author: HERRON, J.,

text:
    In re Jones Trusts

      C.P. of Philadelphia County, O.C.
    Nos. 158 IV of 1971, 159 IV of 1971
    March 18, 2015
   HERRON, J.,

Introduction

The motion for partial summary judgment filed by Trustee PNC Bank, N.A., challenges the viability of objections to its past trustee compensation by certain trust beneficiaries who either explicitly consented or acquiesced to those fees for more than two decades without seeking an account. Based on the documents presented by PNC and for the reasons set forth below, those objections limited to the trustees’ past fees are without merit and are denied. A hearing is still necessary, however, on the remaining objections and the petition to remove PNC as trustee. This ruling does not address any request for a retroactive increase in trustee commissions during the accounting period.

Background

PNC Bank, N.A. (“PNC”) is the present trustee for two trusts that were established by Louise E. W. Jones on October 29, 1923 (Trust 1) and November 29, 1923 (Trust 2). The original trustees for both trusts were The Land Title and Trust Company and Warren Graham. Trust 1 was created for the benefit of the settlor’s two daughters, Evelyn Cubberly and Marion Graham. Trust 2 was created initially to provide income to the settlor. Upon the death of the settlor, the income from Trust 2 was to be distributed in equal shares to her two daughters. Warren Graham, the original individual co-trustee, died on Februaiy 9, 1932. Nelson Garden was appointed as successor co-trustee by decree dated May 14, 1932. Mr. Garden died on July 7, 1969. No substitute co-trustee was sought until June 2013, when Robert R. Kendall filed a petition to be named as individual co-trustee. This petition was granted without opposition, and by decree dated August 19, 2013 Robert Kendall was appointed as individual co-trustee of both Jones Trusts.

On October 30, 2013, PNC Bank, as successor in interest to the original trustee, filed separate accounts of its administration of the two trusts covering the period April 12, 1972 through August 19, 2013. The assets of these two trusts are considerable. The balance of principal before distribution in Trust 1 is $10,388,374, while the balance of income before distribution is $12,333,042. The balance in principal before distribution for Trust 2 is $5,741,805.42 while the balance of income before distribution is $6,544,632. Four beneficiaries of the trusts filed objections to these accounts on November 27,2013. On December 2, 2013, Carole Sheffield, as counsel for Jean C. Wade, filed a miscellaneous entry stating that Jean C. Wade, a 4.166% current income beneficiary of Trust 1 and Trust 2, has joined as an objector to the accounts.

The prolix and lengthy objections focus primarily on trustee fees both past and future. The objectors note that under Article Seventh of the original trust documents, the trustees were to share a 4% trustee commission based upon the annual income of the trust. In 1969, the individual trustee died and was not replaced until 2013 by Robert Kendall. The objectors therefore concede that during the accounting period, PNC would be entitled to the full 4% income commission. They complain, however, that in 1976 PNC sought to raise the commission from 4% to 6% without seeking judicial approval. They also assert the 6% commission was incorrectly calculated.

The objectors further object to a change PNC made as to its fees in 1989, when it began charging a commission rate based on its “then in effect fee schedule” minus certain discounts. The objectors assert that this was improper for a variety of reasons: all of the present income beneficiaries did not consent to this modification; no judicial approval was obtained; and this modification could not bind future generations. The objectors contend the proper fee throughout the accounting period should have been 4%, though they seem amenable to a 6% rate commencing in 1976.

The objectors assert that the assets of both trusts should be combined for purposes of calculating the appropriate fee “given that the present terms and beneficiaries of the two trusts are identical. In addition to challenging past trustee fees, the objectors challenge the trustees’ request to change their future commission rate by (1) seeking to eliminate the discounts and (2) reallocating the source of those future payments from 100% of principal to a division based on 65% to principal and 35% to income. According to the objectors, the trustees have failed to justify an increase under 20 Pa.C.S. § 7768(b). The objectors note that the accountant might also obtain higher compensation under 20 Pa.C.S.A. § 7705 but the accountant has failed to provide sufficient grounds for such an increase.

In response to these accounts and objections, there was a flurry of petitions largely focusing on discovery issues. In August 2014, the objectors filed a Petition to Remove PNC as trustee and on October 21, 2014, PNC filed a Petition for Partial Summary Judgment. The procedural history of the Petition to Remove PNC as trustee is quite complex. PNC filed preliminary objections to that petition, which were granted by decree dated December 22, 2014 on the grounds of legal insufficiency and lack of specificity. The objectors were given 20 days to file an Amended Petition to Remove PNC which was filed on January 12, 2015. In light of the prolix nature of the amended petition, this court issued a rule to show cause why it should not be dismissed without prejudice due to its failure to conform to the rules of pleading. By decree dated February 3, 2015, the rule to show cause was dismissed following oral argument.

Trustee PNC’s Petition for Partial Summary Judgment as to the Narrow Issue of Past Changes in its Trustee Fee Commissions Is Granted Based on the Evidentiary

Evidence

In contrast to the objectors’ prolix petition to remove PNC as trustee of both Louise Jones Trusts, PNC’s motion for partial summary judgment is scalpel sharp in focusing on the objections to its past trustee commissions paid during the period of accounting. PNC notes that in 1976, it sought to raise trustee compensation to 7% of income. To obtain that increase, PNC sent a consent letter to each of the income beneficiaries seeking their approval of the higher compensation. At the beginning of 1976, there had been only two income beneficiaries, the sisters Marion W.J. Graham and Evelyn L.J. Garden. But Evelyn Garden died on June 21, 1976 and her half income interest passed to her two children: David Garden and Louise E. Kendall. Consequently, when PNC sought to increase its fees in 1976, there were only 3 income beneficiaries. PNC sent letters dated November 9, 1976 to those income beneficiaries: Mrs. Marion Graham, David Garden and Louise Kendall. Within weeks, the trustee reduced its requested increase in compensation to 6%. All three of the 1976 income beneficiaries returned written consents to this 6% increase in trustee commission. More specifically, Marion Graham, through her son and power of attorney John Graham, explicitly agreed to this 6% increase in trustee compensation by letter dated December 22, 1976 to the Vice President of Provident National Bank:

Dear Mr. Werley:
In response to your initial letter of November 9, 1976, as modified by your letter of November 16, 1976, and my letter to you of December 9, 1976, this letter is to advise that Marion WJ. Graham agrees to the commission of six percent commencing for the current fiscal years in the above trusts, subject to the provisions as set for in the correspondence identified above.

The two other remaining income beneficiaries in November 1976, likewise consented in writing to the 1976 increase in trustee commission. Both David Garden and Louise Kendall explicitly consented to the 6% trustee commission in their joint letter to the Vice President of Provident National Bank dated December 9, 1976:

Dear Mr. Werley:
With regard to the Provident’s proposed fee increase from four to six percent of income on your trust accounts of Louise E. W. Jones No. 1-46526 and No. 2-46527, the undersigned beneficiaries agree to the increase upon the following conditions:
1. We reserve the right to rescind the two percent increase by written notice to you at any time, longevity of fee existence notwithstanding.
2. Close attention will be given to investments of both portfolios and the performance shall be reported quarterly to all beneficiaries as in the past...
Very truly yours,
David A. Garden
Louise E. Kendall

All the 1976 income beneficiaries, therefore, explicitly and in writing consented to the increase in trustee fee commission from 4% to 6%. In 1985, Louise Kendall died. Her 25% interest in the trust income, passed to her five children, outlined as follows by PNC in its partial summary judgment petition:

Name Objector Status Income Interest
Evelyn Hiltebrandnon-objector 5%
Robert R. Kendall objector 5%
Elaine M. Kendall objector 5%
Thomas E. Kendall non-objector 5%
Elizabeth Kendall objector 5%

Marion W. J. died in 1987. Her 50% interest in trust income passed as follows to her four children, none of whom have filed objections to the accounts:

Name Objector Status Income Interest
John R. Graham non-objector 12.5%
Joyce G. Wade non-objector 12.5%
Jean G. Price non-objector 12.5%
Jeffrey W. Graham non-objector 12.5%

In 1989, the trustee once again sought to change its fees by contacting all the income beneficiaries. At that point, there were ten trust income beneficiaries. PNC sent a letter to all the income beneficiaries notifying them that for the past 12 1/2 years it had been receiving a fee based on 6% of trust income which was greater than the commission initially set in the trust documents. In this June 12, 1989 letter, the trustee also sought the beneficiaries’ approval to charge commissions based on its scheduled rates from trust income with a 30% discount as follows:

Dear Ms. Kendall:
In the above two trusts, our bank has been receiving a fee of 6% of income chargeable to income for the past 12 1/2 years. In the # 1 account that fee translates to the equivalent of $2.47 per $ 1,000 or .00247 or (in the terminology which seems to be in favor today) 24.7 basis points.
You probably recognize that compared to the fees charged by most financial advisors, this is an extremely modest fee. On the other hand, the beneficiaries of the Jones’ trusts over the years have been, in my estimation, equitable in permitting increases from time to time in the rates being charged which are over and above those set forth in the original Deeds of Trust back in 1923.
As you may know, we are entitled to a fee of 2% of the principal of the trust as each trust terminates as reduced by an interim fee (of approximately 1%) allowed to us by the court a number of years ago.
It had initially occurred to me to ask all of the beneficiaries if they would approve of increasing our fee from 6% of income to 7% of income, which in the # 1 account would increase our fee to 28.9 basis points, and in the #2 to 27.5 basis points, but I subsequently thought that all the beneficiaries might be better served and be happy with a proposal that going forward the bank be permitted to charge its scheduled rates in effect from time to time subject to a 30% discount, which would increase our fee to 28.7 basis points in the # 1 account and to 31.9 basis points in the #2 account, but, importantly, in conjunction with that our bank would agree to forego the termination fee when these trusts conclude.
In absolute numbers, such an increase in the fee being charged to income would cost you $34.72 per quarter in the #1 account and $37.91 per quarter in the #2 account in addition to the fee already being paid to our bank and in return (based on current market values) would save a fee to the family overall in excess of $100,000 at the termination of the trusts.
One added feature of this proposal is that since our scheduled rates are occasionally adjusted (but this is always tempered by the competitive nature of the banking and financial industry in Philadelphia), it would be quite unlikely that you would be troubled in the future by any further fee requests on behalf of this bank.
If you concur with me that this seems to be a very desirable way to approach this matter, will you please so indicate by signing the enclosed approval copy of this letter and returning it to me in the envelope provided.
Sincerely,
Carl F. Werley
Vice President

Eight of the ten income beneficiaries in 1989 signed and thus explicitly approved the trustee’s 1989 letter requesting a change in the trustee’s fee calculations. Significantly, two of the objectors — David A. Garden and Robert R. Kendall — signed and consented to this change which they have now protested in their November 2013 objections to the account filed by PNC. In exhibit H, for instance, David Garden signed his name twice to the June 12, 1989 trustee letter after “Approved” and dated it “6/22/89.” Likewise, in exhibit I, objector Robert Kendall signed his name twice after “Approved” to the June 12,1989 letter from the trustee seeking the consent of the income beneficiaries to charge fees based on the bank’s schedule.

