In re Jerome Markowitz Trust
71 A.3d 289
| Pa. Super. Ct. | 2013Background
- Petition filed Nov. 6, 2009 seeking reimbursement from Glenmede for its handling of investments for the Jerome Markowitz Trust.
- Trustee Steven Markowitz managed the trust since 1991; Wachovia previously held ARS investments for the Trust's STIM program.
- Trust assets transferred from Wachovia to Glenmede in late 2006; an Investment Advisory Agreement (IAA) was executed Dec. 12, 2006.
- January 2007 IPS created, permitting discretionary management with liquidity objectives but no explicit ARS liquidation timetable.
- Glenmede liquidated several ARS holdings in 2007–2008; auction rights for ARS transfers were incomplete, delaying liquidations.
- In 2009 Glenmede delivered remaining assets, including Jefferson ARS and Mobile ARS, in-kind to a new custodian; surcharge of $11,700 imposed for breach of fiduciary duty.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Orphans’ Court supported its factual findings. | Markowitz argues findings lack competent evidence. | Glenmede contends findings are supported by record evidence and credibility determinations. | Yes; findings supported; no abuse of discretion. |
| Whether Glenmede breached fiduciary duty by not informing Markowitz timely about auction rights. | Glenmede’s delay harmed the Trust by delaying ARS liquidation. | Delay was not a breach given discretionary authority and market conditions. | Breach found; conduct fell short of fiduciary candor. |
| Whether Glenmede breached the Investment Advisory Agreement (IAA). | IAA imposed standards of care; breach evidenced by mishandling ARS and lack of auction rights. | No clear breach; evidence of care and interpretation of discretionary authority supports no breach. | No IAA breach found; court credits discretion and credibility findings. |
| Whether surcharge amount was proper. | Surcharge should reflect loss from forced sale of ARSs (e.g., $325,500). | Loss measured by actual realized loss; discount due to later events and Markowitz’s actions. | Surcharge set at $11,700; loss measure limited by timing and evidence. |
Key Cases Cited
- In re Estate of Warden, 2 A.3d 565 (Pa. Super. 2010) (deference to fiduciary findings; surcharge requires breach and loss proof)
- Estate of Pew, 440 Pa. Super. 195, 655 A.2d 521 (Pa. Super. 1994) (trustee duties and fiduciary standard; interpretation of trustee actions)
- Paxson Trust I, 893 A.2d 99 (Pa. Super. 2006) (surcharge authority for fiduciary misconduct)
- State Farm Fire & Cas. Co. v. PECO, 54 A.3d 921 (Pa. Super. 2012) (contract interpretation and ambiguities; standards of review)