00:00 - Welcome to the beautiful Pittsburgh courtroom of the Pennsylvania Supreme

00:04 - Court.

00:04 - For oral arguments from the court's October 17th, 2023, argument list.

00:10 - My name is Barbara Griffin, and I'm the director of the Pro

00:13 - Bono Center of the Allegheny County Bar Foundation.

00:16 - I also chair the Pennsylvania Lawyers Fund for Client Security.

00:21 - I'm joined by my colleague, Candace Komar, an attorney and founding partner

00:26 - of the law firm Pollock Beck, which is a firm focusing on family law.

00:30 - Candace also presently serves

00:32 - as chair of the State Continuing Legal Education Board.

00:36 - The Pennsylvania Supreme Court is the highest court in the Commonwealth

00:40 - and is the oldest appellate court in the nation

00:43 - dating back to 1684.

00:45 - The court has seven justices and is responsible for interpreting

00:49 - Pennsylvania's law and constitution to make final judgments

00:53 - on a wide range of legal questions in cases it selects to hear.

00:57 - The Court is led by Pennsylvania's first female chief

01:01 - justice, Madam Chief Justice Debra Todd.

01:05 - The justices are elected by Pennsylvania voters

01:08 - and the court's decisions affect the lives of virtually every Pennsylvanian.

01:12 - In the past decade alone, the court has ruled on cases

01:14 - regarding voting, voting elections, public school

01:18 - funding and more.

01:21 - The first case the court will hear is Mercatus versus Oh,

01:27 - this is a medical malpractise case in which the plaintiff is claiming

01:31 - that an anesthesiologist injured her during this knee surgery.

01:36 - The plaintiffs sued the anesthesiologist,

01:38 - who then hired a law firm to represent her.

01:42 - Later, the plaintiff subpoenaed a different doctor, the surgeon,

01:46 - to require him to answer questions about the case in a deposition.

01:50 - The surgeon also hired the law firm to represent him at the deposition

01:55 - so that both doctors were now clients of the law firm,

01:59 - but only the anesthesiologist was a party in the case.

02:03 - Parties in lawsuits can ask for information

02:06 - from the opposing party through a process called discovery.

02:10 - There are rules regarding how these requests for information can be made.

02:15 - One rule Rule of Civil Procedure

02:17 - 43 governs how lawyers obtain information

02:22 - about a plaintiff's medical treatment from doctors who treated the plaintiffs.

02:27 - It generally requires defendants to use formal discovery methods.

02:31 - The rule also permits a defendant's lawyer to obtain information

02:34 - directly from a physician without going through the formal discovery process.

02:39 - If the physician is the attorneys own client

02:43 - relying on this rule, the defendant's attorney obtained information

02:47 - about the plaintiff's treatment by talking directly to the surgeon

02:51 - because the surgeon was a client of the law firm.

02:55 - The plaintiff filed a motion in the trial court

02:58 - to disqualify the law firm from continuing to represent the anesthesiologist

03:03 - and to bar the law firm from any further communication with the surgeon,

03:08 - arguing that the law firm violated Rule 43.

03:12 - The trial court denied the motion and the plaintiff appealed to the Superior Court.

03:17 - The Superior Court reversed the trial court

03:19 - and held that the defendant's law firm violated the rule

03:23 - by communicating directly with the surgeon.

03:26 - The Superior Court reasoned that the rule was not intended

03:29 - to allow a law firm to communicate with a plaintiff's doctor.

03:33 - If the doctor is not a party in the lawsuit,

03:35 - even if the doctor is a client of the law firm.

03:39 - The defendant appealed, arguing that the plain language of Rule

03:43 - 43 expressly allows this type of communication.

03:47 - Since both doctors are clients of the law firm.

03:50 - The parties asked the Supreme Court to decide how

03:52 - the rule applies under the facts in this case.

03:56 - Let's watch and listen to the oral argument in Morris v o

04:01 - using a suggestive message.

04:04 - Good morning.

04:05 - Morning, Chief Justice.

04:07 - And in this discussion area appeal, we're asked to consider

04:10 - whether Pennsylvania rule of civil procedure for 003.6 permits.

04:17 - Counsel in a medical malpractise case to speak with his client.

04:22 - Plaintiff's Treating Physician Outside the discovery process.

04:27 - When counsel for the physician is being sued and counsel

04:30 - for the treating physician are with the same law firm.

04:35 - Please proceed.

04:36 - Good morning, Chief Justice and Justice is

04:40 - my name is Maureen McBride from the firm of Landmark Ruling.

04:43 - And I am here representing Dr.

04:46 - Dong Jun. Oh, your honors.

04:49 - We're here today to ask this court to reverse the Superior Court's decision,

04:54 - which found that the law firm of Scanlan Howley

04:58 - violated a discovery rule rule 4,003.6

05:04 - by discussing

05:06 - he was a treating physician, discussing the plaintiff's case

05:10 - with him in circumstances where he was a client of the law firm.

05:15 - Rule 4,003.6

05:18 - says that information may be obtained

05:21 - from a treating physician of a party only upon written consent,

05:26 - and I won't go through the rest, except the rule shall not prohibit

05:30 - an attorney from obtaining information from and the very first subsection

05:35 - subsection one, the attorneys client in this case

05:40 - the law firm,

05:41 - represented Doctor O and then a second doctor, Dr.

05:45 - Kim had been subpoenaed and requested that the law firm also represent him.

05:51 - The rules specifically allow that if the

05:54 - if the doctors, the treating physicians or law firm clients, that

05:58 - the law firm is free to speak with them without getting the plaintiff's consent.

06:02 - Doesn't that interpretation really allow for a defense counsel

06:08 - to represent a treating physician under

06:11 - any circumstance?

06:14 - Because in this situation, the treating physician wasn't

06:18 - an employee of a hospital that was previously represented

06:23 - by the defense firm, and he wasn't an office group

06:27 - where he was a member of a group that was previously represented

06:31 - by defense counsel.

06:32 - And although I recognize that there had been some prior

06:36 - representation in some other

06:39 - capacity in the past at the time that the treating physician

06:43 - came to your to the defense office,

06:47 - they were already representing the name defendant in the case.

06:50 - That's correct.

06:51 - But there had also been criticism in the complaint of Dr. Kim.

06:55 - And we laid out those allegations.

06:57 - But clearly, he could have been brought in through the discovery rule.

07:01 - He could have been brought in as a defendant and was entitled

07:04 - to representation.

07:05 - Well, I'm not saying he wasn't entitled to representation, but

07:09 - I don't see how you get around

07:11 - the fact that he was a treating physician

07:15 - and that law firm already represented a named defendant in the lawsuit.

07:20 - And regardless if the two doctors waived privilege or

07:27 - you can't waive 4003.6.

07:31 - Well, Your Honor, with all due respect,

07:33 - I think this is a straightforward rule construction case.

07:38 - The plain language of the rule says if it's the attorneys client,

07:43 - then you can reach out or I'm sorry, you can have conversations

07:46 - with the treating physician.

07:47 - It's a plain meaning rule.

07:49 - I mean, there's no nobody that would allow an insurance company

07:53 - who really directs the coverage of these doctors to send every treating

07:58 - physician to the Office of the Defense Counsel who represents a named defendant.

08:03 - And then 4003.6 means nothing.

08:06 - Your Honor, again, with all due respect, that the rule, first of all,

08:09 - has been in place for a long time, and that's never been

08:12 - it's never been an issue.

08:13 - But this is again, we're using rule construction precepts.

08:18 - The plain language of the rule says that this can happen

08:21 - if the rule needs to be changed or needs to be looked at, that's a different issue.

08:25 - But so can I follow up on certainly, I think

08:29 - if you

08:31 - mentioned it's never been an issue, but ironically,

08:35 - did Scanlan Howley

08:39 - bring to the fore

08:42 - the problem just as Monday's talking about?

08:44 - In other words,

08:46 - if we if we apply your

08:49 - what you call the plain meaning approach, Bob,

08:54 - how would you advise us to rule in your favor and yet

09:00 - not greenlight the kind of practice just as Mundy is describing,

09:04 - whereby the defense could always

09:09 - rope in, so to speak, the treating physician

09:12 - into the defense counsel camp

09:15 - through this means I don't know what the principle

09:18 - distinction, in other words, would be between your scenario here

09:22 - and that whole universe of cases out there.

09:26 - Well, I don't know of any case where anybody has any law

09:30 - firm has gone out and tried to seek out all the treating physicians before

09:34 - this rule was enacted.

09:35 - Everybody defense counsel could talk to any treating physician.

09:40 - The rule was enacted with these three exceptions,

09:43 - and there is no exception here that says you have to be

09:47 - a defendant in the case, which is what my colleague has said,

09:53 - that the rule should only apply if both parties are defendants,

09:57 - but that adds an exception to the rule that doesn't exist.

10:00 - So my argument is a basic argument.

10:02 - This is the rule.

10:03 - If we can't rely on the rules of civil procedure, when we open the book

10:07 - and read them and the rule doesn't say you can only represent one

10:11 - or you can't represent one who's not a defendant.

10:14 - That's not what the rule says.

10:16 - And so it erodes confidence in the rules.

10:18 - If you can't just read this rule for what it is.

10:21 - Well, Mr.. So I have a question.

10:23 - How is it possible

10:25 - that doctor cut Kim sign

10:27 - the conflict with the law firm prior or I should say prior to him

10:32 - signing the conflict, he had to engage in an ex parte conversation

10:37 - regarding the medical negligence before signing that conflict.

10:42 - How's that possible?

10:44 - If you keep arguing that they're the client I want to take you back

10:47 - to prior to signing that conflict, prior to retaining the same law firm.

10:53 - Share with me how the mere fact that the conversation

10:57 - between the law firm representing the defendant and the law firm

11:01 - now speaking to a potential client about plaintiff's case

11:06 - and how that does not, in effect, violate the plain language of the of the rule.

11:12 - Okay. Let me just say two things to that.

11:14 - First of all, there is no record in this case.

11:16 - There is no evidentiary hearing.

11:18 - The plaintiff's counsel in seeking disqualification and sanctions

11:22 - did not ask for an evidentiary hearing, the trial court said, and the trial

11:26 - judge said in her opinion, it's all based on speculation and conjecture.

11:30 - So we have no record before this court

11:32 - as to any conversations, any communications that occurred.

11:36 - The trial court also points out that the plaintiffs did not raise

11:40 - and they're 1925 or on appeal, any issue with respect to ethics or conflicts.

11:45 - This is a pure discovery rule.

11:48 - The issue is only about whether the manner in which you obtain information

11:52 - from a treating physician.

11:54 - And in this circumstance, it's a permissive rule.

11:56 - It allows a law firm to do exactly this.

12:00 - And again, I bring you back to if you can't read the rules

12:03 - in the plain language, no one has said the words are ambiguous.

12:07 - Right. You

12:10 - let's do a plain text analysis, because I'm a little surprised

12:13 - by by you changing the word to the rule a little bit.

12:16 - You keep talking about a law firm.

12:18 - The rule doesn't mention a law firm.

12:20 - It says an attorney.

12:22 - Now, are you conceding or suggesting

12:25 - that we should interpret the word attorney

12:28 - to mean law firm?

12:31 - No. And in this case, there were two different lawyers.

12:35 - So I, I take your point.

12:37 - There are two different lawyers

12:39 - representing the two different doctors in this case.

12:42 - And the other point that the trial judge pointed out was that there's no evidence

12:46 - that they talked to each other about the other client or any information.

12:51 - And again, there is no record in this case.

12:54 - And we can see that that that might be a violation.

12:58 - If attorney

13:00 - if the attorney

13:01 - for the treating physician within the same firm

13:06 - shared information that that attorney obtained from the treating physician

13:10 - with the attorney who is representing the defendant,

13:15 - that would be a violation of the rule of this rule.

13:19 - Yes, I think that would be a different situation.

13:23 - And I can't speak to whether that would be a violation.

13:26 - But I think in terms of what's authorized, it would be at least closer.

13:30 - It would be a closer call.

13:31 - But here I don't see any violation.

13:33 - And again, Dr.

13:34 - Kim had been represented by this firm before.

13:37 - I don't think that matters.

13:38 - I don't think I think that's an unnecessary fact.

13:41 - I think I think the question is, I agree with you.

13:44 - I think it's a statutory construction case.

13:45 - I was interested in the idea that you were.

13:48 - Is there a definition of attorney that includes law firm?

13:52 - I'm wondering why you led with that.

13:55 - Well, because, again, I mean, it's the law firm that that is

13:58 - they're trying to disqualify from representing either of these doctors.

14:03 - Right. Or both of these doctors.

14:05 - Does it make a difference, Ms..

14:06 - McBride, if there were a protective barrier

14:09 - or wall established within the firm to separate,

14:12 - because we don't have any indication that that happened here.

14:15 - Well, absolutely.

14:16 - But that's what that's what Judge Bartley said.

14:18 - Judge Bartley said that there's no evidence

14:21 - that there were any communications between or among the two lawyers representing

14:25 - two of these different doctors.

14:27 - Nor was there evidence,

14:28 - though, that there was a wall set up within the firm to separate them.

14:32 - I don't believe again, because there's no evidence

14:34 - there was no evidentiary hearing as an oral argument.

14:36 - The record that we received would show that the attorney, Hayes,

14:41 - who was representing the treating physicians, showed up at a deposition

14:47 - in the place of doctor the doctor defendant's

14:53 - counsel.

14:53 - Again, there's no evidence of that.

14:56 - But the fact is that it was simply as a placeholder to say

15:00 - that she was going to be late for the deposition.

15:02 - There was no recording of that.

15:05 - That's not part of it. Well, there's there's a there is a transcript.

15:08 - There is a track, because I look, I thought that was interesting point.

15:10 - I looked at the transcript and in that transcript,

15:14 - the attorney that showed up right did not enter,

15:18 - even indicated, I'm here, I represent the treating physician.

15:21 - I don't represent this other person.

15:24 - And they'll they're coming late.

15:26 - I'm just getting on the call to let you know that

15:29 - that lawyer is going to be late.

15:30 - That was it didn't enter their appearance for exactly anybody.

15:34 - And what I was going to say is there's no objection on the record.

15:37 - And that gets into the issue of delay now.

15:39 - So before you get into DeLay, yes.

15:41 - The doctor.

15:42 - Oh, have the consent of this patient to disclose information.

15:48 - So Doctor O is treating physicians the defendant.

15:52 - I'm sorry, Doctor.

15:53 - Dr. Kim Did Dr.

15:55 - Kim have the consent?

15:58 - I don't believe he needed the concern, so I don't know.

16:01 - Why do you say that?

16:02 - We're looking at the straight language of the rule, right?

16:05 - It's like, why did why wasn't

16:08 - the plaintiff the patient's consent necessary?

16:12 - I mean, I read this rule.

16:13 - I don't know, maybe I'm simplistic.

16:15 - I mean, to me, I read this rule to say that

16:19 - if the patient gives consent,

16:24 - then the attorney does not need

16:27 - to get his or her consent, period.

16:31 - That's a plain reading of the rule.

16:33 - I But I just don't I don't understand, Don.

16:37 - I don't understand how the treating physician is exempt

16:41 - from requiring the consent of the patient before discussing

16:46 - or disclosing information, because that, of course, then gives the patient

16:50 - the opportunity to file a protective order or anything of that nature.

16:54 - And so, I don't know, maybe I'm

16:56 - maybe I don't understand the full facets of this case.

17:00 - So the treating physician, Dr.

17:01 - Kim, was subpoenaed.

17:04 - So clearly the plaintiff had agreed that. Dr.

17:07 - Kim, why do you say that?

17:09 - See, I actually don't see that at all.

17:12 - I mean, there is a subpoena issued, but that doesn't mean that

17:17 - the patient's records are free for all, because the subpoena was issued.

17:24 - So, I mean, I'm

17:25 - just doing what you're suggesting, which is reading the rule as it's written.

17:29 - I would read this to say that

17:32 - the treating physician needs to get the consent of the patient

17:36 - before making any disclosure and in the event

17:38 - that the treating physician has that consent, the attorney

17:42 - doesn't need to get additional consent.

17:45 - The attorney is then free to review the information.

17:51 - Okay, I read that last sentence.

17:53 - This rule shall not prohibit an attorney from obtaining information,

17:57 - as do the intern in the extent i.e.

17:59 - the in this case, in this case, the treating physician.

18:06 - Well, they were they were both treating physicians, both Dr.

18:08 - Kim and Dr..

18:09 - Oh, you're both treating physician.

18:11 - And then the the other doctor would need

18:16 - the plaintiff's consent to disclose information.

18:20 - And if he or she gets that consent, then the attorney doesn't

18:23 - have to get an additional consent to disclose information.

18:28 - I mean,

18:30 - I think we're I don't know.

18:32 - I think this is becoming more complicated.

18:35 - I also disagree with the proposition that the roles

18:38 - of professional conduct are not inherent in this discussion.

18:41 - I mean, we have we have de novo review over what the role means,

18:46 - and we are going to read a rule so that it prohibits that, so that it

18:50 - goes against the rules of professional conduct.

18:53 - No, I understand that, Your Honor.

18:54 - My point was that the only issue that the plaintiffs had raised,

18:57 - because the trial judge denied their request for sanctions, denied

19:01 - the request for disqualification, and the plaintiffs

19:04 - argued only under the discovery rule that the firm,

19:08 - the lawyers, were not permitted to get information

19:11 - through discovery without going through discovery.

19:14 - That was the issue.

19:15 - And if you read Judge Carly's opinion, she says they didn't address in their 1925

19:21 - and didn't seem to appear to be addressing any issues with respect

19:25 - to conflict of interest or any ethical issues.

19:29 - And again, I think it does bear repeating, though, that this is, you know, Dr.

19:33 - O represented had been represented by this law firm for at least two years

19:38 - before this issue arose, that the plaintiff's firm

19:42 - was told in August of 2020 that Mr.

19:47 - Hayes would be representing Dr.

19:49 - Kim and did not file anything until April of 2021.

19:54 - Raising this as an issue and you know, the case law from at least

19:59 - from the federal courts and I know there are some superior court decisions,

20:04 - talk about

20:05 - delay and using this as a strategic,

20:09 - you know, weapon to disqualify a law firm.

20:12 - But it takes away Dr.

20:13 - O. And and Dr.

20:15 - Kim's right to counsel.

20:16 - I mean, they both chose this law firm.

20:18 - The law firm is well-respected.

20:20 - The lawyers involved are well-respected.

