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In re Estate of Krasinski

Superior Court of Pennsylvania

May 15, 2018

IN RE: ESTATE OF SOPHIA M. KRASINSKI A/K/A SOPHIA KRASINSKI A/K/A SOPHIA KRASINSKY LATE OF MORRISDALE (COOPER TOWNSHIP), CLEARFIELD COUNTY, PENNSYLVANIA DECEASED NOVEMBER 4, 2006 APPEAL OF: ESTATE OF SOPHIA M. KRASINSKI AND ITS EXECUTOR, EDWARD KRASINSKI IN RE: ESTATE OF SOPHIA M. KRASINSKI, A/K/A SOPHIA KRASINSKI A/K/A SOFIA KRASINSKY, LATE OF MORRISDALE, (COOPER TOWNSHIP) CLEARFIELD COUNTY, PENNSYLVANIA DECEASED ON 11/04/06 APPEAL OF: PATRICIA KRASINSKI-DUNZIK

          Appeal from the Order July 16, 2015 In the Court of Common Pleas of Clearfield County Orphans' Court at No(s): 1707-0003

          BEFORE: GANTMAN, P.J., BENDER, P.J.E., BOWES, J., SHOGAN, J., LAZARUS, J., OLSON, J., OTT, J., STABILE, J., and DUBOW, J.

          OPINION

          OTT, J.

         The Estate of Sophia M. Krasinski (the Estate) through its executor, Edward Krasinski (Edward or the Executor), appeals from the order entered on July 16, 2015, which granted in part and denied in part exceptions to the order confirming the first and final account of the Estate. Patricia Krasinski-Dunzik (Patricia) also appeals from that order. Upon review, we affirm in part, vacate in part, and remand for proceedings consistent with this opinion.

         I. Background

         This matter arises from a dispute among siblings over the distribution of the real property from the Estate of their mother, Sophia M. Krasinski (the Decedent). The Decedent had four children: Patricia, who is married to Gary Dunzik (Gary) (collectively, the Dunziks); Eleanor J. Krasinski (Eleanor); James P. Krasinski (James); and Edward.

         Decedent died testate on November 4, 2006, and the Will was probated and an Estate opened in 2007. Pursuant to the terms of her will, Edward was named as executor of the Estate and granted letters testamentary. The will directed that the Decedent's debts and funeral expenses be paid from the assets of the Estate, and that the residue of the Estate be left in equal shares to the Decedent's four children.

         The primary assets of the Estate included three parcels of real estate.[1]Those parcels were: 1) 20 acres of property with an appraised value of $55, 000 (Johnny Hoover Place);[2] 2) a barn and 95 acres of property, which includes 68 acres of coal rights, with an appraised value of $230, 000 (Wicks' Place);[3] and 3) a house, buildings, and 98.84 acres with an appraised value of $200, 000 (Homestead Place).[4]

         On July 7, 2010, Edward, in his capacity as Executor of the Estate, filed a petition to permit the private sale of real estate to heirs. In that petition, Edward averred that Patricia was objecting to the distribution of all three properties because it was her position she already owns all of them based on a prior oral agreement between herself and the Decedent. After argument and briefing, on March 22, 2011, the orphans' court granted the Executor's petition to permit private sale of the real estate. Specifically, the orphans' court concluded that Patricia did not produce a writing to satisfy the requirements of the statute of frauds to prove that she owned these properties. The orphans' court also concluded that Patricia did not present sufficient evidence to remove the purported oral contract from the statute of frauds.[5]

         Prior to the sale, on February 8, 2013, letters were sent by the Estate's attorney to all four heirs explaining the process by which the sale would occur.[6] Included in this letter was a statement indicating that if the Dunziks did not purchase all of the property of Homestead Place, there would be steps taken to ensure they could maintain ownership of the home and barn on the property. See Plaintiff's Exhibit 30 (Estate's Attorney's Letter, 2/8/2013).

