Passarelli, M. v. Passarelli, J.

J-A04027-20
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
MARGARET G. PASSARELLI, : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellee :
:
v. :
:
JOSEPH A. PASSARELLI, :
:
Appellant : No. 2189 EDA 2019
Appeal from the Order Entered July 5, 2019
in the Court of Common Pleas of Chester County
Civil Division at No(s): 2015-09006-DI
BEFORE: PANELLA, P.J., STRASSBURGER, J.* and COLINS, J.*
MEMORANDUM BY STRASSBURGER, J.: FILED MAY 11, 2020
Joseph A. Passarelli (Husband) appeals from the July 5, 2019 order
granting Margaret A. Passarelli’s (Wife) petition for Husband to reimburse
the marital estate, in the amount of $203,455.46, in order to preserve the
status quo of marital assets during the pendency of Husband and Wife’s
divorce action following Husband’s termination of two 529 accounts.1 Upon
review, we quash.
Wife instituted the instant case when she filed for divorce in
September 2015. A final divorce decree has not been entered. Husband
and Wife were married on November 27, 1998. In the spring of 2015,
____________________________________________
1 A 529 account is a “qualified tuition plan[] established pursuant to 26
U.S.C. § 529[.]” Brooks v. Brooks, ___ A.3d ___, 2020 WL 1242437 at *1
(Pa. Super. 2020). In the instant case, the 529 accounts were “Schwab 529
Education Savings Plan” accounts. Order, 7/5/2019, at 1 n.1.
*Retired Senior Judge assigned to the Superior Court.
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Husband and Wife created an irrevocable inter vivos trust (the Trust).
Shortly after creation of the Trust, Wife learned of Husband’s extramarital
affair. Wife initiated divorce proceedings and in October 2015, filed a
petition for special relief to prevent dissipation of marital assets from the
Trust. By order of December 4, 2015, the family court granted in part Wife’s
petition and froze 50 percent of certain accounts in the Trust.
On January 19, 2016, Wife filed a petition to terminate the Trust in
orphans’ court based upon allegations of fraud, undue influence, and duress.
Following an evidentiary hearing, the orphans’ court dissolved the Trust
based upon a finding of fraudulent conduct by Husband. On appeal to this
Court, a three-judge panel reversed the orphans’ court order. On
reargument en banc, this Court again reversed, concluding that the orphans’
court erred in finding Wife’s execution of the Trust to be the product of
fraudulent inducement. See In re Passarelli Family Trust, 206 A.3d
1188, 1196 (Pa. Super. 2019) (en banc). Our Supreme Court has granted
Wife’s petition for allowance of appeal, and that matter remains pending as
of this writing. Id., appeal granted, 217 A.3d 890 (Pa. 2019).
This appeal by Husband stems from a July 5, 2019 order from the
family court. That order required Husband to reimburse the marital estate
as a result of Husband’s closure of two 529 accounts. By way of
background, around December 31, 2010, Husband opened a 529 account for
Husband and Wife’s minor son in the amount of $55,000, and a 529 account
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for their minor daughter in the amount of $55,000 (collectively, Children).
The 529 accounts were not transferred into the Trust, “presumably because
Husband considered them at that time to be for the educational benefit of
[C]hildren, therefore differentiating them from the $14 million in other
marital assets conveyed into the [T]rust.” Order, 7/5/2019, at 1 n.1.
The purpose for establishing the accounts, formally known as a
“Schwab 529 Education Savings Plan,” was to provide a tax-
advantaged mechanism for the future educational expenses of
[C]hildren. By July 5, 2018, when Husband liquidated both
accounts, their values had grown to $93,655.51 and
$109,799.85, respectively, as evidenced by Exhibit W-11. It is
not disputed that the initial $110,000 invested in December,
2010, was derived from marital assets.
***
Given the manner in which 529 [p]lans are structured under
federal tax law, while [Children] were designated as beneficiaries
of the accounts, [Husband] was still considered to be the
“Primary Account Owner.” As a “Beneficiary,” neither child
possessed any legal ownership interest in the funds, and as
“Account Owner,” Husband had the legal authority to close the
accounts. In this case, he did so on July 5, 2018, without any
advance notification to either Wife or [C]hildren. However, as
reflected in Exhibit W-4, Husband promptly notified [C]hildren of
his liquidation of the accounts, stating, in part, “I no longer have
the funds to defend Mom’s legal action and I have been forced to
reclaim the funds that I originally used to set up 529 plans for
the both of you.” Of course, Husband’s liquidation of the
accounts carried a significant federal income tax consequence
that would not have occurred had the funds been utilized for
qualified higher education expenses.
Id.
On July 30, 2018, Wife filed a petition for special relief in the family
court to prevent the dissipation of marital assets, pursuant to 23 Pa.C.S.
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§ 3323(f) (concerning equity power of divorce court). Therein, she
requested that Husband be directed to reimburse the marital estate for the
value of the two 529 accounts that he terminated. Husband filed an answer
and counterclaim for special relief. Wife responded with a motion to strike.