20:22 - And to take that away,

20:25 - again, based on something that no one has said, the superior court didn't or

20:30 - didn't say this, and the plaintiffs aren't arguing that the language is ambiguous.

20:33 - Well, the fact of the matter is, is the treating physician was the treating

20:37 - physician before he was ever

20:41 - the client of your law firm that you're representing.

20:45 - That's where the problem is. Right.

20:47 - But but there's no prohibition

20:51 - for having one law firm represent more than one one doctor.

20:55 - And this doctor's conduct had been criticized.

20:58 - I mean, the plaintiff said all the treaters, I think that 4003.6

21:04 - definitely precludes the same law firm

21:08 - from representing a defendant, doctor and the treating physician.

21:14 - Well, what I'm saying is that if they were both defendant

21:16 - doctors, the plaintiffs are saying if they were both defendant doctors,

21:19 - that would be okay.

21:21 - But Doctor Kim's conduct was implicated.

21:23 - I mean, he was criticized.

21:25 - It was not yet a name defendant but statute is run.

21:28 - I was here a few years ago in the kind of case

21:31 - where they were trying to use the discovery rule

21:33 - to bring in a defendant after they had taken a deposition.

21:37 - I mean, it happens all the time.

21:39 - He could have been a defendant.

21:41 - That's why he wanted representation.

21:42 - That's why he reached out to that law firm.

21:45 - So I think is your argument that

21:50 - this situation

21:53 - deserves some express consideration to make it

21:58 - so circumvent 403.6?

22:01 - Or is it that the plaintiff's waived their argument or both?

22:06 - Well, first, my argument is that when I read the rule and maybe I'm

22:09 - overly simplistic, I read the rule saying the let this last sentence.

22:13 - The rule shall not prohibit

22:14 - an attorney from obtaining information from the attorneys client.

22:17 - There's no doubt in this case that both of these defendants and Doctor

22:21 - Kim in particular was a firm client, a lawyer, the attorneys client.

22:26 - Therefore, I don't believe needed consent and I believe had the right

22:30 - to have those discussions.

22:31 - So my argument is that we have rules.

22:34 - The rules we we I mean, I've written a ton of briefs

22:37 - where I've said, you know, in this court has held

22:40 - we have to apply the language when it's clear

22:43 - and unambiguous, unambiguous, and there is no higher.

22:47 - You could always take the treating physician to the law firm and then voila,

22:51 - their client. They don't have to

22:54 - behave under the the mandate of the rule.

22:57 - Well, that I mean, some of that and I did see that in the plaintiff's brief and

23:02 - in the amicus brief suggests that there's going to be some nefarious conduct.

23:06 - I mean, first of all, and any suggestion that the doctors would somehow change

23:11 - their testimony or would be dissuaded from testifying, any of that?

23:15 - I'm just suggesting the factual situation

23:18 - of this case, at least in my view, violates that rule.

23:21 - But I think that again, I think that the rule,

23:24 - the language is clear if the rule needs to be changed

23:27 - or modified, certainly, you know, the rule can be looked at.

23:31 - But I don't think you can take a rule that has plain language like this

23:35 - and then tell people that because it may be used improperly,

23:40 - that the words don't mean what the words say, that that's the problem that I have.

23:45 - Because I think unless people, you know, if they can't rely on that,

23:48 - then they're going to have to go and,

23:49 - you know, read all the case law to figure out what the rules mean.

23:52 - But again, that's not the argument.

23:54 - It's not an ambiguity argument.

23:56 - It's that this court did not envision.

23:58 - That's what the superior court said.

24:00 - This court did not envision this circumstance.

24:02 - And I say, yes, this court did, because it has this exception.

24:06 - Well, I don't I don't I don't know if

24:10 - that's like saying the General Assembly envisions

24:12 - every circumstance when they write a statute.

24:14 - I mean, this could be a circumstance

24:16 - that the court didn't envision when it approved

24:18 - that language in the rule. I don't think

24:20 - I'm not sure whether we envisioned or not as particularly persuasive.

24:24 - I think the question is what does the rule provide?

24:27 - And it may very well be that the rules language is, as you say

24:32 - it is, and allowed this to happen and the rule needs to be changed.

24:35 - But I'm I don't know.

24:38 - I think I think for me, it falls down to the simple question of is

24:42 - is attorney synonymous with law firm.

24:45 - If attorney if attorney is synonymous with law firm, I think you have a problem.

24:50 - If attorney if attorney means attorney and it could be attorney

24:54 - within firms, then you might be okay.

24:57 - Yeah.

24:57 - And again, there was no because there's no record.

25:00 - And you know, if well, that's that also is an important point.

25:04 - Right.

25:04 - And, you know, the superior court found a violation

25:08 - without any fact finding by the trial court

25:12 - and then said that the trial court should fashion

25:15 - a remedy for the violation.

25:18 - And of course, the request

25:19 - was for disqualification, which is the harshest of all sanctions,

25:23 - which would be unfair certainly to the doctors

25:26 - in this case, especially Doctor O, who had been represented for two years.

25:30 - And and yet, you know,

25:33 - this there's no sort of due process

25:36 - or consideration for the choice of counsel of these doctors.

25:40 - So, again, my argument is I was going to say

25:43 - this is the easiest case you would have all day, but I guess not.

25:47 - That is it's a it's a plain meaning argument.

25:51 - And if and I think that these this the lawyers in this case did

25:56 - nothing wrong, and they follow the rule exactly as this court envisioned it.

26:00 - So thank you, Your Honor.

26:02 - Before you think it's a coincidence that the rule uses the phrase extensible

26:07 - employee of an attorneys client, that extensible agency

26:11 - concept is really so tied to medical malpractise cases.

26:15 - DCA concerted thought process there

26:19 - on the court's part when they passed this role to capture

26:23 - Malpractise

26:24 - cases with this rule and those exceptions, we went back and tried to find

26:28 - the history and I don't think there is any when the rule was passed.

26:32 - So I can't speak to that.

26:33 - I agree with you that ostensible

26:35 - agency is something they come across all the time in medical malpractise cases,

26:39 - and I'm not sure that I've ever seen it applied in any other context.

26:42 - So I agree with who's probably referencing that.

26:45 - Thank you.

26:45 - Aaron Fried. We'll hear from Mr.

26:48 - Messer.

26:54 - May, please the court.

26:56 - Good morning.

26:57 - Good morning, Madam Chief Justices.

27:00 - I'm Joe Mace on behalf of the plaintiff, Bobby and Curtis, plaintiff.

27:04 - With me today from my office is Angelo,

27:06 - Theo Cassopolis, as well as

27:10 - David Paul, who is Amicus on the brief

27:13 - on behalf of the Pennsylvania Association for Justice

27:18 - Rule for

27:18 - 3.6 is sole purpose is to prevent defense attorneys from contacting

27:22 - plaintiffs treating doctors outside of the discovery process

27:26 - and methods authorized by Chapter 4000 of the rules.

27:30 - We're here because Doctorow's

27:31 - counsel admitted to unauthorized private contacts with Mrs.

27:35 - Burgess's treating doctor, a nonparty that they attempt to justify.

27:39 - I do an ex post facto retention agreement and ex post facto conflict

27:44 - waivers between defendant Doctorow and treating doctor Dr. Kim.

27:49 - The interpretation of the rule that the Scanlan Howley firm urges

27:53 - the court to accept leads to an absurd result.

27:56 - The exception would swallow the rule that was intent.

27:59 - I'm sorry. Interrupt you, Mr.

28:00 - Mason, or ask you this.

28:03 - Is it an absurd result that we created by writing the rule this way?

28:08 - In other words, is the correct result in this case for Ms..

28:12 - For Ms..

28:13 - McBride to win, and then for us to change the rule tomorrow

28:17 - to prevent this problem from appearing again.

28:21 - I would suggest not justice,

28:23 - because the rule is a restrictive rule, not a permissive rule.

28:28 - The rule is a subset of the Chapter 4000

28:31 - Group of Rules, and the rule starts by saying information

28:35 - may be obtained from a treating physician only upon written consent

28:42 - or through a method of discovery authorized by this chapter.

28:45 - Those methods of discovery for treating physician authorized by Chapter 4000

28:49 - in a circumstance like this are subpoena for documents or subpoena for deposition.

28:54 - The subset of the restriction

28:57 - in the rule shall not prevent

29:00 - does not create an avenue for ex parte contacts.

29:04 - It merely identifies a limited exception for communication

29:08 - with a defendant client

29:12 - as was raised before, really

29:15 - in a medical malpractise context

29:17 - where a defendant is a physician and also a client

29:21 - and treating physician and their employees or ostensible agents.

29:25 - Statutory Construction Rules Section 127

29:29 - says the object of all interpretation and construction of rules is to ascertain

29:34 - and effectuate the intention of the Supreme Court.

29:38 - And if you look to subsection

29:41 - A, the Supreme Court does not intend an absurd,

29:47 - impossible of execution or unreasonable result.

29:50 - Counsel Yes.

29:51 - JUSTICE to to determine the intent of the Court as to interpret

29:55 - the intent of the General Assembly.

29:57 - You cannot ignore the plain language of the statute or the or the rule,

30:01 - and you cannot add words to the rule or take away words from the rule.

30:04 - You just added a word to the rule about a dissent, a defendant doctor,

30:09 - that it doesn't say defendant doctor doesn't say defendant doctor.

30:13 - But the setting, as was raised previously by

30:16 - by Justice Donahue, that we only see that

30:20 - ostensibly agent in the case of a physician.

30:23 - Well, let's

30:24 - let's assume your construction is correct,

30:26 - because I think there's an evidentiary issue to that we have to talk about.

30:29 - Do you have any evidence that attorney Hayes relayed

30:32 - any information from Doctor Oh to Attorney Doherty

30:36 - or Hillebrand? Yes.

30:40 - If you look in the record, there is a letter

30:43 - from Attorney Theo to Sharpless after the deposition of Dr.

30:47 - Singh.

30:48 - The deposition that Attorney Hayes showed up that on behalf of Dr.

30:52 - O after not on the transcript record, but after the communiques

30:59 - and off the record between attorney theory Sharpless and Attorney

31:03 - Hayes, where attorney out of the theater, Sharpless said, You can't be here.

31:07 - This is not appropriate.

31:08 - You can't be here on behalf of Doctor. Oh.

31:11 - He then backpedaled, made a call, suggested she was coming later.

31:15 - That is outlined in the letter which was forwarded to

31:19 - I think you're missing my question. I'm sorry.

31:21 - Just is there any information because the rules about information.

31:26 - Right. You can't get information from a treating physician.

31:28 - Other than.

31:29 - So when the information would be information

31:31 - about the case, substantive information, discovery type information.

31:34 - Right.

31:35 - I believe the rule is about the method of contact and it prevents contact.

31:40 - Information doesn't say information other than through discovery.

31:44 - You only get information through discovery, right?

31:48 - You're not. That's what the rule says.

31:50 - And so it has to be discoverable information. Meaning?

31:53 - Meaning information that you would seek through discovery.

31:57 - You wouldn't.

31:57 - And so so is there any evidence in the record

32:01 - and you didn't have an evidentiary proceeding.

32:03 - So I'm not sure how you're going to answer this.

32:06 - Any evidence in the record that Attorney Hayes

32:11 - relayed information that was otherwise only available under the rule

32:16 - through discovery to Attorney Doherty or Attorney Hillenbrand? The

32:23 - evidence, justice,

32:25 - is only that he showed up at the deposition on behalf of Dr.

32:29 - O that is outlined in the subsequent letter, their conversation

32:33 - off the record from Mr. Theotokopoulos to okay.

32:36 - So that's what I'm saying.

32:38 - So there is no evidence in the record that Attorney Hillenbrand or Attorney Hayes,

32:44 - in his conversations with his client, the treating

32:47 - physician, Dr. Kim

32:51 - relayed information to Attorney Doherty and Attorney

32:54 - Hillenbrand that they were only entitled to get through discovery.

32:58 - Oh, we're talking about justice, a six lawyer firm, and they aren't

33:02 - even showing up representing any evidence because it was your burden.

33:05 - It was your burden at the hearing.

33:07 - It was your burden and your motion at the trial court. Yes.

33:10 - Just to show that there was an improper communication,

33:13 - not that there was an improper attorney client relationship or things

33:16 - like that, but that there was an improper ex parte communication,

33:19 - a sharing of information that shouldn't have happened under the rule.

33:23 - But pursuant to the rules of discovery, document requests and interrogatories,

33:28 - where is that in in the record that there was a

33:33 - the rule is the showing that occurred was a violation

33:38 - of the rule by inappropriate

33:41 - ex party contact with the treating doctor.

33:44 - That's what the rule calls for to obtain information

33:48 - for the for the purpose of obtaining information.

33:51 - But what happened was Mr.

33:54 - Hayes clearly obtained information from the treating doctor, Dr.

33:56 - Kim, that he wasn't otherwise permitted to.

33:59 - If that may be true, I'm

34:00 - trying to relay that to Attorney Daugherty and Attorney Hillebrand.

34:04 - But the information that's prevented pursuant to the rule

34:07 - is communicating with that treating doctor ex party Dr.

34:12 - Kim in the first place.

34:13 - So so he couldn't commit. Hi, how are you?

34:16 - How are you?

34:17 - How are you doing? Dr. Kim, play golf today.

34:19 - How are your kids?

34:21 - No, that's prohibited communication about a patient ex-parte.

34:25 - They communicate with patients.

34:27 - So here we have absolute proof in the record that that occurred.

34:30 - And I can point to the court defense counsel admits in the record

34:34 - at the hearing ex parte de communications with Dr. Kim.

34:37 - He says and this is at page 252 of the record

34:41 - notes the testimony at eight colon eight that's 25.

34:45 - Mr. Hayes says on the record, upon contacting me, Dr.

34:49 - Kim was made aware that our firm was already representing Dr.

34:53 - O in this matter.

34:54 - And then he goes on and says, And this is at the record.

34:58 - Page 253 Notes of Testimony 12 Colon three Dash ten

35:03 - Attorney Hayes said to the court, Dr.

35:06 - Kim's written consent was provided to him.

35:09 - Provided by him? I'm sorry.

35:11 - After being informed about the allegations and set forth in plaintiff's complaint.

35:16 - Now counsel for Dr.

35:18 - O here says well we set out for allegations in the complaint

35:22 - that implicate Dr. Kim not true.

35:25 - If you read the complaint what's there is a factual recitation of what occurred

35:30 - and what did not occurred.

35:31 - Pennsylvania as a fact

35:33 - pleading state, requires that the factual allegations relate to Dr.

35:37 - Kim and everything that you just said.

35:39 - And I apologize for interrupting, but you keep as you keep an eye, I'm

35:43 - I'm not sure I even heard an answer to my question yet.

35:46 - You keep talking about procedural things, a waiver,

35:48 - the allegations in the complaint, which were already publicly available.

35:52 - Is there any information in the record that you show

35:56 - that Attorney Hayes received from Dr.

36:01 - O or from Dr. Kim

36:03 - that you're

36:04 - claiming he could only receive through discovery?

36:08 - He showed up at a deposition

36:10 - to represent a defendant that was not.

36:14 - I looked at the transcript.

36:15 - It doesn't appear anywhere where he says, I'm representing the treating physician.

36:19 - To say I'm representing the defendant doesn't say that anywhere.

36:21 - That's why I directed the court to the letter the same day from Mr.

36:26 - Theo Cassopolis from Mr. Thiele.

36:27 - That's Mr.

36:28 - Hayes outlining that, I understand, but that's an allegation.

36:31 - They don't ever say that that's not true in any written form.

36:35 - Okay.

36:37 - So the violation is the method of contact that's not permitted ex parte contact

36:44 - in back to the complaint very briefly, the complaint only talks about Dr.

36:48 - Kim as it relates to Dr. Oh's liability.

36:51 - Doctor Oh, is the anesthesiologist that causes the injury is responsible

36:55 - for the anesthesia.

36:56 - The complaint makes the allegation that Dr.

36:58 - O never provides the patient with information

37:01 - about consent, what the risk complications, etc. are.

37:05 - It then goes on talk about the Dr.

37:09 - Kim and the nurse.

37:10 - The other people who had any conversations with Ms.

37:12 - murders never informed her about allegations relating to

37:17 - the anesthesia wasn't their obligation.

37:20 - The point was only to articulate

37:21 - that Miss Murders

37:22 - never got that information from anyone at any point in time.

37:25 - Mr. Meza Yes.

37:26 - Didn't make a difference in your argument if the firm had constructed a wall,

37:32 - a protective barrier between the two attorneys?

37:35 - No, Your Honor because the contact in the first place is what's prohibited.

37:40 - And this is not a circumstance where the firm represented Dr.

37:45 - Kim already.

37:46 - They were in this case or otherwise.

37:49 - They went out and actively

37:52 - communicated with him, had him sign a retention agreement,

37:56 - and then had a further communication about the complaint and what they claim

38:00 - were allegations made against him and asked him to sign a waiver.

38:05 - And I'm just teasing that out for a minute.

38:08 - Counsel, does it make a difference that in in this case,

38:15 - apparently Kim called Hayes because he no, he called the carrier

38:18 - and said, hey, I've had Hayes before. Can I have Hayes again?

38:23 - As opposed to a scenario where

38:30 - if if Miss McBryde win, if if Dr.

38:33 - O wins here on this appeal, then then the slippery slope

38:38 - I was asking her about about looms where

38:42 - presumably defense firms could

38:45 - institutionalize a practice like this unless we change the rule.

38:49 - Or is this a is this idiosyncratic

38:54 - and somehow isolated to its own circumstance?

38:57 - No, I don't believe it is, Your Honor. I believe it's across the board.

38:59 - It doesn't make a difference under the circumstance.

39:01 - Otherwise, we would have the problem

39:03 - that Justice Mundy raised earlier any time like in this case,

39:07 - physicians were represented by the same insurance carrier.

39:10 - They could have contact any time they were represented.

39:13 - I mean, we have huge mega law firms today that represent doctors

39:17 - in personal matters, business matters, medical malpractise cases and otherwise.

39:21 - Any time a law firm represented a more than one doctor who happened

39:26 - to be involved in a medical malpractise case, that was it.

39:29 - Under this case, could be anything.

39:31 - Could be a slip and fall.

39:32 - Absolutely.

39:33 - Your firm is hired to represent the property owner

39:38 - and then the treating physician goes to the defense firm for representation.

39:42 - When he's subpoenaed for his deposition

39:46 - and yes, justice and would give unfettered access, not permitted under the rule.

