In Re: J. Buncher Foundation ~ Appeal of: A. Rubinoff

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Jack Buncher Foundation :
:
: No. 306 C.D. 2019
Appeal of: Amy Rubinoff, : Argued: February 10, 2020
Caryn Rubinoff, Michael Rubinoff, :
and Daniel Rubinoff :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE J. ANDREW CROMPTON, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE BROBSON FILED: July 1, 2020
Amy Rubinoff, Caryn Rubinoff, Michael Rubinoff, and Daniel Rubinoff
(Appellants) appeal from an order of the Court of Common Pleas of Allegheny
County, Orphans’ Court Division (Orphans’ Court), dated February 12, 2019. The
Orphans’ Court denied Appellants’ Petition for Rule to Show Cause Why
Declaratory Judgment and Equitable Relief Should Not Be Granted (Petition). For
the reasons set forth below, we affirm the Orphans’ Court’s order.
I. BACKGROUND
The relevant background facts, which the Orphans’ Court found and/or the
parties do not appear to dispute, are as follows. Jack Buncher was a successful
Pittsburgh businessman, who, following the death of his brother, became the sole
shareholder of the Buncher Company (Company). Jack Buncher had 2 children,
Stephen Buncher and Bernita Buncher. Bernita Buncher married Richard Rubinoff
in 1958, but they later divorced in 1980. During their marriage, Bernita Buncher
and Richard Rubinoff had 4 children, the Appellants in this matter.
In 1974, Jack Buncher established the Buncher-Rubinoff Foundation, a
Pennsylvania charitable nonprofit corporation, which later became known as the
“Buncher Family Foundation” (Foundation). (Reproduced Record (R.R.)
at 71a-77a, 86a-87a.) As stated in the Foundation’s original Articles of
Incorporation, Jack Buncher created the Foundation “to receive, administer and
distribute property exclusively for religious, charitable, scientific, literary and
educational purposes.” (Id. at 72a.) The Foundation’s incorporators and original
members of its Board of Directors (Board) were Jack Buncher, Joanne Buncher, who
was Jack Buncher’s wife at the time, Bernita Buncher, and Richard Rubinoff.
(Id. at 73a-74a.) The Foundation’s original Articles of Incorporation also provided
that, in the event that the Foundation was dissolved, the Foundation’s remaining
assets were to “be distributed to or for the use of such corporations, trusts, funds or
other organizations, being exempt from federal income tax as organizations
described in Section 501(c)(3) of the Internal Revenue Code of 1954 [(Code),
26 U.S.C. § 501(c)(3)] . . . , as the Board . . . shall select.” (Id. at 76a-77a.) In
addition, pursuant to the Foundation’s original By-Laws, any future members of the
Board were required to be individuals related to Jack Buncher by blood or marriage,
if feasible. (Id. at 79a.)
On December 4, 1989, the Board, which was then comprised of Jack Buncher,
Joanne Buncher, and Bernita Buncher, held its annual meeting. (Id. at 2274a-85a.)
At the meeting, the Board voted unanimously to strike and replace the Foundation’s
existing By-Laws with new By-Laws. (Id. at 2275a.) Article III, Section 10 of the
new By-Laws provided, in relevant part, that: (1) any of Jack Buncher’s heirs, with
2
the exception of Stephen Buncher and his heirs, would be entitled to serve on the
Board; (2) all appointments to the Board were subject to Jack Buncher’s prior
approval or, in his absence, the prior approval of “the senior (oldest) Jack [] Buncher
heir then serving on the Board”; (3) Jack Buncher or the senior Buncher heir present
and serving on the Board was authorized to cast the majority vote on any issue voted
on at a meeting of the Board; and (4) Article III, Section 10 of the By-Laws could
not be amended without the approval of the senior Buncher family member.
(Id. at 2277a-78a.) Article X of the new By-Laws further solidified the mandate that
Article III, Section 10 of the By-Laws could not be altered, amended, or repealed
without the approval of the senior Buncher family member. (Id. at 2283a.) At the
December 4, 1989 meeting, the Board also approved Thomas Balestrieri
(Balestrieri), among others, to serve on the Board and elected Jack Buncher as the
Foundation’s Chairman of the Board/Chief Operating Officer, Balestrieri as one of
the Foundation’s Vice Presidents, Bernita Buncher as the Foundation’s Secretary
and Treasurer, and William Doring (Doring) as the Foundation’s Assistant
Treasurer. (Id. at 2284a-85a.) In addition, the minutes from the Board’s
December 4, 1989 meeting specifically provide that
it was [Jack Buncher’s] intention that a Buncher family
member would always be in control of the Board, and thus
in control of the Foundation. It was [Jack Buncher’s] hope
that the Buncher family and the Board would continue to
carry out the traditions of charitable giving that had been
established with the creation of the Foundation[.]
(Id. at 2285a.)
At a subsequent meeting held on June 14, 1990, the Board voted to make a
written statement prepared by Jack Buncher part of the Foundation’s records as a
philosophy for the future management of the Foundation. (Id. at 2288a.) The
statement set forth Jack Buncher’s personal thoughts and aspirations regarding the
3
Foundation’s charitable activities and the long-term preservation and maintenance
of the Foundation. (Id. at 2287a-88a.) In the statement, Jack Buncher memorialized
his intention to make “significant commitments to the United Jewish Federation, to
the American Jewish Joint Distribution Committee, and to the World Zionist
Organization for the principal purpose of continuing The Buncher Leadership
Program.” (Id. at 2292a.) Jack Buncher also expressed that if there came a time
when The Buncher Leadership Program became unworkable, the Board should
direct the assets of the Foundation to programs in support of Israel. (Id.) Thereafter,
on December 3, 1990, the Board’s Executive Committee appointed Doring and
Joseph Jackovic (Jackovic) to serve on the Board. (Orphans’ Ct. Op., Feb. 12, 2019,
at 4.)
