author: CARRAFIELLO, J.,

text:
    In re Educational Trust for the Benefit of Chambers

      C.P. of Philadelphia County,
    O.C. No. 169 IC of 2005

      Eric L. Winkle, for appellant.

      Kimberly J. Scott, for participant Wells Fargo Bank, N.A.

      Miles H. Shore, for participant School District of Philadelphia.
    Aug. 19, 2014
   CARRAFIELLO, J.,

— Ronald Chambers and Leslie Chambers, (hereinafter referred to as “appellants”), appeal the trial court’s adjudication dated April 28, 2014 of the first and final account of the Ferren Chambers Educational Trust as stated by appellee Wells Fargo Bank, N.A., the appellants’ objections, and the objections of appellee School District of Philadelphia.

Appellants also appeal the trial court’s decree of the same date disposing of the same issues raised in appellants’ petition for declaratory judgment.

By Per Curiam order, the Superior Court consolidated both appeals.

Facts and Procedural History

Appellants are the settlors arid co-trustees with appellee, Wells Fargo Bank, N.A., (hereinafter referred to as “Wells Fargo”), of the educational trust for the benefit of Ferren Chambers, as well as her parents and the guardians of her person and estate.

On April 2, 2004, special education hearing officer Rosemary E. Mullaly, following a due process hearing, issued her order finding that appellee, the School District of Philadelphia, owed Ferren Chambers, (hereinafter referred to as “Ferren”), 3,180 hours of compensatory education based upon two and one-half years of denial of a Free and appropriate public education.

The resultant remedy was the creation of the educational trust for the Benefit of Ferren Chambers under agreement of trust dated January 10, 2005, (hereinafter referred to as the “trust”). Appellants and appellee Wells Fargo Bank, N.A. (formerly Wachovia Bank, N.A.) were appointed co-trustees.

The specific purpose of the trust was to “provide for the supplemental educational needs of the beneficiary pursuant to the special education hearing officer Rosemary E. Mullaly order dated April 2, 2004.” Exhibit A-l/P-1, p.2, emphasis added.

The controlling trust provisions are as follows:

Second: Purpose — This trust is to be primarily an education trust for the beneficiary and secondarily a special needs trust pursuant to 42 USC §1396p(d)(4) (a) and shall bo, for the sole benefit of the beneficiary. The purpose of this trust shall be to provide for the beneficiary’s supplemental educational needs. The Trust shall not provide for those needs of the beneficiary which are provided or should be provided under the beneficiary’s Individualized Educational Plan (IEP) by a school district or other public agency or governmental program.
A. Educational needs shall mean those requisite items, products or services that can be provided to the beneficiary to assist or supplement the beneficiary’s Individualized Educational Plan (IEP).
B. Educational needs shall include but not be limited to teaching assistants, psychiatric/psychological services, recreational therapy, occupational therapy, physical therapy, vocational therapy, durable medical needs, prosthetic devises {sic}, special rehabilitative services or equipment, programs of training, education, transportation and required travel expenses and related insurance.
Fourth: Use of Principal — Trustee shall have the power to distribute such amount of principal (including accumulated income) as the trustee may from time to time determine to be necessary or appropriate for the beneficiary’s supplemental educational needs. Expenditures from the Trust fund must have a reasonable relationship to the educational needs of the beneficiary. Pursuant to the order of the special education hearing officer, the trustee will reimburse the parents from the fundfor any service recommended in writing by the Kennedy-Kreiger Institute or Dupont that will assist the beneficiary in making up for lost educational opportunity. If costs are incurred to obtain recommendation, the parents may seek reimbursement from the Trust to obtain these recommendations.
Furthermore, the trustee is authorized to expend from this fund to pay for those services which the parent and/or trustee notifies the school district in advance where it has failed to provide services to the beneficiary clearly articulated in the students current IEP and which the district has failed to provide. If the district wishes to challenge the trustee’s reimbursement of costs described in this paragraph, it must seek review through the bureau of special educational division of compliance or due process hearing or its objections are deemed waived.
Trustee may pay for the services obtained for the beneficiary starting as of the date of the order of the hearing officer, April 2, 2004, and continuing until December 31, 2010.

Exhibit A-1/P-1, p. 2-4, emphasis added.

The Trust was funded by the School District of Philadelphia (hereinafter referred to as “School District”), with an initial balance of $216,369.83. The appellants routinely requested and received payments and/or reimbursements from Wells Fargo, with their requests concluding with the statement: “As usual endorse checks to individuals, but forward to me for disbursement.”

In accordance with paragraph fifth, the trust terminated on December 31,2010, and any balance remaining was to be paid to the School District subject to the claim of the Pa. Department of Public Welfare.

Approximately two weeks prior to the trust’s termination, the appellants requested Wells Fargo issue checks totaling $133,722.50, which, with the exception of $3,412.50 paid to Freidman Associates, were denied as not within the terms of the trust document. The combined balance of principal and income remaining in the trust as per the account was $117,253.57.

Appellants’ prior request for payment of $20,000.00 to Robert B. Gidding, Esquire for federal court litigation was denied by Wells Fargo by letter dated April 27,2010. Appellants renewed their request and included it in their December requests.

On December 22,2010, Wells Fargo denied appellants’ requests for reimbursement of the $20,000.00 they paid to attorney Gidding, payment of an additional $40,000.00 to attorney Gidding to continue the federal court litigation, and payment of $59,560.00 to Potential, Inc. for additional special education services. On January 3, 2011, Wells Fargo denied appellants’requests for reimbursement of the additional $10,000.00 they paid to attorney Gidding and for payment of the Freidman Associates bills of $750.00. Wells Fargo denied the requests claiming they not within the terms of the trust document.

On October 21, 2011, ten (10) months after the trust terminated, the appellants filed their petition for declaratory judgment requesting determination that the above requested expenditures totaling $130,260.00 “have a reasonable relationship to the educational needs of Ferren Chambers” and should be paid by the trust. The School District filed an answer with new matter and counterclaim against the trustees and the Department of Public Welfare. Wells Fargo filed its answer and also filed preliminary objections to the School District’s counterclaim.

The trust’s first and final account for the period from January 24, 2005 to November 30, 2011, was filed by Wells Fargo on January 17, 2012. and scheduled for audit on March 5, 2012. Wells Fargo raised, as questions for adjudication, the payments requested by appellants in their declaratory judgment petition, taking the position that those requests were not reasonably related to Ferren’s educational needs. Objections to the account were filed by the appellants on February 8, 2012, and by the school district on February 28, 2012.