As PNC concedes, two income beneficiaries — Elaine Kendall and Elizabeth Kendall- did not respond to this initial June 12, 1989 letter. The trustee therefore sent each of them three follow-up letters. In letters dated August 1, 1989 addressed separately to Elaine and Elizabeth, the bank vice president wrote:

Dear Ms. Kendall:
Approximately two months ago I wrote to all the beneficiaries of the Louise E. W. Jones Trusts regarding a proposed increase in the fees to our bank as Trustees of the above trusts. Since that time, I have received approvals from beneficiaries representing more than 75% of the income distributions, and I am hoping that you will join them by signing the approval copy of the letter forwarded to you under the date of June 12,1989, or if that is not handy, by signing the photocopy of that letter which we enclose at this time.

The bank vice president sent another letter to both Elaine and Elizabeth dated September 7, 1989 which stated:

Dear Ms. Kendall:
It has been a little over three months since I first wrote to all the beneficiaries regarding the proposed change in our fees. All the beneficiaries other than you and one other party have approved my suggestions, and I am hoping that I have not heard from you only because you have not had the occasion to sign the approval copy and return it to me.
If you have any questions or any problems with my suggestions as to fees, I would be happy to try to explain them to you. If not, it would be helpful if you could sign either the previous approval copy or the approval copy of this letter and return it to me in the envelope provided so that we can proceed with the new proposals.

A little more than a month later by letters dated October 18, 1989, the bank vice president informed both Elaine and Elizabeth of the trustee’s intent to charge fees based on its fee schedule since it had obtained the approval for this change from 90% of the other income beneficiaries. In so doing, he assured both beneficiaries that as in the past the trustee fees would be set forth in their periodic statements:

Dear Ms. Kendall:
We have not had any response from our letters dated June 12, 1989, August 1, 1989, and September 7, 1989 to you, but since we already have the signed approvals of the income beneficiaries representing 90% of the income from the above two trusts we will be putting into effect the change in compensation set forth in our letter to you of June 12,1989, which is to charge our schedule of rates in effect from time to time subject to a 30% discount and to agree to forego the balance of the termination fee payable to our bank when these trusts conclude.
As mentioned in the letter of June 12,1989, this change in fee structure will only cost you approximately $34.72 per quarter in the #1 account and $37.91 per quarter in the #2 account. These numbers will of course change from time to time as the income and the valuation of the trusts change from time to time.
As in the past our compensation will continue to be reflected in the statement which you receive periodically.

Based on this record, PNC filed its partial summary judgment motion as to these past fees only. It argues, first, that PNC has charged its scheduled rates with a 30% discount for the past 25 years with no objections to the statements the income beneficiaries periodically receive. The beneficiaries’ claims are therefore barred either by explicit consent, by acquiescence or by laches. Procedurally, PNC asserts that only those beneficiaries who actually filed obj ections have standing to pursue them. The objectors would thus lack standing to assert claims on behalf of those beneficiaries who did not file objections on their own behalf. According to PNC, the claim of each beneficiary is limited to his or her proportionate share in the trusts. More to the point, it asserts that two of the objectors, David Garden and Robert Kendall, explicitly consented in writing to the 1976 or 1989 fee changes and thus may not object to these fees at this late date. PNC further asserts that beneficiaries and objectors Elizabeth Kendall and Elaine Kendall were given notice in 1989 of the proposed fee changes and they did nothing to object to them. By this inaction, they therefore acquiesced to them and cannot lodge protests more than 20 years later. Likewise, PNC argues that objector Jean Wade, who became an income beneficiary in 2001 at the death of her mother Joyce Wade, did not object to the trustee fees for the past 12 years. PNC notes that Jean Wade’s grandmother, Marion Graham, had explicitly approved the 1976 change in trustee fees and that her mother, Joyce, had approved the 1989 change in fees. As a consequence, her objections are barred by laches.

In response, the objectors claim that any motion for summary judgment is premature because discovery has not been completed at the time PNC’s motion was filed. They assert that the five beneficiaries who actually filed objections should be considered to represent the interests of all the beneficiaries who failed to file formal objections. In support of this position, they present with their November 20, 2014 “objections” to the partial summary judgment, an exhibit 3 which consists, inter alia, of a declaration by objector Robert Kendall that he has attempted to contact other beneficiaries of the trust, both current and contingent. “Thus far,” he lists 9 income beneficiaries who “have agreed, in writing, with the objections we have filed as to the Account and the relief in the Petition.” He notes that these income beneficiaries total 39.169% of the current income interests and that these beneficiaries “indicate that they ‘support and agree’ with the Objections filed.” Signed statements of these beneficiaries were attached to Mr. Kendall’s declaration which acknowledged:

I did not join in the objection filing but want it to be known that I support and agree with the objections filed and accepted on November 27,2013 by my fellow income beneficiaries.

Dated: 1/13/14 Sign Name: Robert M. Graham

Print Name: Robert M. Graham

The objectors assert that PNC benefited improperly from increasing its commissions. They assert that the bank failed to disclose material information when it obtained the 1976 and 1989 Agreements to change its commissions. They assert that the fees that could be charged by the trustee were controlled by the law of contracts and not trusts and therefore, PNC could not change the 4% fee commission that had been set forth in the 1923 trust documents. They argue that under the 1976 agreement that the beneficiaries had the right to rescind that modification and that each future beneficiary retained the right to rescind this modification. Despite this agreement, the objectors assert, the bank failed to advise each successor beneficiary of his or her right to rescind the increase in its commission.

The objectors likewise assert that the 1989 commission change was invalid for a variety of reasons. First, they assert it was premised on unanimous consent of the beneficiaries and that was not obtained due to the failure of Elizabeth Kendall and Elaine Kendall to consent to that change. They also claim that the bank failed to notify the then-existing beneficiaries of their right to rescind the 1976 agreement. Finally, they complain that PNC has failed to pay Robert Kendall his co-trustee commission since his appointment.

In broad strokes, the objectors assert that the consent of David Garden and Robert Kendall in 1989 was obtained by deceit and that these beneficiaries were not aware of their legal rights. Although conceding that David Garden agreed to the 1976 commission modification, the objectors assert that both Mr. Garden and the bank understood that the 1989 commission modification required unanimous consent. They cite to Mr. Garden’s declaration and to internal bank documents to support this claim. More specifically, they present hand-written notes dated 6/5/89 stating, inter alia, “Currently 6% and we must obtain everyone’s approval to sustain this.” They also maintain that Mr. Werley falsely informed his PNC superiors “that the unanimous approval was obtained for the 1989 agreement to increase commission,” citing the following document presented as exhibit 16:

F. Werley reported that the Income beneficiaries approved ofan increase in compensation to our schedule rates in effect from time to time, less a 30% discount. All compensation should be charged against Income. The Bank has agreed to give up the 1 % principal fee at termination in each account. 11/20/14 Kendall Objection, Ex. 16.

As for Robert Kendall, the objectors note that he came into his 5% interest in the trust in 1985 when his mother, Louise Kendall, died. They note that at that point the bank failed to notify him of his right to rescind the 1976 agreement and failed to obtain his consent to that increased rate of commission. They maintain, once again, that Mr. Kendall understood that the 1989 fee change required unanimous consent of all the income beneficiaries which had not been obtained due to the failure of Elizabeth and Elaine Kendall to consent.

The objectors assert that Elizabeth and Elaine Kendall cannot be deemed to have acquiesced to the 1976 or 1989 agreements because they lacked full knowledge of the relevant facts: the operative provisions of the Trusts’ instruments, the 1976 amendment, or the 1989 attempted modification. Instead, they received “false, incomplete, misleading and erroneous information after the death of their mother from the trustee.

Finally, the objectors claim that Jean Wade’s objections are not barred by laches. PNC argues that Ms. Wade, who became an income beneficiary in 2001 upon the death of her mother, never demanded a formal accounting and has accepted the periodic statements as to trustee fees over the course of 12 years. Based on this inaction, her present objections are barred by laches. The objectors disagree, asserting that even if Ms. Wade had demanded an accounting that would not have uncovered that the “Bank has been misrepresenting the “unanimity” of consent under the 1989 agreement.” They reiterate that Ms. Wade was never informed of her right to rescind the increase fee agreement.

Legal Analysis

Under Pennsylvania law, summaiy judgment may only be granted “where there is no genuine issue of any essential fact and the moving party is entitled to judgment as a matter of law.” Al's Cafe, Inc. v. Sanders Insur. Agency, 820 A.2d 745, 748 (Pa. Super. 2003). The petitioner seeking summary judgment has the burden of establishing that there is no genuine issue as to a material fact. Moreover, a court must view the record in a light favorable to the non-moving party. Laventhol & Horwath, 396 Pa. Super. 553, 559, 579 A.2d 388, 390 (1990).

The standards for a summary judgment motion are also set forth in Pennsylvania Rule of Civil Procedure 1035.2 which provides:

After the relevant pleadings are closed, but within such time as not to unreasonably delay trial, any party may move for summary judgment in whole or in part as a matter of law
(1) whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report, or
(2) if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury.

