Sawyer, D. v. Sawyer, R., Sawyer, D. v. Sawyer, R. No. 809 MDA 2016

Background

Siblings David (administrator of Mary E. Sawyer’s estate) and Rita Sawyer (M.D.) litigated a 2005 wrongful-death/survival civil suit; Rita was criminally convicted of first-degree murder in the same facts.
After liability was resolved by summary judgment, the parties settled in 2011. Settlement required cash payments to the estate and transfers to a Pennsylvania nonprofit foundation (the Foundation) David created to memorialize their parents.
Transfers were delayed because of tax issues and Rita’s incarceration; counsel agreed some transfers would be delayed pending IRS guidance; all transfers were completed by February 2013.
In July 2013 Rita’s counsel claimed an inadvertent overpayment to the Foundation of about $35,254.55 and sought reimbursement; David’s counsel acknowledged the overpayment but for the first time demanded interest for the delay.
After hearings, the trial court found the overpayment was inadvertent and ordered repayment of the overpaid amount less interest for certain delayed payments; the court directed David and/or the Foundation to remit payment.
David appealed, arguing the Foundation was an indispensable party (so the court lacked jurisdiction), that he as administrator was improperly ordered to repay funds he never personally received, and that Rita’s tax treatment of payments as charitable deductions barred reimbursement.

Issues

Issue	Plaintiff's Argument (David)	Defendant's Argument (Rita)	Held
Whether the Foundation was an indispensable party such that the court lacked jurisdiction	Foundation directly benefited from overpayment and was not joined; absence is non-waivable and voids order	David controlled and represented the Foundation; he acted as its official designee in litigation	Foundation was not indispensable; David represented its interests, so jurisdiction was proper
Whether David (administrator) could be ordered to repay funds he did not personally receive	Court improperly directed administrator to repay rather than the Foundation which received funds	Court expected repayment from Foundation but David, as its officer, adequately represented it	Payment order against David and/or Foundation was valid because David controlled and spoke for the Foundation
Whether Rita’s designation of payments as charitable deductions on her tax return precluded her reimbursement claim	Tax-characterization made transfers effectively gifts/charitable, barring restitution	Tax labeling reflected litigation/tax strategy; overpayment was inadvertent and amended off return when discovered	Rita’s tax treatment did not preclude restitution; court found no donative intent and allowed recovery
Whether equitable restitution for mistake and unjust enrichment was appropriate	David argued charitable characterization and conduct defeated restitution	Rita proved mistake of fact and resultant unjust enrichment; amended tax return removing overpayment supports mistake	Court awarded restitution (overpayment less certain interest) based on mistake and unjust enrichment

Key Cases Cited

Columbia Gas Transmission Corp. v. Diamond Fuel Co., 346 A.2d 788 (Pa. 1975) (defines indispensable party as one whose rights are directly connected and affected by litigation)
Sabella v. Appalachian Development Corp., 103 A.3d 83 (Pa. Super. 2014) (absence of indispensable party goes to jurisdiction and is non-waivable)
Fiore v. Oakwood Plaza Shopping Center, Inc., 585 A.2d 1012 (Pa. Super. 1991) (failure to join indispensable party cannot be waived)
Corman v. National Collegiate Athletic Ass’n, 74 A.3d 1149 (Pa. Cmwlth. 2013) (an official designee’s participation can suffice to represent identical interests and avoid joinder)
City of Philadelphia v. Commonwealth, 838 A.2d 566 (Pa. 2003) (substantial justice can be done without joining all persons potentially affected; representative parties may suffice)
Orman v. Mortgage I.T., 118 A.3d 403 (Pa. Super. 2015) (focus on whether justice can be done in absence of a third party)