J. A25004/16
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
E. PAUL PALOSKEY, : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
v. : No. 732 MDA 2016
:
JENNIFER A. HAGERMAN :
Appeal from the Order Entered April 21, 2016,
in the Court of Common Pleas of Clinton County
Orphans’ Court Division at No. 2014-00099
BEFORE: FORD ELLIOTT, P.J.E., SHOGAN, J., AND STEVENS, P.J.E.*
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED JANUARY 25, 2017
E. Paul Paloskey appeals the order of the Court of Common Pleas of
Clinton County that vacated the appointment of Justin K. Houser, Esq., as
counsel for Jennifer A. Hagerman (“appellee”), surcharged appellee in the
amount of $1,214.43 payable to appellant in his capacity as attorney-in-fact
for Edward P. Paloskey, and ordered appellee to reimburse Clinton County in
the amount of $3,688.58 for attorney’s fees paid by Clinton County on
behalf of appellee less a credit of $2,071.17 for reimbursement monies
already paid to Clinton County by appellee.
The background and relevant findings of fact as found and recounted
by the trial court are as follows:
* Former Justice specially assigned to the Superior Court.
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Edward P. Paloskey and Donna C. Paloskey
each executed a general power of attorney naming
each other, as well as their daughter, Carol A.
Folkenroth, and their granddaughter, [appellee] as
attorneys-in-fact.
The power of attorney executed on June 9,
2011, was revoked on July 30, 2012.
On May 20, 2014, [appellant], son of
Edward P. Paloskey and Donna C. Paloskey, filed a
petition to obtain an accounting from [appellee].
On October 6, 2014, [appellee] filed a
collection of documents which [appellee] deemed to
be a response to the Court’s Order to file a formal
accounting.
On January 16, 2015, the Court appointed
Justin K. Houser, Esquire to represent [appellee] and
to assist in the preparation of a formal accounting
with the Court reserving the right to assess
[appellee] for reimbursement to Clinton County.
In response to the Order of this Court and with
the assistance of court-appointed counsel, Justin K.
Houser, Esquire, [appellee] filed her second
accounting on February 27, 2015.
On March 20, 2015, exceptions to the
accounting of [appellee] were filed by [appellant].
On October 20, 2015, a hearing was held on
the exceptions where the Court received testimony
from [appellant], [appellee], Isaac Hagerman,
Clair Folkenroth, Beula Hauman, Robert Huxta, and
Mary George Rhone.
....
FINDINGS OF FACT
....
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3. [Appellant] is the uncle of [appellee].
....
6. The power of attorney executed June 9,
2011 by Edward P. Paloskey and Donna C.
Paloskey included an “acknowledgement of
Power of Attorney” whereby [appellee]
acknowledged that she had the following
obligations:
(1) I shall exercise the powers for
the benefit of the principal.
(2) I shall keep the assets of the
principal separate from my
assets.
(3) I shall exercise reasonable
caution and prudence.
(4) (4) I shall keep a full and
accurate record of all actions,
receipts, and disbursements
on behalf of the principal.
....
8. [Appellee] did not read the
Acknowledgement of Power of Attorney
and did not follow the clearly stated
obligations.
9. [Appellee] filed an accounting on
October 6, 2014 which failed to include
any receipts for disbursements made on
the part of the principals.
....
20. When [appellee] relocated to live with her
grandparents, she was accompanied by
her husband, her step-daughter and her
daughter.
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21. [Appellee], her family and her
grandparents jointly occupied her
grandparent’s [sic] residence.
22. [Appellee’s] grandparents were both
undergoing dialysis.
23. [Appellee’s] grandmother was unable to
operate an automobile and [appellee’s]
grandfather had not exercised his driving
privileges in some time.
24. [Appellee] assumed the responsibility of
running errands, buying groceries and
other household items as well as
transporting her grandparents.
....
26. While residing with her grandparents,
[appellee] cooked, cleaned, did laundry
and did errand running.
....
28. On various occasions, [appellee]
transported her grandparents to either the
Loyalsock Dialysis Clinic or the
Williamsport facility.
29. Occasionally, [appellee] transported her
grandfather to York, Pennsylvania, to a
pain clinic to address pain associated with
his spinal stenosis.
30. [Appellee] primarily used her own mini-
van to transport her grandparents.
31. [Appellee’s] grandmother gave [appellee]
her bank card to use for the purchase of
groceries and other household needs.
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32. Health permitting, [appellee’s]
grandmother accompanied [appellee]
when [appellee] was making purchases for
the household.