On March 16, 1994, Jack Buncher, apparently as part of his estate plan,
executed a Fourth Restated and Amended Revocable Declaration of Trust, which
created the Jack G. Buncher Trust (Trust). (R.R. at 106a-39a.) Section 3.1(a) of the
Trust required the trustees to transfer the Company’s voting common stock to the
Foundation upon Jack Buncher’s death. (Id. at 109a.) Section 7.1 of the Trust
required the trustees to distribute the residue of the Trust to the Foundation, subject
to the directives set forth in Schedule B. (Id. at 116a.) In Schedule II of Schedule B,
Jack Buncher requested that, within 5 years of the date on which the Company’s
stock is transferred to the Foundation, the Board redistribute and retain the
Company’s stock as follows: (1) 16% to the United Jewish Federation of Pittsburgh;
(2) 8.5% to the American Jewish Joint Distribution Committee; (3) 8.5% to the
Zionist Organization of America; (4) 16% to the Riverview Center for Jewish
Seniors; (5) 16% to the Jewish Family and Children Service in Pittsburgh; and
(6) 35% to remain with the Foundation. (Id. at 136a-37a.) Jack Buncher further
4
requested in Schedule B of the Trust that the Board take into consideration his desire
to fund The Buncher Leadership Program, but also provided:
After [his death], the [t]rustees shall have broad
discretion, exercisable by them at any time and from time
to time, with respect to the identity of the charitable
recipients and the amounts, nature and character of
property distributed to each, including specifically the
powers to vary the percentages set forth in Schedule II[,]
to remove the entities specified in such Schedule in whole
or in part, to substitute or add other entities therefor or
decline to do the same; provided, however, that such
organizations shall be described in Section 501(c)(3) [of
the Code] and Section 509(a)(1), (2) or (3) of the [Code,
26 U.S.C. § 509(a)(1), (2) or (3).]
(Id. at 138a-39a.) The Trust also named Bernita Buncher, M.H. Levy, Balestrieri,
and Doring as successor trustees to serve upon Jack Buncher’s death.1 (Id. at 119a.)
On December 18, 1996, the Board, which was then comprised of Jack
Buncher, Bernita Buncher, Balestrieri, Doring, and Jackovic, held a meeting and
thereafter issued a unanimous written consent, whereby the Board amended
Article III, Section 10 of the Foundation’s By-Laws (1996 By-Laws) to change
“senior Buncher heir” to “Senior Buncher Descendent.” (Id. at 144a-45a.) As of
December 21, 1996, the effective date of the amendment, Article III, Section 10 of
the Foundation’s 1996 By-Laws, which remained substantially the same as when the
Board previously amended the By-Laws in December 1989, provided:
(a) Notwithstanding any other provision in the
By-Laws, any [descendant] of Jack G. Buncher, except
Stephen Buncher or his descendants, may be entitled to
serve on the Board. All appointments to the Board will be
subject to the prior approval of Jack G. Buncher, or in his
absence, subject to the prior approval of the Senior
1
The Trust also named Mellon Bank, N.A., as a successor corporate trustee, but Jack
Buncher later removed Mellon Bank, N.A., by an amendment to the Trust, dated August 15, 1996.
(R.R. at 119a, 140a.)
5
Buncher [Descendant] then serving on the Board. If no
Buncher [Descendant] is serving on the Board, then
Article III, except for this section, shall control.
(b) Notwithstanding anything to the contrary in the
By-Laws, Jack G. Buncher or the Senior Buncher
[Descendant] present and serving on the Board shall be
authorized to cast the majority vote on any issue wherein
there is a vote at a Board meeting, and he or she wishes to
cast a majority vote. The purpose of this authorization, to
cast a majority vote, is to insure that a Buncher family
member ([descendant] of Jack G. Buncher) may control
the direction and the activities of the Foundation
consistent with the purposes of the Foundation.
(c) Notwithstanding any other provision of the
By-Laws, this Section 10 of Article III may not be
amended without the approval of the Senior Buncher
[Descendant] on the Board. A Buncher family member
may be removed by the other [D]irectors upon a doctor’s
certificate of incompetence in the handling of the affairs
of the Foundation. If there is a time during which a
Buncher family member or members are unwilling or
unable to serve as Directors of the Foundation, this Section
of the By-Laws will be inoperative and will remain so until
such time as a Buncher family member is able and willing
to serve as a Director, at which time the then acting
Directors will be obligated to appoint the Buncher
[descendant] to the Board, which act will reestablish the
effectiveness of this Section.
(d) Senior Buncher Descendant shall mean the
eldest blood descendant of Jack G. Buncher, excluding
Stephen M. Buncher or his descendants.
(Id. (emphasis in original).)
Jack Buncher died in 2001. (Orphans’ Ct. Op., Feb. 12, 2019, at 5.)
Thereafter, the Foundation entered a transition period, during which time the Board
discussed various proposed amendments to the Foundation’s 1996 By-Laws, as well
as different charitable organizations to support. (Id. at 5-6.) During a transition
meeting held on July 30, 2003, Bernita Buncher announced that the Foundation
6
would align itself with 5 potential organizations: the Carnegie Libraries, Carnegie
Mellon University, the American Jewish Joint Distribution Committee, The
Pittsburgh Foundation, and the United Jewish Federation. (Id. at 5.) Thereafter, on
April 6, 2011, the Board, which was then comprised of Bernita Buncher, Doring,
Balestrieri, and Jackovic, held a special meeting for the purpose of reviewing,
discussing, and amending the Foundation’s Articles of Incorporation and
1996 By-Laws. (R.R. at 2313a.) At the meeting, the Board voted to: (1) amend the
Foundation’s Articles of Incorporation (2011 Articles) to, inter alia, change the
name of the Foundation to “The Jack Buncher Foundation”; and (2) amend the
Foundation’s 1996 By-Laws (2011 By-Laws). (Id. at 2313a-38a.) Bernita Buncher,
Doring, and Jackovic voted in favor of the 2011 Articles and the 2011 By-Laws,
while Balestrieri abstained. (Id. at 2314a-15a.)
Following the April 6, 2011 Board meeting, the relevant portions of the
Foundation’s 2011 By-Laws provided as follows. Article I, Section 1.02 of the
Foundation’s 2011 By-Laws, which set forth the purpose of the Foundation,
provided:
The [Foundation] is incorporated exclusively for religious,
charitable, scientific, testing for public safety, literary and
educational purposes, to foster national or international
amateur sports competition, and for the prevention of
cruelty to children and animals . . . [and] shall support
organizations and purposes described in Section 501(c)(3)
of the Code that promote[, inter alia,] . . . programs that
further the physical, educational and spiritual needs and
well-being of individuals, particularly including those that
provide care and services to the elderly and those that
serve individuals of the Jewish faith (including education
and healthcare in Israel)[.]
(Id. at 2323a.) Article I, Section 1.02 also contained language that prohibited its
amendment, revision, or restatement once Bernita Buncher was no longer a Director
7
of the Foundation and noted that it would govern the Foundation’s “grantmaking
activities throughout the duration of the [Foundation’s] existence, regardless of
whether [Bernita] Buncher [was] then serving as a Director.” (Id.) Article II,
Section 2.02 of the Foundation’s 2011 By-Laws granted Bernita Buncher a perpetual
term on the Board to serve as a Director of the Foundation until her death, incapacity,
or resignation and the sole power to elect and remove the remaining Directors.
(Id. at 2324a.) Following Bernita Buncher’s death, incapacity, or resignation as a
Director, Article II, Section 2.03 provided that Doring would succeed to Bernita
Buncher’s rights with respect to the appointment and removal of Directors. (Id.)
