In re Estate of Easterday

171 A.3d 911

IN RE: ESTATE OF Michael J. EASTERDAY, Deceased

Appeal of: Colleen A. Easterday

In re: Estate of Michael J. Easterday, Deceased

Appeal of: Matthew M. Easterday

No. 2911 EDA 2016

No. 2946 EDA 2016

Superior Court of Pennsylvania.

Argued April 4, 2017

Filed October 3, 2017

David R. Dautrich, Reading, for Easterday, C.

Robert J. Dougher, Birdsboro, for Easterday, M.

BEFORE: PANELLA, J., LAZARUS, J., and STEVENS, P.J.E.^*

OPINION BY LAZARUS, J.:

These are cross-appeals from the order entered in the Court of Common Pleas of Montgomery County, Orphans' Court Division, adjudicating the rights of the parties with respect to pension and insurance benefits payable as a result of the death of Michael Easterday ("Decedent"). Upon review, we affirm.

Decedent died intestate on September 21, 2014. He was survived by two sons, Christopher and Matthew, a daughter, Amanda E. Easterday Melvin, and his second wife, Colleen A. Easterday. Matthew was granted letters of administration on the Decedent's estate. Just over one year prior to the Decedent's death, on August 13, 2013, Colleen initiated divorce proceedings against the Decedent in Lancaster County. Colleen was represented in the divorce action by David R. Dautrich, Esquire. Decedent did not retain counsel. The parties executed a postnuptial agreement ("PNA") on December 5, 2013, wherein they agreed, inter alia, to waive any rights in and to the pension and retirement plans of the other, including any right the parties may have as a surviving spouse or beneficiary thereof. The agreement provided that it was to remain in full force and effect regardless of reconciliation, a change in marital status or the entry of a final divorce decree, absent modification or termination of the agreement by the parties' written mutual consent. The parties never terminated or modified the agreement.

In November 2013, Attorney Dautrich's office prepared an affidavit of consent to divorce for Decedent's signature and gave the document to Colleen to give to Decedent to sign. Decedent signed the affidavit on November 30, 2013 and returned it to Colleen by hand. Colleen retained the affidavit in her possession for a period of time before returning it to her counsel for filing on or before January 14, 2014. Attorney Dautrich was aware that Decedent's affidavit was dated more than thirty days earlier. Nevertheless, he instructed his staff to mail both parties' affidavits of consent to the Lancaster County Prothonotary for filing, which was done on January 14, 2014. The affidavits were time-stamped by the court on January 16, 2014. On January 24, 2014, Colleen filed a praecipe for divorce finalization and a praecipe to transmit the record. Decedent died before the decree was entered. At the time of Decedent's death, Colleen remained the named beneficiary of Decedent's pension and life insurance policy. Three days after Decedent's death, Colleen withdrew the divorce action.

On November 17, 2014, Matthew Easterday, as administrator of the Decedent's estate ("Estate"), filed a petition seeking to compel Colleen to preserve and turn over to the estate the life insurance proceeds and pension benefits she had received. The Estate argued that: (1) the parties' PNA controlled the disposition of the pension proceeds and required that distribution be made to the estate regardless of the beneficiary designation; and (2) Decedent's designation of Colleen as beneficiary of his insurance policy became ineffective under 20 Pa.C.S.A. § 6111.2.

In her answer and new matter, Colleen asserted that: (1) the PNA did not control the distribution of the pension proceeds because the parties never changed beneficiary designations; (2) section 6111.2 does not apply because the Decedent's affidavit of consent was stale and invalid; and (3) the parties were in the process of reconciling prior to Decedent's death and Decedent intended that Colleen should remain the beneficiary of both his pension and insurance policies.

After a hearing held on October 20, 2015, and following the submission by the parties of memoranda of law, the Honorable Stanley Ott issued an order granting the Estate's petition in part and denying it in part. Specifically, the court concluded that the Estate was entitled to the Decedent's pension benefits pursuant to the PNA, but Colleen was entitled to the insurance proceeds, which were not addressed in the PNA. Both parties filed exceptions, which, after oral argument before the Orphans' Court sitting en banc, were deemed denied by operation of law pursuant to Pa.O.C.R. 7.1(f). These timely consolidated appeals followed.