33. Following the purchase of items and use of
the bank card, [appellee] would return the
receipt to her grandmother.
34. [Appellee’s] grandmother authorized
[appellee] to use the grandmother’s bank
card on occasion as [appellee] and her
family were living on her husband’s
disability income.
....
37. During the time [appellee] resided with
her grandparents, her grandparents
continued to spend their own money and
write out some of their own checks.
38. [Appellee’s] mother, Carol Paloskey
Folkenroth, also participated in spending
her parents’ monies and writing out
checks.
....
40. Following an altercation between
[appellee’s] husband and [appellant],
[appellee] and her family relocated a few
days later from the grandparents’
residence.
41. [Appellee’s] grandmother, Donna C.
Paloskey, passed on April 26, 2012.
42. Following [appellee] and her family’s
relocation from [appellee’s] grandparents’
home, [appellant] accused [appellee] of
stealing various items including the lawn
mower.
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....
53. During the time [appellee] resided with
her grandparents, [appellee] incurred
$596.62 in veterinarian bills for her pets
that were paid from her grandparents’
account.
54. [Appellee] wrote checks out on her
grandparents’ account, signing the checks
as “POA.”
....
56. On occasion, [appellee] would purchase
prescriptions for herself, her husband and
her children through Mountain View
Pharmacy on the same bills her
grandparents were receiving and paying.
57. [Appellee] placed charges on the
Principals’ account for a “Realty Tract”
subscription at the rate of $49.95 per
month.
58. [Appellee] place [sic] charges for her nails
on the Principals’ credit card.
59. On the date of her grandmother’s death,
April 23, 2012, [appellee] made purchases
on the Principals’ credit card in the amount
of $182.74 at K-Mart; $49.59 at Dremel’s;
$27.23 at Big Louie’s Pizza; $25.00 for a
line of credit payment; and $11.45 at
Mountain View Pharmacy.
60. [Appellee], or her family members,
purchase [sic] three (3) pornographic
movies on the Principals’ account which
totaled $41.97 in charges.
61. [Appellee] purchased a shamrock light on
the Principals’ account in the amount of
$17.97.
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62. [Appellee] purchased items on the
Principals’ account from A.C. Moore which
were for the personal benefit and use of
[appellee] in the amount of $227.43.
63. [Appellee] placed charges on the
Principals’ account for her own vehicle’s
inspection in the amount of $26.45.
64. [Appellee] has not reimbursed the
Principals for any inappropriate charges
she made to their credit card account or
monies drawn from their checking
account.
Trial court opinion, 4/15/16, Findings of Fact Nos. 3-6, 8-9, 20-24, 26,
28-34, 37-38, 40-42, 53-54, 56-64 at 1-8.
The trial court determined that appellee breached her fiduciary duty to
the principals by failing to keep her assets separate from the principals’
assets, by failing to keep full and complete records of all actions, and by
failing to use her powers exclusively for the benefit of the principals. The
trial court overruled appellant’s exceptions to the accounting in part and
sustained them in part. The trial court overruled objections concerning the
sale of a lawnmower, the removal of a roto tiller from the principals’
residence, the alleged removal of a World War II German officer’s dagger
from the possession of Edward Paloskey, the alleged removal of two fly rods
from the possession of the principals, and an objection regarding appellee’s
failure to pay the living expenses of her family when they stayed with her
grandparents. The trial court also overruled a general objection as to
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inaccuracies in the accounting and overruled an objection as moot regarding
subpoenas. The trial court sustained an objection regarding appellee
charging pornographic movies to the grandparents’ account and sustained
the objections to the personal property purchased by appellee which was
charged to the account of her grandparents which were not related to their
needs. The trial court surcharged appellee in the amount of $1,214.43 and
ordered appellee to reimburse Clinton County for attorney’s fees paid on
behalf of appellee. In an amended order, the trial court credited appellee
with the amount of attorney’s fees for which appellee had already
reimbursed Clinton County.
On April 15, 2016, appellant moved for reconsideration which the trial
court denied that same day.
On appeal, appellant raises the following issue for this court’s review:
“Whether the lower court committed an abuse of discretion or error of law in
failing to enter judgment for [appellant] for all undocumented expenditures
made by [a]ppellee during her tenure as attorney-in-fact for her maternal
grandparents?” (Appellant’s brief at 8.)
We begin our analysis with our standard of review:
When an appellant challenges a decree entered by
the Orphans’ Court, our standard of review “requires
that we be deferential to the findings of the Orphans’
Court.” In re Estate of Miller, 18 A.3d 1163, 1169
(Pa.Super.2011) (en banc).
