IN THE SUPERIOR COURT OF PENNSYLVANIA
IN RE: ESTATE OF JAMES B. KARN.
BRIEF OF APPELLANT
Appeal from the Order of Distribution entered on May 17,
2021 by the Honorable Michael E. McCarthy in the Orphan’s Court Division
of the Court of Common Pleas of Allegheny County, Pennsylvania,
at No. 1566 of 2010
TABLE OF CONTENTS
I. STATEMENT OF JURISDICTION.. 4
III. STATEMENT OF THE SCOPE AND STANDARD OF REVIEW.. 5
IV. STATEMENT OF THE QUESTIONS INVOLVED.. 6
A. THE TRIAL COURT ABUSED ITS DISCRETION BY AWARDING THE ESTATE FUNDS TO A BENEFICIARY BEFORE THE DEBTS WERE PAID. 11
B. THE TRIAL COURT ERR WHEN IT REMOVED THE APPELLANT AS EXECUTOR OF THE DECEASED’S ESTATE. 12
TABLE OF AUTHORITIES
Commonwealth v. Widmer, 560 Pa 308, 744 A.2d 745 (Pa. 2000):………………. 5
Harman ex rel. Harman v. Borah, 562 Pa. 455, 465-69, 756 A.2d 1116, 1122-24 (Pa. 2000)…………………………………………………………………………………………………… 5
In re Estate of Davis, 128 A.3d 819, 821-822 (Pa. Super. 2015)………………… 12
In re Estate of Mumma, 41 A.3d 41, 49 (Pa. Super. 2012)………………………… 14
In re Estate of Pyle, 570 A.2d 1074, 1077 (Pa. Super. 1989)…………………….. 13
In re Fridenberg, 33 A.3d 581, 584 (PA. 2010)……………………………………… 13
In re Wahr’s Estate, 88 A.2d 417, 419 (Pa. 1952)………………………………….. 13
L.-S. v. B.S., 117 A.3d 352, 361 (Pa. Super. 2015)……………………………….. 12
20 Pa.C.S. § 3541……………………………………………………………………………. 11
42 Pa.C.S. §742………………………………………………………………………………… 4
Section 3182 of the Pennsylvania Estates and Fiduciary Code………………….. 11
Section 3392 of Title 20 of Pennsylvania’s Consolidated Statutes……………… 10
Pennsylvania Rule of Appellate Procedure 2135……………………………………. 17
I. STATEMENT OF JURISDICTION
This Court has jurisdiction over this appeal pursuant to 42 Pa.C.S. §742, which grants the Superior Court exclusive jurisdiction over all appeals from final Orders of the Courts of Common Pleas.
II. ORDER IN QUESTION
Appeal from the Order of Distribution entered on May 17, 2021, by the Honorable Michael E. McCarthy in the Orphan’s Court Division of the Court of Common Pleas of Allegheny County, Pennsylvania, at No. 1566 of 2010.
TEXT OF THE ORDER IN QUESTION
The trial court’s sentencing order dated May 17, 2021 states, in pertinent part:
AND NOW, to wit, this 17 day of May 2021, the Account in this case having been filed and confirmed nisi and having been examined and audited by the Court, upon consideration thereof, it is DECREED that the Account be confirmed absolutely and that the personality in the hands of the accountant, to wit, $26,500.41, be distributed in accordance with the attached Schedule A, and that the unconverted real estate in the hands of the accountant, at the valuation of $203,600.00. be distributed in accordance with the attached Schedule B.
Order attached hereto as Exhibit A.
III. STATEMENT OF THE SCOPE AND STANDARD OF REVIEW
The first question presented on appeal challenges the decision of the Court to award the estate funds to the beneficiary before the debts were paid. The standard of review applied by the appellate court depends upon the trial court’s preliminary decision of whether any mistake – involving a factual, legal or discretionary matter –was made at trial. If the mistake concerned an error of law, the court will scrutinize for legal error. Harman ex rel. Harman v. Borah, 562 Pa. 455, 465-69, 756 A.2d 1116, 1122-24 (Pa. 2000). Ultimately, the proper standard of review is whether the trial court abused its discretion. Harman, 756 A.2d 1122. As stated in Commonwealth v. Widmer, 560 Pa 308, 744 A.2d 745 (Pa. 2000):
Discretion is abused when the course pursued represents not merely an error of judgment, but where the judgment is manifestly unreasonable or where the law is not applied or where the record shows that the action is a result of partiality, prejudice, bias or ill will.
Widmer at 322.