In this case, the objectors initially claimed that the entry of partial summary judgment is premature because discovery has not been completed. The parties subsequently filed a stipulation that discovery on the issues raised by PNC’s motion for partial summary judgment would terminate on February 27, 2015 and that a ruling may be rendered on PNC’s motion for partial summary judgment prior to the closing of the pleadings as to the Petition to Remove PNC as trustee because such a ruling would help limit the scope of the pleadings.

The material issue in this case is very narrow: whether the objectors consented or acquiesced to the change in trustee fees in 1976 and 1989 and whether the record is free from doubt. The objectors seek to obscure this narrow issue by asserting that they have the support of those beneficiaries that did not file formal objections. While both PNC and the objectors characterize this as a preliminary question of standing, in fact it is a much simpler issue of the proper procedure for filing objections.

The objectors concede that Philadelphia Orphans’ Court Rules 6.3.A and 6.10A outline the rules for filing objections to an account. Phila. O.C. Rule 6.3.A(3), for instance, provides that if an account is contested, “an appearance in person or by counsel must be made at the audit and that written objections must be filed with the Clerk in accordance with Rule 6.10.A, or the claim or objection may be dismissed.” Rule 6.10.A is, if anything, more emphatic as to the necessity of timely, written objections to an account since it provides:

Rule 6.10.A. Written Objections

Objections to an account or statement of proposed distribution must be in writing and shall be filed with the Clerk of the Orphans’ Court no later than the time and date fixed for the original call of the account for audit, unless otherwise specified by Order of Court. Phila. O.C. Rule 6.10.A.

In this case, the two accounts that were filed for the Louise Jones Trusts were scheduled for the December 2, 2013 audit list. Timely, written objections were filed on November 27, 2013 and on December 2, 2013 (miscellaneous entry) by only 5 income beneficiaries: Robert Kendall, David Garden, Elizabeth Kendall, Elaine Kendall and Jean Wade. The narrow issue posed by PNC’s summary judgment motion is whether these beneficiaries consented in writing or by acquiescence to the trustee commission changes of 1976 and 1989. The documents the objectors attached to their response to PNC’s partial summary judgment do indeed indicate that additional beneficiaries do not oppose their objections but support them. But this cannot be translated into an expansion in time or scope that would add these additional beneficiaries to assert objections to the account in their own right. They merely support those objections formally filed which will be sustained — or denied — on their own merits.

To determine the validity of the objections raised by these five beneficiaries, the facts surrounding each beneficiary’s objection must be examined for the existence of material issues of fact. The objections of David Garden and Robert Kendall are subject to the same critique: they both consented to the trustee’s requested commission changes explicitly and in writing. Under Pennsylvania law, the general principle is well established that a beneficiary who has consented to an action by a trustee may not subsequently object to that action years later. As early as 1914, the Pennsylvania Supreme Court concluded where a life tenant had notice of trustee commissions upon income in several past accounts and failed to object, she could not subsequently object to that commission. Neafie's Estate, 245 Pa. 576, 579, 91 A. 958 (Pa. 1914). Where a trust beneficiary was notified by letter of a proposed reorganization that might affect the value of securities her subsequent objection to an account of that transaction lacked merit. In re MacFarlane Estate, 317 Pa. 377, 177 A.12 (Pa. 1935). As the MacFarlane court observed: “A competent beneficiary who with full knowledge of the facts and his rights expressly consents to or affirms an investment by the trustee cannot, in the absence of fraud, thereafter question its propriety” since if a beneficiary believes a trustee’s action improper, “she was under a duty to speak.” Id., 317 Pa. at 383, 177 A. at 15. Likewise, a son’s objection to an account on the basis that the trustees should have required his father to pay rent for residing in the house that had belonged to his deceased wife were denied because, inter alia, the objector had long standing knowledge of this family agreement and failed to raise a timely objection. As the court observed, “it is well settled that a competent beneficiary who, with full knowledge of the facts, expressly or by acquiescence consents to or affirms the conduct of the trustee in relation to the trust property, cannot thereafter question the propriety of such conduct.” In re Strawbridge’s Estate, 322 Pa. 406,411, 185 A. 726, 729 (Pa. 1936). In a recent case more directly on point, Judge Paula Ott overruled objections to a trustee account where a remainder beneficiary objected to trustee commissions that had been communicated to and approved by the prior income beneficiary. Walton Trust, 23 Fid. Rep. 2d 365 (Chester Cty. O.C. 2003).

PNC presented unrebutted evidence that objector David Garden had consented in writing to both the 1976 trustee commission increase to 6% and the 1989 revision of its commission payments. By letter dated December 9, 1976 Mr. Garden stated that he agreed to the increase in the trustee fee from 4% to 6% with two conditions: he reserved the right to rescind that increase by written notice and he would pay close attention to the performance of the investment portfolios. Similarly, in 1989, Mr. Garden was notified by the trustee that it had been receiving a fee of 6% for the past 12 1/2 years which was above the fee set forth in the 1923 deeds of trust. It then requested his approval for the bank to charge “its scheduled rates in effect from time to time subject to a 30% discount” with the concession that the bank would forego its termination fee when the trusts end. Mr. Garden expressed his approval of this fee arrangement by signing his name — twice — after the word “APPROVED.”

Objector Robert Kendall likewise signed this 1989 letter expressing his approval of the new commission schedule. That letter explicitly informed him that the fee of 6% on income was above the fee set forth in the 1923 trust documents, He became a 5% income beneficiary of the trust in 1985 upon the death of his mother Louise Kendall. Louise Kendall, in turn, had explicitly agreed to the 1976 fee increase with the 1976 letter she signed with David Garden. Again, the only conditions to her consent were that she reserved the right to rescind the increase from 4% to 6% by written notice to the trustee and that she would pay close attention to the portfolios’ performance. The acquiescence of his mother to the 1976 commission increase would attach to Robert. See e.g. Wilbur's Estate, 334 Pa. 45, 72, 5 A.2d 325, 338 (Pa. 1939)(where alleged diversions of trust income occurred long before the exceptant’s interest attached,” they “were excused by her husband’s laches and acquiescence”). See also Estate of Warden, 2 A.3d 565, 580 (Pa. Super. 2010)(Beneficiary is bound by the acquiescence of the prior beneficiary if the successor fails to promptly request an accounting based on an affirmative duty to inquire if concerned about the trust’s administration). Based on this explicit consent, the objections of David Garden and Robert Kendall to the past trustee commissions are without merit.

Despite their signatures consenting to the 1989 trustee fee commission change, David Garden and Robert Kendall argue broadly that this consent was obtained by “deceit.” The “facts” they cite to support this claim of deceit, however, fall dismally short of establishing this claim-especially in light of the relevant case law. David Garden, for instance, asserts that he “understood” that the 1989 change required unanimity similar to the process that had been followed in obtaining consent to the 1976 fee change to 6%. Nowhere in the document he signed, however, was there a unanimity condition. Although the objectors cite to a handwritten memo by a trustee official that everyone’s consent was necessary, that note was not part of the beneficiaries’ agreement. Robert Kendall likewise asserts that his consent to the 1989 commission change was predicated on a belief that such consent required unanimity. But the document he signed in 1989 contained no such condition. The “beliefs” of Mr. Garden and Kendall do not translate into terms of the agreement. In a different vein, Robert Kendall complains that when his mother died, he was not informed of his right to rescind the 1976 agreement to raise the trustee commission to 6%. But under long-standing Pennsylvania precedent, upon the death of a life tenant, the remainder beneficiary has the right to promptly demand an accounting. Failure to do so can result in acquiescence that bars the beneficiary’s claim. Estate of Warden, 2 A.3d at 580. More to the point, “Laches is not excused by simply stating: I did not know. If by diligence a fact can be ascertained the want of knowledge so caused is no excuse for a stale claim. The test is not what the plaintiff knows, ‘but what he might have known, by the use of the means of information within his reach, with the vigilance the law requires of him.’” Id., 2 A.3d at 579. In this case, the objectors acknowledge that they allowed 42 years to elapse before seeking this accounting. Moreover, they concede that after the prior individual trustee died in 1969, no efforts were made to appoint a successor trustee until 2013. In light of this inaction, the objection to the past agreements by prior beneficiaries to changes in the trustee fees are clearly barred by acquiescence.

The objectors invoke Estate of Smith, 874 A.2d 131 (Pa. Super. 2005) for the proposition that “the entitlement to trustees’ compensation is not a matter of the law of trusts, but of the intent of the parties as evidenced by their contract.... If the instrument creating the trust provides what a trustee’s compensation shall be, such provision is binding on all parties concerned.” The facts of this case, however, differ significantly from those in the Estate of Smith. In Smith, the trustee sought a retroactive fee increase for its past services at the time it filed its account. The trustee fees had been set forth in a 1973 will codicil. When the trustee filed its third account in August 1999, it sought “an award of interim compensation from the principal of the trust for past services rendered” which was denied. This request for a retroactive fee increase differs markedly from the facts for both Jones Trusts. Not only did the trustee document its contemporaneous request for a fee increase in 1976 and 1989 from the fees set in the 1923 trust agreements, but the income beneficiaries agreed or acquiesced to those increases without protest until the five objectors filed their objections in November 2013. This long period of acquiescence is particularly relevant to the objections of Elizabeth Kendall and Elaine Kendall.

The objectors emphasize that neither Elizabeth nor Elaine responded to the trustee’s request in 1989 for their approval of the proposed commission change to the bank’s fee schedule minus a 30% discount. They assert that these two beneficiaries lacked full knowledge of their legal rights and “were not informed of the operative provisions of the Trust instruments, the 1976 amendment or the 1989 attempted modifications.” They complain, as well, that Elizabeth and Elaine were not informed “that the purported change in 1989 was not adopted by all of the then beneficiaries.” These assertions fly in the face of the record. PNC presented three letters that the trustee sent in 1989 to these two beneficiaries which clearly stated that not all of the other beneficiaries had consented to the suggested fee change. In its August 1, 1989 letter, the trustee informed Ms. Kendall that more than 75% of the beneficiaries had approved the fee change. Ex. J. In a subsequent September 7, 1980 letter, it noted that at that point “all the beneficiaries other than you and one other party” had approved the fee change. Ex. K. Finally, in an October 18,1989 letter, the trustee notified Elaine Kendall that it would implement the commission change based on the approval of 90% of the beneficiaries. It also noted that this fee change would be reflected in the periodic statements sent to the beneficiaries. Ex. L. The objectors presented no evidence whatsoever that either Elaine or Elizabeth objected to this commission change until the November 2013 objections to the PNC account. Although entitled to seek an accounting, they failed to do so.

