayer for relief included in its counterclaim to
the original petition, requested that the court “order [Grove], personally,
[to] restore the full amount of the annuity contracts to the estate if his
actions are deemed improper” and also sought his removal as executor due
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to the inherent conflict of interest. However, Grove was never formally
joined as a party to the action.
Subsequently, Grove sought leave to file an amended petition, which
the court granted. Where such an amended petition is filed, the original
petition is superseded and rendered a virtual nullity. Brooks v. B & R
Touring Co., 939 A.2d 398, 402 (Pa. Super. 2007) (amended complaint,
once filed, becomes operative pleading). In essence, the case began anew
with the filing of the Amended Petition to Void. Accordingly, Grove was
required to effect proper service of the Amended Petition in order for the
court’s jurisdiction to attach to the respondents. Indeed, Grove obtained
citations4 for respondents the American Cancer Society, Allianz Life
Insurance Company of North America, the American Arthritis Foundation,
the Commonwealth of Pennsylvania as parens patriae, and David Pankiw.5 A
certificate of service filed by counsel for the estate certifies that the citations
were duly served upon the attorneys for the named respondents. Grove,
however, was neither named as a respondent in the Amended Petition, nor
served with a citation. Accordingly, the Orphans’ Court never obtained
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4
Pursuant to section 764 of the PEF Code, “[j]urisdiction of the person shall
be obtained by citation to be awarded by the orphans’ court division upon
application of any party in interest.” 20 Pa.C.S.A. § 764.
5
Earlier in the proceedings, Grove had joined Pankiw as an additional
defendant to the original petition.
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personal jurisdiction over him with respect to the Amended Petition to Void,
which superseded the original Petition to Void. See id. Because Appellant
does not dispute that Grove (now, his estate) is an indispensable party,6 the
Orphans’ Court correctly dismissed the action for failure to join him as a
party.7
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/27/2016
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6
Notably absent from Appellant’s brief is any assertion that Grove’s estate is
not an indispensable party to this action. In fact, Appellant effectively
concedes this fact. Appellant’s brief states: “The fact that [Grove] became
the executor of the Estate and initiated the action seeking to recover the
Annuity proceeds for the Estate by invalidating the beneficiary designations
. . . potentially makes [Grove] liable under 20 Pa.C.S.A. § 5603(p)(3).”
Brief of Appellant, at 16. Appellant goes on to assert that “[b]y dismissing
the action, [Anna’s children] lose the right to have the court adjudicate
Anna’s known or probable intent and allocate the liability between the
agent and beneficiary[ pursuant to section 5603(p)(3)].” Id. at 17.
7
Because the Orphans’ Court properly dismissed this case for failure to join
an indispensable party, we need not address Appellant’s second claim.
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