The second question presented challenges the Court’s decision to remove the Appellant as executor of the deceased’s estate. See Widmer 744 A.2d 745 at 322. Appellant also contends that the Court’s decision amounts to an abuse of discretion. Notably, the Court failed to consider the fact that the Appellant continued to improve the insolvent estate status and may have had funds to pay beneficiaries, in the future.
IV. STATEMENT OF THE QUESTIONS INVOLVED
- Did the Trial Court abuse its discretion by awarding the estate funds to a beneficiary before the debts were paid?
- Did the Trial Court err when it removed the Appellant as executor of the deceased’s estate?
V. STATEMENT OF THE CASE
James B. Karn (the Decedent) died on October 29, 2004, a resident of 6905 Merton Road, Pittsburgh, Pennsylvania. The Decedent was unmarried at time of death and had 2 surviving children.
Appellant (Decedent’s Son) was assigned many roles by the Decedent. Appellant was business partner in Karn Chemical Equipment Co.; acting Power of Attorney until DOD; executor of Estate; creditor of Estate; and primary Beneficiary.
Douglas J. Karn (Decedent’s Son) was an estate beneficiary.
William S. Karn (brother to decedent and an Estate Attorney) was the lawyer for Appellant and Estate adviser for the legal documents that were filed.
The Decedent left a Will dated September 18, 2004, which was admitted to probate on March 12, 2010 by the Department of Court Records, Wills/Orphans; Court Division, Allegheny County, Pennsylvania.
The decedent requested that 518 Dickson Ave, the home that he lived in most of his early life, and 6905 Merton Road, the home he lived in most of his remaining life, be placed in the custody of Appellant, POA and appointed Executor. William S. Karn was instructed by the decedent to put Appellant on the title of these two homes and the property at 815 Camp Horne Road.
On March 12, 2010, Letters Testamentary were duly granted to Appellant, Executor.
The estate of the Decedent consisted of the following property valued, as of the Decedent’s date of death:
- Property – Spruce Run Road – $40,000
- Property – 815 Camp Horne Road – $30,000
- Property – 6905 Merton Road – $100,000
At the time of his death, Decedent had an interest as a joint tenant in the following account Karn Chemical Equipment Co in the name of the Decedent and Appellant, as joint tenants with right of survivorship:
- National City Bank – Checking account $1,032.
There is no partial intestacy as to the estate. Property B & C rights and obligations were assigned as partial payment to Creditor, Appellant by James the decedent on September 18, 2004. Following the sale of the Shop and Equipment (Property A), as stated in the will, this Estate contained no additional assets.
The following administration expenses, debts and taxes are claims against the estate:
- Costs of Administration:
- Appellant – Executor’s fee $ 8,275.
- Appellant – advances for probate costs, short certificates, postage, duplicating charges, advertising letters, etc. $942.
- Funeral expenses: Appellant – reimbursement for funeral expenses $5,404.98.
- Taxes, Utilities
- Other Claims: Appellant, Creditor, has taken responsibility for all past obligations and will be first to be repaid for any future income from the estate.
The assets of the estate totaling $1,023 are insufficient to pay all proper charges and claims against the estate totaling $58,346.90. Pursuant 20 Pa. C.S.A. § 3392, payment was made as follows:
- 6905 Merton Road and 815 Camp Horne Road properties assets and responsibilities are assigned to Appellant as partial repayment to creditor.
- Douglas Karn was paid $3,000 as beneficiary in error. The creditors had priority before the $10,000 Equipment income was distributed. $2,000 (20%) to Douglas Karn and $1,000 (10%) to Elizabeth Sherry Jones, with Sherry Jones refusing her share. The $3,000 paid to Douglas Karn, as conceded to in court, needs to be returned to the estate for Creditor Payment.
All Estate accounting records were compiled and available for review from October 29, 2004 through April 30, 2010; five years later, many of the original documents were lost or destroyed.
Appellant is aware of no additional creditor claims, through April 30, 2010, against the estate which are not admitted. With insufficient funds to pay creditor, no beneficiary benefits should be paid.
According to William S. Karn, Estate Attorney, the Estate of the Decedent was insolvent, and all assets were liquidated in 2010. All assets and debts became the responsibility of the Estate Creditor, Appellant.
On May 2 2019, Douglas Karn, beneficiary, filed a “Petition for Citation to Show Cause Why James L Karn Should Not Be Removed As Executor”.
Appellant, Estate Executor, completed all documents outlined in the Petition prior to September 24, 2019 at a cost of $9,400 to the estate. August 29,2019 advertisement was made in The Pittsburgh Legal Journal. August 28, 2019 advertisement was made in the Pittsburgh Post-Gazette. September 6,2019 First And Final Accounting Filed.
