Case Information
*-711 Circulated 07/18/2017 12:32 PM *1 J-A09039-17
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
DAVID SAWYER AS THE : IN THE SUPERIOR COURT OF
ADMINISTRATOR OF THE ESTATE OF : PENNSYLVANIA
MARY E. SAWYER, DECEASED :
:
Appellant :
:
v. :
:
RITA SAWYER, M.D. :
: Appellee : No. 809 MDA 2016 Appeal from the Order Entered May 3, 2016 In the Court of Common Pleas of Lebanon County Civil Division at No(s): 2005-00136 BEFORE: GANTMAN, P.J., SHOGAN, J., and OTT, J.
MEMORANDUM BY GANTMAN, P.J.: FILED AUGUST 14, 2017
Appellant, David Sawyer, as the administrator of the estate of Mary E.
Sawyer, deceased, appeals from the order entered in the Lebanon County
Court of Common Pleas, which granted the request of Appellee, Rita Sawyer,
M.D., for reimbursement of an overpayment in connection with a wrongful
death lawsuit settlement.
In its opinion filed May 3, 2016, the trial court accurately set forth the relevant facts and procedural history of this case. Therefore, we just
summarize them here. The parties to this appeal are siblings. In 2005, a
jury convicted Appellee of first-degree murder and unlawful administration of
a controlled substance by a practitioner, in connection with the death of the
parties’ mother, Mary E. Sawyer. The trial court sentenced Appellee on
December 14, 2005, to life imprisonment for the murder conviction and
imposed a concurrent sentence for the remaining conviction.
On January 24, 2005, Appellant, as administrator of his mother’s estate, filed a civil complaint against Appellee for assault, wrongful death,
and survival. After the pleadings and discovery closed, on September 26,
2007, Appellant filed a motion for partial summary judgment on the issue of
liability based on Appellee’s murder conviction. Appellee filed her response
in opposition on October 22, 2007. On November 7, 2007, the court granted
summary judgment in Appellant’s favor on the issue of liability.
In or around December 2007, Appellant established a Pennsylvania non-profit foundation in memory of the parties’ deceased parents
(“Foundation”). Appellant intended to fund the Foundation with proceeds
from the civil lawsuit against Appellee.
On September 13, 2011, the parties settled the case. The terms of the settlement agreement (“Agreement”) obligated Appellee to make certain
cash payments to the decedent’s estate; and to pay the remainder of the
settlement amount by way of financial transfers to the Foundation. [1]
Pursuant to the Agreement, Appellee was to make the financial transfers
within thirty (30) days and the cash payments within ninety (90) days. Due
to the complexity of tax related issues surrounding the transfers as well as
____________________________________________
[1] The settlement agreement is marked confidential, and the trial court has
sealed the record.
Appellee’s incarceration, Appellee could not make all of the transfers within
that timeframe. Appellant’s counsel agreed to a delay of some of the
transfers until Appellee’s counsel received answers from the Internal
Revenue Service (“IRS”) regarding the relevant tax issues. Appellee
ultimately completed the transfers required under the Agreement by
February 2013.
On July 26, 2013, Appellee’s counsel sent Appellant’s counsel a written request for reimbursement of overpaid settlement funds. Specifically,
Appellee’s counsel claimed he had inadvertently overfunded the Foundation
by approximately $35,000.00. Appellant’s counsel acknowledged the
overpayment but insisted for the first time that Appellee owed interest for
the delay in performance under the Agreement.
On January 29, 2014, Appellee filed a “motion for a status conference.” Appellee alleged various issues had arisen within respect to
overpayment of the amount specified in the Agreement which the parties
had been unable to resolve and that a status conference was necessary to
discuss these outstanding issues. The trial court scheduled a status
conference for March 7, 2014. After discussing the outstanding issues with
the court in chambers, the court conducted hearings on the disputed issues
on September 4, 2014, April 2, 2015, and November 30, 2015. During the
hearings, Appellant argued that Appellee’s overpayment as well as other
payments made pursuant to the Agreement were designated as “charitable
deductions” on her tax returns, precluding Appellee from requesting any
reimbursement if those payments were made with the donative intent
necessary to take a charitable deduction. [2] At the conclusion of the hearings,
the court ordered the parties to submit post-hearing briefs limited to four
issues: (1) did Appellant’s counsel need express authority from Appellant to
agree to extend the time for performance under the Agreement; (2) could
Appellee’s counsel rely on the apparent authority of Appellant’s counsel to
delay performance under the Agreement; (3) could the settlement amount
be deemed a “gift”; and (4) what is the import of declaring a transfer as a
charitable deduction.