After this more than two decades of acquiescence to the 1989 change in trustee commission, the objections of Elaine and Elizabeth Kendall are without merit. As Judge Ott observed, “it is well established in Pennsylvania that a beneficiaiy may acquiesce or consent to a fiduciaiy’s diversion from the settlor’s will.” Walton Trust, 23 Fid. Rep. 2d 365, 369 (Chester Cty. O.C. 2003). Where beneficiaries for years are given facts about the trust accounts and they acquiesce without seeking a formal accounting, as a matter of equity their claims against the trustee are barred by laches or acquiescence. See, e.g., In re Wilbur's Estate, 334 Pa. 45, 55, 56, 5 A.2d 325, 331 (Pa. 1939)(“not only is the long delay in failing to challenge the trust administration a complete bar” but “we think the conduct of Ray Wilbur and of the exceptant (beneficiaries) is evidence of acquiescence”). See also In re Walton’s Estate, 348 Pa. 143, 146-47, 34 A.2d 484, 485 (Pa. 1943)(where a beneficiaiy was aware of the trustee’s investment in a mortgage and for years failed to object, his objections to a subsequently filed account were dismissed “having done nothing for several years must be considered to have acquiesced in the investments and administration of the trust estate); In re MacFarlane’s Estate, 317 Pa. 377, 382, 177 A. 13, 15 (Pa. 1935)(claim of surcharge was properly dismissed where beneficiary’s conduct amounted to assent to the acquisition and retention of stock).

Finally, the objections of Jean Wade are without merit. Ms. Wade’s interest in the trusts date back to 2001 when her mother, Joyce Wade, died. Joyce Wade had explicitly consented to the 1989 commission change when she signed her name after “APPROVED” in response to the trustee’s June 12, 1989 letter that informed her of its proposed fee schedule and of the past increase in fees to 6% above the fees originally set in the 1923 trust agreements. Prior to that, Jean Wade’s grandmother, Marian Graham, had approved the 1976 fee increase to 6% as evidenced in the December 22, 1976 letter to the trustee written on her behalf by John R. Graham, under her power of attorney. At no point during the twelve years when Jean Wade acquired her interest in the trusts did she seek an accounting. PNC therefore asserts that Ms. Wade’s claim is barred by laches. The doctrine of laches is similar to a statute of limitations: it “may bar a party from seeking equitable relief after the lapse of a certain period, usually six years.” Estate of Warden, 2 A.3d at 579. It is predicated on a lack of due diligence: “laches bars relief when the complaining party is guilty of want of due diligence in failing to promptly institute the action to the prejudice of another.” Id. As a general rule if a beneficiary makes a prompt demand for an accounting after his interest vests, his claim would not be barred by the laches or acquiescence of the preceding income beneficiary. Under Pennsylvania law, a beneficiary “believing a trustee’s action is improper has an affirmative duty to speak.” Id., citing In re MacFarlane’s Estate, 317 Pa. 377, 382-83, 177 A. 12, 15 (1935). If, however, the beneficiary fails to demand an accounting, his or her claim would be barred by the laches or acquiescence of the preceding life tenant. Id. at 580, citing In re Wilbur’s Estate, 334 Pa. at 55, 5 A.2d at 331. Jean Wade’s objections to the past trustee fees are therefore barred by laches due to the acquiescence of herself, her mother and her grandmother.

Conclusion

For all these reasons, PNC Bank, National Associations Motion for Partial Summary Judgment is granted. The objections to the trustee compensation paid to PNC during the accounting period are overruled. A hearing shall be scheduled for the remaining objections as well as for the petition to remove PNC as trustee.

      . PNC Bank responded that it did not oppose the appointment of Mr. Kendall and that it would file an accounting for each of the trusts. It objected, however, to the “inexplicably lengthy petition” which consisted of 82 pages. See, e.g., 6/24/13 PNC Answer (Trust 1) at 1.

      . The objectors are Robert R. Kendall, co-trustee and beneficiary of the Jones Trusts 1 & 2 with 5% current income interest; David Garden, beneficiary of Jones Trusts 1 & 2 with 25% current income interest; Elizabeth Kendall beneficiary of the Jones Trusts 1 & 2 with 5% current income interest; Elaine M. Kendall beneficiary of Jones Trusts & 2 with 5% current income interest. PNC includes Jean Wade as an objector. She became an income beneficiary in 2001.

      . According to the miscellaneous entry, Jean Wade joined by electronic mail from Alaska and her objections were “filed and accepted on November 27, with the Clerk of the Philadelphia Court of Common Pleas. 12/2/14 Miscellaneous Entry. Although these objections do not appear on the docket, PNC includes Jean Wade as an objector. See, e.g., 10/21/14 PNC Petition for Partial Summary Judgment, O.C. No. 158 IV of 1971, Memorandum at 1.

      . 11/27/13 Objections at 1-3.

      .20 Pa.C.S. §7768(b) Compensation of trustee:
      (b) If specified, adjustment.- If a trust instrument or written fee agreement signed by the settlor or anyone who is authorized by the trust instrument to do so specifies a trustee’s compensation, the trustee is entitled to the specified compensation. The court may allow reasonable compensation that is more or less than that specified if:
      (1) the duties of the trustee have become substantially different from those contemplated when the trust was created or when the fee agreement was executed;
      (2) the compensation specified in the trust instrument or fee agreement would be unreasonable; or
      (3) the trustee performed extraordinary services, and the trust instrument or fee agreement does not specify the trustee’s compensation for those services.

      . 10/21/14 PNC Motion for Partial Summary Judgment at 2 & Ex. C.

      . 10/21/14 PNC Motion for Partial Summary Judgment at 2 & Ex. D

      . 10/21/14 PNC Motion for Partial Summary Judgment, Ex. E.

      . 10/21/14 PNC Motion for Summary Judgment, Ex. F.

      . 10/21/14 PNC Motion for Partial Summary Judgment, Memorandum at 3.

      . 10/21/14 PNC Motion for Partial Summary Judgment, Memorandum at 3.

      . 10/21/14 PNC Motion for Partial Summary Judgment at 4-5, Ex. G.

      . See 10/21/14 PNC Motion for Partial Summary Judgment, Exs. G, H & I.

      . 10/21/14 PNC Motion for Partial Summary Judgment, Exs. H & I.

      . 10/21/14 PNC Motion for Partial Summary Judgment, Ex. J.

      . 10/21/14 PNC Motion for Partial Summary Judgment, Ex. K.

      . 10/21/14 PNC Motion for Partial Summary Judgment, Ex. L.

      .11/20/14 Objections by Robert Kendall, Ex. 3 “Declaration,” ¶ 4.

      . 11/20/14 Objections by Robert Kendall, Ex. 3 “Declaration,” ¶
      4. The following beneficiaries are listed in Mr. Kendall’s Declaration:
      (1) Robert M. Graham — 4.167%; (2) Thomas W. Graham — 4.167%;
      (3) Jacquelin G. Newman — 4.167%; (4) Christine H. Price — 4.167%;
      (5) Robie Price — 4.167%; (6) Glen R. Wade — 4.167%; (7) Sydney L. Wade — 4.167%; (8) Evelyn L. Kendall — 5%; (9) Thomas E. Kendall — 5%.

      . 11/20/14 “Objections by Robert Kendall, Ex. 3, Ex. A-1.

      . 11/20/14 Kendall Objections, Memorandum at 18-19.

      . 11/20/14 Kendall Objections, Memorandum at 20.

      . 11/20/14 Kendall Objections, Memorandum 20-21.

      . In paragraph 52 of his Verified Declaration, David Garden stated: “I believed that unanimity was required, consistent with the process by which the 1976 modifications were adopted and in accordance with the laws of the Commonwealth of Pennsylvania.” 11/20/14 Kendall Objections, Ex. Verified Statement of David Garden.

      . 11/20/14 Kendall Objections, Ex. 13.

      . 11/20/14 Kendal Objections, Memorandum at 23.

      . 11/20/14 Kendall Objections, Memorandum at 25.

      . 11/20/14 Kendall Objections, Memorandum at 26.

      . 11/20/14 Kendall Objections, Memorandum of law at 15.

      . 10/21/14 PNC Partial Summary Judgment Motion, Ex. F.

      . 10/21/14 PNC Partial Summary Judgment Motion, Ex. H.

      . 10/21/14 PNC Partial Summary Judgment Motion, Ex. I.

      . 10/21/14 PNC Partial Summary Judgment Motion, Ex. F.

      . 11/20/14 Robert Kendall objection, memorandum of law at21.

      . 11/20/14 Robert Kendall objection, Ex. 13 (PNC Bates 5416).

      . 11/20/14 Robert Kendal objection, memorandum of law at 1 & 4.

      . 11/20/14 Robert Kendall objections, memorandum of law at 19.

      . 11/20/14 Robert Kendall objections, memorandum of law at 25.

      . 11/20/14 Robert Kendall objections, memorandum of law at 25.

      . 10/21/14 PNC Motion for Partial Summary Judgment, Ex. M.

      . 10/21/14 PNC Motion for Partial Summary Judgment, Ex. E.


source: Caselaw Access Project

author: HIGGINS, J.,

license: Public Domain

text:
    Zangenberg v. Weis Markets, Inc.

      C.P. of Monroe County,
    No. 10500 CIVIL 2012

      James J. Conaboy, for plaintiff.

      Maureen E. Kelly, for defendant.
    April 1, 2015
   HIGGINS, J.,

This matter is before the Court in Defendant, Weis Markets, Inc.’s (“Weis”) Motion for Summary Judgment (“SJ”) filed on November 24, 2014. Weis asserts that there are no genuine issues of material facts and that summary judgment is appropriate.