39:51 - I mean, there's more there's more

39:54 - room for harm here in that latter situation.

39:58 - Yes. Justice, I mean, this bless you.

40:01 - This would open up the rules to be utilized as a discovery tool

40:06 - to to be utilized as an affirmative discovery tool.

40:09 - Any time this circumstance exists,

40:11 - all you have to do is go out and get a retention agreement

40:13 - and then you open up a whole new avenue of Discovery.

40:15 - That was never what this rule intended.

40:17 - This rule was intended to restrict the communications and information

40:21 - that could be obtained from a

40:23 - a treating doctor, which is why it sets forth as a restrictive rule,

40:27 - if we would if this court whenever this court drafted this rule,

40:32 - messed up and failed

40:34 - to envision scenarios like this, why is Mrs.

40:38 - McBride wrong, that she's entitled to stand on the plain language and

40:43 - and and that Hayes can get away with this, so to speak, until we change the rule?

40:49 - Why, she that's not exactly her argument she gave the court.

40:53 - I think, more credit than the court deserves,

40:56 - which is very diplomatic of counsel.

41:00 - McBride But why, if, in other words,

41:03 - if the court didn't do this by design, but rather by inadvertence,

41:08 - why isn't she entitled to stand on the language of the rule?

41:12 - And and then and then have you rely on us to fix the mess

41:17 - we made tomorrow or the day after tomorrow?

41:20 - Well, I think characterizing it as a mess is a little bit of an overstatement.

41:25 - It could be construed in a way that we did not originally intend.

41:28 - It looks kind of it looks kind of messy.

41:30 - The whole situation looks very, very bad, doesn't it?

41:35 - I mean, I would say it stinks.

41:38 - I would suggest justice that on its face,

41:41 - if you look at the rules of statutory construction, the rule is clear.

41:45 - It is a restrictive rule.

41:47 - It prohibits the contact other than in one setting ex parte

41:50 - communication through a rule, through a

41:54 - another discovery method authorized by the chapter.

41:57 - That's a clear limitation.

41:59 - It's a restriction.

42:00 - And then it makes exceptions, which only apply

42:04 - in very limited circumstances that this is a twisted interpretation of.

42:08 - And when you look at the rule of statutory construction, that Section 128

42:12 - that did not intend a result, that is absurd,

42:16 - impossible of execution or unreasonable, which is just what this is.

42:20 - If you're then allowing an exception to a restrictive rule to open up

42:24 - a retention agreement as a method for anybody under the sun,

42:28 - to get discovery from any trading position anywhere,

42:31 - or that they either have contact with in the future or have contact

42:35 - with had contact with in the past, or they happened to be represented.

42:40 - The treating doctor by the same law firm for something completely different

42:44 - or happened to be insured by the same insurance carrier.

42:47 - Otherwise that result under the rule construction is not reasonable

42:51 - and the Supreme Court rules Section B of 128

42:55 - says the Supreme Court intends the entire rule or chapter

42:59 - to remain effective and and for the entire chapter, yes.

43:03 - Justice.

43:06 - We know

43:06 - how to craft an ex parte communication bar rule.

43:10 - This rule does not use the words ex parte communication.

43:15 - It it again, it's a discovery rule.

43:17 - It's it's a rule about gathering information in violation of the rule.

43:22 - You're turning it into a contact bar as opposed to an information gathering bar.

43:27 - It's a limitation on discovery and it limits the method

43:30 - that can be utilized to get information, to get information,

43:34 - and it limits the message. So I agree with you.

43:36 - I'm not disagreeing with you. I'm still I'm still back.

43:39 - And I want to give you one more shot at it about what information did the did

43:44 - did the law firm or attorney Hayes share with the two attorneys

43:48 - representing the defendant information share in violation of this rule?

43:53 - Well, we know for sure they didn't set up a conflict.

43:56 - Well, okay.

43:57 - What do you know that we do? We know.

43:59 - Do we know if there was any information sharing

44:01 - or are we just assuming there was information sharing?

44:03 - It's a six lawyer firm.

44:05 - He shows up representing the defendant.

44:07 - So you're saying by implication or by inference?

44:11 - Well, that and the fact that the communication or the

44:15 - the method of contact was prohibited in the first place pursuant to the rule.

44:19 - Now, if I they also they also got a waiver

44:23 - of the conflict from both physicians.

44:27 - True.

44:27 - And a waiver has to be knowing.

44:31 - I mean, I don't understand and I think

44:35 - Justice Dockerty was touching on this earlier

44:39 - how you get a knowing waiver of a conflict,

44:42 - telling someone your interests can be adverse to each other.

44:46 - And now I don't think it's enough to say take our word for it.

44:50 - They could be adverse to each other.

44:51 - You need a knowing waiver of a conflict of interest and that

44:57 - justice goes to the heart of the issue

45:01 - and the mischief that courts who have addressed this, the superior court even

45:06 - then judge justice drops in in the Sox case in a worker's comp setting

45:10 - trial courts that have addressed this issue since there's not a single case

45:14 - since this rule has come into effect where a court has said

45:19 - that this conduct is okay, every case is the opposite.

45:23 - So the way it's been construed, yes, just I think it looks like a lot of mischief.

45:28 - My only question is whether we can get to that,

45:32 - given the language of the rule that we wrote.

45:35 - I'm very troubled by the conduct here.

45:37 - Very troubled it I'm just not sure

45:41 - whether we

45:43 - get to that in this context, given the language we wrote.

45:47 - I and of course, I think

45:48 - it's unanticipated by the court when it wrote that this would happen.

45:52 - I just don't know how we get out of this.

45:56 - Well, I'm a I'm going to use my word mess again

45:58 - that the chief doesn't like here, I believe, and I won't call it mess.

46:02 - And it's not of this court's doing.

46:04 - But I believe the other thing to look at to to

46:09 - to address this issue

46:11 - is the purpose and historical development of the rule.

46:15 - This rule came into effect in 1991 by the Supreme Court,

46:21 - and it came into effect after the Moses versus McWilliams case in 1988.

46:27 - That really turned the rule on its head, where the Superior Court said, Well,

46:32 - we think that this is an effective and efficient way to gather

46:35 - information, to have private interviews with treating doctors.

46:39 - And that

46:41 - had occurred when prior

46:43 - case law, for example, the Alexander versus Knight case,

46:47 - which was affirmed by the Superior Court and in federal court, the Manning case

46:53 - by then Chief Justice Neal and other trial court said, You can't do this.

46:57 - This is not appropriate.

46:59 - Moses comes out in late

47:02 - 1988, then trial court's start

47:06 - to do an about face, which changed what had happened before.

47:10 - Then two and a half years late after Moses,

47:13 - and when trial courts in the interim are following Moses.

47:16 - The Supreme Court comes in 1991

47:20 - and promulgates Rule 4,003.6.

47:23 - And the reason there's not a lot of background or information

47:27 - there is because they promulgated it without notice and comment, period.

47:31 - And here's the reason because it was required

47:35 - in the interest of justice and efficient administration of the court.

47:40 - That's what happens in the wake of Moses, which turned the history

47:45 - of this issue of ex parte communication with treating conditions on its head.

47:51 - From 1961, which began with the Alexander case through 1988.

47:55 - So I think if we look at the historical development in the rule

48:00 - and the purpose of the rule articulated before and since,

48:05 - even as Justice Robson then Judge Robson said

48:08 - in the Sox case to prevent defense counsel from improperly influencing

48:12 - a nonparty physician from testifying in favor of his client

48:16 - against his patient or dissuading him from testifying altogether.

48:20 - That's the mischief that was referred to.

48:22 - And there are compelling policy reasons to interpret the rule that underlie that

48:28 - adoption of the

48:29 - rule in 1991, the recognized privacy interests underlying the doctor

48:34 - patient relationship,

48:35 - the physician's duty of loyalty to their patient safeguards

48:39 - against the revelation of materials

48:40 - that are irrelevant and personally damaging to the plaintiff.

48:44 - Tort liability for physicians who breach

48:48 - their duty of privacy.

48:49 - The potential to improperly influence a physician

48:53 - or dissuade the doctor from testifying altogether.

48:56 - What do we have here?

48:57 - We know facts.

48:57 - They set forth the Scanlon Howley firm in their brief.

49:01 - Oh, well, you could be sued next.

49:03 - You could be the next defendant here.

49:05 - We know that was communicated to him.

49:07 - They say that during the time

49:09 - that there was a communication about a waiver of a conflict.

49:13 - So they have to have that conversation with him for waiver of the conflict

49:17 - that was moschos medical malpractise case.

49:20 - Moses with Moses a medical malpractise case.

49:25 - Moses was a medical malpractise case.

49:27 - And yes, involved communication with treating physicians 100%.

49:30 - Counsel When you take on the representation of a plaintiff

49:36 - who has a medical malpractise or any personal injury case,

49:40 - and you write to the

49:42 - treating physician that you represent, the plaintiff,

49:46 - you also include an authorization signed by the plaintiff

49:49 - that the doctor is free to disclose the medical information to you, of course.

49:55 - Absolutely. Under all, letter is not sufficient to do that.

49:58 - You need the written consent of the plaintiff

50:02 - in order to get that information.

50:03 - Absolutely. And that goes to the right of privacy.

50:06 - And that privacy right is held by the patient, not the physicians.

50:11 - So a waiver between Dr.

50:14 - Kim and Doctor O was really of no moment with respect to this

50:17 - because they cannot waive mismo this rights under this law wouldn't

50:21 - get that information from that doctor

50:23 - unless you had a written authorization from your client who you represent.

50:27 - Absolutely.

50:28 - And that's

50:28 - one of the methods under the rule written consent that was never given here.

50:32 - That's an interesting point, because

50:35 - because viewed in

50:36 - that light, one could say that what happened here is a subordination

50:42 - of the physician patient privilege to a

50:46 - a new a new attorney client relationship.

50:50 - It's a confidentiality of the physician patient relations.

50:54 - Yes. Right.

50:55 - You see my point 100%.

50:57 - It's an issue with respect to the protection of the rights of the patient

51:02 - and their communication with their physician

51:06 - and information that otherwise is only discoverable through

51:10 - the methods articulated in the rule, which is why it's there.

51:14 - What this rule is about.

51:15 - Yes, correct.

51:16 - Just the nature of this rule in the first instance that underlies Moses

51:21 - and that, as I said, the purpose and historical

51:23 - development of this rule is another place this court can look

51:27 - and I don't think we need to go outside the rule or change the rule.

51:31 - I think when you look at the entire landscape of the history,

51:35 - the historical purpose, how the rule is written,

51:37 - the restrictive nature and the exceptions, what it's intended to protect

51:42 - the right of the patient and their patient physician relationship.

51:46 - It's clear.

51:47 - All right. Any other questions for Mr. Messer?

51:49 - I just one follow up, Chief, if I can.

51:52 - If if this firm had represented

51:56 - one to make sure I got the attorney.

51:57 - The doctor's right, Dr.

51:59 - Kim, in a real estate matter,

52:03 - when this matter came in against Dr.

52:06 - L, where was was the firm required to cease

52:10 - communicating or, in your words, contacting

52:14 - Dr. Kim

52:17 - because of its representation of Dr. Al?

52:21 - They could not communicate with him

52:23 - on any issue related to this case

52:27 - or this patient, other than through the rules

52:31 - to a assigned waiver or through a subpoena.

52:36 - So it's not a rule as designed.

52:37 - So it's not I just want to again, I'm just I'm trying to keep it keeping narrow.

52:43 - It's not an ex parte communication bar

52:46 - or it's a bar about talking

52:49 - about information relevant to the case.

52:51 - I think there would have to be also a conflict wall that was erected

52:55 - under those circumstances to ensure that that communication

52:59 - just to protect the law firm didn't didn't occur.

53:03 - But they certainly could not communicate with respect

53:06 - to anything related to this patient, this patients rights and their private

53:10 - information, which was what the rules designed to protect in the first place.

53:14 - Okay. Thank you, Mr. Messer.

53:15 - Thank you, Justice.

53:18 - Very well argued by both counsel.

53:22 - The next case is a hugh versus the borough of Jefferson Hills.

53:28 - This case is

53:29 - a an appeal from the Commonwealth Court

53:32 - that reversed the decision of a zoning board that was affirmed

53:35 - by the Court of Common Pleas, denying the issuance of a zoning permit to a hugh.

53:41 - A hugh, which I will refer to as UPMC,

53:44 - is a wholly owned subsidiary of UPMC, and they applied for a zoning permit

53:49 - for the construction of a new medical center office building

53:52 - and professional center in the south hills of Pittsburgh.

53:56 - In 2017, UPMC requested the zoning officer's

54:00 - written document tation that the medical center and its related

54:04 - facilities were uses permitted as of right under the Office

54:09 - Park Zoning District, where they would be located.

54:13 - After several private meetings with UPMC, the zoning officer issued an

54:17 - informal statement

54:18 - that the Medical Center Clinic and Professional Building were in fact use

54:21 - as permitted by right under the office park designation of the zoning code

54:26 - that UPMC would still need to formally apply for zoning permit.

54:30 - UPMC then filed their application seeking a zoning permit,

54:35 - which was granted in late 2018, subject

54:38 - to further compliance with land development application processes.

54:43 - The residents

54:44 - of Jefferson, Hillsborough, 67 of them,

54:47 - joined together and challenged the issuance of the zoning permit

54:51 - to the zoning hearing board

54:52 - on the basis that the ordinance did not allow for medical center use.

54:56 - And even if it did, the zoning officer still should not have

54:59 - issued the permit because the overall development violated

55:03 - certain land zoning ordinances in a40 decision.

55:07 - After nine nights of hearings, the zoning board overturned

55:11 - the issuance of the permit to UPMC.

55:14 - The board's determination found that the ordinance did not permit

55:17 - upmc's construction of the medical center as a use by Wright

55:21 - and on the parcels in question.

55:23 - Nor did the zoning board or board have statutory authority to avoid deciding

55:28 - whether a zoning permit application complies with all zoning ordinances.

55:33 - UPMC appealed to the Court of Common Pleas of Allegheny County,

55:37 - which affirmed the zoning board's decision.

55:40 - Then UPMC appealed to the Commonwealth Court.

55:43 - The Commonwealth Court reversed the trial court and indicated

55:46 - that the board should have limited its review to whether the medical center

55:50 - was permitted use under the Office Park Zoning category.

55:56 - The citizens of

55:57 - Jefferson Hills have filed this appeal, arguing that the developer's

56:01 - zoning permit application does not comply with the zoning and land ordinances.

56:06 - The zoning hearing board is therefore to deny the permit.

56:10 - The Commonwealth Court merely saw this as an issue where

56:14 - the initial inquiry regarding the official initial permit

56:18 - should have been limited to whether the use was by

56:21 - right under the office park designation.

56:24 - Now let's watch and hear the arguments

56:26 - on a Hugh versus Jefferson Hillsborough

56:31 - in this discretionary appeal.

56:33 - A Pelley a u u e Inc filed a zoning permit application

56:39 - with the borough of Jefferson Hills seeking approval

56:42 - and use certification for UPMC South, a medical center which would include

56:47 - a hospital, a medical clinic, medical professional offices and a helipad.

56:54 - The borough's zoning officer approved the application

56:57 - with respect to the property's use as a medical center

57:01 - conditioned upon a police compliance with the zoning requirements

57:06 - via the Land Development Application Review Process,

57:10 - we are asked to consider whether a zoning officer

57:14 - may issue such a use permit while deferring consideration

57:18 - of other zoning compliance issues to the land development process.

57:23 - Good morning.

57:24 - Good morning.

57:24 - Thank you, Your Honor. My name is Daniel Stewart.

57:27 - I'm with the law firm Marcus and SHAPIRO here in Pittsburgh.

57:32 - And along with my partner, Jonathan Marcus, we represent the 67

57:36 - residents of Jefferson Hills who are challenging this development.

57:40 - And on behalf of the residents, we want to thank the court for taking this case,

57:44 - because while it presents a very straightforward issue,

57:47 - it is a critical one under Pennsylvania land use law.

57:51 - And it is as basic as answering the question,

57:54 - what is a zoning hearing board supposed to do?

57:58 - Now, the answer, as applied in this case, is simple.

58:01 - When a developer submits a zoning permit application that violates the zoning

58:07 - ordinance, the zoning hearing board must deny

58:10 - the application or at minimum.

58:14 - The zoning hearing board has the power

58:16 - to deny the application, and that's all that happened here.

58:20 - UPMC submitted its zoning permit application for UPMC South

58:24 - to the zoning officer, and the zoning officer gave UPMC a zoning permit.

58:29 - The resident objectors challenged the issuance of that permit

58:33 - and proved over nine nights of hearings with the zoning hearing board

58:37 - that upmc's application did not comply with the zoning ordinance in five ways.

58:43 - And based on those violations, the zoning

58:46 - hearing board made a decision to overturn the issuance of the permit.

58:50 - That is exactly what zoning hearing boards are supposed to do.

58:54 - A Commonwealth Court decision which reversed the zoning

58:58 - hearing board is problematic because it completely undercuts

59:02 - the reason that zoning hearing boards exist,

59:06 - and it does so in contravention of the IPC and the Jeffersonville zoning ordinance.

59:12 - The Commonwealth Court reversed the board's decision

59:15 - not because the board misinterpreted the ordinance or because Upmc's

59:21 - application actually does comply with the ordinance, which it does not.

59:25 - The Commonwealth Court held that the board aired

59:28 - because the board enforced the ordinance.

59:31 - The Commonwealth Court decision is telling the Jefferson Hill

59:34 - zoning hearing board and zoning hearing boards throughout the Commonwealth

59:38 - that they are not allowed to deny zoning permits, even when it is proven

59:44 - by objectors that the permit application violates the zoning ordinance.

59:49 - Well, I think it's a little more I think it's a little more nuanced.

59:52 - In fairness to the to the Commonwealth Court, I think the Commonwealth Court said

59:57 - 230 that the zoning hearing board's scope of review

01:00 - 07.236 is limited to the release that was sought in front of the zoning officer.

01:00 - 11.975 And in this, UPMC is taking the position that it only sought

01:00 - 15.678 a quote, use permit, which essentially is

01:00 - 20.283 is this use permitted in the zoning district,

01:00 - 22.418 which I'm not even sure you need one?

01:00 - 23.653 If it's permitted, it's permitted.

01:00 - 26.055 But that's really the question.

01:00 - 29.959 Is the zoning hearing board cabinet

01:00 - 34.831 in its review to the limited issue

01:00 - 37.934 that the applicant prevents presents to the zoning officer?