Following the submission of post-hearing briefs on the issues, by order dated April 28, 2016 and filed on May 3, 2016, the trial court granted in part
and denied in part Appellee’s request for reimbursement. The trial court
rejected Appellant’s argument that Appellee’s designation of settlement
payments as “charitable deductions” on her tax return precluded
reimbursement. The court decided Appellee’s overpayment to the
Foundation was merely inadvertent. Regarding whether Appellee owed
interest, the court found the parties had agreed Appellee could delay some
transfers until the IRS answered certain tax inquiries, which the IRS
____________________________________________
[2] Upon discovery of the overpayment, Appellee’s counsel amended
Appellee’s tax return to remove the overpaid amount from Appellee’s list of
charitable deductions.
provided around June 2012. Nevertheless, the court found Appellee’s delay
in payments after July 2012, should be subject to interest. The court issued
a final order, directing Appellant to remit $28,422.85 to Appellee within 60
days for the overpayment, [3] which was the amount of overpayment
requested, less $6,831.15 in interest accumulated from July 2012 to
February 2013. [4]
Appellant timely filed a notice of appeal on May 20, 2016. On May 23, 2016, the trial court ordered Appellant to file a concise statement of errors
complained of on appeal pursuant to Pa.R.A.P. 1925(b). Appellant timely
complied on June 10, 2016.
Appellant raises five issues for our review: DID THE TRIAL COURT [ERR] BY FAILING TO FIND THAT [THE FOUNDATION] WAS A NECESSARY AND INDISPENSABLE PARTY TO THIS ACTION?
DID THE TRIAL COURT [ERR] BY ORDERING [APPELLANT], ADMINISTRATOR OF THE ESTATE OF MARY E. SAWYER TO REPAY FUNDS THAT [APPELLANT], ADMINISTRATOR OF THE ESTATE OF MARY E. SAWYER DID NOT RECEIVE? DID THE TRIAL COURT [ERR] BY NOT FINDING THAT [APPELLEE], RITA SAWYER [CAN ONLY] RECOVER AGAINST THE [FOUNDATION]?
DID THE TRIAL COURT [ERR] BY FAILING TO FIND THAT ____________________________________________
[3] The court directed “[Appellant] and/or [the] Foundation” to remit payment.
(Opinion in Support of Order, filed May 3, 2016, at 40).
[4] Appellee did not file a cross-appeal challenging the amount of interest
owed.
THE [FOUNDATION] WAS THE PARTY WHO ACTUALLY BENEFITTED AND WHO APPRECIATED SUCH BENEFIT FROM THE ALLEGED OVERPAYMENT?
DID THE TRIAL COURT [ERR] BY FAILING TO FIND THAT THE ADDITIONAL $140,000.00 WHICH [APPELLEE] CLAIMED ON HER 2012 AMENDED FEDERAL INCOME TAX RETURN WAS CHARITABLE CONTRIBUTIONS AND COULD NOT BE USED TO OFFSET AMOUNTS DUE PURSUANT TO THE MEDIATION AGREEMENT?
(Appellant’s Brief at 4).