Article X, Section 10.01 of the Foundation’s 2011 By-Laws provided:
Within [5] years of the later to occur of the cessation of
[Bernita] Buncher’s tenure as a Director or the cessation
of [Doring’s] tenure as a Director, the [Foundation] shall
retain (i) the Voting Common Stock of the [Company] and
(ii) [10%] of the value of the assets of the [Foundation] not
consisting of interests in the [Company] and distribute the
remaining assets, consisting of all other interests in the
[Company], including Non-Voting Common and
Preferred Stock, and the remaining [90%] of
non-[Company] assets, to The Pittsburgh Foundation, or
its successor, provided it is then an organization described
in Section 501(c)(3) of the Code to be held in a fund for
the purposes set forth in [Article I,] Section 1.02.
(Id. at 2336a.)
Subsequently, on April 12, 2017, Appellants filed their Petition, seeking both
declaratory and equitable relief. In their Petition, Appellants requested that the
Orphans’ Court enter an order: (1) declaring the Foundation’s 2011 Articles to be
invalid; (2) reinstating a prior version of the Foundation’s Articles of Incorporation;
(3) declaring the Foundation’s 2011 By-Laws to be invalid; (4) reinstating a prior
version of the Foundation’s By-Laws; (5) removing Doring, Balestrieri, and
8
Jackovic as Directors of the Foundation; (6) appointing one of the Appellants, who
is both willing and able to serve, to the Board to serve as the Senior Buncher
Descendant; and (7) awarding attorneys’ fees and costs. Appellants argued that in
adopting the 2011 Articles and the 2011 By-Laws, Doring, Balestrieri, and Jackovic
breached their fiduciary duties, inter alia, by eliminating both the right of a
descendant of Jack Buncher to serve on the Foundation’s Board and the oversight of
a Buncher family member over the Foundation’s activities and by failing to act in
good faith and solely for the benefit of the Foundation and its beneficiaries rather
than their own self interests.2
Following a 9-day hearing, the Orphans’ Court issued an opinion and order,
denying Appellants’ requested relief while reserving ruling on the Foundation’s
request for an award of attorneys’ fees and costs. In so doing, the Orphans’ Court
concluded, inter alia, that Appellants had not proven that Doring, Balestrieri, or
Jackovic destroyed Jack Buncher’s intentions with respect to the Foundation or
otherwise breached their fiduciary duties by adopting the 2011 Articles or the
2011 By-Laws. The Orphans’ Court reasoned:
Having thoroughly reviewed the Trust document at issue
in this case . . . in conjunction with the By-Laws as
amended in 1996, the [Orphans’] Court finds that [Jack]
Buncher’s intentions are clearly stated in both of these
documents. Although the documents set forth a list of
charitable beneficiaries in Schedules B and II,
respectively, the Trust document states, without
2
Appellants also argued in their Petition that Doring, Balestrieri, and Jackovic breached
their fiduciary duties by exercising undue influence over Bernita Buncher given her lack of
business sophistication and deteriorating mental condition. On appeal to this Court, Appellants do
not appear to challenge the Orphans’ Court’s finding that Bernita Buncher “was capable of taking
care of her own financial and legal affairs, without being influenced by others to make decisions
that she did not want to make,” and, therefore, we do not discuss this argument in any further detail
in this opinion as it is not relevant to this appeal. (Orphans’ Ct. Op., Feb. 12, 2019, at 14.)
9
ambiguity, that the [t]rustees have “broad discretion”,
exercisable “at any time”, to identify the charitable
recipients and the amount, nature, and character of the
property granted to the recipients. Moreover, the
document specifically states that the [t]rustees may
remove recipients “in whole or in part” and substitute or
add other recipients, as long as the recipients are
[Section] 501(c)(3) organizations under the [Code]. Thus,
the action by the [t]rustees and the Directors of the
Foundation in designating new beneficiary organizations
was both consistent with [Jack] Buncher’s intent, as set
forth in both the Trust and the [1996] By-Laws, and
authorized by both the words of the [1996] By-Laws and
the terms of the Trust document.
[Appellants’] reliance on the minutes of
the 1989 Board meeting and [Jack] Buncher’s “Some
Personal Thoughts” Memo are misplaced. It is undisputed
that [Jack] Buncher stated at the 1989 Board meeting that
it was his intention to always have a Buncher family
member on the Board of the Foundation. That being said,
[Jack] Buncher, along with the other Board members,
enacted the 1996 amendments [to the By-Laws] that
provided that the “senior” Buncher heir (later changed to
descendant) serving on the Board was authorized to cast
the majority vote on any issue and the [1996] By-Laws
regarding Directors could only be amended upon approval
of the senior Buncher heir (later changed to descendant)
on the Board. These two provisions gave [Bernita]
Buncher, who was the “senior heir/descendant” on the
Board, majority control and the specific authority to
amend the [1996] By-Laws in any fashion. Taking the
authority she was given, [Bernita] Buncher, with the vote
of [2] of the [3] other members of the Board, properly
enacted the 2011 By-Laws.
(Orphans’ Ct. Op., Feb. 12, 2019, at 10-11.)
Appellants appealed the Orphans’ Court’s decision and order to this Court,
and the Orphans’ Court directed Appellants to file a concise statement of errors
complained of on appeal pursuant to Pennsylvania Rule of Appellate Procedure
(Rule) 1925. In its Rule 1925(a) opinion, the Orphans’ Court further reasoned:
10
[Appellants] first claim is that the [Orphans’] Court
erred in concluding that the [2011 Articles and
2011 By-Laws] were duly adopted. . . . [O]n
April 6, 2011, after several years of discussions and draft
by-laws amendments, Bernita Buncher, [Doring], and
[Jackovic] voted in favor of the amendments, with
[Balestrieri] abstaining. As they were the [4] members of
the Board of the [Foundation], . . . they had the authority
to enact amendments to the [1996 By-Laws]. [Balestrieri]
abstained because he believed that there should be more
members of the senior management of the [Company] on
the Board and he objected to anyone, other than [Bernita]
Buncher, having a majority vote on the Board, due to his
belief that no one, other than [Bernita] Buncher, could
replace [Jack] Buncher. As the vote was [3] in favor of
the amendments and [1] abstention, the [m]otion to amend
the [1996 By-Laws] passed and the amendments were
duly adopted.