On August 13, 2012, the trial court sustained Wells Fargo’s preliminary objections to the declaratory judgment petition and dismissed the School District’s Counterclaim finding that the counterclaim was not a permissible pleading; that all issues alleged in the counterclaim were contained in the School District’s Objections to the first and final account.

A consolidated trial on the account, objections, and declaratory judgment petition was held on June 25, 2013. Having assessed the credibility of the witnesses, reviewed all documentary evidence and post-trial submissions, the trial court issued its adjudication and decree, both dated April 28, 2014.

Appellants timely filed their appeals which have now been consolidated by the Superior Court. No appeals or cross appeals were filed by either Wells Fargo or the School District.

Statement of Issues

Appellants filed their statements of matters complained of on appeal pursuant to Pa. R.A.P. Rule 1925(b) appealing ten issues on the court’s adjudication and eight issues on the court’s decree on the declaratory judgment petition, many of which are identical. Since the appeals have been consolidated, the trial court has therefore restated the issues for purposes of economy and clarity in a form more amenable to fulfilling its mandate under Pa. R.A.P. Rule 1925(a), as follows:

1. Did the trial court err in interpreting the trust document finding that attorney fees related to the federal civil rights litigation were not reasonably related to Ferren’s educational needs.
2. Did the trial court err in assessing surcharges for improperly paid attorney’s fees, for failure to seek reimbursement to the trust from the School District for annual administrative fees paid to Wells Fargo, and for failure to seek reimbursement to the Trust from the attorney fees awarded to the McAndrews Law Offices.
3. Did the trial court err in assessing surcharges against appellants, as co-trustees, who claimed that they had absolutely no control or authority regarding misuse of trust funds.
4. Did the trial court err in not ordering the terminated trust to pay Potential, Inc. and Freidman Associates upon finding that appellants had not shown any damages as a result of the failure to provide educational services.
5. Did the trial court err by failing to award counsel fees to appellants’ counsel for this litigation.

Discussion

1. The Trial Court did not err its interpretation of the Trust document.

A. Attorney fees related to the civil rights litigation are not reasonably related to Ferren’s educational needs.

It is well settled that the polestar in interpretation of trust provisions is the settlor’s intent. See, Trust of Hirt, 832 A.2d 438 (Pa. Super. 2003). The court is bound by the settlor’s intent, the rules for which are the same for trusts as for wills and require consideration of: (a) all the language contained in the four corners of the trust, (b) the settlor’s scheme of distribution, (c) the circumstances surrounding the settlor at the time the trust was made, and (d) the existing facts. See, In re McFadden, 705 A.2d 930, 931 (Pa. Super. 1998).

At the time of the creation of the trust, the appellants, in their capacities as the settlors and Ferren’s parents, were represented by counsel and were integrally involved with their counsel at that time, Stephen J. Pokiniewski, Jr. Esquire, their trust counsel Dana Breslin, Esquire, and “the Wachovia guys” in the drafting and preparation of the trust document pursuant to the Mullaly order. Their signatures as both settlors and trustees appear at the end of the document and are witnessed by their attorney.

Under circumstances such as these, where there is no ambiguity in the trust instrument, extrinsic evidence of the settlor’s intent is not merely unnecessary, but not permitted. See, In re Estate of Harrison, 689 A.2d 939, 943 (Pa. Super. 1997), Restatement (Second) of Trust, §38. Nevertheless, the trial court permitted the appellants to state their opinions, and both of them articulated that the trust would pay for anything that would contribute to Ferren’s educational needs.

The provisions of the trust instrument control. 20 Pa. C.S. §7705(a).

Our Superior Court has held that the court:

“must give effect to every word and clause where reasonably possible so as not to render any provision nugatory or mere surplusage. Further technical words must ordinarily be given their common legal effect as it is presumed these words were intentionally and intelligently employed, especially where they were used by someone learned in probate law.”

In re Estate of Harrison, 689 A. 2d 939, 943 (Pa. Super. 1997) (citations omitted).

Accordingly, the trial court analyzed article fourth of the trust containing the provision for the expenditures of principal, giving effect to each and every section, and stating in its adjudication as follows:

In determining whether to distribute trust principal, the trustees must assess whether the expenditure falls within any of the four provisions listed in article fourth, namely:
“Necessary or appropriate for the beneficiaiy’s supplemental educational needs.” “Expenditures from the trust fund must have a reasonable relationship to the educational needs of the beneficiary.”
“The trustee will reimburse the parents from the fund for any service recommended in writing by the KennedyKreiger Institute or Dupont that will assist the beneficiary in making up for lost educational opportunity. If costs are incurred to obtain recommendation, the parents may seek reimbursement from the trust to obtain these recommendations.”
“The trustee is authorized to expend from this fund to pay for those services which the parent and/or trustee notifies the school district in advance where it has failed to provide services to the beneficiary clearly articulated in the students current IEP and which the district has failed to provide.”

By its very language, the trustees were not limited to any one particular category. They were given broad discretion provided the expenditure would benefit Ferren’s educational needs.

When questioned, the appellants’ own testimony demonstrated their knowledge of the trust’s language. Appellant Leslie Chambers testified that she believed that trust would pay for anything that benefitted Ferren educationally. Appellant Ronald Chambers testified that he believed that the language “reasonable relationship to the educational needs of the beneficiary” meant that the trust would pay for anything that would contribute to the educational needs of Ferren.

Appellants assert that the court interpreted the trust too narrowly in finding that attorney fees related to the federal civil rights litigation were not reasonably related to Ferren’s educational needs. Educational needs are defined. Attorney fees are not an enumerated need. Neither appellant could point to any specific provision in the trust document authorizing payment of the attorney fees incurred in the civil rights litigation. The trust was created as the specific administrative remedy for the School District’s failure to provide Ferren with a Free and Appropriate Public Education (“FAPE”). Nowhere is there an indication that the trust was to be used as a vehicle to fund litigation for a civil rights action.

No evidence was produced at trial to prove the attorney fees for the civil rights litigation were engendered for educational purposes as opposed to damages for the failure to provide those services. The only evidence presented at trial by appellants in support of their position that the attorney fees for the civil rights litigation were reasonably related to Ferren’s educational needs, was their assertion that Wells Fargo changed its policy midstream in March/ April 2010 by refusing to pay the requested fees.