In Appellant’s first four issues, [5] he argues jurisdiction is improper in this case because Appellee failed to join the Foundation as an indispensable
party to this action. Appellant contends the court intended for the
Foundation to reimburse Appellee for the overpayment; but the court’s order
actually directed Appellant, as administrator of his mother’s estate, to remit
payment to Appellee. Appellant claims he did not personally receive the
overpayment, and the Foundation was the entity that directly benefitted
from the overpayment. Appellant insists the Foundation is therefore an
indispensable party to this appeal. Appellant concedes he raises for the first
time on appeal his claim that Appellee failed to join the Foundation as a
necessary party to this action, but he maintains that claim is non-waivable
____________________________________________
[5] Notwithstanding Appellant’s number of questions presented, Appellant
combines issues one through four in one argument section, in contravention
of the rules of appellate procedure. See Pa.R.A.P. 2119(a) (stating
argument shall be divided into as many parts as there are questions to be
argued and shall have at head of each part, in distinctive type, particular
point treated therein, followed by such discussion and citation of authorities
as are deemed pertinent).
under Pennsylvania law. Appellant concludes the trial court lacked
jurisdiction, and this Court should vacate the trial court’s order and dismiss
Appellee’s request for reimbursement. We disagree.
Pennsylvania Rule of Civil Procedure 1032 provides, in relevant part: Rule 1032. Waiver of Defenses. Exceptions. Suggestion of Lack of Subject Matter Jurisdiction or Failure to Join Indispensable Party * * * (b) Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter or that there has been a failure to join an indispensable party, the court shall order that the action be transferred to a court of the Commonwealth which has jurisdiction or that the indispensable party be joined, but if that is not possible, then it shall dismiss the action.
Pa.R.C.P. 1032(b). “In Pennsylvania, an indispensable party is one whose
rights are so directly connected with and affected by litigation that [the
entity] must be a party of record to protect such rights[.]” Columbia Gas
Transmission Corp. v. Diamond Fuel Co. , 464 Pa. 377, 379, 346 A.2d
788, 789 (1975). “The absence of an indispensable party goes absolutely to
the court’s jurisdiction. If an indispensable party is not joined, a court is
without jurisdiction to decide the matter. The absence of an indispensable
party renders any order of the court null and void.” Sabella v.
Appalachian Development Corp. , 103 A.3d 83, 90 (Pa.Super. 2014),
appeal denied , 631 Pa. 744, 114 A.3d 417 (2015) (internal citation omitted).
The failure to join an indispensable party is a non-waivable issue. Id. ;
Fiore v. Oakwood Plaza Shopping Center, Inc. , 585 A.2d 1012, 1020
(Pa.Super. 1991) (stating issue of failure to join indispensable party cannot
be waived).
In determining whether a party is “indispensable,” courts analyze: “(1) whether the party has a right or interest related to the claim; (2) the nature
of the right or interest; (3) whether the right or interest is essential to the
merits; and (4) whether justice can prevail without violating due process
rights of the absent party.” Id. “[T]he basic inquiry remains whether
justice can be done in the absence of a third party.” Orman v. Mortgage
I.T. , 118 A.3d 403, 407 (Pa.Super. 2015). Significantly, not all parties or
entities related to an action are “indispensable” parties. Corman v.
National Collegiate Athletic Ass’n, 74 A.3d 1149 (Pa.Cmwlth. 2013). For
example, “where a person’s official designee is already a party, the
participation of such designee may alone be sufficient, as the interests of the
two are identical, and thus, the participation of both would result in
duplicative filings.” Id. at 1163. See, e.g., City of Philadelphia v.
Commonwealth , 575 Pa. 542, 568, 838 A.2d 566, 582 (2003) (holding
petitioners’ failure to join all parties who were potentially affected by
challenged legislation did not deprive Supreme Court of jurisdiction to review
merits of petitioners’ claims; requiring participation of all parties having any
interest which could be potentially affected by invalidation of statute would
be impractical; while legislation at issue purports to alter rights and
obligations of numerous persons, achieving justice is not dependent upon
participation of all of those persons; complaint named as respondents
Commonwealth and Governor, both of whom are represented by Attorney
General who stands in representative capacity for, at minimum, all non-
Commonwealth parties with interest in seeing statute upheld, and Presiding
Officers and Minority Leaders of both Houses of General Assembly, who are
capable of representing interests of Legislature as whole; substantial justice
can be done without joining any parties other than those who are presently
participating in litigation).