01:00 - 40.336 So that is I agree with you completely.

01:00 - 41.671 That is certainly one of the issues.

01:00 - 45.475 And I think the way UPMC had phrase it was it was a jurisdictional type question.

01:00 - 45.875 Right.

01:00 - 47.810 It's a standard in scope.

01:00 - 49.345 I mean, it's a scope of view view question.

01:00 - 52.448 The zoning hearing board is the adjudicatory body, not the zoning officer?

01:00 - 53.650 That's correct.

01:00 - 55.084 The zoning hearing board creates

01:00 - 57.854 the record and makes the findings the facts that conclusions of law.

01:00 - 03.326 And and the question is, are is that body under the NPC

01:01 - 10.033 limited to the narrow relief or question that the zoning officer decided?

01:01 - 13.069 I think on that question, the answer is no.

01:01 - 15.838 The board is not so constrained

01:01 - 18.041 when the zoning officer makes a determination.

01:01 - 19.342 The only participants in

01:01 - 22.712 that determination would be the applicant, UPMC and the zoning officer.

01:01 - 25.782 The residents find out about the issuance of the permit.

01:01 - 27.450 They then challenge it.

01:01 - 31.721 The board's decision is based on the challenge brought by the residents

01:01 - 34.590 and the evidence presented at the board's hearing.

01:01 - 37.860 The board is not constrained in its review

01:01 - 40.797 to simply do the same thing that the zoning officer did.

01:01 - 45.301 So here the zoning officer said at his during his testimony

01:01 - 50.406 that the only thing that he did was read one page of the 220 page ordinance

01:01 - 53.943 and say a medical center use is permitted in the office park district.

01:01 - 56.145 That is the error.

01:01 - 00.583 His obligation under the NPC is to review and apply the whole ordinance.

01:02 - 01.617 Wait a minute.

01:02 - 04.387 I thought that was really what he was supposed to do.

01:02 - 06.856 Yeah, I saw it on the news. Yeah, I.

01:02 - 08.624 I think.

01:02 - 11.828 I think the problem I have with this case is, is, is, is,

01:02 - 14.897 is there's there's there's the strict application.

01:02 - 17.033 And then there's how it happens in real life.

01:02 - 20.536 And certainly and I think you can see you sort of conceded this,

01:02 - 24.874 the zoning officer had within his or her power

01:02 - 28.878 to simply look at the statute and say, yeah, I'll give you a use permit for what?

01:02 - 29.679 It's a very ordinance.

01:02 - 32.081 I'll give you a use permit. For what it's worth, it's a permitted use.

01:02 - 33.750 Go have a great time.

01:02 - 35.618 It doesn't really mean anything.

01:02 - 39.789 The question is so the zoning officer wasn't prohibited

01:02 - 42.558 from doing that, at least in my view, my understanding of the law.

01:02 - 46.696 The question really is, was the zoning hearing board required to do that

01:02 - 49.899 same thing, or could the zoning hearing board take a broader

01:02 - 52.702 look at the zoning ordinance based on the objections

01:02 - 56.005 raised by the parties and say, yeah, we're going to do that,

01:02 - 59.876 but you still have problems or we're going to grant it with conditions,

01:02 - 03.913 or we're just going to deny it that that my understanding is the law,

01:03 - 05.848 the zoning here, imported, done, all of that.

01:03 - 09.752 So so I would agree with you on the second point on the first point

01:03 - 12.388 about what the zoning officer can do in the first instance,

01:03 - 14.323 I don't think that's right.

01:03 - 17.193 The zoning the Jeffersonville zoning ordinance

01:03 - 21.864 says that no permit of any kind shall be granted for any purpose

01:03 - 24.600 except in compliance with the provisions this ordinance.

01:03 - 28.704 So there is no such thing as a use only permit?

01:03 - 29.672 Oh, sure there is.

01:03 - 31.440 I mean, there's there's two things, right?

01:03 - 37.046 Yeah, there's the zoning the ordinance references, use permits specifically.

01:03 - 41.017 And and in in development, the way development works is a developer

01:03 - 44.220 doesn't want to spend a whole heck of a lot of time on a salvo plan

01:03 - 47.056 and all these other things that the land see.

01:03 - 48.958 The zoning part of it is minimal.

01:03 - 51.227 The expense is on the land development side,

01:03 - 53.596 the engineers and everything that you need.

01:03 - 57.333 So if there's a question over a use in the ordinance,

01:03 - 01.771 developers will often go to the zoning officer and say, Can you just review this

01:04 - 05.241 and make sure that this is a permitted use and give us use approval?

01:04 - 07.777 Not that we want the zoning for zoning approval.

01:04 - 09.278 It's just before we go to

01:04 - 11.747 the expense of the sale, though, we want to resolve the question

01:04 - 13.983 of whether this is a permitted use that happens all the time.

01:04 - 16.786 Well, the sale, though, is a separate statute.

01:04 - 18.487 That is not an issue in this case.

01:04 - 21.390 Use as use is used in the ordinance.

01:04 - 25.661 It means to the proposed use right

01:04 - 29.165 hospital in an office park or restaurant in commercial

01:04 - 33.035 but a use and this is in the Jefferson was ordinance it's 1

01:04 - 36.739 to 1.6 is always subject to the regulations in New York.

01:04 - 39.208 So the question is not every use is

01:04 - 43.246 every use is subject to setbacks and lot size and everything like that.

01:04 - 46.482 But that doesn't mean it's not a permitted use in that zoning design

01:04 - 49.151 and it seems to make sense as a preliminary question.

01:04 - 53.789 Yeah, but those are the well, those are the issues that were the violations.

01:04 - 55.791 So so I agree.

01:04 - 57.660 I don't think you and I are disagreeing.

01:04 - 00.696 I think the point is it doesn't really I my question to you is,

01:05 - 03.733 is it really matter what the zoning officer did, it matters

01:05 - 06.602 what the zoning hearing board is empowered to do.

01:05 - 08.004 I agree with that.

01:05 - 10.206 In the zoning hearing board could have done it.

01:05 - 12.208 You don't have to agree with this part.

01:05 - 15.511 Could have done exactly what the zoning officer did, but they didn't.

01:05 - 16.779 And the question is

01:05 - 20.483 whether the zoning hearing board acted within its authority to say,

01:05 - 24.720 we're not going to give you or use permit because there are so many zoning issues

01:05 - 30.126 here that we want those resolved before we stamp this as before. Yes.

01:05 - 32.061 And I think that is that is absolute.

01:05 - 37.099 We the main issue in this case, it is about the zoning

01:05 - 42.238 hearing board's authority, not what the zoning officer did.

01:05 - 47.276 And in this case, the zoning hearing board is presented with facts over

01:05 - 51.847 nine nights of hearings that Upmc's proposed development on the application

01:05 - 55.351 that they submitted based on testimony from their own witnesses,

01:05 - 57.286 does not comply with the ordinance.

01:05 - 01.123 And the only thing the board decided on that court on that point is

01:06 - 04.860 if you don't comply with the ordinance, we're not giving you a permit.

01:06 - 07.997 The board interpreted the Jeffersonville zoning ordinance

01:06 - 10.800 in an entirely reasonable and justified manner.

01:06 - 15.471 We would say the manner that they they're obligated to interpret it that way.

01:06 - 18.674 But even if it's optional, even if the board could have gone

01:06 - 21.877 the way the zoning officer did, the board chose not to.

01:06 - 24.547 And that is an eminently reasonable decision.

01:06 - 29.885 It comes down when so when it comes to this court, it is a question of what

01:06 - 33.422 decision is on appeal at this court and what's the standard of review.

01:06 - 38.194 The decision that came up that is in front of this court

01:06 - 43.566 is the zoning hearing board's decision to say, we're not giving you

01:06 - 47.970 a zoning permit when your application is noncompliant with the zoning ordinance.

01:06 - 50.072 And under

01:06 - 51.841 the reason that matters, the reason

01:06 - 55.611 the distinction that Justice Bronson was making matters

01:06 - 59.548 is because in this court, deference and great weight

01:06 - 01.350 is typically given to a zoning hearing,

01:07 - 04.053 board's interpretation and application of its own ordinance.

01:07 - 08.791 There is no weight given to a zoning officers decision

01:07 - 11.794 if it is rejected by the board as it was here.

01:07 - 15.031 So the question for this court is,

01:07 - 19.301 is it the board's decision so ill considered and illogical

01:07 - 22.705 that it's an error of law that has to be overturned?

01:07 - 26.909 And and the answer to that should be no, because there's

01:07 - 30.913 no way of reading the Jeffersonville zoning ordinance or the NPC

01:07 - 34.116 as prohibiting a zoning hearing board

01:07 - 37.520 from looking at an application

01:07 - 40.556 that has plans submitted and created by UPMC

01:07 - 43.859 hearing evidence, seeing that the plans don't comply

01:07 - 46.695 with the ordinance and saying, We're not giving you a zoning permit,

01:07 - 51.000 there's no way to read any statute at issue in this case as prohibiting

01:07 - 52.635 the zoning hearing board from doing that.

01:07 - 55.638 And that's all we're asking the court counsel And then what let's say

01:07 - 00.076 that this worked out the way you wanted it to work out in the Commonwealth Court

01:08 - 03.379 affirmed and said, okay, no, no zoning permit.

01:08 - 06.515 What happens to the UPMC project?

01:08 - 11.087 That would be a matter for UPMC if they would, we would be back in in

01:08 - 14.990 in terms of the municipal planning code, what's your next step?

01:08 - 17.159 They would have to if they want to continue

01:08 - 17.827 with a development,

01:08 - 21.030 their next step would be to submit applications that comply with the zoning

01:08 - 24.800 ordinance by consolidating parking parcels by

01:08 - 26.402 zip the

01:08 - 29.071 I would isn't that what was anticipated

01:08 - 33.375 and isn't that exactly what these zoning officer said?

01:08 - 37.780 I'm giving you a use per inmate but it's condition going you working out

01:08 - 41.917 all of these underlying issues with the zoning code.

01:08 - 47.656 And is it reasonable for the the board itself

01:08 - 50.693 to say that's not a legitimate approach

01:08 - 53.896 to a project of this size and complexity?

01:08 - 56.465 So what the zoning officer attempted to do

01:08 - 02.204 is is not to condition the issuance of the permit

01:09 - 05.407 on some condition created by the zoning officer.

01:09 - 09.778 What the zoning officer attempted to do was say, I'm going to give you an opinion

01:09 - 13.516 that a medical center is allowed in the office park district, subject

01:09 - 17.820 to you complying with the zoning ordinance at the subdivision and Land Development

01:09 - 19.421 step.

01:09 - 24.393 That is an abdication of the zoning officer's duty because I can't sleep.

01:09 - 27.062 I with all due respect, you're wrong.

01:09 - 31.433 It happens all the time on the at the Planning Commission when the when

01:09 - 34.970 a is submitted, you know who's sitting in the planning commission meeting?

01:09 - 37.006 The zoning officer.

01:09 - 39.608 The plan goes to the zoning officer for an opinion.

01:09 - 42.211 The zoning officer issues opinion to the planning commission

01:09 - 44.914 saying these are the zoning deficiencies in the plan.

01:09 - 47.850 This this is the way it happens in real life.

01:09 - 49.485 It's not an application.

01:09 - 52.121 The Planning Commission has no authority to approve the zoning.

01:09 - 53.589 That's why the zoning officer is in

01:09 - 56.659 the meet, is in the actual meeting and reviews the subdivision plan.

01:09 - 58.027 I would agree with you

01:09 - 02.064 the in this case what was attempted was to push it to the governing body,

01:10 - 07.069 for the governing body to address what were proven zoning violations.

01:10 - 09.572 The governing body does not have the jurisdiction.

01:10 - 11.640 If you look at 9091b,

01:10 - 15.244 which talks of the MPC, which talks about the governing body's

01:10 - 19.682 jurisdiction, and compare it to what the zoning hearing board's jurisdiction

01:10 - 22.818 is, it's the zoning hearing board that decides the zoning issue.

01:10 - 26.655 It's not the governing body as part of the subdivision process.

01:10 - 29.692 And I don't disagree with you but but but that's

01:10 - 31.694 why you need SALGADO approval

01:10 - 36.565 and zoning approval but the zoning issues

01:10 - 41.604 are usually identified and set it out during the Salto process.

01:10 - 42.671 And again,

01:10 - 43.472 I think you're

01:10 - 46.475 I think you're you're complicating this by even looking at the sound.

01:10 - 51.480 The real question is whether the zoning hearing board has within its power

01:10 - 54.483 to look at a use permit application that the zoning

01:10 - 57.186 officer granted and say, we're granting it,

01:10 - 01.290 we're denying it or we're granting it with conditions.

01:11 - 05.794 That's to me, those are the three things that the zoning hearing boards

01:11 - 07.363 all the time.

01:11 - 11.533 And I take the point about pseudo and what I what I, how I respond to justice.

01:11 - 15.504 Donahue on that point is the Salto is not part of this case.

01:11 - 19.975 There is no indication in the record anywhere from UPMC about what

01:11 - 20.943 they're going to do next

01:11 - 24.413 or how they're going to fix this stuff in Salto or anything like that.

01:11 - 26.882 They they didn't make it part of the record.

01:11 - 30.419 So the zoning hearing board was sitting there looking at proven

01:11 - 33.489 violations of the zoning ordinance and saying, we're not giving you a permit.

01:11 - 38.527 The zoning hearing board had no nothing in front of it, no record at all

01:11 - 42.398 about what it what was potentially going to happen down there.

01:11 - 46.101 Wasn't that but wasn't the zoning hearing board jumping the gun?

01:11 - 51.473 I mean, weren't they expanding this thing from something that the zoning officer

01:11 - 55.611 had contemplated would occur and stage in other words,

01:11 - 57.413 wouldn't

01:11 - 02.051 wouldn't they have properly limited themselves to review of what he did

01:12 - 06.155 and not expanded their review to these categories?

01:12 - 10.125 And there were four of them that he said, here are the caveats.

01:12 - 12.761 You're going to have to deal with these later.

01:12 - 13.629 Call them out.

01:12 - 17.766 There's the zoning hearing board's scope of review is

01:12 - 21.770 is not and cannot be circumscribed by the zoning officer.

01:12 - 23.806 It's determined by what the challenges is.

01:12 - 27.409 So the residents raise a challenge and say the zoning officer

01:12 - 28.977 should have looked at these things.

01:12 - 31.980 And if if he didn't if you zoning board agree

01:12 - 34.850 with us residents that should have looked at these things,

01:12 - 38.087 then you should look at them and they can be the basis

01:12 - 41.323 for your decision not to grant the permit to UPMC.

01:12 - 43.258 And that's what the zoning hearing board did.

01:12 - 44.526 They they took evidence.

01:12 - 48.464 They gave everybody an opportunity to present their evidence as to

01:12 - 50.599 why or why not. The application complied.

01:12 - 54.970 They made factual findings and they issued their opinion that.

01:12 - 59.341 The other point about this notion of the application

01:12 - 03.512 being a use application or something else, two points about that.

01:13 - 06.081 Number one, the board did make a factual finding

01:13 - 10.986 that has never been challenged by UPMC, that UPMC was not seeking justice.

01:13 - 13.555 There was no indication that UPMC was seeking something

01:13 - 15.491 narrow like a use permit.

01:13 - 17.226 That's a factual finding by the board.

01:13 - 22.931 I think it's factual finding number 24 in the board's decision.

01:13 - 26.935 The other part of that, if you look at Upmc's application, say,

01:13 - 30.038 well, this is just asking the question of is

01:13 - 32.341 a medical center allowed in the office park district?

01:13 - 37.045 It's it's reading the entire application process

01:13 - 39.348 to be superfluous

01:13 - 43.819 and it's giving the board an impossible or an or an indecipherable job.

01:13 - 47.322 The ordinance requires a zoning permit applicant

01:13 - 51.226 to submit an application that lists the proposed use and.

01:13 - 55.831 Such other information as is necessary to allow the zoning officer to determine

01:13 - 00.235 if the actual proposed use, as contemplated by UPMC, complies

01:14 - 01.036 with the zoning words.

01:14 - 05.140 But is there any reason that can't be bifurcated that

01:14 - 08.243 the use decision by the zoning officer

01:14 - 11.914 can't be a preliminary step?

01:14 - 14.016 Is there any reason why it can't go that way?

01:14 - 18.554 Yes, because the application doesn't comply with the ordinance

01:14 - 22.891 and the Jeffersonville zoning warrant says if the if there's you shall not issue

01:14 - 25.928 a permit, except in compliance with the provision of this ordinance.

01:14 - 29.198 So it's it's the residents position that if you have a non compliant

01:14 - 32.301 application you don't get the permit the other.

01:14 - 36.939 But consolidating the parcels alleviate all the zoning problems.

01:14 - 41.376 Or is it your position that only the Jefferson Hospital

01:14 - 44.980 fits the definition of a medical center within the relevant ordinance?

01:14 - 48.517 So the consolidation would is not at issue in this case

01:14 - 50.853 because there's no record about any consolidation application,

01:14 - 52.387 but it would not fix the zoning issues.

01:14 - 53.889 I'll give you an example.

01:14 - 58.227 One of the zoning problems is that, well, the property is five

01:14 - 01.930 separate lots and separate zoning districts within the property

01:15 - 04.566 in that

01:15 - 09.538 entire if you put all five lots together, UPMC is still proposing an access road

01:15 - 11.807 to support their medical center use with a gate

01:15 - 14.943 that's on residential property.

01:15 - 18.514 It was proven at the hearing, found by the board that that gate, that road

01:15 - 21.383 is, an accessory use to the medical center use,

01:15 - 23.852 which is not permitted on the residential property.

01:15 - 27.155 So even if you must all five of these lots into one lot,

01:15 - 29.124 you still have three zoning districts

01:15 - 31.293 and it's still non-compliant with the zoning ordinance,

01:15 - 33.128 but you could put on the noncompliance thing.

01:15 - 35.664 I completely understand your argument that the zoning hearing board

01:15 - 37.699 cannot approve something that is not compliant

01:15 - 41.770 with the zoning ordinance, but zoning hearing boards all the time

01:15 - 44.873 approve zoning applications

01:15 - 48.644 conditioned on certain things, and those certain

01:15 - 52.214 things may be to prove compliance with this provision.