While appellants’ declaratory judgment action and their objections to the account focused on Wells Fargo’s denial of the payment of the attorney fees only with respect to attorney Gidding, the School District raised objections to all attorney fees paid by the trust, thus requiring the trial court to examine all attorney fees. That examination ended with the trial court’s determination that the litigation in federal court, which has already claimed attorney fees, is for damages, but has not proven to be for “educational needs.”

B. Attorney fees for the federal civil rights litigation were not proper principal expenditures.

The appellants are sophisticated individuals who employed numerous counsel over the years, and at all times relevant hereto, acted in their combined fiduciary roles as both the guardians of Ferren’s person and estate and as co-trustees of the trust.

Prior to their initiation of the federal civil rights lawsuit, the appellants sought Orphans’ Court approval as the co-guardians of Ferren’s person and estate to enter into the contingent fee agreement with Anapol, Schwartz, Weiss, Cohan, Feldman & Cohan, P.C and Stephen Pokiniewski, Esquire to pursue litigation against the School District in the federal district court for claims under the Americans with Disabilities Act (“ADA”), the Rehabilitation Act (“RA”), and the Individuals with Disabilities Education Act (“IDEA”).

By appellants not requesting disbursements from the trust, their attorney fees were limited to the contingent fee granted.

On November 29, 2007, the District Court rendered its decision in favor of the School District in Chambers, et al. v. School District of Philadelphia, Civil Action No. 05-2535.

The appellants, individually and on behalf of Ferren, then engaged the services of David J. Berney, Esquire to appeal the decision to the Third Circuit Court of Appeals. The fee agreement, entered into by the appellants, without court approval, “represented that [they] directed Wachovia Bank, trustee for the special needs trust fund of Ferren Chambers, to forward Law Firm a check in the amount of $15,000 to satisfy the initial retainer.” The account reflects payment on October 3, 2008 of $15,000.00 to the Law Offices of David J. Berney, and subsequent payments of $10,000.00 on December 26, 2008 and $10,000.00 on March 16, 2009. Appellants’ justification for not obtaining court approval was that it was not required because it was not a contingent fee agreement and “we were paying out of our own pocket.”

The Trustees owed a fiduciary duty to Ferren to properly use the trust assets. Mr. Bemey’s fees were paid by the trust, not from appellants’ “own pocket.” They were not used for Ferren’s educational needs, but rather to pursue the civil rights litigation in federal court. Wachovia’s acquiescence in issuing the checks to the Law Offices of David J. Berney does not justify the appellants’ actions or ratify that the payments were proper expenditures of trust principal.

The protracted federal court litigation continued,29 with appellants retaining new counsel, Robert B. Gidding, Esquire, again without court approval, because in their opinion, it was not needed, to litigate the remanded ADA and RA claims. Appellants paid him $30,000 from their “own pocket” and requested that the Trust reimburse them for those funds plus pay an additional $40,000.00. Both requests were denied by Wells Fargo as not within the terms of the trust. Interestingly, appellant Ronald Chambers testified he personally paid attorney Gidding between $47,000.00 and $50,000.00, but no supporting documentary evidence was ever presented by appellants confirming the amounts paid, nor was a fee agreement ever produced. Appellants’ have now retained yet another attorney without court approval, again reiterating that court approval was not needed because the money is “out of my pocket.”

As set forth in detail in the trial court’s adjudication, which is incorporated herein by reference as though fully set forth herein, the court analyzed the attorney fees paid and requested for the civil rights litigation, finding that: 1) they were not authorized by the trust, 2) they did not have a reasonable relationship to Ferren’s educational needs, 3) they were not necessary or appropriate for Ferren’s supplemental educational needs, 4) they were not a service recommended by Kennedy Kreiger or Dupont, and 5) they were not services which the School District failed to provide.

The attorney fees paid by the trust to the Law Officers of David J. Bemey totaling $35,000.00 were improper expenditures of trust principal by all co-trustees, appellants and Wachovia, predecessor of Wells Fargo, and as such resulted in a loss to the trust which was properly the subject of a surcharge.

The decision of Wells Fargo not to pay litigation fees in connection with the federal civil rights case to Robert B. Gidding, Esquire was proper.

The trial court has no jurisdiction over the matters raised by the appellants in their federal civil rights litigation, and if successful in their efforts, Appellants’ remedy for attorney fees lies with the federal courts, not this trial court.

2. The Trial Court committed no error in assessing surcharges.

The supreme duty of any trustee is “the preservation of the assets of the trust.” In re Estate of Lychos, 470 A.2d 136, 141 (Pa. Super. 1983). In protecting the trust, the appellants must “exercise such common skill, prudence, and caution as . . . reasonably prudent [people] would exercise in dealing with [their] own property.” Id. Any fiduciary possessing greater skill is held to a higher burden because of its increased knowledge. Id.

It is well established in the Commonwealth of Pennsylvania that a fiduciary may be surcharged when he causes a loss to the trust. In re Lux’ Estate, 389 A. 2d 1053, 1057 (Pa. 1978).

The Pennsylvania Supreme Court has held that:

[sjurcharge is the penalty for failure to exercise common prudence, common skill, and common caution in the performance of the fiduciary’s duty and is imposed to compensate beneficiaries for loss caused by the fiduciaiy’s want of due care.

Miller’s Estate, 26 A.2d 320, 321 (Pa. 1978).

The court is authorized to impose a surcharge whenever improper payments are made from the trust. In the matter at hand, all co-trustees are equally responsible for the depletion of the trust and bear equal responsibility in ensuring the recovery of the trust’s assets.

The trial court assessed surcharges totaling $76,424.34 against all co-trustees for breach of their fiduciary duties. Wells Fargo has not appealed the trial court’s adjudication awarding surcharges against it, and has therefore accepted that it was properly surcharged.

A. The Trial Court committed no error in assessing surcharges for improperly paid attorney’s fees.

The account showed payment of attorney fees by the trust totaling $101,304.08, which were objected to in their entirety by the School District, the remainder beneficiary. After careful review and analysis of all payments, the trial court sustained objections and assessed surcharges for the attorney fees paid to the Law Office of David J. Bemey totaling $35,000.00 in connection with the federal civil rights case as set forth above, and to payment of $312.00 to Caryl Oberman which charge was never explained by any of the co-trustees.