On September 24,2019 Appellant was replaced by the court as Estate Executor with Pro Bono Attorney Arnold Caplin.
Arnold Caplin has failed to perform his duties including, but not limited to:
- Assigning payments from 815 Camp Horne Road Mortgage to Appellant, Creditor.
- Transferring title of 6905 Merton Road to Appellant, Creditor.
- File any report or financial Statement justifying his collection of funds.
- Return $3,000 to Estate that was paid Douglas J Karn, Beneficiary, in error.
Appellant filed a Petition for Settlement of Insolvent Estate at the in the Orphan’s Court Division of the Court of Common Pleas of Allegheny County, Pennsylvania.
On May 17, 2021, the Court issued an Order denying Appellant’s Petition and distributing the estate to Douglas J Karn.
VI. SUMMARY OF ARGUMENTS
The Court abused its discretion when it awarded the estate funds to the beneficiary before the debts were paid. It is trite law that all debts must first be paid before any assets are distributed. Section 3392 of Title 20 of Pennsylvania’s Consolidated Statutes sets out the order in which the debts of an estate are to be paid. Therefore, the Court erred in distributing the estate without settling the estate’s debts.
The Trial Court erred when it removed the Appellant as executor of the deceased’s estate. Section 3182 of the Pennsylvania Estates and Fiduciary Code provides the grounds for removal of a personal representative (or an executor). None of the grounds applied to the Appellant. The Court failed to consider the fact that the Appellant continued to improve the insolvent estate status and may have had funds to pay beneficiaries, in the future.
A. THE TRIAL COURT ABUSED ITS DISCRETION BY AWARDING THE ESTATE FUNDS TO A BENEFICIARY BEFORE THE DEBTS WERE PAID.
Debts of an estate must first be paid before the estate is distributed. See 20 Pa.C.S. § 3541 (delineating order of distribution to pay claimants and distributes if the assets are insufficient to pay all claimants and distributes in full). Accordingly, Section 3392 of Title 20 of Pennsylvania’s Consolidated Statutes contains the order for paying creditors of an estate. The said Section states:
If the applicable assets of the estate are insufficient to pay all proper charges and claims in full, the personal representative, subject to any preference given by law to claims due the United States, shall pay them in the following order, without priority as between claims of the same class:
(1) The costs of administration.(2) The family exemption.(3) The costs of the decedent’s funeral and burial, and the costs of medicines furnished to him within six months of his death, of medical or nursing services performed for him within that time, of hospital services including maintenance provided him within that time, of services provided under the medical assistance program provided within that time and of services performed for him by any of his employees within that time.(4) The cost of a grave marker.(5) Rents for the occupancy of the decedent’s residence for six months immediately prior to his death.(5.1) Claims by the Commonwealth and the political subdivisions of the Commonwealth.(6) All other claims.
20 Pa.C.S. § 3392
“[a] trial court has abused its discretion if it failed to follow proper legal procedures or misapplied the law.” L.-S. v. B.S., 117 A.3d 352, 361 (Pa. Super. 2015).
Appellant contends that all the expenses and debts of an estate are to be paid in full prior to distribution to beneficiaries. See In re Estate of Davis, 128 A.3d 819, 821-822 (Pa. Super. 2015). It follows, therefore, the Trial Court ought to have withheld the distribution until the estate’s debts were paid. Such erroneous decision amounts to an abuse of the Court’s discretion, because the Court failed to follow the law on distribution of estates.
B. THE TRIAL COURT ERR WHEN IT REMOVED THE APPELLANT AS EXECUTOR OF THE DECEASED’S ESTATE.
Courts are not permitted to determine what they think the testator might or would have desired under the existing circumstances or even what they think the testator meant to say. Rather, the Court must focus on the meaning of the testator’s words within the corners of the will. In re Fridenberg, 33 A.3d 581, 584 (PA. 2010). Further, “[a]s most wills are seldom alike, it is necessary to interpret each will according to its own peculiar terms.” In re Estate of Pyle, 570 A.2d 1074, 1077 (Pa. Super. 1989) (citing In re Wahr’s Estate, 88 A.2d 417, 419 (Pa. 1952) (dissenting opinion, Bell and Musmanno, JJ.)).