[We] must determine whether the record
is free from legal error and the court’s
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factual findings are supported by the
evidence. Because the Orphans’ Court
sits as the fact-finder, it determines the
credibility of the witnesses and, on
review, we will not reverse its credibility
determinations absent an abuse of that
discretion. However, we are not
constrained to give the same deference
to any resulting legal conclusions.
Where the rules of law on which the
court relied are palpably wrong or clearly
inapplicable, we will reverse the court’s
decree.
Id. (alterations and citation omitted). Evaluating the
reasonableness of the amount of a surcharge is
within the province of a trial court. In re Wade’s
Estate, 343 Pa. 520, 23 A.2d 493, 495 (1942).
Absent an abuse of discretion, we will not disturb a
trial court’s finding. Id.
In re Estate of Brown, 30 A.3d 1200, 1206 (Pa.Super. 2011).
When a party seeks to recover assets misused by a fiduciary, it is
seeking to surcharge the fiduciary. “[I]t is well settled in this
Commonwealth that a fiduciary who had negligently caused a loss to an
estate may properly be surcharged for the amount of such loss.” Estate of
Lohm, 269 A.2d 451, 454 (Pa. 1970). A surcharge is the penalty imposed
for the failure to exercise common prudence, common skill, and common
caution in the performance of a fiduciary duty and is imposed in order to
compensate beneficiaries for a loss caused by a fiduciary’s lack of due care.
In re Estate of Schultheis, 747 A.2d 918, 927 (Pa.Super. 2000). The
objecting party bears the burden of proving wrongdoing on the part of the
fiduciary. Once the objecting party establishes evidence of wrongful
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conduct, the burden shifts to the fiduciary to prove due care. Id. “Where a
fiduciary claims credit for disbursements made by him, the burden rests
upon the fiduciary to justify them. Proper vouchers or equivalent proof must
be produced in support of such credits. Accountant’s unsupported testimony
is generally insufficient.” Strickler Estate, 47 A.2d 134, 135 (Pa. 1946).
Appellant contends that he established a prima facie showing that
appellee engaged in wrongful conduct which shifted the burden to appellee
to justify the expenditures. For example, appellant refers to the trial court’s
Finding of Fact No. 56 in which the trial court found that appellee
occasionally purchased prescriptions for her immediate family through
Mountain View Pharmacy on the same bills that her grandparents were
receiving and paying, but the trial court only surcharged one item for
$11.45. Similarly, the trial court found in Finding of Fact No. 64 that
appellee had not reimbursed the Principals for any inappropriate charges
which she made on their credit card account or on monies drawn from their
checking account. Besides those examples, appellant essentially argues that
for all expenditures for which appellee could not provide receipts, appellee
should be surcharged. According to appellant, the total amount of
expenditures by appellee during the period in question was $60,522.32, and
the documented expenditures were $7,348.52 which left a balance of
$53,173.80 for which appellee should be surcharged.
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In its opinion pursuant to Pa.R.A.P. 1925(a) opinion, the trial court
explained:
The Court’s Opinion is based specifically on the
Findings of Fact contained in the Opinion. It does
not appear that the Appellant disputes the Court’s
recitation of the applicable law but disputes the
Court’s Findings and application of those Findings to
the law. The Appellant’s objections were poorly
drafted and the Court provided the Appellant
numerous opportunities to amend the same.
The Court heard detailed testimony from the
Appellee and was satisfied that the Appellee was able
to explain and support the disbursements with either
documentation or other evidence. As discussed in
the Court’s Opinion, there were multiple hands in the
pot for the matters at issue. Those hands included
the Principals, the Co-Power of Attorney, and the
Appellee. The Court surcharged the Appellee for
each item that the evidence permitted. The Court
made a determination regarding the credibility of the
evidence, noting that it [did] not have the
opportunity to receive testimony from either of the
Principals.
Trial court opinion, 5/19/16 at 1-2.
Appellant argues that the only expenditures for which appellee should
not be surcharged are those for which checks were written by either of his
two parents, his sister who also had power of attorney, and one check
written to his attorney for the preparation of deeds. Appellant ignores the
fact that the trial court, as fact-finder, found appellee credible with respect
to expenditures other than those for which he surcharged appellee when it
evaluated the evidence pursuant to Strickler. Appellant does not attack the
trial court’s evaluation of the evidence but just sets forth the broad position
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that appellee should be surcharged in the amount of $53,173.80. Appellant
has failed to establish that the trial court abused its discretion when it made
its credibility determinations or that the trial court committed an error of law
in making its legal conclusions.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/25/2017
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