By requesting payment from the trust of attorney fees to David J. Bemey for their civil rights litigation, the appellants failed to exercise common pmdence in interpreting the tmst instrument and violated their fiduciary duty to protect the trust.

Wells Fargo, as successor to Wachovia, is equally liable for payment of attorney fees incurred in the federal litigation by the trust. As evidenced by Wells Fargo’s later refusal to allow such bills to be paid or reimbursed by the tmst, Wells Fargo, as a tmst expert and corporate fiduciary, should have been aware that those expenses were not reasonably related to the purpose defined in the trust instrument.

The tmst instmment is unambiguous enough so as not to be easily misconstmed, especially by parties so involved as the appellants and Wells Fargo. There is little question that Ferren’s educational trust was only intended to cover attorney’s fees when those fees were incurred in an effort to directly secure educational services for Ferren.

Further, Ferren’s educational trust was neither the only avenue nor the proper avenue for appellants to seek payment of attorney fees. The federal litigation, if successful, would have resulted in the payment of the appellants’ attorney fees. Orphans’ Court does not have jurisdiction to allow a tmst to pay attorney fees not reasonably related to the purpose of the tmst. As this court has determined that the fees were not reasonably related to Ferren’s educational tmst, disbursement of any money from the tmst to pay for such fees was improper.

B. The Co-Trustees’ failure to seek reimbursement to the Trust from the School District for annual administrative fees paid to Wells Fargo resulted in a loss to the Trust.

Article tenth of the trust sets forth the corporate trustee’s compensation and provides that “the Philadelphia School District shall be responsible to pay for the services of the corporate Trustee.” It further provides that: “The fee shall be paid from the principal of the trust each year, however the bill shall be presented to the Philadelphia School District for reimbursement.”

All co-trustees were aware that Wells Fargo’s administrative fees were to be paid by the School District because all co-trustees were involved in the drafting of the trust instrument. Appellants testified that they knew that the bank would be paid “$3,500 per year.” When these fees were paid by the trust, it became the responsibility of the co-trustees, as protectors of the trust, to seek reimbursement from the School District. No such reimbursement for the $21,000.00 paid by the trust was sought until March 4, 2011. By failing to timely seek reimbursement of the Trust, the co-trustees waived their right to seek reimbursement from the School District, and violated their fiduciary duty to protect the assets of the trust. Surcharge against the co-trustees for failure to timely seek reimbursement for the administrative fees paid by the trust totaling $21,000.00 was the proper remedy.

C. The Co-Trustees’ failure to seek reimbursement to the Trust from the attorney fees awarded to the McAndrews Law Offices resulted in a loss to the Trust.

Similarly, all co-trustees were aware that attorney fees were awarded against the School District during litigation handled by the McAndrews Law Offices to obtain services for Ferren, and that these attorneys’ fees had already been paid by the trust.

The account reflected payments by the trust to the McAndrews Law Offices totaling $49,320.40. The trial court found that the attorney fees were reasonably related to Ferren’s educational needs and a proper trust expenditure; however, there was no justification for the trustees’ failure to reimburse the trust from the fees awarded by the District Court. Appellants’ fee agreement with McAndrews Law Offices clearly stated that if attorney fees were awarded, all fees paid by the parties would be reimbursed. The co-trustees bore the responsibility of ensuring that the trust was reimbursed from the fee award. While $29,208.06 was eventually returned to the Trust, $20,112.34 was never reimbursed. In violation of their fiduciary duties, the co-trustees made no effort to seek reimbursement of the remainder of the funds expended by the trust. No credible evidence was presented to justify or explain the failure to seek the return of the additional funds to the trust. Therefore, surcharge of $20,112.34 against all co-trustees was proper.

3. The Trial Court committed no error in assessing surcharges against Appellants.

The appellants claim in their 1925(b) Statement that they had “absolutely no control over or authority regarding the funds in the trust.” This argument is spurious. As was set forth above, when to their advantage, the appellants treated the trust as money “out of their own pocket.” Now, that their actions are called into question, they claim no control. The appellants’ attempt to shift all blame onto Wells Fargo is without merit.

The appellants remain liable for improper disbursements from the trust even if the final disbursement decisions were made by Wells Fargo.

The appellants are in no way excused from their obligation to protect the trust simply because they are laypeople. The appellants were settlors of the trust as well as the trustees, and were thoroughly represented by counsel during the trust’s formation, and at all times thereafter. The appellants’ degree of involvement in drafting the trust instrument and their testimony is proof that the appellants were familiar with the purpose and terms of the trust.

They had a fiduciary duty to exercise common prudence in protecting the trust’s assets and acted in clear violation of that duty by using the trust “as their own pocket” to pay for litigation unrelated to Ferren’s educational needs. They failed to ensure the Trust was fully reimbursed from the McAndrews fee award, and they failed to seek reimbursement from the School District for Wells Fargo’s annual compensation.

Further, as trustees of Ferren’s educational trust and guardians of Ferren’s person and estate, appellants were parties in interest. As such, the court was accessible to them any time they disagreed with Wells Fargo’s administration of the trust. The appellants made no attempt to contest Wells Fargo’s decisions in administering Ferren’s trust at any point prior to the trust’s termination. The appellants violated their fiduciary duties as co-trustees and are properly surcharged.

4. The Trial Court committed no error in refusing payment of the Potential, Inc. and Freidman Associates bills by the terminated Trust.

As set forth in the trial court’s adjudication, the trial court found that the services to be rendered by Potential Inc. and the services rendered by Dr. Richard Hess of Freidman Associates were reasonably related to Ferren’s educational needs. The appellants argue that it was error for the court to have found the services reasonably related and yet have refused to order payment of the bills.

Pursuant to the unambiguous language of paragraph fourth of the trust, the trustees may provide for Ferren’s educational services obtained during the period starting April 2,2004, the date of the Mullaly order, and continuing until the trust’s termination on December 31, 2010.

The trust having terminated prior to any services being rendered by Potential, Inc., there was no obligation for any payment to be made by the trust.

The testimony at trial by the service provider, Potential, Inc., from Christine Quinby, the founder and executive director, was that no services were provided by Potential toFerrenin 2010.