[Appellants’] second claim is that the [Orphans’]
Court erred in holding that the Directors of the
Foundation did not violate their fiduciary duties in
adopting the 2011 amendments. As [D]irectors of [the]
Foundation, the Board of Directors have fiduciary duties,
including a duty of care and loyalty to the Foundation’s
mission and goals. By enacting the 2011 amendments, the
Directors acted completely properly and demonstrated
their loyalty to the future of the Foundation. Specifically,
the purpose clause was revised to state as follows: “The
[Foundation] is incorporated exclusively for religious,
charitable, scientific, testing for public safety, literary and
educational purposes, to foster national or international
amateur sports, competition, and for the prevention of
cruelty to children and animals . . . [.]” Further, the
amendments provide for [Bernita] Buncher, who is the
“Senior Buncher Descendant”, to remain on the Board
until her death or incapacity, and then there is a provision
for a much-needed succession plan. The Directors’ desire
to cement the future of the Foundation by ensuring that
long-time members of the Board (i.e., [Bernita] Buncher,
and then [Doring]), who have irreplaceable institutional
knowledge of the mission of the Foundation, remain on the
11
Board is definitive evidence of their loyalty to the
Foundation.
[Appellants’] third claim is that the [Orphans’]
Court erred in not finding that Jack Buncher’s donative
intent was “destroyed” by the actions of [Doring,
Balestrieri, and Jackovic]. Nothing could be further from
the truth. In fact, [Jack] Buncher’s intentions, which are
set forth clearly in the Trust document and the
1996 amendments to the By-Laws, were carefully
considered by [Doring, Balestrieri, and Jackovic].
Although a list of charitable beneficiaries is set forth in the
Trust, the document states, without ambiguity, that the
[t]rustees have “broad discretion”, exercisable “at any
time”, to identify the charitable recipients and the amount,
nature, and character of the property granted to the
recipients. Thus, the actions by the [t]rustees and the
Directors of the Foundation in designating new
beneficiaries was consistent with [Jack] Buncher’s
intentions. Interestingly, . . . although there has been
heavy emphasis by [Appellants] with regard to [Jack]
Buncher’s intent to benefit members of the Jewish faith
and “Jewish causes”, the first time the words “Jewish
faith” are found in either the Articles of Incorporation or
the By-Laws of the Foundation is in [Article I,
Section] 1.02 of the 2011 By-Laws, the enactment of
which is being questioned by [Appellants]. Thus, not only
has [Jack] Buncher’s donative intent not been destroyed,
it has been sustained and enhanced by the actions of
[Doring, Balestrieri, and Jackovic].
(Orphans’ Ct. Op., Apr. 23, 2019, at 2-4.)
II. ARGUMENTS ON APPEAL
On appeal to this Court,3 Appellants argue that the Orphans’ Court erred by
not invalidating the Foundation’s 2011 Articles and 2011 By-Laws because: (1) by
adopting the 2011 Articles and the 2011 By-Laws, Bernita Buncher, Doring, and
3
“On appeal from an order of the Orphans’ Court, this Court’s scope of review is limited
to determining whether the record is free from legal error and whether the court’s factual findings
are supported by the evidence.” In re Estate of Berry, 921 A.2d 1261, 1263 n.1 (Pa. Cmwlth.),
appeal denied, 934 A.2d 1279 (Pa. 2007).
12
Jackovic breached the duties of care, obedience, and loyalty that they owed to the
Foundation; and (2) the 2011 Articles and the 2011 By-Laws constituted
fundamental changes with respect to the administration of the Foundation and the
distribution of the Foundation’s assets—i.e., the objects for which the assets of the
Foundation were donated—that required prior approval from the Orphans’ Court.4
III. DISCUSSION
A. Breach of Fiduciary Duty
Appellants argue that the Orphans’ Court erred by not invalidating the
Foundation’s 2011 Articles and 2011 By-Laws because, by adopting the
2011 Articles and the 2011 By-Laws, Bernita Buncher, Doring, and Jackovic
breached the duties of care, obedience, and loyalty that they owed to the
Foundation.5 More specifically, Appellants contend that, pursuant to Article X of
the 1996 By-Laws, any amendment to Article III, Section 10 of the 1996 By-Laws—
i.e., the provisions preserving the Buncher family’s control over the Foundation—
required not only the approval of the Senior Buncher Descendant but also the
4
By order dated April 5, 2019, this Court noted that the Orphans’ Court’s order did not
dispose of all of the parties’ claims given that the Foundation’s request for attorneys’ fees remained
outstanding and ordered the parties to address the appealability of the Orphans’ Court’s order in
their principal briefs on the merits. After reviewing the parties’ briefs and hearing the parties’
arguments on the appealability issue, we are satisfied that, although the Orphans’ Court’s order is
not immediately appealable as a final order under Pa. R.A.P. 341, this Court has jurisdiction to
hear this appeal under Pa. R.A.P. 342(a).
5
Before the Orphans’ Court, it appears that Appellants argued only that Doring, Balestrieri,
and Jackovic breached their fiduciary duties to the Foundation by adopting the 2011 Articles
and 2011 By-Laws. In other words, Appellants did not argue or suggest that Bernita Buncher
breached her fiduciary duties to the Foundation. Rather, Appellants contended that Doring
exercised undue influence over Bernita Buncher. In this appeal, Appellants have abandoned their
argument that Bernita Buncher was the subject of undue influence and, instead, argue that Bernita
Buncher, Doring, and Jackovic, the three Directors that voted in favor of the 2011 Articles and
the 2011 By-Laws, breached their fiduciary duties to the Foundation.
13
affirmative vote of a majority of the Foundation’s Directors then in office. In other
words, Appellants suggest that the provision set forth in Article III, Section 10(b) of
the 1996 By-Laws that permits the Senior Buncher Descendant to cast a majority
vote does not apply to an amendment to Article III, Section 10, because Article III,
Section 10(b) cannot override the more specific language set forth in Article X and,
even assuming it could, the record does not reflect that Bernita Buncher, the Senior
Buncher Descendant, exercised her ability to cast a majority vote to approve the
adoption of the Foundation’s 2011 By-Laws. Appellants further contend that, in
order to determine Jack Buncher’s donative intent properly, the Orphans’ Court was
required to look beyond the Trust and 1996 By-Laws “to the facts and circumstances
of [Jack] Buncher’s life, the adopted purposes of the Foundation as reflected in its
governing instruments, Board resolutions[] and other corporate documents, the
Foundation’s history of giving, and [Jack] Buncher’s testamentary documents,”
which the Orphans’ Court failed to do. (Appellants’ Br. at 57.)