         The private sale was conducted on February 15, 2013. Edward, James, and Patricia attended the sale.[7] Patricia did not bid on any of the properties. James and his wife, Marie, bid $230, 000 for Wicks' Place. Edward bid $55, 000 for Johnny Hoover Place. Edward, James, and Marie jointly bid $120, 000 for Homestead Place.

         On March 7, 2013, the Executor petitioned the orphans' court to approve the sale of these properties to the residuary heirs for these amounts. Contrary to the letter of the Estate's attorney, no provision for Patricia and her husband's ownership of the house and barn at Homestead Place was included in the deeds. On March 14, 2013, Patricia filed pro se an objection to the petition.[8] On April 30, 2013, after argument, the orphans' court approved the Executor's petition.

         On May 30, 2014, the Executor filed a first and final account. Patricia, through counsel, filed six objections. Those objections challenged: 1) the manner in which the private sale was conducted; 2) the failure to include a limiting condition regarding the Dunziks' home and barn and underlying land in the Homestead Place deed; 3) the proposal to sell Homestead Place with a right-of-way from Johnny Hoover Place; 4) the appraised values of the properties as either suppressed or inflated; and 5) tax implications related to the Executor's report to the Internal Revenue Service that Patricia sold her interest in the land, and the Executor's date of death valuation of the real estate. Objection No. 6 was a series of miscellaneous objections, and is discussed in section III, infra, as that objection relates solely to the Executor's appeal.

         A hearing was held on all objections on September 5, 2014. Testimony and evidence were sparse at this hearing and the majority of the testimony did not relate to the objections filed by the Dunziks. Furthermore, Patricia did not appear; however, both her husband, Gary, and the Dunziks' attorney appeared.

         On September 10, 2014, the orphans' court ordered Patricia to file a brief within 30 days, and also provided the Executor 20 days thereafter to respond. Patricia did not file a brief, but the Executor filed answers to the objections on October 27, 2014.

         On April 22, 2015, the orphans' court entered an order and opinion in this matter. The orphans' court sustained, in part, Objection No. 6, finding that natural gas payments received by the Estate for Homestead Place in the amount of $39, 536.00 were the property of Patricia and not the Estate, and directed the filing of an Amended Account to remove the $39, 536.00 from the Estate. The orphans' court overruled the remaining objections. With respect to Objection Nos. 1 through 4, concerning the private sale of the properties, the orphans' court concluded these issues were waived because they should have been raised in an appeal from the order confirming the private sale on April 30, 2013, pursuant to Pennsylvania Rule of Appellate Procedure 342(a)(6) (order "determining an interest in real … property" appealable as of right). As to Objection No. 5, tax ramifications, the orphans' court concluded that the Executor acted appropriately.

         On May 4, 2015, Patricia filed a motion for reconsideration, contending, inter alia, the April 30, 2013 order approving the private sale was interlocutory; the Executor and James and his wife removed a significant amount of timber from Homestead Place; the party who sold the Decedent's real estate was the Executor, and not Patricia; and seeking a revised account that properly reflected the value of the land on the date of the Decedent's death as the appraised value, and retraction of improper tax filing.[9] On May 13, 2015, the orphans' court granted Patricia's motion for reconsideration and set argument on two issues. Those issues included: 1) whether the April 30, 2013 order was a final order, and 2) whether the value of timber removed from the property was included properly in the account.[10] See Order, 5/13/2015. By order entered July 16, 2015, the orphans' court rescinded the May 13, 2015, order, construed Patricia's motion for reconsideration as exceptions, and dismissed those exceptions.[11] The orphans' court also dismissed the exceptions filed by the Executor concerning ownership of the gas and oil rights to Homestead Place.

         The Executor timely filed a notice of appeal, and Patricia filed a cross appeal.[12] A divided panel of this Court affirmed the orphans' court's order in part, vacated in part, and remanded for further proceedings. Thereafter, Patricia sought en banc review, which this Court granted. The matter is now ready for our disposition.[13]

         In considering both appeals, we bear in mind our well-settled standard of review.