Instantly, the trial court analyzed Appellant’s claims as follows: [6] From its inception, [the] Foundation in this case was controlled by [Appellant]. [Appellant’s] lawyer created the Foundation and communicated all information about it to [Appellee] and her lawyer. Throughout the litigation during 2014 and 2015, [Appellant] and/or his attorney spoke for [the] Foundation and even raised issues on behalf of it. [1]
[1] For example, [Appellant] argued that interest should be paid to [the] Foundation during the period of time when [Appellee] delayed payment of what she owed.
As we see it, [Appellant] is the “official designee” for [the] Foundation. Moreover, [Appellant’s] interest and the interest of [the] Foundation are identical. As such, [Appellant’s] participation in the litigation that has progressed since 2014 is sufficient to protect [the] ____________________________________________
[6] Given the existing legal precedent, we bypass the trial court’s initial
conclusion of waiver and move directly to the court’s resolution of the
dispute on the merits. See Sabella, supra ; Fiore, supra .
Foundation and its interests. Reversing the decisions we have already rendered regarding the overpayment because [the] Foundation was not a party would do nothing more than result in “duplicative litigation.” Accordingly, we believe that all components of the legal principle articulated in Corman and City of Philadelphia …apply in this case. So too should the conclusion of those cases apply—[the] Foundation should not be declared an indispensable party.
(Trial Court Opinion, filed July 12, 2016, at 7-8) (internal capitalization
omitted). We agree with the court’s decision. The trial court’s order
directed “[Appellant] and/or the Foundation” to remit payment to Appellee.
The record makes clear the court expected Appellant to make that payment
from the Foundation, which Appellee had inadvertently overfunded.
Appellant admits he is the Board President, Treasurer, and Founding Director
of the Foundation. The record confirms Appellant is the individual who
speaks for and on behalf of the Foundation; in other words, Appellant is the
“official designee” of the Foundation. No violation of the Foundation’s due
process rights occurred because Appellant represented the Foundation’s
interest at each of the hearings. See Fiore, supra . See also Orman,
supra . Under these circumstances, the Foundation was not an
indispensable party that deprived the court of jurisdiction. See City of
Philadelphia, supra ; Corman, supra . Therefore, Appellant’s issues one
through four merit no relief.
After a thorough review of the record, the briefs of the parties, the applicable law, and the well-reasoned opinion of the Honorable Bradford H.
Charles, we conclude Appellant’s fifth issue merits no relief. The trial court
opinion comprehensively discusses and properly disposes of that question.
( See Opinion in Support of Order at 27-33; 40-41) (finding: Appellee’s
counsel characterized some of settlement payments as “charitable
contributions” on Appellee’s tax return because that benefited Appellee from
tax standpoint, where ultimate purpose of Foundation was to be benevolent,
and based on advice that IRS would likely approve such characterization;
upon discovery of $35,254.55 overpayment, Appellee’s counsel amended her
2012 tax return to delete that overpayment from list of charitable
contributions; Appellee’s decision to pay Foundation was motivated by desire
to resolve wrongful death lawsuit and was not act of “disinterested
generosity”; whether Appellee should or will be required to pay additional
taxes based upon her tax filing characterizations is issue to be addressed
between Appellee and IRS; court rejected Appellant’s argument that
Appellee’s attempt to claim some of her settlement payments as charitable
deductions precluded court from determining that $35,254.55 was mistaken
overpayment; Appellee’s counsel credibly testified regarding inadvertent
overpayment; court was convinced without doubt that Appellee mistakenly
overfunded Foundation by $35,254.55, and that Appellee had no donative
intent to contribute that amount gratuitously to Foundation; to permit
Appellant to take advantage of Appellee’s overpayment would be unjust;
principles of equitable restitution apply; Appellee established both mistake of
fact and consequential unjust enrichment; thus, Appellee was entitled to
return of overpayment (less interest)). Therefore, with respect to
Appellant’s fifth issue on appeal, we affirm on the basis of the trial court’s
May 3, 2016 opinion.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/14/2017