Ms. Quinby had met with the appellants and Ferren on December 10, 2010 and submitted her proposal for services. The proposal contained an “estimate of recommended therapeutic hours” with an estimated yearly cost of $59,560.00. The specific hours and rates contemplated by the proposal were: 2.5 hours per week per year with a board certified behavior analyst for an annual cost of $13,000.00; 14 hours per week for the 44 weeks when school was in session and 20 hours per week for the 8 weeks when school is not in session with an ABA therapist, for an annual cost of $46,560.

Dr. Richard Hess, the certified school psychologist, who worked with Ferren for a number of years, reviewed the potential proposal and rendered his opinion that the program would be beneficial. His report, generated after his review of the revised potential proposal, was dated December 30, 2010, one day prior to the termination date of the trust.

After the trust terminated, potential did provide services to Ferren for the 2011/2012 school year, which were paid for by the School District. However, that, in and of itself, does not amount to clear and convincing evidence of a breach of a fiduciary duty by Wells Fargo.

The trial court found that the proposed services were reasonably related to Ferren’s educational needs. However, no testimony was presented by appellants that Ferren received any actual services from potential prior to the trust’s termination on December 31, 2010 which required payment. Nor was there any evidence presented by appellants, in their effort to prove that the services were reasonably related to Ferren’s educational needs, that the trust’s failure to provide payment, prior to the trust’s termination for the services that would be rendered after the trust terminated, caused the appellants to advance their own funds or caused a significant delay in obtaining services for Ferren.

The Freidman Associates bills for Dr. Hess’ review of the Potential, Inc. report and Ferren’s IEP submitted for payment by appellants on December 30 and 31,2010 were not paid by Wells Fargo. They were clearly reasonably related to Ferren’s educational needs, however, appellants failed to present any further testimony indicating whether these bills had been paid by appellants or remained outstanding. The only testimony was that Wells Fargo had denied payment from the trust; therefore the court was without sufficient facts to make any further determination.

5. The Trial Court committed no error in failing to award counsel fees to Appellants’ counsel for this litigation.

Award of attorney fees is within the sole discretion of the Orphans’ Court. In re Estate of Geniviva, 480 Pa. Super. 54, 675 A.2d 306, 313, alloc. den., 546 Pa. 666, 685 A.2d 545 (1996). The general rule is that each party is required to pay his or her own counsel fees. Estate of Wanamaker, 460 A.2d 824, 825 (Pa. Super. 1983).

The appellants breached their fiduciary duties as co-trustees of the trust as stated above, and thus are not entitled to any award of counsel fees.

Conclusion

Considering the number of issues raised by the parties, it is hard to believe that they participated in the drafting and execution of the trust instrument which brought them before the trial court. The instrument is clear, unambiguous and not so complicated as to be misinterpreted. Yet assertions have been made that its clear meaning and intent must be redefined by extrinsic evidence, despite controlling law to the contrary. All parties were represented in the creation of the trust by counsel of extreme expertise with Ferrens’s own parents as settlors. Because they were represented and because they were settlors, their attempt to attack the document they helped create, in accordance with controlling precedent, has failed, with the trial court permitting the document to be read as written.

In making this ruling, the trial court was mindful that there has been no previous effort to reform or bring into question the meaning of its terms during the life of the trust, with complaints arising only after its expiration with the unused fund to be otherwise returned to the School District. It was properly determined that the true meaning of the trust cannot lie outside its own four corners.

This court does not find it easy or pleasant to make decisions which seem to limit remedial care to one in such need as Ferren. However this court may only grant relief within the confines of its statutory jurisdiction, which limits it to relief permitted by law as applied to the trust as written.

Fortunately other courts with jurisdiction do exist which can address these concerns. In fact, the appellants continue to be engaged in litigation and are pursuing remedies requested here in other judicial forums. Fortunately for Ferren, they are not under the jurisdictional limitations of the Orphans’ Court.

In that all issues have been fully addressed, and the trial court having entered its decision in accordance with controlling precedent, it is respectfully submitted that it be affirmed.

      . Per Curiam order filed 7/31/14, In Re: Educational Trust for the Benefit of Ferren Chambers, No. 1547 and 1548 EDA 2014.

      . Decree of the honorable Anne Lazarus dated April 2, 2004 adjudicated Ferren Chambers incapacitated and appointed appellants guardians of her person and estate.

      . Special education hearing officer decision dated April 2, 2004 (hereinafter referred to as the “Mullaly order”), exhibit A-1/P-l, Addendum.

      . Educational trust for the benefit of Ferren Chambers, exhibit A-1/P-l. The trial court notes that exhibit A-l/P-1 is a fully executed copy of the trust and was offered as the joint exhibit of appellants chambers and appellee Wells Fargo. Wells Fargo, as the accountant, designated its exhibits beginning with the letter “A”. Appellants’ exhibits are designated beginning with the letter “C”, and the School District’s exhibits begin with the letters “SD”.

      . Account of Wells Fargo Bank, N.A., exhibit A-2, p.3.

      . Exhibit C-4.

      . Exhibit A-l/P-1, p.4.

      . Exhibits C-4, A-3.

      . Exhibit A-2, p.2.

      . Exhibit A-3.

      . Exhibit C-4.

      . N.T. p. 146, 151, exhibit A-3.

      . Petition for declaratory judgment, control no. 112914.

      . DPW subsequently notified the court and all parties in interest that it was not pursuing any claim against the trust.

      . First and final account and petition for adjudication, control no. 120159.

      . Petition for adjudication, rider to question 13.

      . Decree dated August 13,2012. The trial court note that this issue was not appealed.

      . N.T. p. 85, 87, 106, 108; exhibit SD-21.

      . Exhibit A-l/P-l,p.6.

      . N.T. p. 32, 58-59.

      . Trial court adjudication, page 5.

      . N.T. p.32.

      . N.T. p.58-59.

      . Exhibit C-8, eecree of judge Lazarus dated May 3,2005.

      . Exhibit SD-6 order, memorandum and opinion dated November 29,2007 of the honorable Gene E.K. Pratter granting summary judgment in favor the School District on the IDEA, ADA and RA Claims.

      . N.T. p. 76, 116; exhibit C-10, paragraph 4.

      . N.T. P. 117, 118; exhibit A-2 account, p. 10, 11, 12.

      . N.T. p. 116.

      . Exhibit SD-7 — opinion of the honorable Fisher affirming the district court’s grant of summary judgment on the IDEA claim, and remanding the ADA and RA claims to the district court.

      . N.T. p. 119, 120-121.