Following several continuances, the family court held an evidentiary hearing
on February 19, 2019. Both Husband and Wife submitted written closing
arguments, and Wife moved to reopen and supplement the record with
several exhibits. The family court granted that request.
On July 5, 2019, the family court issued an order granting Wife’s
petition for special relief. The order required Husband to reimburse the
marital estate in the amount of the closed 529 accounts to preserve the
status quo of the marital assets during the pendency of their divorce action.
In order to accomplish this, the family court ordered Wife to open a separate
account specifically for Children’s future college educational needs. The
family court then permitted the limited unfreezing of the Trust to permit
Husband to transfer funds from the Trust into the newly-created account for
Children, while noting that its December 4, 2015 order, among others,
otherwise remained “in full force and effect[.]” Order, 7/5/2019, at 2.
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This timely-filed appeal followed.2 On August 13, 2019, this Court
issued a rule to show cause as to why the appeal should not be quashed
because the order appealed from was not “final or otherwise appealable.”
Order, 8/13/2019. Husband filed a response, arguing that the July 5, 2019
order was appealable as a collateral order as of right. See Husband’s
Response to Rule to Show Cause, 8/15/2019, at 3. This Court discharged
the rule to show cause and deferred the matter to the merits panel. Order,
8/20/2019.
On appeal, Husband raises two questions for this Court to review:
1. Whether the family court division of the court of common
pleas has jurisdiction to overrule an order of the orphans’
court division related to management of the assets of an
irrevocable trust.[3]
____________________________________________
2 The family court ordered Husband to file a concise statement of errors
complained of on appeal pursuant to Pa.R.A.P. 1925(b). In his statement,
Husband did not challenge the substance of the July 5, 2019 order, but
rather recited the procedural history of the case. The family court was
unable to ascertain what errors Husband intended to raise on appeal, and so
it issued a Rule 1925(a) opinion directing us to its July 5, 2019 order.
3 We note that the orphans’ court has mandatory and exclusive jurisdiction
over, inter alia, the “administration and distribution of the real and personal
property of inter vivos trusts[.]” 20 Pa.C.S. § 711(3). See Green v.
Green, 783 A.2d 788, 793 (Pa. Super. 2001) (“Under Pennsylvania law, the
exclusive jurisdiction over an inter vivos trust… is in the orphans’ court of
the county in which the trust is located.”). However, because we do not
reach the merits of Husband’s claims for the reasons stated infra, we need
not determine whether the family court’s July 5, 2019 order implicated the
“administration and distribution” of the Trust, such that it infringed on the
orphans’ court’s mandatory and exclusive jurisdiction over the Trust.
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2. Whether a judge presiding over a matter should be
removed from a case where he refers to the defense of the
case as “shenanigans” before the defendant has presented
any evidence and where he instructs counsel in the case to
continue a line of inquiry because it is “getting under the
skin” of a party/witness.
Husband’s Brief at 7 (unnecessary capitalization and family court answers
omitted).
Before we address the questions Husband raises on appeal, we first
must determine whether the order appealed from is appealable, as
appealability implicates our jurisdiction.
“Jurisdiction is purely a question of law; the appellate standard
of review is de novo and the scope of review plenary.” Barak v.
Karolizki, 196 A.3d 208, 215 (Pa. Super. 2018) (citation
omitted).
In order to be appealable, the order must be: (1) a final order,
Pa.R.A.P. 341-42; (2) an interlocutory order appealable by right
or permission, 42 Pa.C.S. § 702(a)-(b); Pa.R.A.P. 311-12; or (3)
a collateral order, Pa.R.A.P. 313.
Interest of J.M., 219 A.3d 645, 650 (Pa. Super. 2019).
In the instant case, Husband states in his brief on appeal that the
order appealed from is a final order, and that this Court has jurisdiction
pursuant to Pa.R.A.P. 341 (relating to final orders). Husband’s Brief at 1.
This Court has held consistently that “where a decree in divorce has not
been entered and ancillary claims remain unresolved, issues such as those
seeking special relief, are interlocutory and unappealable.” Moser v.
Renninger, 40 A.3d 156, 157 (Pa. Super. 2012) (citation and quotation
marks omitted). See also Griffin v. Griffin, 558 A.2d 86, 90 (Pa. 1989)
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(“This Court has held that an order granting special relief under the Divorce
Code is not a final and appealable order[.]”). A final divorce decree has not
been entered in this case, and the equitable distribution issues remain
outstanding. Thus, the order appealed from is not a final order for purposes
of appeal.
Husband has not alleged that this is an appeal from an interlocutory
order appealable by right or permission. In Husband’s response to this
Court’s rule to show cause, and again at oral argument, he invoked the
collateral order doctrine. We consider this mindful of the following.
This Court has held that a non-final order in a divorce proceeding
may be appealable under the collateral order doctrine. See
Radakovich v. Radakovich, 846 A.2d 709, 714-15 (Pa. Super.
