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Steele v. First Nat'l Bank of Mifflintown

United States District Court, M.D. Pennsylvania

August 8, 2013

JOHN T. STEELE, as co-beneficiary under the Will of Margaret R. Steele, Plaintiff,
v.
FIRST NATIONAL BANK OF MIFFLINTOWN, Defendants

For John T. Steele, as co-beneficiary under the Will, co-trustee of the Amended Trust, and as co-executor of the estate of Margaret R. Steele, Plaintiff: Clara S. Kalhous, John C. Meringolo, Meringolo & Associates, P.C., New York, NY; Stephen F. Moore, Peters & Wasilefski, Harrisburg, PA.

For First National Bank of Mifflintown, Defendant, Third Party Plaintiff: Andrew William Davitt, Jeffrey J. Chomko, Marshall Dennehey Warner Coleman & Goggin, Philadelphia, PA.

For Kevin T. Brennan, Third Party Defendant: Jeffrey P Lewis, Eckert Seamans Cherin & Mellott, LLC, Philadelphia, PA.

Page 418

MEMORANDUM

Hon. John E. Jones III, United States District Judge.

Pending before the Court is the motion for judgment on the pleadings or in the alternative for reconsideration nunc pro tun (doc. 116) of Defendant First National Bank of Mifflintown. The motion has been fully briefed and is ripe for our review. For the reasons that follow, we will grant the motion in its entirety.

I. PROCEDURAL AND FACTUAL BACKGROUND

Plaintiff John Steele (" Plaintiff" ) is a Vermont resident and the co-executor of the estate of decedent Margaret Steele (" Decedent" ). (Doc. 1, ¶ 1). The Plaintiff is a co-beneficiary under the Decedent's last will and testament; he is also named as co-trustee, together with Amy Steele Miller, of the Decedent's Amended Trust. ( Id. ¶ ¶ 2-4). Defendant First National

Page 419

Bank of Mifflintown (" First National" ) is a wholly-owned subsidiary of First Community Financial Corporation, a corporation organized under the laws of Pennsylvania with a principal place of business in Mifflintown, Pennsylvania. ( Id. ¶ 5). Elyse Rogers (" Rogers" ) is an attorney residing and duly licensed in the Commonwealth of Pennsylvania. ( Id. ¶ 6).

On or about May 7, 2008, the Decedent signed a durable power of attorney appointing First National as her agent and attorney-in-fact. ( Id. ¶ 11). The bank then appointed its vice president, Kimberly Benner, to act as power of attorney. ( Id. ¶ 12). Rogers was thereafter retained by Benner to assist with the Decedent's estate planning. ( Id. ¶ 13). On or about the same day, the Decedent executed her last will and testament designating her grandchildren, the Plaintiff and his sister, Amy Steele Miller (" Miller" ), as equal co-heirs of her estate and appointing First National as sole executor and trustee under the testamentary trust established therein. ( Id. ¶ ¶ 14-16). On or about January 27, 2010, the Decedent executed a codicil to the will, revoking the appointment of First National as executor and appointing her grandchildren as co-executors. ( Id. ¶ 17).

On September 1, 2010, First National, exercising its power of attorney, executed a revocable deed of trust (the " September Trust" ) pursuant to 20 Pa. Cons. Stat. § 5603(b) in order to " establish a trust for the active management and control of the trust property" during the Decedent's lifetime. ( Id. ¶ 18). Plaintiff and Miller were named co-trustees of the trust along with First National. ( Id. ¶ 19). The trust was drafted by Rogers and provided that the appointment or removal of a trustee, as well as any amendments or modifications to the agreement, were to be made in writing. ( Id. ¶ 20). On November 4, 2010, the Decedent retained two law firms, former third-party Defendants Kevin Brennan, Franklin Montgomery, and Vince & Brennan, P.C., (collectively, " Estate Attorneys" ) to further assist in her estate planning. ( Id. ¶ 33). The following day, First National informed the Estate Attorneys that the Decedent had expressed a desire to have Rogers remain involved in the estate planning process. ( Id. ¶ 34). On December 2, 2010, Rogers wrote to the Estate Attorneys via email that the Decedent's physician " is clearly of the opinion that Mrs. Steele is not impaired in her mental ability to effectively receive and evaluate information ... and is able to manage her financial resources." ( Id. ¶ 48).

The Estate Attorneys drew up an amended trust agreement with the goal of conferring tax benefits on the Decedent's estate and her heirs. ( Id. ¶ 35). An amended trust (the " December Trust" ) was developed to defer estate taxes by transferring the Decedent's investment portfolio of $28 million to a limited liability company, the Ross (2010) LLC, prior to the Decedent's death. ( Id. ¶ 36). In addition to these tax benefits, the December Trust was designed to save the estate approximately $900,000 to $1 million in banking fees which would be owed if the entire estate passed through probate. ( Id. ¶ 38). The amended estate plan " required [First National] to transfer monies from [the Decedent's] accounts at the First National Bank of Mifflintown to fund the Ross (2010) LLC in order to realize the tax saving prior to [the Decedent's] death." ( Id. ¶ 39).

On December 17, 2010 the Decedent, the Plaintiff, and Miller " knowingly executed" the December Trust. ( Id. ¶ 36). Thereafter, First National Bank refused to fund the LLC. ( Id. ¶ 44). The Decedent died two months later with her intended estate plan not yet implemented. The Plaintiff

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alleges that First National " willfully and recklessly and/or negligently failed and refused to fund the Ross (2010) LLC" and has attempted to justify its failure to do so by relying on Rogers' assertion that the Decedent was " incompetent when she signed the December Trust, despite [Rogers] written and oral acknowledgment of clear and unambiguous evidence in her possession to the contrary." ( Id. ¶ 44-46). The Plaintiff alleges that the bank thus caused the estate and its heirs to sustain a loss of no less than $4 million in federal and Pennsylvania taxes. ( Id. ¶ 47).

As we have previously noted, this matter has followed a tortuous procedural course. The Plaintiff initiated this action on June 13, 2011 by filing a Complaint against First National Bank and Rogers. (Doc. 2). The Plaintiff asserts claims against these Defendants for tortious interference (Count I), breach of fiduciary duty (Count II), negligence (Count III), and gross negligence (Count IV), each arising out of the Defendants' involvement in the Decedent's estate planning. The Plaintiff brought these claims in his individual capacity, in his capacity ...


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