Appellants also contend that, in addition to the customary duties of care,
loyalty, and obedience applicable to all directors of nonprofit corporations, Bernita
Buncher, Doring, and Jackovic also owed a heightened duty to the Foundation to act
as a trustee in their administration of the Foundation’s assets. Appellants argue that
Bernita Buncher, Doring, and Jackovic breached these fiduciary duties when they
voted to adopt the Foundation’s 2011 Articles and 2011 By-Laws because:
(1) Bernita Buncher mistook the powers granted to her as the Senior Buncher
Descendant as a basis to change the fundamental structure and purpose of the
Foundation without any consideration of Jack Buncher’s intentions for the
Foundation; (2) Doring engaged in self-dealing given that the Foundation’s
2011 By-Laws grant him “the ability to remove any directors without cause,
14
effectively making him the sole decision-maker on all Foundation matters, including
grants[,] enable him to transfer the Foundation’s assets to a donor-advised fund that
he or his family can direct[,] and cement[] his control of the Company that employs
him and his son”; and (3) Jackovic failed to exercise any independent judgment—
i.e., he did not consider the reasons for the amendments or Jack Buncher’s
intentions—but instead voted in favor of the adoption of the 2011 Articles
and 2011 By-Laws simply because he thought Bernita Buncher wanted him to do
so. (Appellants’ Br. at 38.) In sum, Appellants contend that, given the need for a
majority vote in favor of the adoption of the Foundation’s 2011 Articles
and 2011 By-Laws and Balestrieri’s abstention from such vote, even if only one of
Bernita Buncher, Doring, or Jackovic breached their fiduciary duties to the
Foundation, the 2011 Articles and 2011 By-Laws must be invalidated.6
In response, the Foundation and Doring7 argue that the Orphans’ Court
properly concluded that Bernita Buncher, Doring, and Jackovic fulfilled their
fiduciary duties to the Foundation when they voted in favor of the adoption of the
2011 Articles and 2011 By-Laws. More specifically, the Foundation and Doring
contend that the Orphans’ Court properly ascertained Jack Buncher’s intent from the
6
In their brief, Appellants spend a considerable amount of time suggesting that the
Orphans’ Court’s opinions in this matter—i.e., the February 12, 2019 opinion issued at the
conclusion of the 9-day hearing and the Rule 1925(a) opinion issued on April 23, 2019, in response
to this appeal—are internally inconsistent and contradictory, specifically related to the issue of
whether Bernita Buncher was authorized to cast a majority vote to adopt the 2011 By-Laws. We
have reviewed both of the Orphans’ Court’s opinions, and we are satisfied that the Orphans’
Court’s opinions are not internally inconsistent or contradictory. The Orphans’ Court issued the
opinions at different stages of the proceedings in response to arguments presented by Appellants
at the time. To the extent that the subject matter or the Orphans’ Court’s rationale may differ, we
view such difference simply as a response to Appellants’ arguments.
7
While Doring, Balestrieri, Jackovic, and the Foundation were named as respondents
before the Orphans’ Court, based on our review of the docket in this matter, it appears that only
the Foundation and Doring have filed a brief in opposition to Appellants’ appeal.
15
“four corners” of the Trust and the 1996 By-Laws because both documents are clear
and unambiguous. The Foundation and Doring argue that the Trust clearly and
unambiguously provides that the trustees for the Trust had “broad discretion” to
change the charitable beneficiaries identified on Schedule II of Schedule B of the
Trust. The Foundation and Doring also argue that the 1996 By-Laws clearly and
unambiguously provide that Bernita Buncher herself, as the Senior Buncher
Descendant on the Board following Jack Buncher’s death, had the authority to alter
and amend Article III, Section 10 of the 1996 By-Laws. The Foundation and Doring
suggest that the Senior Buncher Descendant’s authority to cast the majority vote on
any issue is not in any way restricted by Article X of the 1996 By-Laws, because
Article III, Section 10(b) specifically provides that the Senior Buncher Descendant
is authorized to cast a majority vote “[n]otwithstanding anything to the contrary in
the [1996] By-Laws.” They also suggest that the 1996 By-Laws did not require
Bernita Buncher to expressly state that she was exercising her right to cast the
majority vote on the adoption of the 2011 Articles and 2011 By-Laws. The
Foundation and Doring further contend that, given that Jack Buncher’s testamentary
intent is clearly and unambiguously set forth within the four corners of the Trust and
the 1996 By-Laws, the Orphans’ Court properly restrained itself from considering
any statements of Jack Buncher’s intentions as set forth in the minutes from the
Board’s December 4, 1989 meeting and Jack Buncher’s written statement that was
made part of the Foundation’s records at the time of the Board’s June 14, 1990
meeting. The Foundation and Doring also contend that, contrary to Appellants’
arguments, Bernita Buncher, Doring, and Jackovic were not subject to the
heightened duty to act as a trustee in their administration of the Foundation’s assets,
and that the Orphans’ Court properly determined that Bernita Buncher, Doring, and
16
Jackovic did not violate the fiduciary duties that they did owe to the Foundation by
voting to adopt the 2011 Articles and 2011 By-Laws.
The Commonwealth of Pennsylvania (Commonwealth) argues that the
Orphans’ Court properly concluded that Bernita Buncher, Doring, and Jackovic did
not breach their fiduciary duties when they voted in favor of the adoption of
the 2011 Articles and 2011 By-Laws because Article III, Section 10 and Article X of
the Foundation’s 1996 By-Laws “unambiguously authorized the Board to” enact
the 2011 Articles and 2011 By-Laws. (Commonwealth’s Br. at 21-22.) The
Commonwealth argues further that, given that the 2011 Articles and 2011 By-Laws
were enacted “in conformity with the unambiguous structural safeguards that Jack
[Buncher] had established,” the Orphans’ Court properly concluded that the
2011 Articles and 2011 By-Laws should not have been invalidated.
(Commonwealth’s Br. at 27.)
A director of a nonprofit corporation stands in a fiduciary relation to the
corporation and is required to perform his/her duties “in good faith, in a manner
he[/she] reasonably believes to be in the best interests of the corporation and with
such care, including reasonable inquiry, skill and diligence, as a person of ordinary
prudence would use under similar circumstances.” Section 5712 of the Nonprofit
Corporation Law of 1988 (Law), 15 Pa. C.S. § 5712. In addition to this duty of care,
a director of a nonprofit corporation also has a duty of loyalty and obedience.
Cmwlth. by Kane v. New Foundations, Inc., 182 A.3d 1059, 1067
(Pa. Cmwlth. 2018) (New Foundations). “The duty of loyalty requires that [a]
corporate director[] devote [himself/herself] to corporate affairs with a view to
promote the common interests and not only [his/her] own, and that [he/she] cannot
directly or indirectly utilize [his/her] position to obtain any personal profit or
17
advantage.” Id. Section 5728(a) of the Law, however, sets forth certain
circumstances under which an interested director may engage in permissible
self-dealing:
A contract or transaction between a nonprofit corporation
and one or more of its directors . . . shall not be void or
voidable solely for that reason, or solely because the
director . . . is present at or participates in the meeting of
the board of directors that authorizes the contract or
transaction, or solely because the vote of the director or
officer is counted for that purpose, if:
(1) the material facts as to the relationship or
interest and as to the contract or transaction are
disclosed or are known to the board of directors and
the board authorizes the contract or transaction by
the affirmative votes of a majority of the
disinterested directors even though the disinterested
directors are less than a quorum;
(2) the material facts as to the director’s . . .
relationship or interest and as to the contract or
transaction are disclosed or are known to the
members entitled to vote thereon, if any, and the
contract or transaction is specifically approved in
good faith by vote of those members; or
(3) the contract or transaction is fair as to the
corporation as of the time it is authorized, approved
or ratified by the board of directors or the members.
