The Doctrine of Standing and the Right to an Accounting in Pennsylvania
In the Matter of Nadzam, Deceased, 2019 PA. Super. 14 (Jan. 14, 2019).
JoAnn Domitrovich and Mandy Burket were two of the six children of the decedent, Allen Nadzam (“the decedent”). The decedent died on July 1, 2017.
Thereafter, JoAnn initiated an action with the Court of Common Pleas of Beaver County Orphans’ Court in November 2017, alleging the following: (1) that she was a potential intestate heir of the decedent; and (2) that the decedent had a will bequeathing his estate in six equal shares to his children. However, no will was probated, nor was an estate opened.
JoAnn also asserted that her sister Mandy exercised undue influence over the decedent when became an agent under a Power of Attorney prior to his death and thereafter transferred several, if not all, of the decedent’s assets into her own name. She further alleged that her sister improperly influenced the decedent to execute a new will making herself the sole beneficiary. As such, JoAnn sought an accounting of her sister’s management of the decedent’s assets in order to determine whether she had breached her fiduciary duties.
Upon the filing of the petition, the Clerk of the Orphans’ Court issued a rule to show cause why the accounting should not be filed.
Mandy responded by filing Preliminary Objections to the petition stating that JoAnn lacked capacity to sue, because she failed to allege facts that established that she was an aggrieved party. Attached to her brief, Mandy produced a number of documents concerning the assets of the decedent. Those documents included, in chronological order:
- a change-of-beneficiary form dated October 17, 2000, for retirement assets listing Mandy as the secondary beneficiary after the decedent’s then-wife (the couple later divorced);
- a deed from July 25, 2012, transferring the decedent’s Raccoon Township real property to Mandy and her husband;
- a bank statement from August 2012, reflecting the decedent and Mandy as joint account holders;
- a durable power of attorney dated October 15, 2012, naming Mandy as the decedent’s attorney-in-fact; and
- a will executed by Decedent on December 21, 2012, naming Mandy as his sole beneficiary.
During oral argument on the Preliminary Objections, Mandy contended that JoAnn lacked standing to seek an accounting because she was not an aggrieved person and that all of the decedent’s assets were transferred inter vivos and there was no estate. However, even if there was an estate, Mandy argued it would all go to her pursuant to the decedent’s December 21, 2012, will. Finally, Mandy argued that an accounting would be unduly burdensome and expensive, not to mention that since Mandy was the beneficiary of the joint accounts of the decedent, JoAnn stood to gain nothing regardless of what the accounting would show.
In February 2018, the Orphans’ Court entered an Order sustaining Preliminary Objections, and providing that if JoAnn wished to contest the validity of the will, she was directed to request the grant of Letters Testamentary or Letters of Administration from the Register of Wills, or request that the Register issue a citation directing Mandy to deposit the purported will or show cause why she should not do so. JoAnn filed the timely appeal.
The main issue on appeal was whether JoAnn lacked standing to pursue an accounting. JoAnn argued on appeal that the statute governing an Orphans’ Court power to direct an attorney-in-fact to give an accounting, 20 Pa. C.S. §5610, has no standing requirement. Further, she argued that even if standing was required, she had established it by proving herself as an aggrieved party as the decedent’s intestate heir.
The Superior Court of Pennsylvania agreed that JoAnn was correct that the statute does not mandate that the request for an accounting be initiated by a party with standing. However, they found that there was no authority for her apparent contention that the Orphans’ Court should or must require an accounting any time any person requests one.
The Superior Court looked at the case of Rellick v. Smith as for the doctrine of standing, quoting the decision as follows: “the core concept of standing is that a person who is not adversely affected in any way by the matter he seeks to challenge is not ‘aggrieved’ thereby and has no standing to obtain a judicial resolution to his challenge.” Rellick-Smith, 47 A.3d 897, 901 (Pa. Super. 2016) (quoting Office of Governor v. Donahue, 626 Pa. 437, 98 A.3d 1223, 1229 (2014) (emphasis added).
The Superior Court found that JoAnn failed to establish any fiduciary relationship between herself and Mandy nor had she alleged any fraud on the part of Mandy in exercising her agency powers. Rather, the allegations of impropriety in the petition related to transfers that occurred before the decedent executed the Power of Attorney and prior to Mandy’s influence upon the decedent’s modification of his will. Concerning Mandy’s actions as agent for the decedent, JoAnn indicated both in her petition and oral argument that she had no reason to believe that malfeasance occurred, but she wanted an accounting to determine if any impropriety had occurred. Accordingly, the court found under Pennsylvania law she failed to allege facts to establish her standing to seek an accounting.
The Superior Court also disagreed with JoAnn’s assertion that even if standing is required, she established it as an aggrieved party because she was an intestate heir of the decedent. As the Orphans’ Court had explained, even if the Orphans’ Court had entertained JoAnn’s request for an accounting and irregularities were discovered, and surcharges were imposed upon Mandy, any amount she was surcharged would ultimately be returned to the estate of which Mandy is the sole beneficiary. The Superior Court found the reasoning of the Orphans’ Court to be sound and agreed that there was no reason to direct an accounting at this juncture.