The Plaintiff, Grace Zangenberg, (“Plaintiff’) filed a complaint on December 21, 2012, against Weis alleging that she sustained injuries as a result of a fall inside Weis’ building located on Route 611, Tannersville, Pennsylvania. Plaintiff seeks damages as a result of a slip and fall at Weis market. Plaintiff claims she fell as a result of the floor being slippery. On November 8, 2013, Plaintiff filed a Writ of Summons against Defendants Contrast LLC and Enterprise Solutions (collectively “Defendants”) at docket number 9442 CV 2013. Plaintiff then filed a complaint against Defendants on March 28,2014, alleging that her fall was the result of their negligence. Plaintiff alleges that Defendants subcontracted with Weis to wax the floors and permitted a slippery condition and/or wax buildup to accumulate which created a dangerous condition. On August 29, 2014, by stipulation of the parties, the two actions were consolidated to docket number 10500 CV 2012. After discovery was conducted between the parties, Weis filed for SJ on November 24,2014. The parties have filed briefs and presented argument before the Court on Januaiy 5, 2015. We are now prepared to dispose of Weis’ SJ.

Pa. R.C.P. 1035.2 provides that
[a]fter the relevant pleadings are closed, but within such time as not to unreasonably delay trial, any party may move for summary judgment in whole or in part as a matter of law
(1) whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report, or
(2) if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury.

Summary judgment is granted where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material facts and the moving party is entitled to judgment as a matter of law. Coleman v. Coleman, 663 A.2d 741, 744 (Pa. Super. 1995) (citation omitted). “Although the moving party has the burden of showing that no genuine issue of material facts exists...’once the motion for summary judgment has been properly supported, the burden is upon the non-movant to disclose evidence that is the basis for his or her argument resisting summary judgment.’” Myers v. Penn Traffic Co., 606 A.2d 926, 928 (Pa. Super. 1992) (citation omitted). Additionally, the mere fact that an accident occurred does not confirm that negligence was involved. Id. Plaintiff has the burden to demonstrate the following four elements: (1) a duty or obligation recognized by law; (2) a breach of that duty; (3) a causal connection between the conduct and the resulting injury; and (4) actual damages.

For recovery in a slip and fall in a store, the invitee must prove that the store owner deviated in some way from his duty of reasonable care under the circumstances. Zito v. Merit Outlet Stores, 647 A.2d 573, 575 (Pa. Super. 1994) (citation omitted). Restatement (Second) of Torts §343 (1965), provides that:

A possessor of land is subject to liability for physical harm caused to his invitees by a condition on the land if, but only if, he
(a) knows or by the exercise of reasonable care would discover the condition, and should realize that it involves an unreasonable risk of harm to such invitees, and
(b) should expect that they will not discover or realize the danger, or will fail to protect themselves against it, and
(c) fails to exercise reasonable care to protect them against the danger.

A business owner has an obligation to police its premises to discover dangers to its customers. Restatement (Second) of Torts §344 (1965).

Here, Weis claims that Plaintiff failed to produce any evidence that it had actual notice of a condition which involved an unreasonable risk of harm to her. Since Plaintiff has not offered evidence that Weis had actual notice of a slippery condition or an accumulation of wax buildup; we will instead look at whether Weis had constructive notice of the “dangerous” condition.

“What constitutes constructive notice must depend on the circumstances of each case, but one of the most important factors to be taken into consideration is the time elapsing between the origin of the defect or hazardous condition and the accident.” Neve v. Insalaco’s, 771 A.2d 786, 791 (Pa. Super. 2001) (citation omitted). “In sum, to charge a defendant store with constructive notice of a harmful condition a plaintiff need not produce positive testimony as to how long the defect existed if: (1) the defect is of a type with an inherently sustained duration, as opposed to a transitory spill which could have occurred an instant before the accident; and (2) a witness saw the defect immediately before or after the accident.” Id. Ill A.2d 791 (citations omitted).

Plaintiff argues that she met her burden of proof by producing evidence that Weis had constructive notice of the harmful conditions. She claims that Weis’ floor was extremely slippery due to the waxing application or wax accumulation. The question in cases involving negligent accumulation or application of wax is “not whether there was an improper application but whether such alleged improper application created a condition so obviously dangerous as to amount to evidence from which an inference of negligence would arise.” Myers, 906 A.2d at 831 (citation omitted). “Recovery has been permitted where the skid mark caused by the plaintiff’s heel had raised sides as if someone had slid through mud and appeared in a yellow waxy substance.” Id. 906 A.2d at 831 (citation omitted).

Here, Plaintiff has not produced any evidence that an improper application of wax created a dangerous condition so obvious as to amount to evidence which an inference of negligence would arise. Plaintiff has only produced the testimony of her daughter who stated that there was a black skid mark on the floor. This is not evidence of improper application of wax which created a dangerous condition. Moreover, Plaintiff’s daughter was not present at the time she fell.

In viewing all evidence in a light most favorable to the non-moving party, we note the following evidence which Plaintiff submitted in support of her basis for resisting summary judgment: Plaintiff testified at deposition on May 23, 2013, that she fell after she entered the store and walked past the courtesy counter near a podium. [Notes of Testimony, May 23, 2013, p. 24-25 (hereinafter “N.T.”)] Plaintiff’s daughter, Arlene Langdon, dropped her off near the front entrance of Weis where Plaintiff entered the store unassisted. [N.T., p. 23-24] Plaintiff stated that she “just slipped. Just like you would just slide across the floor.” [N.T., p. 27] She does not remember looking at the ground prior to her fall. [N.T., p. 26] Plaintiff did not notice any debris on the floor, any garbage, paper or anything like that. [N.T., p. 27] She testified that the floor was very slippery and that she did not notice any water, oil, grease or any foreign substance on the floor. [N.T., p. 28] Immediately after her fall, Plaintiff did not notice anything on her hands, on her clothing, or on her shoes which may have led her to the conclusion of what caused her to fall, just that the floor was very slippery. [N.T., P. 29]

At the time of Plaintiff’s fall, Weis subcontracted with Enterprise Solutions, (“Enterprise”) to clean and wax its floors. Weis’ floors were waxed twice annually which typically takes 1-2 weeks. Enterprise subcontracted with Contrast LLC (“Contrast”) to strip and wax Weis’ floors. [See Plaintiffs Brief in Opposition to Weis’ Motion for Summary Judgment, p.81. Subcontractor Agreement] Enterprise invoiced Weis for stripping and waxing floors between March 22, 2012 and March 29, 2012, the week when Plaintiff fell. [See Plaintiffs Brief in Opposition to Weis’ Motion for Summary Judgment, Exhibit D].

Weis argues that Plaintiff’s testimony speculates as to the cause of her fall, and, therefore, she cannot sustain her burden of proof. In order to “impose liability on a possessor of land, the invitee must present other evidence which tends to prove that... the proprietor knew, or in the exercise of reasonable care ought to have known, of the existence of the harm causing condition.” Moultrey v. Great A&P Tea Co., 422 A.2d 593, 596 (Pa. Super. 1980) (citations omitted). In this case, we believe that Plaintiff has failed to establish that Weis knew of any harmful condition on its floors. Even if we accept Arlene Langdon’s testimony that she observed a skid mark on the floor, she could not identify the mark as being Plaintiff’s scuff mark. [Notes of Testimony, Arlene Langdon, May 23,2013, p.23 (hereinafter “N.T. 5/23/13”)] Ms. Langdon did not walk over and touch the floor where she observed the scuff mark. [N.T. 5/23/13, p.23]

Weis employee Robin Prunest testified that she was present when Plaintiff fell and after assisting Plaintiff up from the floor, she looked at the area of the fall. [Notes of Testimony, Robin Prunest, May 23, 2013, p.18-21] Ms. Prunest stated that she did not find anything on the floor. [Notes of Testimony, Robin Prunest, May 23, 2013, p.21] There was nothing on the floor which Ms. Prunest observed and she “went over to the floor and looked.” [Notes of Testimony, Robin Prunest, May 23, 2013, p.21] Based upon this testimony, we find that there is no evidence from which to conclude that Weis was in constructive notice of a harmful condition and therefore, breached its duty of care to Plaintiff. Plaintiff failed to present evidence that Weis knew or should have discovered that the floor was “very slippery,” as she testified. Plaintiff is required to meet her burden of proof that the application of wax or an accumulation of wax created a condition so obviously dangerous that an inference of negligence arises. Plaintiff failed to produce evidence which would require the issue to be submitted to a jury. Therefore, since Plaintiff cannot sustain her burden, we find that Weis’ S J should be granted.

Accordingly, we enter the following ORDER:

ORDER

AND NOW, this 1st day of April 2015, after oral argument and upon consideration of the record and Weis’ Motion for Summary Judgment, along with the briefs filed by the parties, it is hereby ORDERED that Weis’ Motion for Summary Judgment is GRANTED and Plaintiffs claims against Defendant Weis Markets, Inc., are dismissed.


author: HARLACHER SIBUM, J.,

text:
    Twin Lake Estates Property Owners Association v. Chilcote

      C.P. of Monroe County,
    No. 9910 CV 2014
    April 16, 2015
   HARLACHER SIBUM, J.,

On December 12, 2014, Plaintiff commenced this action against Defendants for unpaid property owners’ association dues and assessments. Defendants filed Preliminary Objections to the complaint on January 6, 2015. The relevant facts and procedural history can be summarized as follows: Defendants, Robert Chilcote and Kathryn Volcy, are owners of lot number 1009 (Lot 1009) located within Twin Lake Estates, a planned community whose common areas are managed and maintained by Plaintiff. In 1963, Twin Lake Estates were subdivided into approximately 140 lots. The previous owners of the subdivided lots entered into agreement permitting current and future lot owners to use the common areas, and also required future lot owners to abide by future restrictive covenants and become part of a homeowners’ association, if one was ever formed. This agreement was recorded in the Monroe County Recorder’s Office on My 26, 1973. As contemplated by the 1973 Agreement, a document entitled “Schedule of Covenants, Easements, Reservations, Charges and Conditions” (Covenants) was recorded on My 30,1973. On August 2,2001, Twin Lake Estates Property Owners Association (Association) was formed. The original development owners then assigned their interest in the Covenants to the Association on September 13, 2001.