15 Pa. C.S. § 5728(a). The duty of obedience, as set forth in Section 5545 of the
Law,8 “requires that the director’s decisions to expend funds substantively further
the purpose for which the nonprofit was organized and not to any of its members,
directors[,] or officers of the corporation.” New Foundations, 182 A.3d at 1068.
Before we can address whether the Orphans’ Court erred by failing to
conclude that Bernita Buncher, Doring, and Jackovic breached their fiduciary duties
8
15 Pa. C.S. § 5545.
18
to the Foundation, we must first consider Appellants’ proposition that Bernita
Buncher, Doring, and Jackovic were subject not only to the customary duties of care,
loyalty, and obedience applicable to all directors of nonprofit corporations, but also
to the heightened duty to act as a trustee in their administration of the Foundation’s
assets. In support of their proposition, Appellants direct our attention to this Court’s
decision in New Foundations. Appellants contend that, in New Foundations, this
Court confirmed that, pursuant to Section 5547(a) of the Law,9 trust principles apply
to all directors of nonprofit corporations.
Appellants have grossly mischaracterized this Court’s analysis and holding in
New Foundations. In New Foundations, we considered the issue of “whether the
actions of directors of nonprofits formed for charitable purposes are governed by the
same standard as other nonprofit directors, or whether [Section 5547(a) of the Law]
deems all the charitable assets held ‘in trust,’ making those directors’ standard of
care the same as trustees of a charitable trust.” New Foundations, 182 A.3d at 1070.
We noted that “[t]he answer to this question is important because if all the assets are
held in trust, then trust principles apply to directors of nonprofits[, and, u]nlike
9
15 Pa. C.S. § 5547(a). Section 5547(a) of the Law provides:
Every nonprofit corporation incorporated for a charitable purpose or
purposes may take, receive and hold such real and personal property
as may be given, devised to, or otherwise vested in such corporation,
in trust, for the purpose or purposes set forth in its articles. The
board of directors or other body of the corporation shall, as trustees
of such property, be held to the same degree of responsibility and
accountability as if not incorporated, unless a less[er] degree or a
particular degree of responsibility and accountability is prescribed
in the trust instrument, or unless the board of directors or such other
body remain under the control of the members of the corporation or
third persons who retain the right to direct, and do direct, the actions
of the board or other body as to the use of the trust property from
time to time.
19
[Section 5728 of the Law], which permits self-dealing in certain circumstances,
self-dealing is much more proscribed when involving charitable assets.”
Id. at 1070-71. After performing a textual analysis of the language set forth in
Section 5547(a) of the Law, we concluded that
a director of a nonprofit charitable corporation does not
have the equivalent obligation of a trustee but the director,
when exercising his or her fiduciary duties, must take into
consideration what is “in the best interests” of the
corporation. This includes acting with due care, including
reasonable inquiry, skill and diligence as a person of
ordinary prudence would use under similar circumstances.
The director must also take into consideration that the
primary purpose is to advance the charitable purposes of
the corporation.
Id. at 1074 (emphasis added). In reaching this conclusion, we specifically noted that
“if the General Assembly wanted trust principles to apply to all assets committed to
the charitable purpose, it would have said so, just like it said so with regard to [the]
diversion of charitable assets” in Section 5547(b) of the Law.10 Id. For these
reasons, we simply cannot agree with Appellants’ proposition that, pursuant to our
decision in New Foundations, Bernita Buncher, Doring, and Jackovic were subject,
not only to the customary duties of care, loyalty, and obedience applicable to all
directors of nonprofit corporations, but also to the heightened duty to act as a trustee
in their administration of the Foundation’s assets.11
10
15 Pa. C.S. § 5547(b).
11
Following oral argument, Appellants directed our attention to our more recent unreported
decision in In re: Independent Fire Co. No. 1 (Pa. Cmwlth., No. 1489 C.D. 2018, filed
Feb. 5, 2020) (Independent Fire). Appellants contend that our decision in Independent Fire
affirmed the continued vitality and importance that a charitable nonprofit corporation’s assets are
held in trust and that the fiduciary duties of the directors of such nonprofit corporation are
established by trust principles, not corporate law principles. Appellants have again
mischaracterized this Court’s analysis and holding. In Independent Fire, the Commonwealth
20
sought to have a charitable nonprofit corporation’s assets distributed to a separate entity pursuant
to the cy pres doctrine. Independent Fire, slip op. at 1-3. In support thereof, the Commonwealth
argued, inter alia, that, pursuant to Section 5547(a) of the Law, all of the nonprofit corporation’s
assets were held in trust. Id., slip op. at 13-14. In rejecting the Commonwealth’s argument, we
explained:
While the doctrine of cy pres presupposes (above all else) the
existence of a “trust,” the Commonwealth’s argument rests on the
faulty premise that all of the assets and property that [the nonprofit
corporation] owns are, per se, placed into a “trust.” In [New
Foundations], . . . this Court concluded as much. In that decision,
we analyzed Section 5547(a) of the [Law] to determine whether the
board of directors of nonprofits were acting as trustees with respect
to trust property or as a corporate fiduciary concerning property that
was not held in trust. We observed that resolution of this issue
necessitated an examination of what assets were held in trust by the
nonprofits in order to decide the applicable standard to be imposed
upon the board and whether trust principles or corporate law
principles controlled the board’s decision-making.
In [New Foundations], the Commonwealth argued that
Section 5547(a) of the [Law] “means that all assets of the
[nonprofits], whether they be in cash or other personalty or realty,
are imbued with the corporations’ charitable purposes and, as such,
are held in trust for the benefit of the public at large.” The
Commonwealth further maintained that Section 5547(a)
“encompasses all the assets of a nonprofit corporation formed for
charitable purposes, not only assets that have been expressly
donated.” This Court, however, rejected the Commonwealth’s
assertions. . . .