2004) (holding that an order entered in a non-final divorce
action that awarded the parties’ son an interest in a brokerage
account was appealable as a collateral order). A collateral order
is defined as follows in the Rules of Appellate Procedure:
A collateral order is an order separable from and
collateral to the main cause of action where the right
involved is too important to be denied review and
the question presented is such that if review is
postponed until final judgment in the case, the claim
will be irreparably lost.
Pa.R.A.P. 313(b).
Kulp v. Kulp, 920 A.2d 867, 869-70 (Pa. Super. 2007). Our Supreme Court
has clarified our scope of review.
[We] construe the collateral order doctrine narrowly, and insist
that each one of its three prongs be “clearly present” before
collateral appellate review is allowed. Indeed, [w]e construe the
collateral order doctrine narrowly so as to avoid undue corrosion
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of the final order rule, ... and to prevent delay resulting from
piecemeal review of trial court decisions. As colorfully explained
by then-Justice, later Chief Justice, Henry X. O’Brien, “[i]t is
more important to prevent the chaos inherent in bifurcated,
trifurcated, and multifurcated appeals than it is to correct each
mistake of a trial court the moment it occurs.” Calabrese v.
Collier Township Municipal Authority, [] 248 A.2d 236, 238
([Pa.] 1968) (O’Brien, J., dissenting).
Shearer v. Hafer, 177 A.3d 850, 858 (Pa. 2018) (some citations and
quotation marks omitted).
With this background in mind, we turn to application of the three-
pronged test to the instant case.
As noted above, the collateral order doctrine permits an appeal
as of right from a non-final collateral order if the order satisfies
the three requirements set forth in Rule 313(b)—separability,
importance, and irreparability.
With regard to the first prong of the collateral order doctrine, an
order is separable from the main cause of action if it can be
resolved without an analysis of the merits of the underlying
dispute and if it is entirely distinct from the underlying issue in
the case.
***
Turning to the second prong of the collateral order doctrine, the
importance prong, a right is important if the interests that would
go unprotected without immediate appeal are significant relative
to the efficiency interests served by the final order rule. Further,
the rights involved must implicate interests deeply rooted in
public policy [and] going beyond the particular litigation at hand.
Shearer, 177 A.3d at 858-59 (citations and quotation marks omitted). “The
third prong requires us to examine whether the claim would be irrevocably
lost if review were postponed until final judgment.” Spanier v. Freeh, 95
A.3d 342, 346 (Pa. Super. 2014) (emphasis omitted).
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As noted hereinabove, Husband alleged in his response to this Court’s
rule to show cause that the instant appeal from the July 5, 2019 order was
permissible pursuant to the collateral order doctrine. Instead of expounding
on how the order appealed from satisfies the above three-pronged test,
however, Husband merely recited Rule 313’s definition of a collateral order
and stated that there “is precedent for consideration of appeals in divorce
matters where the court [o]rder affects ownership and management of
property, which does not or may not belong to the divorce litigants.”
Husband’s Response to Rule to Show Cause, 8/15/2019, at 3-4. In support
thereof, Husband cited Griffin, 558 A.2d 75, Radakovich, 846 A.2d 709,
and Nemirovsky v. Nemirovsky, 776 A.2d 988 (Pa. Super. 2001).
Griffin involved a support order, whereas the instant case involves an
attempt to maintain the status quo of marital assets. Thus, we find the
instant case distinguishable. Radakovich and Nemirovsky involved
interveners asserting property rights over accounts related to the underlying
divorce action. In finding the orders appealed from collateral, this Court
noted that property rights are deeply rooted in public policy, and that the
orders regarding the interveners were separate and collateral to the
underlying divorce action. See Nemirovsky, 776 A.2d at 991;
Radakovich, 846 A.2d at 714. As to irreparability, this Court held in
Nemirovsky that “any rights the appellants may have to the property will
be irreparably lost if review is postponed until final judgment in the
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underlying divorce action because the property will be sold to satisfy the
National Penn Bank loan.” 776 A.2d at 991 (citation omitted). See also
Radakovich, 846 A.2d at 714-15 (“[A]ny rights [appellant] may have as to
the account will be irreparably lost if review is postponed until a final divorce
decree is entered since [s]on could dissipate the funds in their entirety.”).
In the instant case, there is no danger of the Trust being dissipated as
it has already been frozen by the family court. Contrarily, Husband
dissipated an account that had been funded with marital assets and had not
been frozen – the 529 accounts. It was this action that prompted the
appealed-from order. The July 5, 2019 order attempts to maintain the
status quo of the parties’ marital assets pending the underlying divorce
action, despite Husband’s efforts to the contrary. In this case, no right will
be lost irreparably by postponing the matter of the Trust until the end of the
underlying divorce action when equitable distribution is determined, or after
our Supreme Court rules on the validity of the Trust. Accordingly, there is
no danger of irreparable loss, and the collateral review doctrine does not
apply here.
Thus, the order appealed from is not appealable, and we are without
jurisdiction to review the merits of Husband’s claims. Accordingly, we quash
this appeal.
Appeal quashed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/11/20
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