N.B.J Corporation, the previous owner of Lot 1009, conveyed the property to Paragon Equipment Company subject to the Covenants. After several conveyances, Lot 1009 was finally conveyed to the Defendants on September 14,2004. After refusing to pay for the assessed homeowners’ association dues, Plaintiffs have filed suit against the Defendants. Upon consideration of the pleadings filed, we are now prepared to decide Defendants’ preliminary objections.

DISCUSSION

Pursuant to Pa.R.C.P. 1028(a), preliminaiy objections may be filed by any party to any pleading on several grounds, including:

(2) Failure of a pleading to conform to law or rule of court or inclusion of scandalous or impertinent matter;
(3) Insufficient specificity in a pleading;
(4) Legal insufficiency of a pleading (demurrer);
(5) Failure to join a necessary party.

Pa.R.C.P. 1028(a)(2)-(5). In ruling on preliminary objections, we recognize that the Court must accept as true “all well-pleaded allegations and material facts averred in the complaint, as well as all reasonable inferences deducible therefrom....”, Wurth by Wurth v. City of Philadelphia, 584 A.2d 403, 407 (Pa.Cmwlth.1990). The court need not accept as true, however, “conclusions of law, unwarranted inferences from facts, argumentative allegations, or expressions of opinion.” Myers v. Ridge, 712 A.2d 791, 794 (Pa. Cmwlth. 1998).

When ruling on a preliminary objection that would dismiss the action, we are mindful to sustain the objection only in the cases which are clear and free from doubt. King v. Detroit Tool Co., 682 A.2d 313, 314 (Pa.Super. 1996). In determining whether the factual averments of a complaint are sufficient to state a cause of action, all doubts must be resolved in favor of the sufficiency of the complaint. Slaybaugh v. Newman, 479 A.2d 517, 519 (Pa.Super. 1984). A demurrer will be sustained only where the complaint demonstrates with certainty that under the facts averred within, the law will not permit a recovery. Id.; see also Cianfrani v. Commonwealth, State Employees’ Retirement Bd., 479 A.2d 468, 469 (Pa. 1984). If any theory of law will support the claim raised by the complaint, dismissal is improper. Slaybaugh, 479 A.2d at 519; Cianfrani, 479 A.2d at 469. Alternatively, a motion to strike a pleading may be granted when lack of conformity to a law or a rule of court occurs. Pa.R.C.P. 1028(a)(2). We will now address Defendants’ Preliminary Objections in turn.

A. Insufficient Pleading under Pa.R.C.P. 1028(a)(3) and Pa.R.C.P. 1028(a)(2)

Defendants argue that Plaintiff’s complaint must be dismissed for failure to allege a cause of action with specificity as required under Pa.R.C.P. 1019. Upon review of Plaintiff’s objection, we will address this argument as an objection for insufficient specificity of pleading under Pa.R.C.P. 1028(a)(3). Defendants aver fifteen (15) instances where Plaintiff has failed to plead with specificity, which included (1) Plaintiff’s failure to define Twin Lake Estates’ property owners; (2) failure to define the boundaries of the 145 parcels; (3) failure to cite which lots were subject to the Covenants; (4) failure to show when the Association was established to enforce the Covenants; and (5) failure to specifically describe the common areas.

Under Pa.R.C.P. 1019(a), a complaint shall state “[t] he material facts on which a cause of action...is based...in a concise and summary form.” This rule is satisfied if the allegations in a pleading contain averments of all facts the plaintiff must eventually prove in order to recover, and the averments are sufficiently specific to enable the adverse party to prepare a defense. Commonwealth ex rel. Pappert v. TAP Pharm. Prods., Inc., 868 A.2d 624 (Pa. Cmwlth. 2005). The complaint must not only apprise the defendant of the claim being asserted, but it must also summarize the essential facts to support the claim. Landau v. Western Pennsylvania National Bank, 445 Pa. 217, 282 A.2d 335, 339 (1971). Upon review of the complaint, we find that the allegations set forth therein are sufficient to advise Defendants of the basis of the claims. The Rules of Civil Procedure only require that “material facts on which a cause of action...is based...[be pleaded]...in a concise and summary form.” (emphasis added). If Defendants require additional information above and beyond what the Plaintiffs are required to state in their complaint, the various discovery rules set forth in the Pennsylvania Rules of Civil Procedure provide Defendants with an avenue for acquiring additional information. Accordingly, Defendants’ preliminaiy objection based on insufficient pleading is overruled.

B. Failure of a Pleading to Conform to Law or Court Rules under Pa. R.C.P. 1028(a)(2)

Defendants next assert that Plaintiff’s reference to the case previously filed with this Court concerning the parties should be stricken for failure to conform to law or court rules and that the Court should sustain Defendants’ preliminary objection. Defendants, however, do not present any argument as to why they are entitled to this relief. We find Defendants’ argument lacks merit.

Defendants also argue that Plaintiff has stated two causes of action within one “count” in the complaint in violation of Pa.R.C.P. 1020. The rule provides in relevant part-

(a) The plaintiff may state in the complaint more than one cause of action cognizable in a civil action against the same defendant. Each cause of action and any special damage related thereto shall be stated in a separate count containing a demand for relief.
(b) Causes of actions may be pleaded in the alternative.

Pa. R.C.P. 1020(a)-(c). Under Count II of the complaint, Plaintiff brings a “Breach of Contract and/or Quantum Meruit (Fair Share Contribution)” claim. Plaintiff argues that both legal theories arise from the same set of facts and therefore constitute a single cause of action. We disagree.

Breach of contract and quantum meruit are two separate and distinct causes of action. A breach of contract action involves (1) the existence of a contract, (2) a breach of a duty imposed by the contract, and (3) damages. J.F. Walker Co., Inc. v. Excalibur Oil Group, Inc., 792 A.2d 1269 (Pa.Super. 2002). On the other hand, quantum meruit is an equitable remedy to provide restitution for unjust enrichment in the amount of the reasonable value of services. Am. & Foreign Ins. Co. v. Jerry’s Sport Ctr., Inc., 2 A.3d 526, 532 fn. 8 (2010) (citing Black’s Law Dictionary (8th ed.2004)). In unjust enrichment claims, the law implies a contract, which requires the defendant to pay to the plaintiff the value of the benefit conferred. Schenck v. KE. David, Ltd., 446 Pa.Super. 94, 666 A.2d 327 (1995). The elements necessary to prove unjust enrichment are: (1) benefits conferred on defendant by plaintiff; (2) appreciation of such benefits by defendant; and (3) acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value. Id. at 328. (citations omitted).

The Pennsylvania Rules of Civil Procedure specifically provide for the alternative pleading of causes of actions. Pa.R.C.P. 1020(c). Moreover, causes of action that are inconsistent are permitted so long as they are pleaded at separate counts. Duquesne Light Co. v. U.S. Indus. Fabricators, Inc., 483 A.2d 534 (Pa. Super. 1984). Pennsylvania courts have held that breach of contract and unjust enrichment must be pleaded alternatively in order to allow recovery under the latter theory where an express contract cannot be proven. Lugo v. Farmers Pride, Inc., 967 A.2d 963, 970 (2009) (citing Birchwood Lakes Community Ass’n Inc. v. Cornis, 442 A.2d 304, 308-309 (Pa.Super. 1982)). Thus, we sustain Defendants’ preliminary objection as to Plaintiff’s improper pleading of Count II.

C. Lack of Capacity to Sue under Pa.R.C.P. 1028(a)(3) and (a)(5)

Lastly, Defendants argue that Plaintiff lacks standing to bring this action. Defendants admit that they are subject to the Covenants requiring lot owners to become part of the homeowners’ association and that they did join a similarly named homeowners’ association, which was formed in 1985. However, Defendants argue that they are not a member of the Plaintiff’s association as it was formed some time later. Plaintiff, on the other hand, argues that it is the only homeowners’ association existing with respect to Defendants’ premises. For the following reasons, we overrule Defendants’ preliminary objection.

Based on the pleadings of record and in the light most favorable to Plaintiff, the record establishes that there is only one association formed pursuant to the Covenants and has governed the subdivision where Defendants reside. Defendants do not dispute that they are subject to the Covenants, which gave Defendants easement rights to the common roads and lakes in the community. The Covenants also obligated Defendants to pay any fines assessed and imposed by the association. Moreover, Plaintiff is a “planned community” under the Uniform Planned Community Act (UPCA). 68 Pa.C.S. § 5103. Under the UPCA, the Association is authorized to “[ajdopt and amend budgets for revenues, expenditures and reserves and collect assessments for common expenses from unit owners.” Id. § 5302(a)(2). Therefore, Defendants are obligated under the Covenants and under UPCA to pay for the dues assessed and imposed by Plaintiff. Defendants’ preliminary objection with respect to Plaintiff’s capacity to sue is overruled.

Accordingly, we enter the following Order.

ORDER

AND NOW, this 17th day of April, 2015, upon consideration of Defendants’ Preliminary Objections to Plaintiff’s Complaint, the response(s) thereto, and after oral argument, it is ORDERED as follows:

1. Defendants’ Preliminary Objection for Insufficient Pleading under Pa.R.C.P. 1028(a)(3) and Pa.R.C.P. 1028(a)(2) is OVERRULED.
2. Defendants’ Preliminary Objection for Failure of a Pleading to Conform to Law or Court Rules under Pa.R.C.P. 1028(a)(2) is SUSTAINED. Plaintiff is given twenty (20) days from the date of this ORDER to file an amended complaint.
3. Defendants’ Preliminary Objection for Plaintiffs Lack of Capacity to Sue is OVERRULED.

      . A prior case concerning the parties has been previously litigated. Plaintiff filed a complaint seeking unpaid homeowners’ association dues against the Defendants in 2010, which resulted in a judgment in favor of Plaintiff on January 4, 2012. Defendants appealed this Court’s decision to the Commonwealth Court. On November 7,2012, the Commonwealth Court affirmed. Plaintiff filed the instant action to recover additional unpaid homeowners’ association dues that have been incurred since.


author: WALLACE, /.,

text:
    Simon v. Specialty Orthopaedics, P.C.

      C P. of Mercer County,
    No. 2013-3056

      Harry F. Kunselman, Erica L. Laughlin and Jenna C. Murray, for plaintiff.