The [o]rphans' [c]ourt decision will not be reversed unless there has been an abuse of discretion or a fundamental error in applying the correct principles of law. This Court's standard of review of questions of law is de novo, and the scope of review is plenary, as we may review the entire record in making our determination. When we review questions of law, our standard of review is limited to determining whether the [orphans'] court committed an error of law.

In re Fiedler, 132 A.3d 1010, 1018 (Pa. Super. 2016) (citations and quotation marks omitted). For ease of discussion, we begin with Patricia's appeal.

         II. Patricia's Appeal

         We first consider Patricia's arguments related to the private sale of property that occurred on February 15, 2013. She argues that the orphans' court erred in permitting the private sale that only allowed the heirs to participate in the bidding because it "was never intended to and did not, in fact, maximize the value of the real estate for the benefit of all of the heirs[.]" Patricia's Brief at 13. Patricia also argues that she was not given adequate notice of the sale. Id. at 15. Patricia further contends that there was no need for the Executor to offer Homestead Place for sale with a right of way in favor of Johnny Hoover Place, except to serve as an impediment and deterrent to her and her husband's purchase of Homestead Place. Id. at 16-17. Patricia also argues that James and Edward "changed[d] the terms of the sale" of Homestead Place by failing to recognize ownership by Patricia and her husband of the home and barn, the lands underlying the home and barn, and the appurtenant facilities servicing them in the deed. Id. at 18.

         The orphans' court concluded that Patricia waived these issues by failing to appeal from the April 30, 2013 order confirming and approving the private sale, as required by Pennsylvania Rule of Appellate Procedure 342. See Orphans' Court Opinion, 4/22/2015, at 8, citing Pa.R.A.P. 342(a)(6) and (c). As more fully discussed below, we agree with the orphans' court's determination.

         Effective February 12, 2012, Pa.R.A.P. 342 provides, in relevant part:

(a) General rule. An appeal may be taken as of right from the following orders of the Orphans' Court Division: …
(6) An order determining an interest in real or personal property; ….
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(c) Waiver of objections. Failure to appeal an order that is immediately appealable under paragraphs (a)(1)-(7) of this rule shall constitute a waiver of all objections to such order and such objections may not be raised in any subsequent appeal.

Pa.R.A.P. 342(a)(6), (c).

         At the outset, it is important to recognize that the Executor had the authority to sell the Decedent's real estate, pursuant to Sections 3311(a) and 3351 of the Probate, Estate and Fiduciaries (PEF) Code.[14] Furthermore, the orphans' court authorized the Executor to sell the real estate by private sale to the heirs by order entered March 22, 2011. The private sale took place on February 15, 2013. Thereafter, on April 30, 2013, the orphans' court approved the sale and ordered the properties conveyed to the grantees. See Order, 4/30/2013.

         By way of background to the adoption of current Rule 342, we begin with the Pennsylvania Supreme Court's decision in In re Estate of Stricker, 977 A.2d 1115 (Pa. 2009), which involved the prior version of Rule 342. In Stricker, our Supreme Court held that an orphans' court's order directing the co-executors to sell the estate's real estate was an interlocutory order that was not appealable under Rule 342 or Rule 313 (collateral order). At that time, under Rule 342, the determination of the finality of an order "making a distribution, or determining an interest in realty or personalty or the status of individuals or entities" was left to the discretion of the orphans' court. Stricker, at 1117-1118. Because the orphans' court judge had not certified the order to sell the estate's real estate as final, the Stricker Court ruled the order was not appealable under Rule 342. The Stricker Court further determined the order did not qualify as a collateral order appealable pursuant to Rule 313. Therefore, the order of this Court quashing the appeal was affirmed.