      . N.T. p. 122

      . Trial court adjudication, p.8-9

      . Exhibit A-1/P-1, p.4

      . N.T. p.79

      . Id.

      . N.T. p. 148; exhibit A-4.

      . Exhibit A-2 account, p.6, 8, 10, 11, 20, 21.

      . Exhibit C-9, p.2

      . Exhibit A-1/P-1,p.4.

      . N.T. p. 47.

      . Exhibit C-2.

      . Id.

      . N.T. p. 96-97, exhibit C-3.

      . N.T. p. 46-47, 97.


source: Caselaw Access Project

author: PICCIONE, /.,

license: Public Domain

text:
    Maria Cher’s Wall St. Treats v. Daffin’s Inc.

      C.P. of Lawrence County,
    No.10283 of 2013, C.A.

      James W. Manolis, for plaintiff.

      Paul T. Grater, for defendant.
    Aug. 19, 2014
   PICCIONE, /.,

— Before this court for disposition are the preliminary objections filed on behalf of the defendant, Daffin’s, Inc., a Pennsylvania Corporation (hereinafter, the “defendant”), to the complaint filed on behalf of the plaintiff, Maria Cher’s Wall St. Treats, LLC, a Pennsylvania Limited Liability Company (hereinafter, the “plaintiff’). This current action was commenced on May 9, 2013, when the plaintiff filed the complaint asserting claims of negligence, negligent misrepresentation, intentional misrepresentation, breach of contract, breach of implied warranty and breach of express warranty against the defendant. According to the complaint, Ms. Constance Mariacher (hereinafter, “Mariacher”) formed the plaintiff limited liability company on April 14,2008 for the primary purpose of producing, marketing, and selling certain confections comprised primarily of Com Chex, caramel, white, milk, or dark chocolate, and either peanuts, cashews, almonds, or pecans (hereinafter, collectively, the “confection”). The plaintiff’s confection was well received, and as of the spring of 2009, the plaintiff’s confection was sold in over 100 college bookstores and in 6 Giant Eagle stores. In early 2011, the plaintiff received a request from Giant Eagle to supply it with confection for 75 Giant Eagle stores. The plaintiff was unable to produce such a large quantity to meet the demand at Mariacher’s house.

In or about February 2011, plaintiff entered into an oral agreement with the defendant whereby the defendant agreed to produce the plaintiffs confection at its production facility in exchange for payment. Additionally, the defendant agreed to purchase the raw materials for the production of the plaintiff’s confection then produce, and package the confection in accordance with the recipe and general directions provided to the defendant by the plaintiff and ship the confection on behalf of the plaintiff. The plaintiff avers that the defendant and its agents held themselves out to have the necessary facilities, knowledge, education, experience, expertise and employees sufficiently to provide these services for the plaintiff pursuant to the oral agreement. The plaintiff avers that it relied upon the representations of the defendant and its agents in making the decision to enter into the oral agreement with the defendant. Prior to commencing each party’s requirements per the agreement, the defendant produced and provided samples of the confection to the plaintiff for the plaintiff’s approval.

The parties commenced the oral agreement in March 2011. The defendant commenced utilizing its production facility and equipment and employees, purchasing raw materials for the confection, and producing, packaging and shipping confection as the plaintiff placed orders. The defendant then billed the plaintiff for these services, and the plaintiff paid each bill. On July 15, 2011, the plaintiff received an order numbered 0000235343, from Giant Eagle; and the plaintiff placed an order with the defendant to fulfill Giant Eagle’s order. The defendant was to ship this order to Giant Eagle no later than August 3, 2011.

On July 27, 2011, Mariacher visited the defendant’s place of business to inquire on the status of the order to Giant Eagle. During the visit, Mariacher learned that although the almond and peanut confection portion of the order had been produced and packaged pursuant to the order, the cashew and pecan confection portion of the order was produced but had not been packaged. Mariacher alleges that an employee of the defendant, Ms. Marcie Mack (hereinafter, “Mack”), had assumed responsibility for the production of the order in the absence of Mr. Gary Sigler (hereinafter, “Sigler”), the operations manager for the defendant, because Sigler had not made adequate arrangements to ensure that the cashew and pecan confection portion of the order was timely packaged. Mariacher and her husband were forced to assist with the packaging of the cashew and pecan confection portion to ensure it would be timely shipped as promised to Giant Eagle. Additionally, while in the defendant’s business, Mariacher and her husband noticed that moths were present within the facility. When Mariacher approached Mack about the moths, Mack responded that she had previously spoken to Sigler about the moths and Sigler said the moths were harmless and not attracted to chocolate. Sigler informed Mack that if the moths landed on the confection, they would fly off the product when disturbed during the packaging process. Sigler told Mack that the moths did not pose any health, safety or other threat nor would they compromise the quality or wholesomeness of the confection.

The plaintiff argues that at the time Mack and Sigler made the representation, they knew or should have known that the moths could adulterate or contaminate the confection. The plaintiff also alleges that the defendant knew or should have known that the presence of moths would adulterate and contaminate the order and jeopardize the plaintiff’s relationship with Giant Eagle. At the time Mack and Sigler made the representation, they knew or should have known that the adulteration or contamination of the confection would result in Giant Eagle’s canceling its contract and ending its relationship with the plaintiff or would have a significant and reasonable likelihood of causing Giant Eagle to cancel its contract and end its relationship with the plaintiff. The plaintiff also alleges that Mack and Sigler made the representations with the intent to induce the plaintiff to rely on the representations and to persuade the plaintiff to package and ship the potentially adulterated or contaminated confection to Giant Eagle and to pay the defendant’s for the confection. Based upon those representations, the plaintiff caused the cashew and pecan confection portion of the order to be packaged and shipped to Giant Eagle, along with the peanut confection portion of the order on August 3, 2011.

On October 10, 2011, a Giant Eagle representative contacted the Plaintiff and reported that two packages from the cashew and pecan confection portion of the order had been returned to two or more Giant Eagle stores by customers because there were moths in the product; and Giant Eagle recalled those portions of the order. Giant Eagle then demanded an explanation as to why the cashew and pecan confection portion of the order was adulterated and contaminated with moths, and demanded further assurances from the plaintiff that the remaining confection and future orders of confection would not be adulterated or contaminated by moths or otherwise. Mariacher expressed to Sigler her concern that moths may have adulterated or contaminated the almond or peanut confection portion of the order that had been packaged by the defendant prior to July 27, 2011 and shipped to Giant Eagle along with the cashew and pecan confection portion of the order on August 3,2011, Sigler assured Mariacher and the plaintiff that the almond and peanut confection portion of the order had been packaged under circumstances that could not have resulted in adulteration or contamination by moths. Based upon these representations, Mariacher represented to Giant Eagle that no other confection was adulterated or contaminated. Giant Eagle continued with its relationship with the plaintiff and did not cancel the contract between the parties.