      Lynn E. Bell and Jason M. Logue, for defendant.
    May 22, 2015
   WALLACE, /.,

Presently before the Court is Plaintiff Mary Jane Simon’s Motion to Compel Defendant’s Discovery Responses.

Facts

Mary Jane Simon (Plaintiff) is an adult individual residing in Sharon, PA. Specialty Orthopaedics, P.C. (Defendant) is a corporation conducting business in Pennsylvania with a registered office in Hermitage, PA. On October 3, 2011, Plaintiff attended a therapy/exercise session with Defendant. She was being instructed by an employee, Robert Griffith. Mr. Griffith instructed Plaintiff to balance her leg on a large fitness ball. Plaintiff was 82 years old at the time and had only attended two prior sessions with Defendant. While attempting to comply with Mr. Griffith’s instructions, Plaintiff fell into gym equipment located next to her. Plaintiff alleges that she sustained injuries as a result of the fall accident and has suffered numerous complications

On January 23, 2014, Plaintiff served upon Defendant Plaintiff’s First Set of Interrogatories and Requests for Production of Documents Directed to Defendant requesting the identities of any eye witnesses to the accident. Plaintiff filed a Motion to Compel Discovery Responses on March 10, 2014, and said motion was granted on March 17,2014. Defendant served its Answers to Plaintiff’s First Set of Interrogatories and Requests for Production of Documents upon Plaintiff’s counsel on April 7, 2014. In its Answers, Defendant objected to providing the identities of any witnesses to the accident on the grounds that their identities are protected by the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA). Plaintiff filed another Motion to Compel Discovery Responses on August 1, 2014 alleging that Defendant’s discovery responses were deficient. On August 4, 2014, this Court issued an Order reserving any ruling on the HIPAA issue pending Defendant’s briefing of said issue. Defendant was given seven days to submit a brief with respect to the HIPAA issue, and Plaintiff was given 10 days to file a reply brief.

However, Defendant did not brief the HIPAA issue. Instead, Defendant sent correspondence to Plaintiff’s counsel on August 8, 2014 amending its response to Interrogatory 20, claiming that Defendant was unaware of whether any other individuals present at the Wellness Center were eyewitnesses to the incident. On August 18, 2014, Plaintiff sent her Third Set of Interrogatories and Second Request for Production of Documents to Defendant limited to the issue of identifying potential witnesses. Defendant objected to this discovery request on the grounds that the identities of the individuals at the Wellness Center are protected under HIPAA. Plaintiff then filed another Motion to Compel Discovery Responses on November 19, 2014. Defendant then filed an Omnibus Brief addressing the HIPAA issue. There was a hearing before this Court on December 22, 2014. In an Order issued on the same day, this Court noted that Defendant submitted a brief on the HIPAA issue concerning the identity of witnesses. This Court gave Plaintiff 30 days to submit her reply brief, and the parties were to notify the Court whether they wished to schedule argument in this matter. On February 2, 2015, Defendant filed a Praecipe for Argument Date to resolve the HIPAA dispute. Oral argument was held before this Court on April 6, 2015.

Law and Discussion

At issue in this case is whether the identities of potential eye witnesses to Plaintiff’s accident in Defendant’s Wellness Center is protected healthcare information under HIPAA. This Court will discuss the following issues: whether HIPAA creates an evidentiary privilege injudicial proceedings, whether Defendant is a healthcare provider under HIPAA and whether the information sought is protected health information under HIPAA? For the reasons discussed below, this Court finds that the identity of a potential witness is not protected under the HIPAA privacy provisions.

Whether HIPAA may be used as an Evidentiary Privilege?

First, this Court will examine whether the HIPAA privacy provisions create an evidentiary privilege in judicial proceedings. In T.M. v. Elwyn, Inc., 950 A.2d 1050 (Pa.Super. 2008), the plaintiff was a student at Elwyn Alternative School, which handled and educated children with mental health and behavioral issues. The plaintiff sued the school for a number of claims including negligent hiring, training and supervision after being assaulted on multiple occasions by one of the defendant’s employees. The plaintiff made several discovery requests, which the trial court granted. These discovery requests involved obtaining pleadings and discovery from other lawsuits against the school for sexual abuse by its employees. The defendant appealed raising a number of objections based on privilege. One of these obj ections was that the requested information was protected by HIPAA. The defendant argued that it was a covered entity under HIPAA and that it must comply with HIPAA and its associated regulations because it provides behavioral and mental health services. The Superior Court disagreed with the defendant and found that HIPAA does not create an evidentiary privilege in court proceedings. Id. at 1059-60. Additionally, the Superior Court noted that even if the defendant was a protected entity under HIPAA, section 164.512(e) of the privacy rule “indicates generally (with certain caveats and requirements for disclosure pursuant to a court order or subpoena) that release of protected health information is permissible without patient authorization in judicial proceedings.” Id. 1060. (citing 45 C.F.R. § 164.512(e)). Thus, even protected health information may be obtained injudicial proceedings.

HIPAA outlines the steps to follow in order to obtain protected health information during a judicial proceeding in 45 CFR 164.512(e). There are three ways to obtain protected health information in judicial proceedings under HIPAA. First, a party may obtain a Court Order to acquire such information. 45 CFR 164.512(e)(l)(i). In the absence of a Court Order, 45 CFR 164.512(e)(1) (ii)(A) and (B) provide two additional methods available when used in conjunction with more traditional means of discovery. Specifically relevant to this case, § 164.512(e) permits disclosure of protected health information in the course of any judicial proceeding “[i]n response to an order of a court or administrative tribunal, provided that the covered entity discloses only the protected health information expressly authorized by such order . . .” 45 C.F.R. § 164.512(e)(l)(i). Therefore, Defendant cannot use HIPAA as a shield to avoid reasonable discovery requests injudicial proceedings.

Whether Defendant is a Healthcare Provider under HIPAA?

Next, this Court must determine whether Defendant is an entity covered by HIPAA’s privacy provisions. HIPAA applies to the following entities: a health plan, a healthcare clearinghouse and a healthcare provider who transmits any health information in electronic form in connection with a transaction. 45 C.F.R. § 160.102(a)(l)-(3). In order to understand what this entails, this Court must further examine the definitions of different terms within HIPAA.

In order for the HIPAA privacy provisions to apply, Defendant must be considered a healthcare provider under HIPAA. Accordingly, a healthcare provider is defined as a provider of services under 42 U.S.C. § 1395x(u), a provider of medical or health services under 42 U.S.C. § 1395x(s) and any other person or organization who furnishes, bills, or is paid for healthcare in the normal course of business.” 45 C.F.R. § 160.103. Defendant argues that it is a provider of medical or health services and is, therefore, covered by HIPAA. Thus, the term medical or health services is defined as “outpatient physical therapy services, outpatient speech-language pathology services, and outpatient occupational therapy services.” 42 U.S.C. § 1395x(s)(D).

Finally, this Court must examine the definition of the term transaction under HIPAA. A transaction “means the transmission of information between two parties to carry out financial or administrative activities related to healthcare . . “ and includes (1) healthcare claims or equivalent encounter information, (2) health are payment and remittance advice, (3) coordination of benefits, (4) healthcare claim status, (5) enrollment and disenrollment in a health plan, (6) eligibility for a health plan, (7) health plan premium payments, (8) referral certification and authorization, (9) first report of injury, (10) health claims attachments, (11) healthcare electronic funds transfers and remittance advice, and (12) other transactions that the Secretary may prescribe by regulation. 45 C.F.R. § 160.103.

In this case, Defendant claims that it is a covered entity under HIPAA because it employs physicians and other healthcare providers who provide medical care and services, and the Wellness Center provides physical therapy and occupational therapy services in addition to exercise services. While Defendant may provide outpatient physical therapy and occupational therapy services, the privacy protections of HIPAA are only triggered if the healthcare provider transmits any information in an electronic form in connection with a transaction. 45 C.F.R. § 160.102(a) (3). Here, Defendant does not allege that it engages in any of the covered transactions discussed above, or that it transmits any of this information electronically. Therefore, Defendant failed to prove that it is a protected entity under HIPAA. However, even if Defendant was a protected entity under HIPAA, 45 CFR 164.512(e), supra, clearly creates an exception to the HIPAA privacy provisions in judicial proceedings.

Whether the information sought is protected health information under HIPAA?

Finally, this Court must determine whether the identity of a witness is considered to be protected health information under the provisions of HIPAA. Protected health information under HIPAA is defined as individually identifiable health information that is (1) transmitted by electronic media; (2) maintained in electronic media; or (3) transmitted or maintained in any other form or medium. 45 C.F.R. § 160.103. Thus, in order to determine whether the identity of a witness is considered protected health information under HIPAA, this Court must first determine the meaning of the term health information.

Accordingly, health information under HIPAA is defined as follows:

Health information means any information, including genetic information, whether oral or recorded in any form or medium, that:
(1) Is created or received by a healthcare provider, health plan, public health authority, employer, life insurer, school or university, or healthcare clearinghouse; and
(2) Relates to the past, present, or future physical or mental health or condition of an individual; the provision of healthcare to an individual; or the past, present, or future payment for the provision of healthcare to an individual.

Id. Individually identifiable health information is a subset of health information that

(1) Is created or received by a healthcare provider, health plan, employer, or healthcare clearinghouse; and
(2) Relates to the past, present, or future physical or mental health or condition of an individual; the provision of healthcare to an individual; or the past, present, or future payment for the provision of healthcare to an individual; and
(i) That identifies the individual; or
(ii) With respect to which there is a reasonable basis to believe the information can be used to identify the individual.

Id. These definitions make it clear that in order for the information requested to be protected, it must be concerned with the physical health, mental health or condition of the person, the provision of healthcare to that person, or the payment for provision of healthcare. In this case, Plaintiff is only seeking the identities of any individuals who may have seen her fall on the date in question at the Wellness Center. Plaintiff is not asking for information relating to the physical or mental health, provision of healthcare or payment for healthcare of Defendant’s patrons. Plaintiff only wants to inquire with any individuals about her fall accident. Therefore, the information requested by Plaintiff is not protected health information under HIPAA.