         In a concurring opinion, Mr. Justice Saylor wrote:

The majority aptly observes that our Rules of Appellate Procedure contain a vehicle to address the particularized concerns arising from orders determining interests in estate property. Specifically, Rule 342 permits an appeal from a distribution order or an order determining an interest in estate property to proceed as of right, inter alia, upon a determination of finality by the orphans' court. See Pa.R.A.P. 342(1). The majority correctly interprets the rule as investing absolute, largely standardless discretion in the orphans' court. I differ, however, with the majority's categorical assessment regarding the wisdom of the rule in this regard. See Majority Opinion, slip op. at 4.
In my view, there are substantial arguments to be made that estate administration would be better served by a rule providing for the general appealability of estate-related orders determining property interests at least in the real property setting. Notably, the present "determination of finality" procedure does not closely align with the justifications for permitting immediate appeals (facilitating the prompt resolution of potential title disputes to benefit purchasers, the estate, and beneficiaries). Further, the vesting of absolute, standardless discretion in our orphans' courts yields the potential for disparate treatment. …
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… Thus, I believe our Appellate and Orphans' Court Procedural Rules Committees should continue to study the application of the present rule in practice and make recommendations for improvements where appropriate, particularly given the troubling implications of maintaining a system based on absolute, largely standardless discretion.

Id. at 1120-1121 (Saylor, J., concurring).

         Thereafter, Rule 342 was revised, effective February 12, 2012. The revised rule eliminated the requirement that the orphans' court make a determination of finality, and identified certain orders that would be appealable as of right.[15] The Rule specifically states that objections to such orders must be raised in an immediate appeal, and failure to do so constitutes waiver. The Comment to Rule 342 states:

[I]t is difficult to analogize civil litigation to litigation arising in estate, trust and guardianship administration. The civil proceeding defines the scope of the dispute, but the administration of a trust or estate does not define the scope of the litigation in Orphans' Court. Administration of a trust or an estate continues over a period of time. Litigation in Orphans' Court may arise at some point during the administration, and when it does arise, the dispute needs to be determined promptly and with finality so that the guardianship or the estate or trust administration can then continue properly and orderly. Thus, the traditional notions of finality that are applicable in the context of ongoing civil adversarial proceedings do not correspond to litigation in Orphans' Court.
In order to facilitate orderly administration of estates, trusts and guardianships, the 2011 amendments list certain orders that will be immediately appealable without any requirement that the Orphans' Court make a determination of finality. Orders falling within subdivisions (a)(1)-(7) no longer require the lower court to make a determination of finality.
Subdivisions (a)(1)-(7) list orders that are unique to Orphans' Court practice, but closely resemble final orders as defined in Rule 341(b).

Pa.R.A.P. 342, Comment.

         Here, the private sale occurred on February 15, 2013, having been authorized by the orphans' court's March 22, 2011 order. On March 7, 2013, the Executor filed a Report and Return of Private Sale (Report), seeking court approval of the private sale. The Report attached fiduciary deeds for the properties as Exhibits "1", "2" and "3". The Executor's fiduciary deed for Homestead Place contained NO provision regarding the Dunzik's ownership of the house and barn, underlying land, and appurtenances. The April 30, 2013 order finalized the sale of the real estate by the Executor and approved the fiduciary deeds attached to the Report as Exhibits 1, 2, and 3.

         Significantly, the orphans' court's April 30, 2013, order explicitly directs that "the Report of Edward P. Krasinski, Executor of the estate of the above Decedent, is hereby approved in all regards and the properties described in Exhibits 1, 2 and 3 of said Report shall be conveyed to the grantees in accordance with the terms set out in the Report." Order, 4/30/2013. As such, the order clearly "determines an interest in real … property." Pa.R.A.P. 342(a)(6). Consequently, the orphans' court's April 30, 2013, order was appealable as of right pursuant to Rule 342. Although Patricia filed pro se objections, as the orphans' court noted, she "did not raise the appropriate issues in her pro se objections, " and the private sale was confirmed. Orphans' Court Opinion, 4/22/2015, at 10.

         Furthermore, Patricia had challenged ownership of the properties in a civil action that caused the court to issue a stay on the Executor's sale of the properties. The civil suit resulted in the trial court's December 24, 2012, determination that there was no oral agreement upon which Patricia could base her claim of ownership of the properties. This Order was never appealed. See Footnote 5, supra. Therefore, it is ...


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