The defendant alleges that at the time Sigler made the representation, he knew or should have known that the adulteration or contamination of the peanut confection portion of the order would result in Giant Eagle’s canceling its contract and ending its relationship with the plaintiff or would have a significant and reasonable likelihood of causing Giant Eagle to cancel its contract and end its relationship with the plaintiff. The plaintiff alleges Sigler made the representations with the intent to induce the plaintiff’s reliance thereon and to persuade the plaintiff not to recall the peanut confection portion of the order or advise Giant Eagle of the circumstances, or take other measures to address the issue and to induce the plaintiff to pay for the peanut confection portion of the order. Based upon Sigler’s representation, the plaintiff did not recall the peanut confection portion of the order, advise Giant Eagle of the circumstances, or take other measures to address the issue.

Thereafter, on November 7,2011, the plaintiff received an email from Giant Eagle indicating that it received the plaintiff’s chocolate caramel with peanuts confection but it contained worms therein. On December 1, 2011, Giant Eagle confirmed the cancellation of the contract with the plaintiff. The plaintiff alleges that had the peanut confection portion of the order not been contaminated and adulterated by moths, Giant Eagle would not have cancelled its contract and terminated its relationship with the plaintiff. The plaintiff also alleges that had the defendant advised the plaintiff that the peanut confection portion of the order could be or was contaminated and adulterated by moths, Giant Eagle would not have cancelled its contract and terminated its relationship with the plaintiff. The plaintiff avers that all or part of the confection produced by the defendant pursuant to the above-identified order that was returned by customers of Giant Eagle was adulterated and contaminated by the moths at the defendant’s facility. Finally, the plaintiff argues that the defendant failed to advise the plaintiff of the facts above, and instead, represented that the moths posed no such threat and would not adulterate or contaminate the order.

As stated above, the plaintiff has asserted claims of negligence, negligence misrepresentation, intentional misrepresentation, breach of contract, breach of implied warranty, and breach of express warranty against the defendant. The defendant filed preliminary objections to the complaint on July 11, 2013. Each party filed a brief in support of its position, and oral argument was hearing in this court on January 27, 2014. A further hearing specifically on the issue of venue was held before this court on June 30, 2014.

The defendant’s preliminary objections contains two objections. The first preliminary objection is in the nature of a demurrer to counts I, II, and III in the complaint. The defendant argues that these counts are barred by the economic loss doctrine as well as by the gist of the action doctrine. The defendant’s second objection raises a claim of improper venue pursuant to Pa.R.C.P. 1028. The court will address the defendant’s second preliminary objection first. “The plaintiff’s choice of forum is given great weight.” Zampana-Barry v. Donaghue, 921 A.2d 500, 503 (Pa. Super. 2007). The party challenging the choice of venue “bears the burden of proving that a change of venue is necessary, while a plaintiff generally is given the choice of forum so long as the requirements of persona! and subject matter jurisdiction are satisfied.” Purcell v. Bryn Mawr Hospital, 579 A.2d 1282, 1284 (Pa. 1990). In Zappala v. Branolini Property Management, Inc., 909 A.2d 1272 (Pa. 2006), the Pennsylvania Supreme Court set forth the proper procedural and substantive components of a venue challenge. In Zappala, the court stated,

[PJursuant to rule 1006(e), the defendant may challenge venue as improper by preliminary objection. This is the exclusive method to challenge venue as “improper.” A rule 1006(e) challenge to improper venue by preliminary objection has two key components: one substantive and one procedural. Substantively, the basis for a rule 1006(e) challenge is the defendant’s belief that venue is “improper” in the plaintiff’s chosen forum. The meaning of the word improper, as used in subsection (e), is ... shaped by rule 2179 (providing where a personal action against a corporation may be brought), 1006(a) and (b) (providing where an action may be brought) and... 1006(c). These rules exclusively address where venue properly may be laid at the time the suit is initiated. Thus, question of improper venue is answered by taking a snapshot of the case at the time it is initiated: if it is “proper” at that time, it remains “proper” throughout the litigation.

Id. at 1281. “[I]f venue is improper, the court lacks superintendence to hear the case. A challenge to improper venue, therefore, must be addressed before the case proceeds.” Wilson v. Levine, 963 A.2d 479, 484 (Pa. Super. 2008) (citations omitted).

The defendant argues that this action should be transferred to Mercer County, Pennsylvania, in accordance with Rule 2179, which sets forth the proper venue for an action against a corporate entity. Rule 2179 provides, in pertinent part, that the venue of an action against a corporate entity may be brought “in and only in (1) the county where its registered office or principal place of business is located; (2) a county where it regularly conducts business; (3) the county where the cause of action arose; [or] (4) a county where a transaction or occurrence took place out of which the cause of action arose[.]” Pa.R.C.P. 2179(a) (1)-(4), See also Pa.R.C.P. 1006(b). “The prerequisites to venue provided in Pa.R.C.P. 2179(a) are stated in the disjunctive and thus acts triggering any one of the subsections are sufficient to attach venue.” Deyarmin v. Consolidated Rail Corp., 931 A.2d 1, 8 (Pa. Super. 2007) (brackets and citations omitted).

It is undisputed that the defendant’s principal place of business is in Mercer county and that the events from which the cause of action occurred took place in Mercer County. Therefore, venue properly lies in Lawrence County only if the defendant regularly conducts business in Lawrence County.

“To determine whether a corporate entity regularly conducts business in a particular county, [the Court] must consider whether the corporate entity’s contacts with that county are sufficient to compel it to defend itself there.” Singley v. Flier, 851 A.2d 200, 201 (Pa. Super. 2004). “It is well established law in Pennsylvania that the court applies the ‘quality’ and ‘quantity’ test to determine if business contacts are sufficient to constitute regularly conducting business for purposes of establishing venue. Fritz v. Glen Mills Schools, 840 A.2d 1021, 1023 (Pa. Super. 2003). “Quality of acts means those directly, furthering or essential to, corporate objects; they do not include incidental acts. Quality means those acts which are so continuous and sufficient to be general or habitual.... For corporate acts, those in aid of a main purpose are collateral and incidental, while those necessary to its existence are direct.” Kronsowski v. Ward, 836 A.2d 143, 147 (Pa. Super. 2003).