ORDER

AND NOW, this 22nd day of May, 2015, it is hereby ORDERED, ADJUDGED and DECREED as follows:

1. Defendant, Specialty Orthopaedics, P.C., is compelled to produce the identities of the persons, including each persons’ name, telephone number and address, who were present at the Wellness Center on the date of Plaintiff’s fall accident. However, said discovery will be limited to those individuals who were present at the wellness center at the time of the accident.
2. Discovery in this case shall be extended generally and shall be completed within sixty (60) days of this Order.

      . Both parties have attached exhibits to their briefs. This Court notes that a party does not make an exhibit part of the record by attaching it to the brief. See, e.g., Erie Indemnity Co. v. Coal Operators Casualty Co., 272 A.2d 465, 466-67 (Pa. 1971) (facts averred in a brief that are not otherwise contained in the record are not a part of the record); Scopel

        v. DonegalMut. Ins. Co., 698 A.2d 602, 606 (Pa.Super. 1997) (exhibits attached to briefs are not part of the record); In re Leonhard’s Estate, 56 Pa. D. & C.2d 185, 189 (Pa.Com.Pl. 1972) (“Briefs and exhibits attached to briefs and not part of the record form no part of the formal record upon which we can base an adjudication.”). Therefore, none of the exhibits attached to the parties’ briefs were considered by this Court in reaching its decision.


text:
    Walters v. Buck Hill Falls Co.

      C.P. of Monroe County,
    No. 1970 CIVIL 2015

      Scott R. Steirer, for plaintiffs.

      George W. Westervelt, Jr., for defendant.
    June 8, 2015
   WILLIAMSON,«/.,

This matter comes before us on Preliminary Objections filed by Buck Hill Falls Company (hereafter “Defendant”) in response to the Complaint filed by Michael J. Walters, et al. (hereafter “Plaintiffs”).

Background

Plaintiffs in this case are some of the present and former owners of record of developed lots in the community of Buck Hill Falls, Pennsylvania. Defendant is the owner of the common areas in the community. The Lot and Cottage Owners’ Association (LCOA) of Buck Hill Falls is a unit owners’ association which represents the owners of individual lots in the community. In 1995, the LCOA filed a Declaratory Judgment action against Defendant and entered into a settlement agreement prior to any disposition on June 8, 1996. Plaintiffs allege that, instead of making the required apportionment of community service costs to developed and undeveloped lots pursuant to the 1996 agreement, Defendant has charged all of such costs to individual owners of developed lots only. Plaintiffs also allege other violations of the 1996 agreement.

Defendant and the LCOA entered into another agreement on June 8, 2004 which restated the 1996 agreement and increased dues. Plaintiffs allege that the LCOA board of directors entered into this agreement without an affirmative vote of LCOA members. Thus, Plaintiffs also seek to enforce the terms of the 1996 agreement and deem the 2004 agreement invalid. Plaintiffs have calculated the excess amount of dues they have been charged since the agreement in 1996 and request that amount in money damages.

Argument

“Preliminary objections in the nature of a demurrer test the legal sufficiency of the complaint.” Haun v. Community Health Systems, Inc., 14 A.3d 120, 123 (Pa. Super. 2011). Moreover, “preliminary objections which seek the dismissal of a cause of action should be sustained only in cases in which it is clear and free from doubt that the pleader will be unable to prove facts legally sufficient to establish the right to relief.” Id. Finally, “if any doubt exists as to whether a demurrer should be sustained, it should be resolved in favor of overruling the preliminary objections,” Id.

In ruling on preliminary objections, “all well-pleaded allegations and material facts averred in the complaint, as well as all reasonable inferences deducible therefrom, must be accepted as true.” Wurth by Wurth v. City of Philadelphia, 584 A.2d 403, 407 (Pa. Cmwlth. 1990). The “court need not accept as true conclusions of law, unwarranted inferences from facts, argumentative allegations, or expressions of opinions.” Perm Title Ins. Co. v. Deshler, 661 A.2d 481, 483 (Pa. Cmwlth. 1995).

Defendant’s first preliminary objection is a motion for a more specific complaint. Defendant argues that, in violation of Pa.R.C.P. 1019(f), Plaintiffs have not attached the “various sets of covenants” they reference in the Complaint; and that, in violation of Pa.R.C.P. 1019(f), Plaintiffs have failed to aver how any action of Defendant violated these referenced covenants. Plaintiffs acknowledge that, in the Complaint, they reference that “various sets of covenants” regulate the lot owners in the community. However, Plaintiffs argue that the Complaint makes clear that the cause of action in this matter is Defendant’s breach of the agreed upon procedure and standards for calculating dues as clarified by the 1996 agreement and the overcharges that resulted from Defendant’s breach.

“When any claim or defense is based upon a writing, the pleader shall attach a copy of the writing, or the material part thereof, but if the writing or copy is not accessible to the pleader, it is sufficient so to state, together with the reason, and to set forth the substance in writing.” Pa.R.C.P. No. 1019(0- “Averments of time, place and items of special damage shall be specifically stated.” Pa.R.C.P. No. 1019(f). Allegations will withstand a challenge under Pa.R.C.P. 1019 if they contain averments of all of the facts the plaintiff will eventually have to prove in order to recover, and they are sufficiently specific so as to enable the defendant to prepare their defense, Lerner v. Lerner, 954 A.2d 1229, 1236(2008).

Here, Plaintiffs’ claim is based upon a breach of the 1996 agreement. While Plaintiffs state in their Complaint that the 1996 agreement clarifies the “various sets of covenants” which regulate the lot owners in the Buck Hill Falls community, the covenants themselves do not appear necessary for Defendant to prepare a defense against Plaintiffs’ claim. Plaintiffs’ claim is not based on the referenced covenants, but rather enforcement of the 1996 agreement and alleged invalidation of the 2004 agreement and the actions of the Defendant as a result of the 2004 agreement. We are uncertain whether Defendant will allege the various sets of covenants apply in some manner; however, Plaintiffs have not alleged that they apply. Therefore, it is not necessary for Plaintiffs to attach the “various sets of covenants” regulating the lot owners in the community to their Complaint.

Defendant’s second preliminary objection is that Plaintiffs’ Complaint failed to join a necessary party pursuant to Pa.R.C.P. 1028(a)(5). Defendant argues that Plaintiffs continually reference the LCOA and that the LCOA is a necessaiy party for a resolution of Plaintiffs’ claims. Defendant also argues that non-plaintiff owners of lots in the community are necessary parties for resolution of Plaintiffs’ claims.

In their respective briefs, both parties discuss a case from the Court of Common Pleas of Pennsylvania, Lackawanna County. In Murray v. Haggerty, the court held that a necessary party, pursuant to Pa.R.C.P. 1028(a) (5), is one “whose presence, while not indispensable, is essential if the court is to resolve completely a controversy and to render complete relief.” Murray v. Haggerty, No. 06 CV 2292, 2006 WL 5534079 (C.P. Lackawanna County). In that case, the court reasoned that the party was a necessary party to the proceedings by stating:

“Unless [the party] is joined as a necessary party to this proceeding, the prospect of duplicative litigation and inefficient use of limited judicial resources will exist. The interests of the litigants and the courts will best be served if [the party] is joined as a party in this action so that a single, definitive adjudication can be made.”

Id.

Here, Plaintiffs argue that the LCOA is not a necessary party because Plaintiffs have not alleged that the LCOA breached any agreement or miscalculated dues owed by lot owners. However, the LCOA is a party to the 1996 agreement which Plaintiffs seek to enforce. LCOA is also a party to the 2004 agreement which Plaintiffs state is invalid because the LCOA board entered into the agreement without an affirmative vote of LCOA members. The Complaint also states in paragraphs 21 and 22 that pursuant to the 1996 agreement, the Defendant was to consult with the LCOA and seek advice on the costs of services and the level of annual dues. The Complaint goes on to allege the Defendant increased dues and failed to apportion them properly and that it was done, in part, under the 2004 agreement which Plaintiffs allege is invalid. These facts necessitate that the LCOA be joined as a party to these proceedings in order to efficiently utilize judicial resources and prevent duplicative litigation.

Defendant further argues that the non-plaintiff owners of developed and undeveloped lots in the community are necessary parties because of the financial impact these proceedings may have on them. However, at this point in the proceedings, any future litigation of non-plaintiff lot owners based on negative financial impact from this case is speculative and they are not necessary parties at this time. Furthermore, Plaintiffs are alleging a violation of the 1996 agreement, which both parties appear to admit is an agreement that is, or at least was, approved by all lot owners. Whether or not the 2004 agreement is binding is disputed by the parties, but the asserted issue is whether or not actions of the LCOA in entering into the agreements operated to bind all owners. The next question then becomes what is required or allowed by those agreements.

Defendant’s third preliminary objection is that Plaintiffs’ Complaint failed to conform to law or rule of court in violation of Pa.R.C.P. 1019(i). Defendant argues that Plaintiffs failed to attach either the 1996 agreement or 2004 agreement to their complaint, both of which were referenced in Plaintiffs’ Complaint.

As this court discussed above, when a claim is based upon a writing, the pleader shall attach a copy of the writing. Here, Plaintiffs’ claim relies on enforcement of the 1996 agreement and invalidation of the 2004 agreement. Plaintiffs’ claim is thus based on both the 1996 agreement and 2004 agreement. Therefore, Plaintiffs must attach both of these referenced agreements to an amended complaint.

ORDER

AND NOW, this 8th day of June, 2015, upon consideration of the Preliminary Objections filed by Defendant, it is ORDERED AND DECREED as follows:

1. Defendant’s first preliminaiy objection is OVERRULED. Plaintiffs need not attach the “various sets of covenants” to their Complaint.
2. Defendant’s second preliminaiy objection is OVERRULED in part as Plaintiffs are not required to join non-plaintiff lot owners as necessary parties to this claim at this time.
3. Defendant’s second preliminaiy objection is SUSTAINED in part as Plaintiffs are required to join the LCOA as a necessary party to this claim.
4. Defendant’s third preliminary objection is SUSTAINED as Plaintiffs failed to attach the 1996 agreement and 2004 agreement to their Complaint.
5. Plaintiff shall file an Amended Complaint within twenty (20) days of the date of this Order.