01:15 - 55.350 When you do when you go to do the access, to prove the compliance,

01:15 - 58.887 to get lot consolidation, to do this, to do, to do, to do that,

01:15 - 03.559 that is compliant with the zoning ordinance because it's a conditioned

01:16 - 07.763 approval conditioned upon you meeting the other requirements of the ordinance.

01:16 - 10.799 That type of approval is not a violation of the zoning ordinance.

01:16 - 14.970 Whether it is or not, it wouldn't it didn't happen.

01:16 - 16.805 The issue in this case didn't happen here.

01:16 - 20.242 The issue really, as I think you identified earlier, it's a

01:16 - 23.879 can the board do something or cannot do something else?

01:16 - 27.849 The Upmc's position is they had to give us the use permit.

01:16 - 29.685 They had no other choice. Right.

01:16 - 31.486 I think that would be upmc's position.

01:16 - 34.089 And the problem is to get back to the point about the application.

01:16 - 37.292 If you look at it and say that the only thing

01:16 - 41.229 that that the board could do, if you take a Commonwealth Court's view

01:16 - 44.766 and say the board must have granted this use permit,

01:16 - 48.236 what you're telling this board is that they should have stopped

01:16 - 51.607 looking at Upmc's permit application on the first page.

01:16 - 57.112 The first page of their application says Medical Center and Office Park District.

01:16 - 59.348 The rest of it is plants, right?

01:16 - 02.284 It's specifications and shows the lot lines and the setbacks

01:17 - 04.486 and other things from the zoning ordinance,

01:17 - 08.790 ostensibly for the purpose of allowing the zoning officer and the zoning

01:17 - 12.661 hearing board to decide whether it's compliant with the zoning ordinance.

01:17 - 15.998 The Commonwealth Court decision is problematic because it's

01:17 - 19.201 telling the Jefferson Hills Board that your legal error,

01:17 - 23.005 your mistake was looking at pages two, three, four, five and six.

01:17 - 26.274 If it's saying the only thing that you were allowed to do

01:17 - 30.746 is look at whether Medical Center is listed in the Office Park District.

01:17 - 34.683 I don't think boards know what they're supposed to do.

01:17 - 39.054 Now, if that's the case, they said forget about the Commonwealth Court

01:17 - 40.555 opinion for a minute.

01:17 - 44.726 I mean, the zoning board concluded

01:17 - 48.597 that the zoning officer lacked the sovereignty to issue

01:17 - 51.600 a permit on a use only basis

01:17 - 54.936 and then they took off from there.

01:17 - 57.472 I don't see that as part

01:17 - 02.844 of the operational background for what the zoning officer can do.

01:18 - 06.882 It seems to me the zoning officer can in fact issue

01:18 - 13.021 a permit on use on a use only basis with the conditions that they have here.

01:18 - 18.360 So, I mean, it was that zoning board correct, that

01:18 - 23.298 the zoning officer lack the authority to issue your permit on a use only basis.

01:18 - 25.701 We believe the zoning board was correct on that.

01:18 - 29.171 But even if even if this gets back to the point earlier,

01:18 - 32.040 even if you could find a way

01:18 - 35.577 to say that the zoning officer could do what he did,

01:18 - 38.580 it's not the question that's before this court.

01:18 - 42.451 The question is, what's before this board is

01:18 - 45.420 is how this case got here.

01:18 - 49.791 And the zoning board's decision was based

01:18 - 54.663 upon its conclusion of law that the zoning officer

01:18 - 58.600 lacked the authority to issue a permit on a use only basis

01:18 - 04.172 and its interpretation of the ordinance as to that interpretation,

01:19 - 07.442 because they came to the conclusion that the zoning officer

01:19 - 11.480 didn't have the authority to do with the zoning officer did hear.

01:19 - 14.683 And that's part of why they came to their conclusion.

01:19 - 18.420 They also came to their conclusion based on a factual finding

01:19 - 21.990 that UPMC wasn't seeking just this use

01:19 - 25.994 permit, that there was no indication that they were

01:19 - 29.030 that UPMC was trying to slice and dice this process up.

01:19 - 34.469 So the zoning hearing board, again, is sitting there with their ordinance and

01:19 - 37.672 did file an application for

01:19 - 41.409 the whole case before it couldn't be.

01:19 - 44.479 Zoning officers say, I'm not going to go that far.

01:19 - 48.383 I'm going to decide the issue, which is a predicate issue,

01:19 - 50.519 whether or not this is a permitted case.

01:19 - 52.554 And I'm going to say that it is,

01:19 - 55.657 but nothing else is going to happen on this property

01:19 - 58.226 until all of the potential zoning

01:19 - 01.263 violations are worked out.

01:20 - 03.298 And if that doesn't happen within

01:20 - 06.601 it is years period of time the use permit expires.

01:20 - 12.541 Well, I don't know why that is an unreasonable conclusion.

01:20 - 15.310 Even If UPMC requested

01:20 - 19.748 100% approval the way the Jefferson Hills

01:20 - 22.951 ordinance is written and what our position is, is that no

01:20 - 26.922 permit of any kind shall be issued except in compliance with the provisions.

01:20 - 29.324 And provisions is plural. It means all the provisions.

01:20 - 32.260 So the view that what what

01:20 - 35.664 our position is and I think what the board's position was,

01:20 - 40.202 which is correct, is that compliance with the zoning ordinance in Jefferson

01:20 - 42.871 Hills is a condition precedent to getting the permit.

01:20 - 44.906 It's not subsequent.

01:20 - 49.945 So there is no provision in the ordinance for that to allow the zoning officer

01:20 - 54.716 to make to issue a permit conditioned on subsequent compliance.

01:20 - 56.585 Well, that that that's all that's happened.

01:20 - 56.885 Yeah.

01:20 - 00.222 That's that's the problem you're running into is, is these zoning

01:21 - 03.091 approvals are granted with conditions all the time

01:21 - 06.661 and those conditions are often reviewed by the Commonwealth Court

01:21 - 09.631 or by the courts of common pleas first and then the Commonwealth Court

01:21 - 11.032 for reasonableness.

01:21 - 11.967 They're usually challenged.

01:21 - 13.668 I mean, you're basically saying conditional

01:21 - 15.670 you're challenging conditional approvals.

01:21 - 17.973 You're saying you can never issue a condition approval.

01:21 - 22.043 I'm saying we're saying you get your permit if you comply

01:21 - 22.544 with the ordinance.

01:21 - 26.281 Not again, we're not saying every curb and sewer

01:21 - 30.018 light and other conditional approvals can include zoning.

01:21 - 34.623 Conditional approvals can include zoning, they can include lot consolidation.

01:21 - 38.226 They can include a whole bunch of things, not just compliance

01:21 - 41.229 with the sale, though, but also future compliance with the zoning ordinance.

01:21 - 46.001 So I think that's that's not the way that the Jeffersonville is particular.

01:21 - 47.302 But your action is written.

01:21 - 50.205 Well, I might disagree with you, too, because I don't think Jefferson Housing

01:21 - 51.840 Ordinance is anything special compared

01:21 - 53.642 to other zoning ordinances throughout the state.

01:21 - 58.079 In any event, it still gets back to what the board's decision was, which was

01:21 - 00.815 we we get the

01:22 - 04.185 board's review is de novo of what the zoning officer did.

01:22 - 05.487 The zoning oddball.

01:22 - 09.591 It's it's let me help you a little bit it's even greater than de novo

01:22 - 13.662 because the board is hearing evidence and challenges

01:22 - 17.966 and things that the zoning officer doesn't even get to correct.

01:22 - 21.536 And it has participants that aren't a participant

01:22 - 24.239 have rights to appeal in the application process. Right.

01:22 - 27.876 So it's necessarily so that the zoning hearing board

01:22 - 31.646 does more than the zoning officer, because the zoning hearing board has more power,

01:22 - 35.250 it has objectors, it can come and participate.

01:22 - 39.020 The you know, if the objectors challenge

01:22 - 42.190 can't be limited by just what UPMC

01:22 - 45.593 and the zoning officer chose to talk about when were going over the application.

01:22 - 48.997 They have to they have protections and rights, too.

01:22 - 51.800 And that's all they tried to avail themselves of.

01:22 - 54.669 Here is, look, we have a zoning permit application.

01:22 - 56.204 It's got violations of the ordinance.

01:22 - 58.239 We're not in favor of this development.

01:22 - 03.511 And we ask you, zoning hearing board to overturn the issuance of the.

01:23 - 07.115 Okay, Stewart, I think we understand your position.

01:23 - 09.451 Thank you. Let's hear from Mr.. You

01:23 - 17.025 are morning may, please.

01:23 - 19.294 The Court my name is Tom Abe.

01:23 - 22.063 I represent a you e inc.

01:23 - 26.001 Here with me today is Peter S.N.

01:23 - 31.773 Wolf from the firm of Petra Gallo, Gordon Alfano, basic and rest B.A.

01:23 - 36.277 an a u u e is a wholly owned subsidiary of UPMC.

01:23 - 38.413 That is correct. Okay.

01:23 - 41.883 So the process that was followed by

01:23 - 46.488 the appellate here is a standard customary process,

01:23 - 50.058 but it's also one founded in the law,

01:23 - 54.696 in the ordinance, and then all the documents that told you,

01:23 - 58.833 you e how to proceed, how to file an application.

01:23 - 02.070 This wasn't a step outside of the ordinary.

01:24 - 05.607 It wasn't an effort to circumvent any process.

01:24 - 09.911 It was to comply fully with the requirements of the zoning

01:24 - 14.215 ordinance, which are consistent with the municipality's planning code.

01:24 - 17.652 The devil's in the details.

01:24 - 21.623 There's a section of the zoning ordinance 12 2.1

01:24 - 25.326 specifically requires that no structure shall be erected

01:24 - 30.398 until zoning approval has been issued by the zoning officer.

01:24 - 32.767 First step you have to get zoning approval.

01:24 - 38.006 There was a question asked by Justice Robson is the use permitted?

01:24 - 39.407 Why was it even needed?

01:24 - 42.777 Took four years to have a determination that a use by right

01:24 - 46.381 was allowed under a zoning ordinance for this hospital use.

01:24 - 51.820 So inherently in the process is the fact that others can challenge it and delay.

01:24 - 55.323 So the normal process is you get your use approved first.

01:24 - 59.761 Ostensibly the simplest approval,

01:24 - 02.730 and then you go through the more complex and detailed

01:25 - 07.268 and costly process of getting subdivision and land development approval.

01:25 - 11.539 And then when you get that approval, you even go for the more

01:25 - 16.111 costly building permit process where you start getting into the minutia.

01:25 - 20.415 It starts with the big picture of the use, and that eventually ends the minutia of

01:25 - 21.783 how do you build your building?

01:25 - 25.720 Because there would be no point in going through any of that if you didn't

01:25 - 29.257 if you weren't able to know you had the use.

01:25 - 31.926 That's exactly right. Now,

01:25 - 37.765 why do you have issues that cannot be addressed at the same time?

01:25 - 42.303 Because the municipal planning code gives you different processes

01:25 - 45.507 to get your ultimate end use approved.

01:25 - 49.644 You go through a zoning process to get your use approved,

01:25 - 53.615 you go through a land development process to get your land development.

01:25 - 58.353 Now, is it inherent that one has to occur before the other? No.

01:25 - 03.291 In fact the cases that I've cited indicate that only if the subdivision

01:26 - 04.292 and land development

01:26 - 08.096 ordinance requires one to go first, do you have to follow that process.

01:26 - 12.267 But we have here is a zoning ordinance that says you get your use first,

01:26 - 15.103 but it also contemplate what does it say?

01:26 - 16.104 You get your use first.

01:26 - 17.705 It says no

01:26 - 20.575 structure shall erected you about to erect a structure.

01:26 - 22.944 Well, eventually that's the goal.

01:26 - 25.146 I know, but you can't do that until you have Salto approval.

01:26 - 25.780 That's correct.

01:26 - 27.882 So there's nothing in the ordinance that says you couldn't

01:26 - 31.653 go through the Salto process and then get your zoning final zoning approved.

01:26 - 35.490 There isn't justice, but there is a provision in seven or 1.8

01:26 - 39.561 that says and we're in the o-P district uses in the op

01:26 - 44.999 district shall be subject to approval of a land development plan if required

01:26 - 48.670 by the Borough of Jefferson Hills Subdivision and Land Development Plan.

01:26 - 54.475 I'm not I'm I'm just I'm just pointing out that I, I respectfully disagree.

01:26 - 55.009 I disagree.

01:26 - 58.112 I agree with your point that there's no order that you have to go in.

01:26 - 02.383 I respectfully disagree with your point that an ordinance required

01:27 - 06.521 you to get something called a use permit before going through the Salto process.

01:27 - 09.424 I it's a I think it's a good practice.

01:27 - 10.525 It makes sense.

01:27 - 11.693 It makes sense.

01:27 - 13.361 But but I don't see anything in the ordinance

01:27 - 14.929 that required you to do this.

01:27 - 18.099 But I see why they're the lawyers for UPMC wanted to do it.

01:27 - 18.600 Correct.

01:27 - 23.972 It requires you to get a use permit and to follow the logical, practical process.

01:27 - 27.175 You get your use permit and then you go through the more detail.

01:27 - 30.511 And the ordinance contemplates that you have to get land development.

01:27 - 32.647 And that's the one section I just cited.

01:27 - 37.085 And also Section 12 02.6 talks about the revocation of the permit.

01:27 - 40.321 But if you don't comply with all the conditions

01:27 - 44.692 attached to a zoning approval, the permit can be revoked.

01:27 - 47.295 So this is a that

01:27 - 50.999 necessarily has to be followed one way or the other.

01:27 - 52.133 You have to get both.

01:27 - 56.604 Now, what's the logical conclusion of the appellate approach here?

01:27 - 00.975 If you PMC would have gone for land development approval first,

01:28 - 05.079 you have to tell the tribunal starts with the Planning Commission,

01:28 - 06.948 goes to the governing body.

01:28 - 08.082 This is my use.

01:28 - 10.952 I want land development for this medical center.

01:28 - 15.089 Well, the first objection is the use is not allowed in the district.

01:28 - 19.694 So you don't get your land development approval because the use is not allowed.

01:28 - 24.966 So one of the things you want to do practically is know your use is allowed.

01:28 - 27.502 So when you go through the land development process,

01:28 - 30.605 you have that understanding with the governing body

01:28 - 33.207 that what you're doing is lawful under the zoning.

01:28 - 36.444 I don't I don't I don't think I certainly don't

01:28 - 39.714 disagree with the process that you were you tried to employ here.

01:28 - 43.618 I don't think that I don't think there's a question about the legality of

01:28 - 47.789 of what you tried to do the question is, when it came to the zoning

01:28 - 51.993 hearing board, was the zoning hearing board's only option

01:28 - 55.129 to either?

01:28 - 58.900 Well, I guess I guess your thing is their only option was to affirm

01:28 - 02.070 I guess affirm even though it's sort of a de novo review,

01:29 - 05.573 they affirmed the zoning officers the use permit.

01:29 - 09.043 They could have granted the

01:29 - 13.648 they could have added additional conditions to the grant of the approval.

01:29 - 17.952 I mean, it really down to their limited review and the NPC calls

01:29 - 22.190 for this issue reviewed decisions of the zoning officer in issuing permits.

01:29 - 23.591 Right but it doesn't say

01:29 - 27.228 it doesn't say what kind of deference you have to give their hearing.

01:29 - 30.898 They're hearing the challenges by land, by neighbors

01:29 - 34.802 and community members and organizations that are bringing forward evidence

01:29 - 35.103 and a whole.

01:29 - 38.106 But I mean, the zoning hearing board is the adjudicatory body.

01:29 - 39.774 They're the ones that make the

01:29 - 42.643 the decision that gives people rights to appeal to the courts

01:29 - 46.814 and the question in this case, to me, the very narrow question is

01:29 - 48.750 what was the power of the zoning hearing board?

01:29 - 52.353 Were they limited simply to

01:29 - 57.692 deciding whether the zoning officer acted reasonably under the ordinance?

01:29 - 01.095 Or could could they have considered all of the challenges

01:30 - 03.898 raised by the third parties and decided yeah,

01:30 - 07.235 you know, and maybe maybe the zoning hearing board

01:30 - 10.438 was wrong to say the zoning officer lacked the authority to grant a use permit.

01:30 - 11.873 But could they have looked at everything and said,

01:30 - 15.376 we're just going to do it differently, we're going to say this is too complex.

01:30 - 18.112 We're we're not going to just give a use permit here.

01:30 - 20.081 And by the way, we don't think you asked for that.

01:30 - 22.316 We're just going to deny this because we're not convinced

01:30 - 24.752 that this is going to ever meet zoning approval.

01:30 - 29.223 Does the zoning hearing board lack the power to go that route?

01:30 - 30.625 It does, Your Honor,

01:30 - 34.729 fundamentally, and this was argued at the lower court level,

01:30 - 38.599 this is an appeal from the decision to grant a use permit.

01:30 - 44.405 The zoning officer testified that all he was doing was issuing

01:30 - 49.343 approval of the use and that the other aspects that were being challenged

01:30 - 54.182 would be the subject of further review based upon the conditions.

01:30 - 56.951 When is there do you have a I struggle to find a case

01:30 - 00.421 and I did a lot of this stuff in Commonwealth Court that

01:31 - 04.859 that limits the zoning hearing board's review

01:31 - 08.596 that way too, basically.

01:31 - 11.999 Because if if that was really it, then you wouldn't need a record, right?

01:31 - 12.900 You wouldn't.

01:31 - 15.069 You wouldn't have needed the challengers.

01:31 - 16.404 The only the only issue would have been

01:31 - 18.272 does the zoning ordinance allow this or doesn't it?

01:31 - 19.774 And you don't need evidence for that.

01:31 - 23.144 Well, that's what we argued from day one, that this is a statute,

01:31 - 26.881 Tory interpretation of a zoning ordinance for a use by.

01:31 - 27.482 Right.

01:31 - 31.853 And we didn't need nine days of hearings to determine the use was allowed by right

01:31 - 34.922 and that it was inappropriate for the zoning hearing

01:31 - 38.159 board to delve into all these broader matters.

01:31 - 41.462 Do you have a case that stands for that proposition that the zoning hearing

01:31 - 47.702 board's is cabins that narrowly I, I do not I have the NPC

01:31 - 53.140 that says what the subject of an appeal to the zoning hearing board should be.

01:31 - 57.411 And it says appeals from the determination of a zoning officer,

01:31 - 59.146 including but

01:31 - 02.283 not limited to the granting or denial of any permit.