The Estate raises the following issues on appeal:

1. Whether the Orphans' Court committed an error of law by holding that the Superior Court's decision in Tosi v. Kizis, 8[5] A.3d 585 ( [Pa. Super.] 2014), appeal den'd, 626 Pa. 700, 97 A.3d 745, applies in the present case, and that Tosi required the Orphans' Court to consider the merits of the Estate's [p]etition under the legal fiction that there were no divorce proceedings pending at the time of Decedent's death, despite the factual reality that there was a divorce action filed by Colleen A. Easterday against the Decedent and which was pending in Lancaster County at the time of the Decedent's death.

2. Whether the Orphans' Court committed an error of law by not ruling that 20 Pa.C.S. § 6111.2 applies to this case to invalidate Decedent's designation of Colleen A. Easterday as beneficiary of Decedent's American General Life Insurance Policy because Decedent died domiciled in Pennsylvania during the course of divorce proceedings, no decree of divorce had been entered, but grounds for divorce had been established pursuant to 20 Pa.C.S.A. § 3323(g) prior to Decedent's death.

Appellant's Brief of Estate, at 6-7.

In her consolidated appeal, Colleen raises the following issue for our review:

Did the Decedent make a deliberate and conscious choice that his wife was to be the irrevocable beneficiary of his Fed-Ex pension plan and that she was to receive those benefits after his death, even though a post-nuptial agreement contained a waiver signed by her regarding the Fed-Ex ERISA pension?

Appellant's Brief of Colleen Easterday, at 4.

We begin by noting our scope and standard of review of a decision of an Orphans' Court. The findings of a judge of the Orphans' Court, sitting without a jury, must be accorded the same weight and effect as the verdict of a jury, and will not be reversed by an appellate court in the absence of an abuse of discretion or a lack of evidentiary support. In re Estate of Talerico, 137 A.3d 577, 580–81 (Pa. Super. 2016), quoting In re Jerome Markowitz Trust, 71 A.3d 289, 297–98 (Pa. Super. 2013). An abuse of discretion is not merely an error of judgment, but if in reaching a conclusion the law is overridden or misapplied, or the judgment exercised is manifestly unreasonable, or the result of partiality, prejudice, bias or ill-will, as shown by the evidence of record, discretion is abused. Id. When the Orphans' Court arrives at a legal conclusion based on statutory interpretation, our standard of review is de novo and our scope of review is plenary. Id., quoting In re Estate of Fuller, 87 A.3d 330, 333 (Pa. Super. 2014) (citation omitted).

We begin with the claims raised by the Estate challenging the lower court's award of the life insurance proceeds to Colleen. The Orphans' Court concluded that, because Colleen withdrew the divorce action after Decedent died, the proper course was to proceed as if the action had never been filed and award the proceeds in accordance with the policy's beneficiary designation. The court found the provision of the Probate, Estates and Fiduciaries ("PEF") Code regarding the effect of a pending divorce on beneficiary designations, section 6111.2, to be inapplicable.¹ The court concluded that this result was compelled by this Court's holding in Tosi v. Kizis, 85 A.3d 585 (Pa. Super. 2014).² The Estate argues that the Orphans' Court erred in applying Tosi and, consequently, in failing to apply section 6111.2. The Estate asserts that the holding in Tosi is a narrow one, limited to situations in which a party to a divorce action files a discontinuance seeking to avoid the application of equitable distribution rules after the death of the other party. Because neither Michael Easterday nor his estate ever sought equitable distribution under the Divorce Code, the Estate claims that this matter is outside the scope of the holding in Tosi. Rather, the Estate asserts, the disposition of the insurance proceeds is governed by section 6111.2, the application of which, it claims, is fixed as of the date of a decedent's death.

To the extent the decision of the Orphans' Court in this matter was grounded in the rationale of Tosi, it is unsound. In Tosi, Husband died during the pendency of divorce proceedings. At the time of Husband's death, both he and Wife had filed affidavits of consent, thus establishing grounds for divorce under section 3323. Four months after Husband's death, Wife filed a praecipe to discontinue the divorce action pursuant to Pa.R.C.P. 229. The trial court denied Husband's estate's petition to strike the discontinuance, and the estate appealed. On appeal, the estate asserted that, once the parties both filed affidavits of consent, section 3323(d.1) of the Divorce Code mandated that the parties' economic claims be resolved pursuant to the Divorce Code and that the court erred in allowing Wife to discontinue the action.

In affirming the trial court, this Court concluded that Wife's power to discontinue the action under Rule 229 was not preempted by section 3323(d.1). Rather, the Court found that "the language of [ section 3323(d.1) ] merely provides that in the event of [the] death of one of the parties in a divorce action, the action may continue and the economic claims shall be determined under equitable distribution principles rather than under the elective share provisions of the [PEF] Code." Tosi, 85...