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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
IN RE: KLIONSKY FAMILY : IN THE SUPERIOR COURT OF
FOUNDATION : PENNSYLVANIA
:
:
APPEAL OF: MATTHEW KLIONSKY, :
NINA KLIONSKY, AND RUTH :
KLIONSKY SHAPIRO :
:
: No. 1237 WDA 2019
Appeal from the Order Entered July 15, 2019
In the Court of Common Pleas of Allegheny County Orphans' Court at
No(s): 2591 of 2019
BEFORE: SHOGAN, J., McLAUGHLIN, J., and MUSMANNO, J.
MEMORANDUM BY McLAUGHLIN, J.: FILED SEPTEMBER 29, 2020
Matthew Klionsky, Nina Klionsky, and Ruth Klionsky Shapiro
(collectively, “Appellants”) appeal the order sustaining the Preliminary
Objections of the Klionsky Foundation1 and dismissing Appellants’ Petition to
be named trustees. Appellants argue they have standing based on their special
interest in the Foundation. We affirm.
The relevant facts are as follows. Bernard and Esther Klionsky, husband
and wife, had four children: Nina, Matthew, Ruth (i.e., Appellants), and Daniel.
In 1998, Bernard and Esther created the Klionsky Foundation, a charitable
trust, of which Bernard and Esther were the initial trustees. The original trust
instrument provided for at least five and as many as nine trustees.
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1 Although the caption lists the “Klionsky Family Foundation,” this dispute
involves the Klionsky Foundation, not the Klionsky Family Foundation. See
Petition, Ex. A (trust instrument, naming the trust the “Klionsky Foundation”);
Preliminary Objections, 6/10/19, at ¶ 1; Trial Court Opinion at 1 n.1.
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Bernard and Esther amended the trust instrument in 2015 to change
the number of trustees to at least one but no more than five trustees. Although
Bernard and Esther had given Daniel a power of attorney, they executed the
Amendment themselves. The Amendment appointed Daniel as a third trustee,
and Matthew as a successor trustee, should Daniel be unable or unwilling to
fulfill his duties. Esther and Bernard died in 2016 and 2017, at the respective
ages of 86 and 92. In 2018, Daniel appointed his four daughters – Cipora,
Yael, Iris, and Noa – as the remaining four trustees.
In 2019, Appellants commenced this action by filing a Petition against
the Foundation, seeking to be named as trustees. They alleged that neither
Esther nor Bernard knowingly or intelligently executed the 2015 Amendment,
and that Daniel breached his fiduciary duty as his parents’ power of attorney
and exerted undue influence over his parents “to have himself solely appointed
as trustee.” Pet., 4/17/19, at ¶¶ 16-18. They claimed this was at odds with
their parents’ “prior stated intention to appoint all four of their children as
successor trustees,” and that Daniel had “acknowledg[ed] in 2014 that all four
siblings should collectively succeed their parents as the trustees of the
Foundation.” Id. at ¶¶ 13-14. Appellants claimed that not being appointed as
trustees is “not fair and deprives [them] of substantial economic and
reputational value.” Id. at ¶ 15.
The Foundation filed Preliminary Objections. The Foundation objected
that Appellants have no standing to enforce the provisions of the trust, under
20 Pa.C.S.A. § 7735. The Preliminary Objections also set forth two demurrers.
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The Foundation did not attach a notice to plead with their Preliminary
Objections. The Commonwealth of Pennsylvania, through the Office of
Attorney General and acting as parens patriae, intervened. Following
argument,2 the court sustained the Preliminary Objections and dismissed the
Petition.
Appellants filed a Motion for Reconsideration, arguing that the
Preliminary Objections raised a question of fact – whether they have standing
based on their special interest in the Foundation – and that the court did not
give the parties the opportunity to develop the record under Rule of Orphans
Court 3.9(d)(2). See Pa. O.C. Rule 3.9(d)(2). Appellants also argued the court
was obligated to overrule the Preliminary Objections because the Foundation
did not attach a notice to plead.
After the Foundation and the Office of the Attorney General responded,
the court denied the Motion for Reconsideration. In its Rule 1925(a) opinion,
the trial court explained that it dismissed the Petition because Appellants lack
standing to enforce the trust, and because there are no vacant trustee
positions to which it could appoint Appellants. See Trial Court Opinion,
9/18/19, at 2-3.
Appellants filed a notice of appeal. They ask this Court to decide the
following: “Whether the trial court erred by dismissing this action without
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2 Transcript of the argument is not in the certified record.
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following the proper procedure to decide a preliminary objection raising a
question of fact - i.e., Appellants’ standing?” Appellants’ Br. at 4.
We review an Orphans’ Court order sustaining preliminary objections for
an error of law or abuse of discretion. Rellick-Smith v. Rellick, 147 A.3d
897, 901 (Pa.Super. 2016). We accept as true all well-pleaded material facts
set forth in the petition and all reasonable inferences that may be drawn from
those facts. Id. (quoting Estate of Gentry v. Diamond Rock Hill Realty,
LLC, 111 A.3d 194, 198 (Pa.Super. 2015)). If any doubt exists whether the
petitioner will be able to prove facts establishing the right to relief, the court
should overrule the objections. Id. “Threshold issues of standing are questions
of law; thus, our standard of review is de novo and our scope of review is
plenary.” Id. (quoting Johnson v. Am. Std., 8 A.3d 318, 326 (Pa. 2010)).