01:32 - 06.420 So if the permit is only for the use

01:32 - 11.659 and the subject of the appeal is the approval of that use,

01:32 - 13.060 it follows that the zoning

01:32 - 16.797 hearing board should only be looking at that very matter, and the zoning

01:32 - 20.401 hearing board to the zoning officer have denied your use permit

01:32 - 23.604 and said so

01:32 - 25.072 to the zoning.

01:32 - 28.376 The zoning here of officer approved your use permit with conditions.

01:32 - 31.112 Yes. If the zoning hearing board have denied it

01:32 - 33.347 or the zoning officer have denied it, yes.

01:32 - 35.850 Okay So you're basically saying then

01:32 - 39.554 under the zoning ordinance in the NPC,

01:32 - 42.623 the zoning hearing board reviews

01:32 - 46.727 the determined of the zoning officer for an abuse of discretion.

01:32 - 49.764 And if the zoning officer was allowed to do these things,

01:32 - 51.566 the zoning here in port can't do anything about it.

01:32 - 53.634 Well, that is correct.

01:32 - 54.035 And if

01:32 - 58.306 had been denied, then it would have been a you you e filing the appeal

01:32 - 01.709 to the zoning hearing board saying we have a use by right and we can't get

01:33 - 05.513 it approved for a zoning permit.

01:33 - 09.617 And then at that point in time, does that appeal then entitle objectors

01:33 - 14.021 to raise all these other ancillary issues that would be addressed at land

01:33 - 15.423 development stage?

01:33 - 18.593 You know, my position here before this court is it does not

01:33 - 22.063 we have to follow that logical process of how

01:33 - 25.800 you address issues at the proper time.

01:33 - 29.570 And fundamentally, there was a question raised

01:33 - 33.007 does a consolidation plan address all these issues?

01:33 - 33.608 It does.

01:33 - 36.444 Does a land development approval address the issues?

01:33 - 37.411 It does.

01:33 - 41.983 The comment was made by opposing counsel that there's this private access

01:33 - 46.454 road, it's an emergency access road that is proposed to share with us.

01:33 - 50.491 Based upon your position, how do you distinguish your position

01:33 - 55.529 from Bethlehem Manor, the 2021 Commonwealth Court case?

01:33 - 57.932 Your Honor, I am

01:33 - 00.801 not specifically familiar with the Bethlehem Manor case.

01:34 - 02.870 Let me just share with you the Commonwealth Court.

01:34 - 05.940 In 21, a ruling in the zoning hearing board

01:34 - 09.777 even said it and its appellate capacity is not to engage in a narrow

01:34 - 14.482 review of the zoning of the decision based only on the materials

01:34 - 18.185 offered to the zoning officer, but is required to make findings

01:34 - 22.256 based upon proceedings conducted before the zoning hearing board.

01:34 - 26.794 In essence, justice property's consent seems to conflict with your position,

01:34 - 29.930 but if the issue that is before the board is only

01:34 - 34.168 the initial narrow issue and it starts delving in the matters

01:34 - 36.871 that will be addressed in subsequent appeals

01:34 - 41.842 or application processes such as the subdivision and land

01:34 - 46.580 development, it gives the zoning hearing board the ability to jump the gun.

01:34 - 50.851 They get to rule on something before it has been vetted, before the proper

01:34 - 51.986 tribunal and.

01:34 - 55.289 That tribunal here would be the land development approval

01:34 - 59.960 that goes through the Planning Commission to the governing body and

01:35 - 03.864 maybe this is one of those things where I feel like I probably know

01:35 - 08.002 too much that that the Sardo process does not result in zoning approval.

01:35 - 09.437 It does not,

01:35 - 13.240 but it addresses these issues that have been raised in this case.

01:35 - 16.644 And there is a condition when the use was approved

01:35 - 21.215 that you have to satisfy these other requirements.

01:35 - 24.985 And when Salto approval is given, there's also a condition that the

01:35 - 28.689 you have to comply with the zoning ordinance and get zoning approval.

01:35 - 29.423 Absolutely.

01:35 - 32.927 And a party has the right to appeal the Salto approval.

01:35 - 35.796 If this is a this is a this is sort of a chicken.

01:35 - 39.667 And that is exactly the problem, really, the problem that I'm having.

01:35 - 42.069 And I keep going back to

01:35 - 44.739 who gets to determine which goes first.

01:35 - 48.476 And your position is that the zoning officer gets to determine

01:35 - 49.744 which goes first.

01:35 - 54.548 And the the in the NPC

01:35 - 58.652 or the zoning ordinance confirms your view that the zoning officer gets to make

01:35 - 03.090 the zoning officer, UPMC, get to make that decision the decision.

01:36 - 05.493 The appellant's position is no.

01:36 - 08.496 The zoning hearing board makes that decision.

01:36 - 08.863 The zoning

01:36 - 12.099 hearing board certainly could have done exactly what the zoning officer did.

01:36 - 16.137 But the question is whether the zoning hearing board was prohibited from saying,

01:36 - 20.574 you know, there's too many wheels going on here, we're not ready

01:36 - 24.712 to bless this until certain things are fleshed out further.

01:36 - 29.250 You're saying they could not do that, not when especially there are conditions

01:36 - 31.519 that are imposed upon, the approval of the use

01:36 - 34.555 that specifically require that for the use to take place.

01:36 - 38.692 And I don't want everyone to lose sight of what this approval is.

01:36 - 40.594 It doesn't say you get to have your development.

01:36 - 42.296 It doesn't say you get to build your building.

01:36 - 45.032 It just says your use as a medical center is allowed

01:36 - 49.336 and there is a whole plethora of processes that you need to go through to complete

01:36 - 53.240 that process to be able to put a shovel in the ground if you want to make.

01:36 - 54.842 It's an eminently reasonable position.

01:36 - 56.911 It's just the question of the power of the zoning hearing board.

01:36 - 59.313 I think that's what this case comes down to and the practical

01:37 - 04.652 are though, that you quell development across the Commonwealth

01:37 - 10.291 if you force parties to simultaneously comply with all land provisions

01:37 - 14.128 that allow a party to develop and use a parcel of real estate.

01:37 - 18.299 I mean there's more then subdivision and land development as you are aware,

01:37 - 22.303 when you get Salto approval, it's conditioned on OPI approval,

01:37 - 25.840 stormwater management approval.

01:37 - 30.477 There's any number of additional approvals if they all have to be concurrent

01:37 - 34.448 and occur at the same time and get approved at the same time

01:37 - 37.751 practically you and the way property is developed

01:37 - 39.987 in the Commonwealth, the way it has been developed

01:37 - 43.591 since I've been practicing law and that's can I ask a

01:37 - 46.861 more practical reason when

01:37 - 51.999 let's assume that what the zoning hearing officer did in this case was approved.

01:37 - 55.469 The when would the residents

01:37 - 58.105 of the Borough of Jefferson

01:37 - 02.810 have their opportunity to be heard on these zoning issues?

01:38 - 06.480 They would have had the they would have the opportunity

01:38 - 12.119 to come during the subdivision and land development process when a consolidation

01:38 - 16.790 plan is being filed that I think would address the very issues.

01:38 - 20.661 And then the decision at that stage would then be appealable.

01:38 - 23.764 It is to the same

01:38 - 24.698 same process.

01:38 - 28.369 It's a statutory appeal process by a positive zoning hearing board.

01:38 - 30.404 It does bypasses zoning hearing board.

01:38 - 34.308 Now, it's common that a land development

01:38 - 38.846 approval process might be predicated upon the need for a not here,

01:38 - 42.583 and then it would make it conditioned on going before the zoning hearing board.

01:38 - 46.420 The conditioning of this whole process goes back

01:38 - 48.622 and forth and has always existed.

01:38 - 53.160 Now the question was asked like, what dictates what process you follow first?

01:38 - 56.664 You know, there are cases that I've cited

01:38 - 59.166 and it's in

01:38 - 02.336 Ray Smith and it says the order of the dole tracts.

01:39 - 03.704 That's the argument we've made.

01:39 - 05.773 There's a dual track process.

01:39 - 09.343 The courts have supported and recognized and acknowledged.

01:39 - 13.380 Subdivision and land development is one track, then zoning approval has the other.

01:39 - 17.251 It says the order of these double tracts

01:39 - 20.354 is based upon the subdivision and land development ordinance.

01:39 - 24.191 And in this case the borough's ordinance was silent

01:39 - 27.294 as to what tract should proceed.

01:39 - 30.464 And as a result it gave the opportunity

01:39 - 36.103 for UPMC to choose what is probably the most fundamental.

01:39 - 37.805 Is the use allowed

01:39 - 41.642 before you incur the great expense to seek land development approval?

01:39 - 43.410 Okay, I think we understand.

01:39 - 44.678 Are there any other questions?

01:39 - 47.247 I just have one.

01:39 - 48.582 I just wanted to

01:39 - 52.353 give a kudos to the appellants preparation of their brief in this matter.

01:39 - 56.056 It included within the body of the brief various schematic

01:39 - 58.959 plans of this proposed development.

01:39 - 00.361 And it was just very helpful.

01:40 - 03.230 I found when I was reading it, to have the picture there, instead

01:40 - 05.265 having to try to dig through a record for it.

01:40 - 06.600 So thank you.

01:40 - 09.470 And may I say that both of you have managed

01:40 - 13.474 to accomplish something that I thought was nearly impossible,

01:40 - 18.679 and that is to make a zoning case interesting.

01:40 - 22.583 The next case the court will hear is Ferraro versus Patterson,

01:40 - 24.451 Erie Corporation.

01:40 - 27.588 This is a personal injury case in which the plaintiff claims

01:40 - 30.691 that the defendant is responsible for injuries the plaintiff suffered

01:40 - 33.327 when she slipped and fell at a Burger King restaurant.

01:40 - 37.364 The plaintiff followed her complaint, the court, and mailed a copy to the county

01:40 - 41.001 sheriff's office with a request for the sheriff to serve the defendant

01:40 - 43.637 and a check to pay for the service.

01:40 - 45.806 But that service never happened.

01:40 - 50.744 Instead, two months later, the plaintiffs hired a private process server

01:40 - 53.781 to serve the defendant, and that service was completed.

01:40 - 58.052 Plaintiff took no further action in the case until six months later,

01:40 - 00.721 when she filed paperwork to reinstate the complaint.

01:41 - 03.690 And the sheriff served the paperwork on the defendant.

01:41 - 07.261 But By this time, the statute of limitations for filing

01:41 - 09.596 the lawsuit had expired.

01:41 - 13.100 To further complicate things, this was occurring in 2020,

01:41 - 17.938 when many court and other offices were closed due to the COVID 19 pandemic.

01:41 - 21.508 Pennsylvania's rules of civil procedure require

01:41 - 25.112 that the original complaint in the case must be served on the defendant

01:41 - 28.682 by a sheriff within 30 days after filing the complaint.

01:41 - 33.353 The statute of limitations required the complaint in a personal injury lawsuit

01:41 - 37.458 to be served the general rule within two years after the injury occurred.

01:41 - 42.062 In this case, the defendant filed a motion to dismiss the complaint,

01:41 - 44.465 arguing that the plaintiff did

01:41 - 47.568 to ensure that the sheriff served the original complaint

01:41 - 51.872 and that when the complaint was finally served by the sheriff, it was too late.

01:41 - 56.143 The trial court denied the request for dismissal, ruling

01:41 - 00.414 that the plaintiffs had made a good faith effort to serve the complaint on time.

01:42 - 01.982 That there was no requirement

01:42 - 05.319 that the plaintiff check with the sheriff to make sure the service was completed,

01:42 - 09.123 that the defendant had actual notice of the lawsuit,

01:42 - 12.359 and that defendant was not harmed by late service.

01:42 - 14.428 The defendant.

01:42 - 17.331 But the Superior Court upheld the trial court's decision.

01:42 - 20.000 The defendants then appealed to the Supreme Court.

01:42 - 23.303 The Supreme Court previously

01:42 - 28.675 addressed this issue in a case decided in 2021 called Gotham v TEAGLE.

01:42 - 32.045 In that case, the court held that a complaint

01:42 - 34.815 should not be dismissed for lack of proper service.

01:42 - 38.785 If the plaintiff's diligent efforts to serve the defendant

01:42 - 42.990 resulted in the defendant receiving actual notice of the lawsuit.

01:42 - 47.861 Unless the failure to properly serve the defendant was an attempt to delay

01:42 - 51.632 the judicial process or otherwise prejudice the defendant.

01:42 - 56.103 So now listen, as the Supreme Court considers how the rules

01:42 - 00.407 and its prior decision in Gotham apply in the case of Ferraro

01:43 - 08.582 versus Patterson, Erie Corporation,

01:43 - 12.853 this appeal presents the issue of whether the plaintiff

01:43 - 17.124 demonstrated a good faith effort to effectuate service of her personal

01:43 - 21.828 injury complaint on the defendant, she requested the sheriff

01:43 - 25.866 serve the complaint accordance with our rules of civil procedure.

01:43 - 27.701 But for unknown reasons.

01:43 - 30.871 The sheriff did not do so and did not give

01:43 - 33.540 the plaintiff notice of the failure to serve.

01:43 - 37.077 Upon learning that service was not effectuated,

01:43 - 40.647 the plaintiff hired a private process server

01:43 - 44.551 who served the defendant within statute of limitations.

01:43 - 49.223 Then, ten weeks after the limitations period expired,

01:43 - 54.761 the plaintiff reinstated her complaint and the sheriff served it.

01:43 - 57.831 The defendant moved for judgment on the pleadings,

01:43 - 01.935 contending that the complaint was barred by the statute of limitations

01:44 - 06.540 which the trial court denied the superior court affirmed, holding

01:44 - 10.444 that the plaintiff made a good faith effort to timely serve her complaint

01:44 - 15.415 that she did not have an intent to stall the judicial machinery

01:44 - 19.653 and that the defendant was not prejudiced as it received actual notice

01:44 - 23.323 of the complaint within the statute of limitations period,

01:44 - 27.761 we accepted appeal to review the lower court's determination.

01:44 - 29.930 Good morning.

01:44 - 31.932 Good morning, Madam Chief Justice.

01:44 - 33.300 And may it please court.

01:44 - 34.835 My name is Aaron Weiss.

01:44 - 38.639 I am with the law firm of Zimmer Coons and I represent the appellant

01:44 - 40.674 PSC Management.

01:44 - 44.211 There are five key facts to consider when evaluating this case.

01:44 - 47.681 First of how we never attempted to serve her complaint

01:44 - 50.350 within that first 30 day requisite period.

01:44 - 54.054 Second, all other plaintiffs in the same county

01:44 - 57.791 and at the same time were able to do so properly via the sheriff.

01:44 - 02.529 But that's but that why is that her fault if the sheriff messed up

01:45 - 07.501 this one instance, why does that divests her of of her

01:45 - 09.903 if she otherwise showed a good faith effort?

01:45 - 11.638 Well, Your Honor, I think that is the point.

01:45 - 13.106 Is it ques duty?

01:45 - 16.109 Is it and under the law and under the Seminole case, of course, on

01:45 - 19.112 the plaintiff has the duty not only to file the complaint,

01:45 - 20.914 but to ensure that there is service.

01:45 - 25.552 So if she does nothing, as she admits, then placing the complaint and a check

01:45 - 29.856 in the mail, does that just end her duty and she's fulfilled good faith?

01:45 - 31.892 Or does she have a duty to ensure

01:45 - 35.862 that it actually does get received by the sheriff and an attempt at services?

01:45 - 41.635 Well, that wouldn't that mean that that every single case would go your way

01:45 - 46.740 if the service wasn't effectuated, doesn't that devour

01:45 - 50.544 the whole good faith exception or good faith principle?

01:45 - 51.878 Not necessarily, Your Honor.

01:45 - 53.213 It depends on the facts

01:45 - 56.216 and circumstances of the case as this court held in Mccreesh.

01:45 - 59.986 If you have an example where there is a plaintiff who makes

01:45 - 04.391 a admittedly technically deficient but good faith effort to serve

01:46 - 08.161 and to actually effect that notice within that first 30 day

01:46 - 11.932 timeframe, then there can be a leniency in that case by case analysis.

01:46 - 16.737 But here to take a step back again, the very first point in this is that the

01:46 - 20.207 there was no attempted service within that requisite 30 day

01:46 - 24.177 time frame, which is required under Rule 401 in MCCREESH.

01:46 - 26.747 There was service the very next day after the complaint was served.

01:46 - 30.484 So I think the reason for that is because after 30 days

01:46 - 35.589 you no longer have a life process, you don't have a life complaint.

01:46 - 37.958 You're exactly

01:46 - 43.163 after 30 days if you don't reinstate the complaint, you reissue the rest.

01:46 - 46.566 You are serving a piece of paper. Exactly.

01:46 - 47.634 Serving process.

01:46 - 50.670 And that's why that 30 day period is important

01:46 - 53.206 there is no re issuance of this

01:46 - 56.343 complaint and reinstatement of this complaint

01:46 - 00.147 even when it was served by a private process server.

01:47 - 01.348 Exactly Your Honor.

01:47 - 05.085 So this isn't a question of overlooking failure of service

01:47 - 07.687 by the sheriff within 30 days.

01:47 - 12.259 This is overlooking failure to comply with the rules

01:47 - 16.430 of civil procedure that require reinstatement of the complaint.

01:47 - 18.365 That is exactly correct, Your Honor.

01:47 - 19.433 Well, let me ask you this.

01:47 - 23.503 Is it possible to the sheriff's failure to serve,

01:47 - 28.208 since the sheriff's duties are enmeshed in the judicial system

01:47 - 31.945 as a breakdown in the mechanics, the judicial system?

01:47 - 33.814 I don't believe so, Your Honor.

01:47 - 38.018 And that was what the I believe Superior Court was hinting at when they to respond

01:47 - 41.888 to a referenced the Bradford opinion and they the difference was it was

01:47 - 45.959 the court itself that was supposed to mail something in and that was never done.

01:47 - 47.694 Here we have the exact opposite.

01:47 - 52.432 It's the burden on the plaintiff to ensure that service is fulfilled.

01:47 - 55.335 That's established in rules 404 oh one.

01:47 - 59.372 So the plaintiff's burden, although they initiate it by serving

01:47 - 03.343 or excuse me by filing the complaint, it is not complete until service.

01:48 - 06.046 We can't rely on the sheriff.

01:48 - 09.783 She no, she has to ensure that she takes

01:48 - 12.786 additional necessary steps to ensure that the service

01:48 - 17.524 the sheriff actually does that service and we see that established in the case.