Section 3182 of the Pennsylvania Estates and Fiduciary Code provides the grounds for removal of a personal representative (or an executor). The said Section states in that regard that:
The court shall have exclusive power to remove a personal representative when he:
(1) is wasting or mismanaging the estate, is or is likely to become insolvent, or has failed to perform any duty imposed by law; or(2) Deleted. 1992, April 16, P.L. 108, No. 24, § 4, effective in 60 days.(3) has become incapacitated to discharge the duties of his office because of sickness or physical or mental incapacity and his incapacity is likely to continue to the injury of the estate; or(4) has removed from the Commonwealth or has ceased to have a known place of residence therein, without furnishing such security or additional security as the court shall direct; or(4.1) has been charged with voluntary manslaughter or homicide, except homicide by vehicle, as set forth in sections 3155 (relating to persons entitled) and 3156 (relating to persons not qualified), provided that the removal shall not occur on these grounds if the charge has been dismissed, withdrawn or terminated by a verdict of not guilty; or(5) when, for any other reason, the interests of the estate are likely to be jeopardized by his continuance in office.
20 Pa.C.S. § 3182
“The removal of an executrix is a matter vested in the sound discretion of the trial court, and thus we will disturb such a determination only upon a finding of an abuse of that discretion.” In re Estate of Mumma, 41 A.3d 41, 49 (Pa. Super. 2012). (Emphasis added).
With respect to 20 Pa.C.S. § 3182, the Pennsylvania Supreme Court has stated: “While, under that statutory provision, orphans’ courts do have the power of removal of personal representatives and such removal lies largely within the discretion of such courts, an abuse of such discretion renders its exercise subject to appellate review… An executor, of course, is chosen by the testator himself, and his appointment represents an expression of trust and confidence by the testator. Hence, his removal is a drastic action which should be undertaken only when the estate within the control of such personal representative is endangered. To justify the removal of a testamentary personal representative the proof of the cause for such removal must be clear. In re Estate of Lux, 389 A.2d 1053, 1059 (Pa. 1978) (citations omitted). (Emphasis added).
In the instant case, the Court disregarded the Decedent’s intent from his will. Notably, the Decedent expressly appointed Appellant the executor and/or personal representative of his estate. Besides, on March 12, 2010, Letters Testamentary were duly granted to Appellant as the Executor. Furthermore, there is no proof that Appellant meets any of the grounds for his removal as executor of the estate.
Also, it is worth noting that the Decedent, the Appellant and William Karn formed a partnership in 2001, when the Decedent went into the hospital, to manage the Decedent’s estate. Accordingly, Appellant handled the estate finances, and William Karn handled the property contracts and legal matters. Douglas Karn (the beneficiary) declined to partner in the estate management, did not attend the decedent’s funeral and disappeared from the family contact for years.
Notably, Appellant prays this Court to consider Appellant’s record as the executor of the estate. As the appointed Executor, the Appellant completed the required documents for adjudication. He continued to improve the insolvent estate status and may have had funds to pay beneficiaries, in the future. In that regard, Appellant contends that the Trial Court erred when it failed to consider the investment done by the Appellant on the insolvent estate. The Court ought to have considered the tireless efforts made by the Appellant in the estate, when issuing its Order of distribution. The investments made by the Appellant in the estate are mostly public record, including property taxes, funeral expenses, and inheritance tax. Other investments are easily estimated including new roof, furnace, and water heater. Besides, the money generated from sale or mortgage of the Estate properties were invested back into the Estate. It is worth noting that the estate should have been distributed to the Appellant considering the investment he made in the Estate as personal representative before the Court removed him as executor.
Accordingly, the Court’s action of removing the Appellant as executor of the estate amounts to an abuse of discretion. See Widmer 744 A.2d 745 at 322.
For the reasons articulated above, Appellant is seeking reversal of the Court of Common Pleas’ decision distributing the estate to Douglas Karn. The Appellant also prays this Honorable Court approves payment of all proper charges and claims against the estate. Finally, Appellant prays this Court issue any other Order(s) it deems just.
CERTIFICATE OF COMPLIANCE
I hereby certify that the foregoing Brief for Appellant consists of 2,735 words, excluding the title page, table of contents, and table of citations, and thus complies with the requirement of Pennsylvania Rule of Appellate Procedure 2135 that principal briefs shall not exceed 14,000 words.
CERTIFICATE OF SERVICE
I certify that a copy of this Notice of Appeal was served on [ENTER DATE] to the appellee in this action.
707 Grant Street, Suite 2340
Pittsburgh, PA 15219
429 Forth Ave, Suite 1806
Pittsburgh, PA 15219
(412) 471-4872 FAX
EXHIBIT A. (Trial Court’s Order)
At Legal writing experts, we would be happy to assist in preparing any legal document you need. We are international lawyers and attorneys with significant experience in legal drafting, Commercial-Corporate practice and consulting. In the last few years, we have successfully undertaken similar assignments for clients from different jurisdictions. If given this opportunity, The LegalPen will be able to prepare the legal document within the shortest time possible. You can send us your quick enquiry ( here )