Instantly, the defendant argues that there is no allegation in the complaint indicating any controlling transaction took place in Lawrence County other than the parties’ entering into an oral agreement and the alleged failure of the defendant to perform adequately in Mercer County to enable the plaintiff to provide her products to Giant Eagle stores in Lawrence County. In its brief in support of the preliminary objections, the defendant argues that “the plaintiff’s complaint contains an unsupported allegation that the defendant regularly does business in Lawrence County[.]” Def. brief, pg. 7, Upon review of the complaint, the court agrees. In the preliminary objections, the defendant does not raise issues of fact averred by the plaintiffs; rather, the defendant argues that there are insufficient contacts within Lawrence County to provide this court with jurisdiction. Although a court is not compelled to hear further evidence or testimony when an issue of fact is not raised, upon review of the pleadings, this court found that there were insufficient facts on which to rely to determine if venue properly lies in Lawrence County. Consequently, the court was unable to make a fully reasoned decision with those facts contained in the pleadings, and, therefore, scheduled a hearing on this issue. See Fritz v. Glen Mills Schools, 840 A.2d 1021, 1024 (Pa. Super. 2003). Therefore, the court permitted limited discovery on the issue of venue prior to the hearing on June 30, 2014, during which time the defendant offered the testimony of Sigler.

As stated above, Sigler is the defendant’s operations manager. Sigler testified that he oversees the production and manufacturing as well as sales of the defendant’s products. Sigler testified that the defendant has store locations in Mercer and Venango Counties only. Additionally, the defendant employs a sales staff that solicits business, and none of the sales staff solicits business in Lawrence County. Although it is not a direct customer of the defendant’s, Sigler is aware that Bunny’s Cardsmart, located in Lawrence County, sells the defendant’s products. Sigler testified that he calculated the percentage of revenue from Bunny’s Cardsmart to be approximately .001%.

Sigler also testified as to the defendant’s fundraising. The defendant provides its products to all of the local school districts within Lawrence County. The school districts include Shenango, Laurel, Mohawk, Neshannock, New Wilmington, Union, and the New Castle school districts. Sigler testified that the defendant receives little to no profit as a result of this. Those groups that choose to fundraise with the defendant’s products travel to Mercer County to retrieve the defendant’s product. Also, Sigler testified that the defendant advertizes in the New Castle Newspaper but did not recall any other locations in Lawrence County where the defendant advertises.

For rebuttal, the plaintiff offered the testimony of Mariacher. Mariacher testified that she contracted with the defendant with the intent to have the defendant produce her confection and have her products sold in Giant Eagle locations. She testified that she made it known to the defendant that Giant Eagle stores in Lawrence County agreed to sell her product.

Upon consideration of the facts on the record, the court is not satisfied that the defendant regularly conducts business in Lawrence County to enable an action to be brought against it in Lawrence County. It appears that the plaintiff is arguing that Lawrence County is the proper venue for this action because the defendant’s products are shipped and ultimately sold to and within Lawrence County regardless of whether the defendant contracted with entities within Lawrence County or itself entered Lawrence County or delivered its products to stores within the county for the purposes of conducting business. More simply, the plaintiff seemingly argues a stream-of-commerce ultimately ending in Lawrence County provides a sufficient basis to establish proper venue when filing suit against a corporation with its principal place of business outside Lawrence County. Although stores within Lawrence County may sell the defendant’s products, the defendant is not engaged in every step of the distribution process to establish sufficient contacts within Lawrence County. Other affiliates of the defendant may distribute the defendant’s product, in Lawrence County, but an affiliate’s contact within Lawrence County does not necessarily flow from the affiliate to the defendant. The court will not attribute an unknown independent’s actions to the defendant corporation. Moreover, the confection the defendant agreed to produce was to be packaged and sold as the plaintiff’s product, rather than the defendant’s.

Conversely, the defendant provided sufficient evidence to satisfy the burden placed upon it. The defendant presented evidence that the proper venue of the instant action should be Mercer County, Pennsylvania. The defendant’s corporate office and store locations are located in Mercer County. The defendant exclusively solicits business and mainly advertises within Mercer County. Although the defendant provides its products to school districts in Lawrence County, those groups who choose to use the defendant’s products to fundraise pick up the product from the defendant’s location in Mercer County. Moreover, the court does not consider such fundraising activities to be sufficient “quality” acts to meet the “regularly conducts business” test explained above. Finally, a court may also consider sales contacts in determining whether a corporation regularly conducts business within a county. See Mathues v. Tim-Bar Corp., 652 A.2d 349, 351 (Pa. Super. 1994). Only a small portion of sales were shown to result from sales within Lawrence County. Because the defendant’s quality contacts are within Mercer County, Lawrence County is without the necessary authority to hear the action. Based upon the foregoing, the defendant’s preliminary objection to venue is hereby sustained. The instant action shall be transferred to Mercer County.

ORDER OF COURT

And now, this 19th day of August, 2014, this matter having been before the court on January 27, 2014 and June 30, 2014 regarding defendant’s preliminary objections, with James W. Manolis, Esquire, appearing and representing the plaintiff, and Paul T. Grater, Esquire, appearing and representing the defendant, and after a complete and thorough review of the applicable record, the court hereby orders and decrees as follows:

1. The defendant’s preliminary objections are hereby sustained pursuant to the attached opinion, to the extent that the court finds that the venue of this action in Lawrence County is improper and the venue of this action is transferred to the Court of Common Pleas of Mercer County, Pennsylvania. No ruling is made in any other preliminary objection not related to venue, but reserved for disposition in Mercer County.

2. The prothonotary shall properly serve notice of this order and attached opinion upon counsel of record. Pursuant to Pa.R.C.P. 1006(e), the prothonotary shall forward to the prothonotary of Mercer County certified copies of the docket entries, process, pleadings, depositions, and other papers filed in the action. The costs and fees for transfer and removed of the record shall be paid by the plaintiff.

      . The court notes that during the oral argument held on January 27, 2014, the plaintiff conceded that the defendant’s first preliminary objection was meritorious and agreed to strike those counts from the complaint.