01:48 - 19.593 Law Counsel Can I just look at this

01:48 - 23.463 a couple of points that were made about the sheriff failing to serve.

01:48 - 27.400 Is there any evidence that the sheriff ever got the service

01:48 - 30.670 letter, the request, any is there any is a proof of mailing?

01:48 - 34.207 Is there anything that suggests the sheriff somehow failed to do anything?

01:48 - 35.175 None at all, Your Honor.

01:48 - 39.746 And in fact, I would argue that under the record at 324, three 328,

01:48 - 43.517 in fact, every other plane in the same county at the same time

01:48 - 47.821 who did get their complaint to the sheriff properly, it was served within that.

01:48 - 50.457 There's no evidence in record that the sheriff failed.

01:48 - 51.157 None at all.

01:48 - 55.695 Your Honor, that's let's change that to it was not served by the sheriff.

01:48 - 58.231 It was not, Your Honor.

01:48 - 01.535 But but again, my primary point is that

01:49 - 05.505 when does the duty for the plaintiff end and the plaintiff

01:49 - 09.276 has the obligation under Rule 404 oh one and to begin.

01:49 - 12.946 We see in the angler opinion by the Pennsylvania Superior Court

01:49 - 17.784 that there is more of a duty than just mailing a copy of the complaint

01:49 - 21.354 to the sheriff you can't hope that it gets there, assume that it will be served

01:49 - 24.157 and just sit back and rely on the sheriff to do so.

01:49 - 27.527 And in fact, as I quote the contention that the filing

01:49 - 31.665 of a recipe and delivery of the writ one time is all the law requires

01:49 - 35.201 is quite simply contrary to the case law in this commonwealth.

01:49 - 38.905 That is a decision that was posted in the opinion

01:49 - 41.975 by this honorable court and again supports that.

01:49 - 46.179 Although you initiate the process of service by filing you,

01:49 - 50.917 the plaintiff have the obligation to fulfill that and by simply mailing

01:49 - 53.820 something or placing it in the mail, hoping it gets there,

01:49 - 58.258 hoping it gets served without ever checking the docket, calling the sheriff,

01:49 - 02.162 ensuring that it's done timely belies a good faith effort.

01:50 - 03.530 Well, well, well,

01:50 - 05.765 even assuming

01:50 - 08.935 part of your sentence there was valid correct

01:50 - 14.040 at the end where you said belies a good faith effort.

01:50 - 17.177 Does the fact that that

01:50 - 21.781 that the private process server was sent and successfully

01:50 - 25.318 provided the papers

01:50 - 28.888 and that there was actual notice and there was a litigation hold

01:50 - 33.193 and that the carrier completed an investigation

01:50 - 37.130 and all these other things were going forward.

01:50 - 43.436 Does that militate against your position that there was no good faith effort here?

01:50 - 47.540 Or is that is that an alternative argument or what it is not, Your Honor,

01:50 - 51.478 and I believe the plaintiff's argument is essentially, first,

01:50 - 54.180 the fact that she mailed it sufficed her good faith effort,

01:50 - 57.350 which we do not believe it does for the reasons that we just set forth.

01:50 - 00.720 But then her backup argument is that even if we didn't

01:51 - 04.157 make a good faith effort just by that mailing and complaint,

01:51 - 08.662 then our untimely private process, an actual notice should suffice.

01:51 - 10.830 So I think those are her two arguments.

01:51 - 15.435 And to directly answer your question, that is insufficient based on the law now.

01:51 - 17.003 So what good faith.

01:51 - 21.708 Are we looking for good faith to comply with the rules of civil procedure?

01:51 - 22.676 Exactly, Your Honor.

01:51 - 25.979 The good faith standard is to make a diligent effort

01:51 - 29.182 to comply with rules 404 one.

01:51 - 34.954 Okay, so the process server is giving a what may a piece of paper.

01:51 - 36.523 Exactly right.

01:51 - 39.492 The complaint was never reinstated. Correct.

01:51 - 40.694 There's plenty of time.

01:51 - 42.662 There is a wide statute of limitations.

01:51 - 46.032 I would have a totally different view of this if we were looking at,

01:51 - 50.336 you know, 28 days before the statute expires and things of that nature.

01:51 - 55.308 This was just a complete ignoring of the

01:51 - 58.111 of the rules of civil procedure.

01:51 - 59.412 You're exactly right, Your Honor.

01:51 - 04.784 First of all, there was no action whatsoever taken within that first 63 days

01:52 - 08.688 after the complaint was mailed on March 4th, it was filed excuse me?

01:52 - 10.957 It was mailed allegedly to the sheriff.

01:52 - 13.293 Nothing happens for 63 days.

01:52 - 15.962 At that point in time, 60 days later in May,

01:52 - 20.533 had the plaintiff simply press happy to reinstate the complaint

01:52 - 24.637 and had it serve you, the sheriff, it would or should have been done because.

01:52 - 26.072 As we know from the record,

01:52 - 29.843 the sheriff was serving in Butler County excuse me, at that time.

01:52 - 34.514 But instead of taking the legitimate and rules of civil

01:52 - 38.451 processes in place by this honorable court, instead

01:52 - 43.456 they chose to circumvent and disregard those by hiring a private process service

01:52 - 47.093 that was admitted with an incorrect procedure to take.

01:52 - 51.564 And when I say the term, admittedly, I'm referring specifically to the record

01:52 - 55.568 at page 320 where in the lower court at the trial level,

01:52 - 59.639 appellant conceded that she, and I quote, has never argued

01:52 - 02.542 this doesn't need to be taken care of by original process.

01:53 - 07.380 We are not attempting to supplant the sheriff with a private process server.

01:53 - 12.118 So by her own admission, all she is doing 63 days

01:53 - 16.022 after the initiation of this lawsuit is giving an actual notice,

01:53 - 20.193 which is untimely and which is furthermore not in compliance

01:53 - 23.863 with the rules of civil procedure established by this Honorable Court.

01:53 - 26.399 I guess my question to you is

01:53 - 30.236 we have these rules of

01:53 - 33.840 so that a court

01:53 - 40.046 can acquire personal jurisdiction over a defendant in this commonwealth.

01:53 - 43.983 And so without complying

01:53 - 47.520 either of the two rules,

01:53 - 54.727 when you have plenty of time to do that, are you creating a situation

01:53 - 57.530 where we would encourage people, just ignore the rules,

01:53 - 00.233 Your Honor, that's 100% accurate.

01:54 - 04.571 And that was one of the primary arguments in our brief, was that allowing a case

01:54 - 08.208 such as this to proceed would entirely erode the share service

01:54 - 11.211 requirement in this Commonwealth that was not only established

01:54 - 15.114 by this Court, but was upheld in 1985 when it reestablished

01:54 - 19.018 specifically that it is the sheriff that has to serve in this Commonwealth.

01:54 - 22.922 What I'm referring to is the preemptory comment to the Rule

01:54 - 28.494 400 in 1985, where they specifically discussed whether or not someone other

01:54 - 31.731 than the sheriff, like a private process server, could do so.

01:54 - 33.933 Federal Court, for example. That's perfectly fine.

01:54 - 37.604 This court chose not to adopt that reasoning.

01:54 - 39.772 And so not only because it wasn't the sheriff,

01:54 - 42.976 but also because it was not timely within that 30 days.

01:54 - 46.980 Then for both of those reasons, either independently this case

01:54 - 48.314 can and must be dismissed.

01:54 - 49.983 Counsel It's a red herring.

01:54 - 53.119 This private process server is a red herring here.

01:54 - 55.989 I mean, there was a complaint that was dead.

01:54 - 01.961 I mean, this plaintiff could have put it in ordinary mail.

01:55 - 04.931 Right, and said, I gave actual notice.

01:55 - 05.598 Right.

01:55 - 11.070 And that's precisely what we've argued, is if this case is permitted to proceed,

01:55 - 14.040 not only can that happen, that is what's happening.

01:55 - 18.211 We cited in our reply brief and Appendix A because there were decisions

01:55 - 20.313 from preliminary objection, rulings at lower courts,

01:55 - 23.883 I believe in Westmoreland County just last year in 2022,

01:55 - 27.220 that despite the fact that appellate counsel in this case is claiming

01:55 - 31.057 this was a one time good faith effort, in fact, there continue saying

01:55 - 34.394 this same procedure of using private process service

01:55 - 39.098 throughout this commonwealth even last year, well, that's clearly improper.

01:55 - 41.668 I mean, there's no question that service was improper.

01:55 - 46.139 But it's always been the case in these cases that we've we've taken

01:55 - 49.609 mccreesh custom and all these other cases that there was something improper.

01:55 - 51.978 Otherwise they wouldn't come up to us. Right.

01:55 - 55.481 But the but the standard set forth in

01:55 - 59.986 custom was improper but diligent attempted service.

01:55 - 01.554 So for you to win,

01:56 - 05.892 we have to find or conclude, don't we, that attempts were not diligent.

01:56 - 06.826 Would you agree with that?

01:56 - 09.996 I do agree with that because we said in some that

01:56 - 13.566 her improper but diligent attempts

01:56 - 16.769 at service resulted in the defendant receiving actual notice.

01:56 - 21.607 And that was fine unless plaintiff's evinced an intent to stall.

01:56 - 22.342 And you're not.

01:56 - 25.144 You haven't maintained that they intended to stall, right?

01:56 - 27.613 My intent is that we never get to that issue,

01:56 - 30.249 because first it is plaintiff's preliminary burden

01:56 - 33.553 as set forth and reiterated in question by the late Justice Blair.

01:56 - 38.091 We consider the fact that this was at the beginning of the pandemic and anyway,

01:56 - 39.425 not at all, Your Honor.

01:56 - 41.761 And there's a couple of reasons for that.

01:56 - 45.932 Number one, it is a red herring issue because, again, every other plaintiff

01:56 - 48.935 in that county at the same time as supported by the record

01:56 - 52.772 on those pages, 324 through 328 were able to serve properly.

01:56 - 56.109 Second, there is no evidence that the sheriff's office

01:56 - 57.677 actually received her payment.

01:56 - 58.244 None at all.

01:56 - 01.414 And again, it is the plaintiff's burden to set forth that.

01:57 - 05.218 So if they would show certified mail with proof of receipt

01:57 - 08.654 or proof that the check that they allegedly sent was cashed

01:57 - 10.890 that would support their good faith effort,

01:57 - 13.593 but again, never got the return of service from the sheriff.

01:57 - 14.494 No, certainly not.

01:57 - 17.663 Because, again, the sheriff that alerts you that maybe something's wrong.

01:57 - 18.231 Exactly.

01:57 - 21.567 And you have to do something more than just wait

01:57 - 26.839 63 days before you inquire why is mine not getting served,

01:57 - 29.675 especially when can see publicly that everybody else is.

01:57 - 30.143 But I don't.

01:57 - 33.413 I mean, the 63 days is interesting, but I think the more interesting time

01:57 - 36.049 frame is 113 days out of 63 days.

01:57 - 39.218 I agree. I one time, 63 days.

01:57 - 41.521 I mean, this is this is a little different than custom.

01:57 - 42.655 And I'm terrible with case names.

01:57 - 45.558 I tell my clerks this all the time, but I think some was the Philadelphia case

01:57 - 46.592 where the Philadelphia

01:57 - 49.595 roll of Service is a little bit different than everywhere else.

01:57 - 50.329 MCCREESH Okay.

01:57 - 51.030 Mccreesh Okay.

01:57 - 53.232 So Mccreesh was a little different there. There.

01:57 - 57.303 The argument was the lawyer actually thought using a private process server,

01:57 - 59.072 a private individual was fine.

01:57 - 00.039 So there was a

01:58 - 04.143 there was at least a arguable, diligent effort to comply with the rules.

01:58 - 07.547 Your argument here is that this is not a technical misstep.

01:58 - 11.317 This was this this wasn't her trying to comply with service.

01:58 - 16.189 This was her just not trying to comply with service for 113 days.

01:58 - 16.456 Right.

01:58 - 19.358 Not Only is it an intentional circumvention

01:58 - 22.628 of the requirement of the sheriff, but also a significant difference

01:58 - 25.965 in that Mccreesh opinion was again, that was served one day later.

01:58 - 27.033 So it's not dead.

01:58 - 29.168 As Justice Donohue pointed out at that point in time.

01:58 - 30.937 It's very much alive here.

01:58 - 33.973 Everybody knows 63 days later it is dead.

01:58 - 35.608 But she could have.

01:58 - 36.509 I think the

01:58 - 39.545 I think the reinstatement point that Justice Donohue made is a good point.

01:58 - 42.715 I guess I'm going 63 days later.

01:58 - 47.453 She learns somehow, some way that the sheriff has not served,

01:58 - 49.789 regardless of whether she should or should not have reinstated

01:58 - 50.790 the complaint at the point.

01:58 - 54.994 I think she should have, but she didn't try to serve by sheriff again,

01:58 - 56.863 and she had plenty of time to. Sure, by sure.

01:58 - 00.900 I think she just decided I'm going to go some other way,

01:59 - 04.137 which is not what Mccreesh What's happened in Mccreesh Absolutely, Your Honor.

01:59 - 08.007 And again, I refer the court to that record at 320 where she admits

01:59 - 11.677 that she knew her use of private process was improper.

01:59 - 13.179 So you're 100% correct on that.

01:59 - 17.016 And not to be a stickler about this reinstating complaints, plaintiffs

01:59 - 19.252 in this case at some point in time believed that

01:59 - 23.422 that was an essential prerequisite for continuing this action because they,

01:59 - 27.727 in fact, reinstated the complaint after the statute of limitations passed.

01:59 - 30.062 And, Your Honor, as I cited in footnote six,

01:59 - 34.066 I think that even further supports her own knowledge that what she had done

01:59 - 37.803 up to that point in time did not effectuate service,

01:59 - 42.909 because if it did or if she truly believed that she had properly served, why not?

01:59 - 48.181 As of June of 2020, filed a ten day notice and said, Hey, I served you.

01:59 - 51.517 You're misstating what's going on here, though there is never

01:59 - 54.921 a thought that there was proper service here right.

01:59 - 55.421 Right? Right.

01:59 - 58.457 There was never a thought that there was proper service here.

01:59 - 01.827 Agreed, either by virtue of using the sheriff

02:00 - 04.931 the second time around or reinstating complaint

02:00 - 08.100 when you attempted service by service of process.

02:00 - 09.802 Yeah, I apologize.

02:00 - 14.106 My point was, if she had truly thought that exactly as Your Honor pointed out,

02:00 - 17.977 then she wouldn't have reinstated it at some point in time, which confirms that

02:00 - 21.347 that if if you're going to claim you've made a good faith effort, don't

02:00 - 23.282 you have to be able to assert that?

02:00 - 25.351 I believe that I complied with the rules?

02:00 - 27.820 Yes, Your Honor, that that is correct.

02:00 - 31.190 And as Your Honor pointed out in the case off

02:00 - 36.028 from this very court in Santos in 1990, that service has to be strictly followed

02:00 - 39.932 and is not merely a procedural defect that can be ignored, which I think and hope.

02:00 - 42.468 The personal jurisdiction. Exactly.

02:00 - 44.670 And I think and I hope you all of this. Right.

02:00 - 46.239 Why this court would be here today

02:00 - 50.209 following up on the questions

02:00 - 53.846 offered by this

02:00 - 55.748 case. And then I

02:00 - 58.317 also have some questions on the case.

02:00 - 01.187 I think at the time that this was unwinding,

02:01 - 04.957 that she wasn't out for the appeal.

02:01 - 08.494 It happened in the session.

02:01 - 11.063 And so I'm looking back to some of that.

02:01 - 14.500 And the creation here is, again,

02:01 - 17.470 just scarce opinion and.

02:01 - 20.339 Certainly, there are cases now rules possible.

02:01 - 24.443 Punishing a victim of missteps really satisfies

02:01 - 29.448 the purpose of the statute of limitations by compliance in special notice. And,

02:01 - 33.753 you know, you tried to put together these different factual records.

02:01 - 36.789 And certainly in this case, there was an attempt

02:01 - 38.858 to provide that for the fact

02:01 - 40.226 that.

02:01 - 43.763 Right this all, your honor, it should not drive a different result.

02:01 - 45.131 And here's why.

02:01 - 48.801 When Justice Bear was considering, he wrote the opinion

02:01 - 53.372 of both Mccreesh and Grissom, and as he explained, he even was concerned

02:01 - 56.642 that Mccreesh could be misinterpreted in a way to suggest

02:01 - 59.812 that any notice, actual notice by any means would be okay.

02:02 - 04.417 And therefore he specifically put in a page 1056 like Fair.

02:02 - 08.554 And actually Mackris did nothing to modify plaintiff's duty to act diligently

02:02 - 09.822 to serve notice.

02:02 - 13.693 Nor, for that matter, did Mackris change the rule, clarified and fair, and actually

02:02 - 14.960 that the plaintiff carries

02:02 - 19.398 the evidentiary burden to prove made that good faith effort so good.

02:02 - 24.570 Some all it does is provide further support putting mccreesh in line

02:02 - 28.808 with the long line of 50 years of cases set forth by this honorable court fair.

02:02 - 32.611 FARRAN She Lampe Witherspoon which, by the way, Witherspoon,

02:02 - 36.816 I think is probably the most factually accurate to what we have here,

02:02 - 40.586 which is a case where there was just one alleged attempted service

02:02 - 42.722 and then nothing for an additional nine months.

02:02 - 47.360 And here we have about an eight month delay between the filing of the complaint

02:02 - 51.630 and then ultimately that reinstatement, which occurs 69 days after the passing

02:02 - 56.902 of the statute of limitations and 271 days after the complaint had been served.

02:02 - 01.073 So again, we are talking about that good faith diligence standard

02:03 - 06.278 that Justice Wecht hinted at and diligence was discussed eight times.

02:03 - 07.980 Is it

02:03 - 12.752 a good faith standard in following the rules of civil practice?

02:03 - 14.520 I think Justice Donohue said this.

02:03 - 16.922 Or was it, as they say and fair enough.

02:03 - 21.093 Is it the good faith effort to notify defendant

02:03 - 23.629 of the pending action?

02:03 - 28.300 It is absolutely the good faith effort to comply with the rules of civil procedure.

02:03 - 29.068 And here's why.

02:03 - 32.772 That's not what fairness she says, Your Honor, fair or not, she states

02:03 - 36.509 that you have to comply with local rules and procedure in order to ensure

02:03 - 40.913 that that services affected service is not the same thing as notice.