. . . [W]e pointed out that in Section 5547(b) of the [Law],
the General Assembly specifically stated that the doctrine of cy pres
applies where a nonprofit “diverts” any of its assets, whether it be in
the event of voluntary dissolution, involuntary liquidation and
dissolution, or a general asset transfer. However, as explained by
this Court, the General Assembly omitted the doctrine from
Section 5547(a). Accordingly, this Court, drawing a distinction
between assets that a nonprofit receives from a third party and assets
that a nonprofit seeks to transfer to a third party, concluded that “if
the General Assembly wanted trust principles to apply to all assets
21
With these principles regarding the fiduciary duties of directors of charitable
nonprofit corporations in mind, we now consider whether the Orphans’ Court erred
by failing to conclude that Bernita Buncher, Doring, and Jackovic breached their
fiduciary duties to the Foundation by voting in favor of the adoption of the
2011 Articles and 2011 By-Laws. The crux of Appellants’ argument appears to be
that Bernita Buncher, Doring, and Jackovic breached their fiduciary duties to the
Foundation because they did not consider Jack Buncher’s wishes and intentions for
committed to the charitable purpose, it would have said so, just like
it said so with regard to diversion of charitable assets.”
Pursuant to [New Foundations], Section 5547(a) denotes
that a nonprofit holds in “trust” only those assets or property that
were “given, devised to, or ... vested” in it from an outside source.
Or, phrased differently, a nonprofit holds assets or property in
“trust” when the outside source “donated[,] granted, or devised” the
assets or property to the nonprofit, including when the outside
source commits assets pursuant to an express trust. . . . Ultimately,
it is these types of assets, or, more precisely, the manner in which
these assets are transferred and/or otherwise devoted to a nonprofit,
that potentially renders them subject to the doctrine of cy pres.
However, all other assets owned by a nonprofit, which do not fall
within this general category, cannot be effectively seized and
transferred to another nonprofit pursuant to the legal concept of cy
pres, unless the nonprofit itself has taken its assets and created its
own charitable trust for those assets, or the Commonwealth secures
involuntary dissolution of the nonprofit. Succinctly put, and
contrary to the overall thrust of the Commonwealth’s argument, a
charitable nonprofit corporation is not synonymous with a charitable
trust and the two are not one and the same.
Id., slip op. at 14-18 (footnotes omitted) (citations omitted). In sum, in Independent Fire, we did
not in any way discuss or consider whether a director of a charitable nonprofit corporation is, in
addition to the fiduciary duties applicable to the directors of all nonprofit corporations, subject to
the heightened duties of a trustee. Rather, we considered the limited issue of whether our decision
in New Foundations established that all assets of a charitable trust are held in trust such that the
assets would be subject to the doctrine of cy pres. As a result, our decision in Independent Fire
has no applicability to the issues presented in this case.
22
the Foundation—i.e., that the Foundation would always be controlled by his
descendants, would focus primarily on Jewish charities, and would exist
indefinitely—as expressed in, inter alia, the minutes of the Board’s
December 4, 1989 meeting and Jack Buncher’s written statement that was made part
of the Foundation’s records at the time of the Board’s June 14, 1990 meeting. We
will address each of Jack Buncher’s alleged wishes and intentions for the Foundation
separately below.
First, while it may be undisputed that Jack Buncher expressed his hope and
intention that a Buncher family member would always be in control of the
Foundation, it is also undisputed that Jack Buncher, along with the other members
of the Board, enacted the 1996 By-Laws, which specifically authorized the Board to
amend or remove Article III, Section 10 with the approval of the Senior Buncher
Descendant. Jack Buncher and the rest of the Board could have completely restricted
the Board’s ability to amend or remove Article III, Section 10 of the 1996 By-Laws,
but they did not do so. Rather, Jack Buncher and the rest of the Board left the
decision to amend or remove Article III, Section 10 of the 1996 By-Laws to the
Board with the approval of the Senior Buncher Descendant. We simply cannot see
how Bernita Buncher, Doring, and Jackovic could have breached their fiduciary
duties to the Foundation by removing the Senior Buncher Descendant position on
the Board when the 1996 By-Laws permitted them to do so.
Second, there is no evidence of record to suggest that Bernita Buncher,
Doring, and Jackovic ignored and/or destroyed Jack Buncher’s donative intent with
respect to the focus of the Foundation’s charitable giving. In fact, quite the opposite
is true. In March 1994, approximately 4 years after his personal thoughts and
aspirations regarding his intended support of certain Jewish organizations and
23
programs were made part of the Foundation’s records, Jack Buncher executed the
Fourth Restated and Amended Revocable Declaration of Trust for the Trust.
In Schedule II of Schedule B of the Trust, Jack Buncher requested that, within
5 years of the date on which the Company’s stock is transferred to the Foundation,
the Board redistribute a portion of the Company’s stock to certain enumerated
Jewish organizations. (R.R. at 136a-37a.) Despite this enumeration of specific
Jewish organizations, however, Jack Buncher granted the trustees “broad discretion”
to remove and/or replace those organizations. (Id. at 138a-39a.) In selecting the
Carnegie Libraries, Carnegie Mellon University, the American Jewish Joint
Distribution Committee, the Pittsburgh Foundation, and the United Jewish
Federation as organizations with which the Foundation would align, Bernita
Buncher did not eliminate support for Jewish organizations from the Foundation’s
charitable giving; she simply exercised the discretion given to her by Jack Buncher
as a trustee for the Trust and a member of the Board while also continuing the
Foundation’s support of certain Jewish organizations.
In fact, Jack Buncher specifically referenced the United Jewish Federation and
the American Jewish Joint Distribution Committee on Schedule II of Schedule B of
the Trust. (Id. at 137a.) It is also important to note that Article I, Section 1.02 of the
2011 By-Laws indicates that the Foundation was incorporated to support, inter alia,
“programs that further the physical, educational and spiritual needs and well-being
of individuals, particularly including those that provide care and services to the
elderly and those that serve individuals of the Jewish faith (including education and
healthcare in Israel).” (Id. at 2323a.) This appears to be the first time that the Board
specifically referenced the Jewish faith in the Foundation’s governing documents.
(Id.)
24
Given that the Board continued the Foundation’s support of Jewish
organizations following Jack Buncher’s death and exercised the discretion given to
it by Jack Buncher in its selection of supporting organizations, we do not believe
that Bernita Buncher, Doring, and Jackovic ignored and/or destroyed Jack Buncher’s
donative intent with respect to the focus of the Foundation’s charitable giving, and,
therefore, we cannot conclude that Bernita Buncher, Doring, and Jackovic breached
their fiduciary duties by adopting the 2011 Articles and 2011 By-Laws, specifically
those provisions that establish the Foundation’s purpose and the focus of the
Foundation’s charitable giving.
Third, contrary to Appellants’ assertions, the 2011 By-Laws do not effectively
put an end to the Foundation. Article X, Section 10.01 essentially provides a
framework for the continuation of both the Foundation and its charitable purposes
following Bernita Buncher’s and Doring’s tenure as Directors of the Foundation.
Article X, Section 10.01 provides that, within 5 years of the cessation of Bernita
Buncher’s or Doring’s tenure as a Director of the Foundation, whichever occurs
later, the Company’s Voting Common Stock and 10% of the value of the
Foundation’s non-Company assets would remain with the Foundation.
