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Carroll v. Fein

United States District Court, E.D. Pennsylvania

July 13, 2018

STEPHEN CARROLL
v.
BERNICE S. FEIN, ET AL.

          MEMORANDUM

          GERALD AUSTIN MCHUGH UNITED STATES DISTRICT JUDGE.

         This case involves a dispute over the assets of an estate. Plaintiff Stephen Carroll is an attorney appointed by court order to serve as the Administrator of the Estate of Leonard J. Moskowitz. Mr. Carroll was appointed by the Orphans' Court Division of the Delaware County Court of Common Pleas because of concerns about transfers of assets both before and after the death of Mr. Moskowitz. Plaintiff claims that Defendant Michael Fein abused his authority as the holder of a Power of Attorney for the late Mr. Moskowitz when he transferred ownership of certain assets from Mr. Moskowitz to his mother, Defendant Bernice Fein, and himself. Plaintiff further contends that both Fein, an attorney, and his mother, wrongfully converted assets of the estate. The claims raised here essentially mirror those that were pursued in Orphans' Court, albeit under different legal theories, and as discussed in my earlier memorandum, this case to a large degree, albeit not exclusively, is in in the nature of a protective action.

         As this matter proceeded, the underlying state case progressed as well, and ultimately I stayed this action, including the parties' cross-motions for summary judgment, pending resolution of the claims in Orphans' Court. After many years and multiple appeals, that case is now definitively resolved, In re Estate of Moskowitz, ___Pa.___, 181 A.3d 1080 (2018), with Plaintiff prevailing on every claim. I continued to hold this matter in suspense to allow the parties time for settlement discussions. It appears, however, that negotiations have failed, and I am therefore reactivating this case to address the pending motions.

         In Defendants' Motion, they argue that the statute of limitations has run on the Administrator's conversion claim and that the existence of an adequate legal remedy deprives this court of equity jurisdiction. In the Administrator's Motion, he argues that the judgment rendered in a parallel state court proceeding entitles him to summary judgment on the merits based on issue preclusion.

         For the reasons that follow, Defendants' Motion for Summary Judgment is granted with respect to Plaintiff's claims for legal damages. As to Plaintiff's equitable claims, they are now largely moot, but to the extent that they are not, they are barred because there was an adequate remedy at law until the statute of limitations expired.

         I. Facts

         In 2000, Leonard Moskowitz granted a Power of Attorney (POA) to lawyer Michael Fein, one of the two defendants in this case. In January and February 2009, Mr. Fein invoked his POA to transfer assets to his co-defendant, Bernice Fein, Mr. Moskowitz's long-time companion and Mr. Fein's mother.

         Specifically, Mr. Fein conveyed a house in Philadelphia from Mr. Moskowitz to Mr. Moskowitz and Ms. Fein, as joint tenants with right of survivorship. Mr. Fein also transferred roughly $600, 000 in securities from an account solely in Mr. Moskowitz's name to a joint account held by Mr. Moskowitz and Ms. Fein. Some weeks later, these securities were transferred to a third account belonging to Mr. and Ms. Fein.

         Shortly thereafter, in March 2009, Mr. Moskowitz died testate. In his will, he named Ms. Fein and his friend, Joshua Taylor, as co-executors. Moskowitz also bequeathed his personal property to Ms. Fein, and left the balance of the Estate in trust for her, with his nephew, Joseph Fein, as beneficiary upon Ms. Fein's death.

         In April 2009, Mr. Taylor petitioned for appointment as sole executor of the Estate, alleging that Mr. Fein had exercised his POA unlawfully and that Ms. Fein had a conflict of interest that prevented her from pursuing the claim. In her answer to Mr. Taylor's petition, Ms. Fein raised the issue of Mr. Moskowitz's state of domicile, claiming that he was a resident of New Jersey when he died and that his will should therefore be probated there. The parties spent the next twenty-one months litigating the issue of Mr. Moskowitz's domicile. In April 2011, the Delaware County Orphans' Court settled the matter in Mr. Taylor's favor when it ordered the Delaware County Register of Wills to probate Mr. Moskowitz's will.

         In November 2011, more than two-and-a-half years after Mr. Fein executed the disputed transfers, Mr. Taylor and Ms. Fein renounced their rights to administer the Estate in favor of a neutral administrator. Later the same month, the Orphans' Court appointed Plaintiff Stephen Carroll as Administrator de Bonis Non Cum Testamento Annexo.

         In April 2012, responding to a petition from Mr. Carroll, the Orphans' Court ordered Mr. Fein to file an accounting of the assets he transferred from Mr. Moskowitz pursuant to his POA. In August 2012, Carroll sought and obtained a preliminary injunction enjoining the Feins from dissipating or transferring the assets identified in Mr. Fein's initial accounting. While it granted Carroll's preliminary injunction, the Orphans' Court found that Fein's initial accounting did not enable the court to ascertain the precise scope or timing of the disputed asset transfers. It therefore ordered Fein to submit a more thorough accounting. This Fein repeatedly failed to do, thereby prolonging the proceeding by several months.

         Finally, in October 2013, the court granted partial summary judgment to Carroll, holding that the transfers had exceeded the scope of Mr. Fein's POA, and ordering the Feins to return all assets that Mr. Fein had transferred under the POA.

         The Feins appealed to the Pennsylvania Superior Court arguing, among other things, that Carroll's claims were time-barred by the two-year statute of limitations set forth in 42 Pa. Cons. Stat. § 5524. The Superior Court disagreed, holding that “the Estate's action in the Orphans' Court to recover transferred assets was equitable in nature, ” and that the statute of limitations was therefore relevant “only as a frame of reference to evaluate any purported delay in support of a claim of laches.” Pl.'s Resp. Br., Ex. A, at 10, 18, ECF No. 34-2.

         In weighing whether laches applied, the court stressed that Ms. Fein was to blame for Carroll's delay in bringing the claim. According to the court, because Ms. Fein was co-executor of Mr. Moskowitz's estate, her consent was necessary before the estate could sue for the return of wrongfully transferred assets. Ms. Fein withheld this consent, choosing instead to raise the issue of whether Mr. Moskowitz was domiciled in New Jersey. It was only after the two-year statute of limitations had run that Ms. Fein renounced her right to administer the estate, leading to Mr. Carroll's appointment and his suit on behalf of the estate. Under these circumstances, the court refused to find that the Feins would be unduly prejudiced by allowing the suit to proceed and concluded that any laches defense therefore failed as a matter of law.

         The Superior Court issued its opinion on May 8, 2015. On September 28, Orphans' Court Judge Joseph P. Cronin issued a decree re-ordering the Feins to return the illegally transferred Philadelphia property and the securities, which it valued at $1, 278, 980. Citing the Feins' repeated instances of noncompliance with court orders, Judge Cronin ...


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