Appellants argue that whether they have standing turns on questions of
fact, and the court erred by deciding they did not have standing before taking
any evidence. Appellants claim the court did not adhere to Orphans Court Rule
3.9(d)(2), which states that if a preliminary objection raises an issue of fact,
the court shall consider evidence by deposition or otherwise. See Pa. O.C.
Rule 3.9(d)(2). Appellants also argue that the official comment to Rule 3.9
states that if a preliminary objection is based on standing, it cannot be
determined from the facts of record, and the court must overrule the objection
unless the moving party included a notice to plead. See Pa. O.C. Rule 3.9,
Explanatory Comment. Appellants assert they have standing because Daniel
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coerced their parents into excluding them from the Foundation and they have
a “special interest” in their family’s foundation. Appellant’s Br. at 11, 12.
The Foundation maintains that Appellants do not have “special interest”
standing simply because they were the settlors’ children, and they lack any
substantial, direct, or immediate interest in the Trust. The Office of the
Attorney General, for its part, argues that if Appellants felt the Foundation
was being mismanaged, or that Daniel had exerted undue influence or violated
his duty of loyalty when the Klionskys amended the Foundation in 2015, they
should have reported these allegations to it.
Our Supreme Court has described the doctrine of standing as “a
prudential, judicially created principle designed to winnow out litigants who
have no direct interest in a judicial matter.” Rellick-Smith, 147 A.3d at 901
(quoting Office of Governor v. Donahue, 98 A.3d 1223, 1229 (Pa. 2014)).
Standing requires that the controversy be “real and concrete,” such that the
party initiating litigation has been “aggrieved.” Id. (quoting Donahue, 98
A.3d at 1229).
A party is “aggrieved” for purposes of standing if the party has a
substantial, direct, and immediate interest in the outcome of litigation. Id.
(citing Donahue, 98 A.3d at 1229). A party’s interest is “substantial” if “it
surpasses the interest of all citizens in procuring obedience to the law[.]” Id.
(quoting Donahue, 98 A.3d at 1229). “It is ‘direct’ when “the asserted
violation shares a causal connection with the alleged harm[.]” Id. (quoting
Donahue, 98 A.3d at 1229). It is “immediate” when “the causal connection
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with the alleged harm is neither remote nor speculative.” Id. (quoting
Donahue, 98 A.3d at 1229). Those with standing to bring an action to enforce
a charitable trust include the Attorney General, a charitable organization
named in the trust instrument, or “someone having a special interest in the
trust.” In re: Milton Hershey Sch., 911 A.2d 1258, 1262 (Pa. 2006); see
also 20 Pa.C.S.A. § 7735(c).
In general, private parties do not have “special interest” standing to
enforce charitable trusts for which the public is the intended beneficiary. In
re: Milton Hershey Sch., 911 A.2d at 1262. For example, in In re: Milton
Hershey School, the Pennsylvania Supreme Court found that the Milton
Hershey School’s Alumni Association did not have “special interest” standing
to enforce a charitable trust and challenge an agreement between the Milton
Hershey School and the Attorney General. 911 A.2d at 1263. Despite the
Association’s “real and commendable” concern, it was not a beneficiary of the
trust, and did not have an actual interest. Id. The Court pointed out that the
Attorney General has statutory authority to enforce charitable trusts, and
although the Association had authority to lobby the Attorney General, it did
not have the direct interest necessary for standing. Id.
The Orphans’ Court did not err in dismissing the Petition because, as a
matter of law, Appellants do not have standing. Appellants are not listed in
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the trust instrument,3 and have no “actual,” personal, and immediate interest
in the Foundation. Id.; 20 Pa.C.S.A. § 7735(c). As they have not alleged any
facts that would support standing, the court did not err in sustaining the
Preliminary Objections without allowing for the presentation of additional
evidence.
Although the Foundation did not attach a notice to plead, that failure did
not doom its Preliminary Objections in this case. The trial court was not bound
by the statement in the explanatory comment that preliminary objections to
standing “cannot be determined from the facts of record.” Pa. O.C. Rule 3.9,
Explanatory Comment; Estate of Paterno v. Nat'l Collegiate Athletic
Ass'n (NCAA), 168 A.3d 187, 200 n.13 (Pa.Super. 2017) (“explanatory
comments express the opinion of the rules drafting committee and therefore
are not binding”). Moreover, the failure to attach a notice to plead merely
relieves the responding party of the duty of filing a pleading denying factual
averments. Here, even accepting as true all facts Appellants assert, they lack
standing.
Order affirmed.
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3 Insofar as the 2015 Amendment listed Matthew as a successor trustee,
Matthew has not alleged that Daniel is unwilling or unable to perform his duties
as trustee, and is not claiming standing on that basis.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/29/2020
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