(R.R. at 2336a.) The Foundation’s remaining assets, including the Company’s
Non-Voting Common and Preferred Stock and 90% of the value of the Foundation’s
non-Company assets, would be transferred to The Pittsburgh Foundation “to be held
in a fund for the purposes set forth in [Article I,] Section 1.02” of the
Foundation’s 2011 By-Laws. (Id.) In other words, not only would the Foundation
continue with its retention of certain assets, but its charitable purposes would
continue to be fulfilled by The Pittsburgh Foundation. We do not view Article X,
Section 10.01 of the 2011 By-Laws as effectively putting an end to the Foundation’s
25
existence or purposes, and, therefore, we cannot conclude that Bernita Buncher,
Doring, and Jackovic breached their fiduciary duties to the Foundation by adopting
the 2011 By-Laws, specifically Article X, Section 10.01.
Generally speaking, it is also important to recognize that the Board’s decision
to adopt the 2011 Articles and 2011 By-Laws was not a decision that the Board made
overnight; rather, the Board considered potential changes to the Foundation’s
governing documents over a period of approximately 10 years while it was going
through a period of transition. Additionally, we cannot agree with Appellants that
Doring somehow engaged in impermissible self-dealing when he voted in favor of
the adoption of the 2011 Articles and 2011 By-Laws. Just because Doring will
succeed to Bernita Buncher’s rights with respect to the appointment and removal of
directors of the Foundation upon Bernita Buncher’s death, incapacity, or resignation
does not mean that Doring will somehow receive a personal benefit or advantage as
the successor to Bernita Buncher. If and when he succeeds to Bernita Buncher’s
position on the Board, Doring will be required to exercise his authority in accordance
with the Foundation’s stated purposes. For all of the above-stated reasons, we
cannot conclude that the Orphans’ Court erred by failing to determine that Bernita
Buncher, Doring, and/or Jackovic breached the duties of care, obedience, and loyalty
that they owed to the Foundation when they voted in favor of the adoption of the
2011 Articles and 2011 By-Laws.12
12
Given our conclusion that the Orphans’ Court did not err by failing to conclude that
Bernita Buncher, Doring, and Jackovic breached their fiduciary duties to the Foundation by
adopting the 2011 Articles and 2011 By-Laws, we need not consider whether Bernita Buncher was
permitted to cast the majority vote to amend Article III, Section 10 of the 1996 By-Laws, because
a majority of the Board voted in favor of the adoption of the 2011 By-Laws—i.e., Bernita
Buncher’s majority vote, even if permitted, was not needed to adopt the 2011 By-Laws.
26
B. Fundamental Changes
Appellants argue that the Orphans’ Court erred by not invalidating the
Foundation’s 2011 Articles and 2011 By-Laws because the 2011 Articles and
the 2011 By-Laws constituted fundamental changes with respect to the
administration of the Foundation and the distribution of the Foundation’s assets—
i.e., the objects for which the assets of the Foundation were donated—that required
prior approval from the Orphans’ Court. More specifically, Appellants contend that
the fundamental changes embodied in the Foundation’s 2011 Articles
and 2011 By-Laws—i.e., the elimination of “the method of selection of directors
dictated by Jack Buncher, namely, that they be selected in part from the members of
his family,” the change of the Foundation’s purpose to “formally end the Jewish
focus to its giving,” and the “end to the Foundation via the mandated transfer of
substantially all of its assets in the near future”—could not be undertaken without
the Orphans’ Court’s approval. (Appellants’ Br. at 45.)
In response, the Foundation, Doring and the Commonwealth argue that the
2011 Articles and 2011 By-Laws did not contain any fundamental changes that
would have required the prior approval of the Orphans’ Court because: (1) the
alteration, amendment, or repeal of Article III, Section 10 was expressly permitted
by the 1996 By-Laws; (2) the amendments set forth in the 2011 Articles and
2011 By-Laws do not change and are entirely consistent with the original purposes
of the Foundation and the broad discretionary powers granted to the trustees under
the Trust; and (3) the 2011 By-Laws do not bring an end to the Foundation, but
rather, create a necessary succession plan that is consistent with Jack Buncher’s
donative intent.
27
Pursuant to Section 5547(b) of the Law, “[p]roperty committed to charitable
purposes shall not . . . be diverted from the objects to which it was donated, granted
or devised, unless and until the board of directors . . . obtains” the Orphans’ Court’s
approval. For the reasons explained more fully above, the Board’s adoption of
the 2011 Articles and 2011 By-Laws does not amount to a fundamental change
under Section 5547(b) that would require the Orphans’ Court’s prior approval.
First, the removal of Article III, Section 10 from the Foundation’s
1996 By-Laws—more specifically, the removal of the Senior Buncher Descendant
position on the Board—was expressly permitted by the 1996 By-Laws, provided that
the Senior Buncher Descendant, in this case Bernita Buncher, agreed to its removal,
which she did when she voted in favor of the adoption of the 2011 By-Laws. Second,
the amendments to the Foundation’s stated purposes did not end the Jewish focus of
the Foundation’s charitable giving, rather, such amendments continued the
Foundation’s support of Jewish organizations and programs, as Article I,
Section 1.01 of the Foundation’s 2011 By-Laws specifically references the Jewish
faith. Third, Article X, Section 10.01 of the Foundation’s 2011 By-Laws did not
effectively put an end to the Foundation, because, even when Article X,
Section 10.01 is implemented, the Foundation will continue in existence with its
retention of certain assets and The Pittsburgh Foundation will continue to fulfill the
Foundation’s charitable purposes. In other words, even with the transfer of certain
of the Foundation’s assets to The Pittsburgh Foundation, the Foundation’s assets will
not “be diverted from the objects to which [they were] donated, granted or devised”
because The Pittsburgh Foundation will be required to adhere to the Foundation’s
stated purposes in its administration of the Foundation’s assets. See Section 5547(b)
of the Law.
28
IV. CONCLUSION
For all of these reasons, we cannot conclude that the Orphans’ Court erred by
not invalidating the Foundation’s 2011 Articles and 2011 By-Laws. Accordingly,
we affirm the Orphans’ Court’s order.
P. KEVIN BROBSON, Judge
Judge Fizzano Cannon did not participate in the decision of this case.
29
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Jack Buncher Foundation :
:
: No. 306 C.D. 2019
Appeal of: Amy Rubinoff, :
Caryn Rubinoff, Michael Rubinoff, :
and Daniel Rubinoff :
ORDER
AND NOW, this 1st day of July, 2020, the order of the Court of Common
Pleas of Allegheny County, Orphans’ Court Division, is hereby AFFIRMED.
P. KEVIN BROBSON, Judge