02:03 - 46.051 And if we hold otherwise, it relegates rules 404 one to mere surpluses.

02:03 - 50.756 If all we have to do is notify someone that there's a lawsuit against them,

02:03 - 54.460 then not only do they eliminate those two rules, but to bring up justice.

02:03 - 56.529 Bayer's prior hypothetical in the oral argument,

02:03 - 59.865 you could send a letter to someone, tell them they've been sued,

02:03 - 03.002 go on a yearlong cruise, and under that standard,

02:04 - 06.972 that would okay, if all that's required is actual notice.

02:04 - 10.443 And for that reason, actual notice cannot

02:04 - 13.679 serve as a shortcut to circumvent and disregard the rules.

02:04 - 14.480 Civil procedure.

02:04 - 19.652 One last significant point, and again, just to highlight

02:04 - 25.090 that this matters significantly more than just this case is again

02:04 - 29.628 the fact that if this case and the improper service

02:04 - 32.531 and the untimely service and use of private process

02:04 - 37.970 just to actual notice is sufficient to stand, then no one will have to comply

02:04 - 44.543 with rules 404 one in this Commonwealth and two specific only address that point.

02:04 - 48.881 This counsel or this appellate counsel has continued

02:04 - 51.150 and we have set forth evidence via

02:04 - 55.688 Appendix A to our reply brief that they are continuing to do so.

02:04 - 59.792 So if this Court does not reverse the error by the lower courts,

02:05 - 04.763 then they will continue to use that private process, get actual notice,

02:05 - 08.100 and then that will end any argument that it hasn't been properly served.

02:05 - 13.472 If this court wants to get rid of share service, then it is okay, do so.

02:05 - 17.476 If it wants to amend those rules of civil procedure, it's an unpublished stuff.

02:05 - 21.947 It's an unpublished superior court opinion

02:05 - 27.386 with no precedential, Your Honor, that is true for this case below.

02:05 - 28.854 But we're here before, Your Honor.

02:05 - 30.556 And if it's not corrected,

02:05 - 31.757 we're already seeing

02:05 - 35.561 that the practical effect is that people are continuing to do this

02:05 - 39.665 method of just service and or excuse me, not service notice

02:05 - 43.802 by any means and circumvention of the rules of civil procedure

02:05 - 47.907 that were not only set forth by this court, but confirmed by this court

02:05 - 51.010 as being the only way in this Commonwealth to serve.

02:05 - 53.345 Okay. I think we understand your position.

02:05 - 55.881 And the other question I have one other question.

02:05 - 00.152 Let's talk again about reinstating the complaint.

02:06 - 02.755 What's your view?

02:06 - 05.724 The reason that we have that requirement within our roles,

02:06 - 09.094 Your Honor, the reason to reinstate the complaint, yes,

02:06 - 12.865 I think it is to ensure that the plaintiff is doing their due diligence

02:06 - 16.869 to ensure that they're keeping the process of the judiciary moving.

02:06 - 19.471 If it's been 30 days and the sheriff hasn't served,

02:06 - 21.941 then we need to make sure why hasn't the sheriff served?

02:06 - 24.543 Is it some issue and can we get it fixed?

02:06 - 28.714 That's why I personally think it occurred or why the rule occurred.

02:06 - 33.385 But more importantly, frankly, it doesn't matter at my opinion why it's there.

02:06 - 35.688 It is the rule there, isn't it?

02:06 - 38.591 There also because the court has a player here.

02:06 - 42.127 We need to know when there are active lawsuits

02:06 - 45.598 in our courts and if it's not reinstated,

02:06 - 49.234 then as Justice Donohue said earlier, it's just a piece of paper.

02:06 - 52.104 Yes, Your Honor, that is correct.

02:06 - 55.374 And when the defendant is served with a complaint

02:06 - 59.511 that no longer says complaint, but it says reinstated complaint,

02:06 - 02.815 the defendant then knows that the claims are not

02:07 - 10.255 they are claims currently being asserted pursuant to the reinstated complaint.

02:07 - 11.056 Correct, Your Honor.

02:07 - 15.094 I mean, maybe the rules in anachronism am I mean, I don't happen to think so.

02:07 - 19.298 But, you know, the fact of the matter is, is that it's a rule.

02:07 - 20.699 Correct, Your Honor.

02:07 - 25.204 And I think another another point again, to emphasize not only the reinstatement,

02:07 - 28.474 but the sheriff is the sheriff has been handing someone

02:07 - 31.477 in uniform a piece of paper that says, hey, this is significant.

02:07 - 33.646 You need to do something about this.

02:07 - 34.947 And again, that's not what occurs.

02:07 - 37.383 I mean, we

02:07 - 41.286 keep we keep talking about the rule, but everybody knows the rule was broken here.

02:07 - 45.791 But, I mean, the this question of whether

02:07 - 50.462 your client knew the complaint was stale or not

02:07 - 55.434 or it seems to ignore the fact

02:07 - 58.871 that you have this litigation hold the carriers on notice.

02:08 - 03.609 I mean, you folks, there was a live case here, right?

02:08 - 06.679 I mean, so I'm not sure about this

02:08 - 10.049 this stale theory, Your Honor, the case, the record.

02:08 - 13.752 And I apologize for cutting you off the record at page 91 confirms that

02:08 - 17.523 what was discussed before was pre suit information

02:08 - 19.958 and the carrier denied liability.

02:08 - 22.461 So it's not like there's ongoing settlement discussions

02:08 - 23.762 or issues as to the case.

02:08 - 24.897 They're told there's an incident.

02:08 - 26.665 They say we're not liable.

02:08 - 28.734 That's the last notice that they have.

02:08 - 32.438 And furthermore, there is a slew of case law that simple notice

02:08 - 35.340 to either the insurer or pre suit claims are insufficient.

02:08 - 39.611 Those is the Superior Court in 1999 or actually most recently

02:08 - 43.382 the Senate opinion from the superior in 2023 confirmed that as well.

02:08 - 46.885 But it harks back to the distinction between notice

02:08 - 49.621 and service and the rules require service.

02:08 - 50.622 Thank you, Mr.

02:08 - 51.824 WEISS Let's hear from Mr.

02:08 - 58.030 Flaherty.

02:08 - 59.765 Thank you, Chief Justice there, please.

02:08 - 03.001 The Court Ryan Flaherty from the mike, of course.

02:09 - 04.570 Ryan Flaherty from Simon.

02:09 - 07.406 And Simon, on behalf of the plaintiff, Beverly Ferrero,

02:09 - 12.111 the case law in this matter has been settled since 2005

02:09 - 16.648 in the mccreesh matter and then it was affirmed again in 2021

02:09 - 21.019 in the Gus a matter custom added no additional requirements,

02:09 - 26.325 but affirmed the rationale of Mccreesh which adopted expressly

02:09 - 29.762 a more flexible approach at service

02:09 - 35.701 when a timely filing occurs in a good faith effort at service

02:09 - 38.871 not a good faith effort, as has been forwarded to comply

02:09 - 41.907 precisely with the rules of civil procedure that was expressly

02:09 - 46.178 but the various service is a technical word under the rules of civil procedure.

02:09 - 51.049 It's not it's it's not you can't divorce it from the requirements of service.

02:09 - 52.751 It doesn't say our case law

02:09 - 56.989 does not say good faith effort at giving the defendant notice.

02:09 - 59.725 It says good faith effort. It's service. I agree.

02:09 - 05.397 And it also says will forgive technical missteps. But

02:10 - 09.034 the IT counsel in this case,

02:10 - 12.070 in my view, didn't do a technical misstep.

02:10 - 16.542 The counsel in this case ignored the rule and went with a private process server

02:10 - 19.545 when they had every opportunity to go back to the sheriff

02:10 - 21.246 or go to the sheriff in the first instance.

02:10 - 23.282 If they didn't get there correctly the first time.

02:10 - 26.919 And I would indicate that that only occurred as a backup situation

02:10 - 29.922 when it became clear that the sheriff was not serving the complaint.

02:10 - 32.758 Well, no, there's no evidence the sheriff had the complaint.

02:10 - 35.160 There's evidence that the docket received it in the dock

02:10 - 37.396 and received two certified copies to the sheriff.

02:10 - 40.165 And the docket records, the sheriff check of $73.

02:10 - 44.736 The docket also records that the monetary mailed certified

02:10 - 48.440 mail of the assignment of Judge Yeager from this case to defendant.

02:10 - 51.210 Two days after the filing was received,

02:10 - 54.213 plaintiff in this case, took every usual and customary step.

02:10 - 55.314 I don't know I with it.

02:10 - 56.448 When I was in private practice,

02:10 - 58.584 I handed it to the sheriff and got a time stamp act.

02:10 - 02.087 So I never I never made it to the sheriff in March 2020.

02:11 - 05.924 There needs to be some recognition that this was not operating as normal.

02:11 - 10.829 And two days after the filing of this, when he was or I 113 days

02:11 - 16.068 after you learn that the sheriff didn't serve for whatever reason,

02:11 - 18.303 do you

02:11 - 22.808 not try to get sheriff service that period out of an abundance of caution?

02:11 - 26.078 But when we did but you didn't do abundance of caution.

02:11 - 27.145 You did alternative.

02:11 - 31.083 You didn't you didn't go to the sheriff and give private process.

02:11 - 33.986 You just went private processer. You didn't try to do the sheriff.

02:11 - 38.457 The assumption in May, May six of 2020 was that the sheriff's office

02:11 - 40.259 simply wasn't functioning

02:11 - 41.793 and it should be added that what evidence

02:11 - 43.996 what evidence was there that it wasn't functioning?

02:11 - 47.499 That was the assumption of the firm because no response was received.

02:11 - 48.400 It is not unusual.

02:11 - 51.169 Where is the evidence in the record that that was the assumption of the firm,

02:11 - 55.440 but the assumption of the firm was we mailed by we went process server

02:11 - 58.610 because we didn't think the sheriff's office was open.

02:11 - 01.280 That's what I'd written in the in the brief,

02:12 - 02.814 but there's no evidence of that.

02:12 - 03.949 He didn't bring the sheriff in,

02:12 - 06.184 and the sheriff then testified we were not operating.

02:12 - 08.820 In fact, the evidence seems contrary that the sheriff was serving.

02:12 - 10.956 It does seem some complaints were served.

02:12 - 12.691 It doesn't say anything about which ones weren't,

02:12 - 15.994 because we have no way of knowing that I can't prove a negative to the court.

02:12 - 17.930 Well, I don't know why. Nobody.

02:12 - 19.631 Sheriff, I saw. What?

02:12 - 21.233 Why not go back to the sheriff?

02:12 - 25.504 We did eventually go back to the sheriff in November after the end of limitations.

02:12 - 29.574 And you reinstated the complaint after the statute of limitations.

02:12 - 30.008 When?

02:12 - 33.211 When in May of 2020,

02:12 - 36.481 you learned that the sheriff hadn't served.

02:12 - 39.384 Why not reinstate the complaint and go back to the sheriff?

02:12 - 41.753 That wasn't enough time, but plenty of time.

02:12 - 44.456 At that time, we had assumed that the sheriff's office

02:12 - 45.958 wasn't functioning normally.

02:12 - 47.793 But was there any evidence of that?

02:12 - 49.328 The evidence that we never received

02:12 - 52.898 any affidavit of service or non service in a response to our initial filing.

02:12 - 56.034 That's a big leap because we made every effort

02:12 - 59.571 with the courts to make sure our courts were open for business

02:12 - 00.572 throughout the pandemic.

02:13 - 03.942 And I to my understanding, the sheriffs offices were as well.

02:13 - 05.010 It seems that they were.

02:13 - 06.979 But at the time that was the rationale taken

02:13 - 08.981 and we knew we had timely filed the complaint

02:13 - 11.283 and we knew that we did every usual and customary

02:13 - 12.918 step in the hundreds of complaints that are filed

02:13 - 15.988 every year to engage the sheriff that was met with silence.

02:13 - 18.991 So extraordinary measures were taken and we paid for an additional service

02:13 - 23.962 step in a situation where we know the defendants already had actual notice,

02:13 - 25.564 not only that a lawsuit was coming,

02:13 - 28.367 but of a complaint of the facts and circumstances in this case.

02:13 - 30.869 I think we get the issue more questions.

02:13 - 35.474 Why didn't you reinstate the complaint before you attempted service

02:13 - 38.043 by a private process over again?

02:13 - 40.412 The rationale at the time was that it wasn't functioning normally

02:13 - 41.880 with the courts.

02:13 - 45.450 You reinstate a complaint in the courts, you go to the court.

02:13 - 49.521 The court issues a new document stamps it called reinstated complaint.

02:13 - 50.722 The justice is correct.

02:13 - 53.992 I don't have an answer to that question.

02:13 - 56.161 Any other questions in Butler County?

02:13 - 00.899 I mean, do you normally get a return of service from the sheriff?

02:14 - 02.100 We do.

02:14 - 03.602 And I would add that it's not uncommon

02:14 - 07.072 receive the return of service, either affidavit of service or affidavit of non

02:14 - 10.108 service weeks after your recipe

02:14 - 13.612 or complaint has expired and you're automatically reinstating at that point.

02:14 - 16.381 It's not like on day 30 you get one way or the other.

02:14 - 19.885 It may be a 45 day, 60 day 70 when something comes back to you,

02:14 - 26.291 certainly in March or April or May of 2020 mail was not exactly on time as well.

02:14 - 28.560 It just needed this needs to be viewed in the context.

02:14 - 32.631 This was at the height of the pandemic when various public and private services

02:14 - 35.133 were closed in shutting down an entrance

02:14 - 38.770 to the courts and the sheriffs offices were not closed down.

02:14 - 41.073 They did function for essential operations.

02:14 - 45.143 I'm very uncomfortable with going your way,

02:14 - 47.312 adopting

02:14 - 50.282 this theory that the reason why you should have been entitled to ignore

02:14 - 51.349 the rules was the courts

02:14 - 53.652 and the sheriff were not functioning in the absence of evidence

02:14 - 55.987 that the courts and the sheriffs were not functioning for justice.

02:14 - 59.858 We didn't ignore the rules at the first service.

02:14 - 02.794 We made a good faith effort at service, and that's what we

02:15 - 05.797 non-nano non.

02:15 - 09.835 There are times when a sheriff does not serve

02:15 - 14.439 and when you don't get your return service which you found out

02:15 - 19.277 and you had 113 days left the appropriate or you could have called

02:15 - 22.981 the sheriff's office you just you just kind of decide it.

02:15 - 24.816 We're just not going to bother.

02:15 - 27.152 We're going to hire a private process server.

02:15 - 31.089 I don't I'm struggling to see how that that's not mccreesh mccreesh was

02:15 - 34.993 the lawyer said I actually I was complying with the rules civil procedure.

02:15 - 38.864 This one you concede you didn't comply with the rule

02:15 - 44.236 and you concede that you intentionally chose go with a private process server

02:15 - 46.638 when you could have gone back to the sheriff.

02:15 - 48.373 That's accurate.

02:15 - 52.444 Justice is also accurate that the mccreesh holding does not require

02:15 - 53.912 perfect diligence.

02:15 - 55.914 It requires a good faith effort

02:15 - 59.651 at service and compliance, which occurred two days after the fire.

02:15 - 00.886 Hear, hear.

02:16 - 02.821 Interesting

02:16 - 04.956 way of looking at I think an interesting way

02:16 - 07.058 of looking at at least is

02:16 - 11.930 assuming a good faith effort and no intent to stall.

02:16 - 15.467 We still have the language from Gus about diligence.

02:16 - 20.338 And as I see it, as I see it, at this point,

02:16 - 23.909 we need to assess diligence in deciding this case.

02:16 - 27.012 The Bradford case, which is alluded to by

02:16 - 30.815 the court, doesn't indicate case law and diligence.

02:16 - 33.018 That due diligence does not require perfection.

02:16 - 37.422 Due diligence is a good faith standard, which is what the fair analogy court does.

02:16 - 41.660 Even if we even if we buy that, what do we do with the fact

02:16 - 47.966 that the complaint was never reinstated or was not reinstated within the statute?

02:16 - 53.338 The jurisdiction is triggered by the timely filing which occurred here.

02:16 - 56.942 Actual notice occurred as well, not only from before

02:16 - 00.745 the timely filing, but when the Butler County presided.

02:17 - 01.346 Terry

02:17 - 05.217 copied the order of assigning Judge Yeager by certified mail to the defendant,

02:17 - 06.685 which is part of the record.

02:17 - 10.255 And then after the statute was told they received

02:17 - 13.558 another copy of the complaint through process server.

02:17 - 16.394 So I agree there is a 30 day window

02:17 - 20.365 where one is supposed to have the sheriff serve that that was attempted

02:17 - 26.204 and it it failed for reasons that the record cannot explain.

02:17 - 26.671 All right.

02:17 - 30.775 But what was served through the process server was not actually a complaint.

02:17 - 32.477 It was a copy of the complaint,

02:17 - 35.547 which I mean, it wasn't the reinstated complaint.

02:17 - 36.081 Correct.

02:17 - 38.750 You had a complaint that was no longer alive.

02:17 - 40.485 I understand your position.

02:17 - 42.621 All right.

02:17 - 44.522 Anything else?

02:17 - 48.093 Thank you, counsel for your time here.

02:17 - 52.831 The next case the court will hear is in re trust B of Richard H.

02:17 - 53.865 Wells.

02:17 - 56.401 This case deals with a state law called

02:17 - 58.870 the Charitable Trust Termination Statute.

02:17 - 02.874 In a provision of his will, Richard Wells created

02:18 - 06.444 a trust to benefit a charity called the VMI Foundation.

02:18 - 12.484 The trust to be administered by PNC Bank, meaning that PNC Bank controls

02:18 - 17.355 when and how the funds were distributed to VMI for the uses that Mr.

02:18 - 19.291 Wells intended.

02:18 - 23.161 VMI filed a lawsuit in Branco County Orphans Court

02:18 - 27.265 seeking to dissolve the trust and have the funds distributed to

02:18 - 30.168 and controlled directly by VMI

02:18 - 32.570 rather than by P and PNC.

02:18 - 36.174 Pennsylvania's Charitable Trust Termination Statute

02:18 - 40.412 allows a charitable trust to be terminated if administrative expenses

02:18 - 43.581 or other burdens are unreasonably out of proportion

02:18 - 47.152 to the charitable benefits of the trust.

02:18 - 50.488 BMI argue to the Orphans Court that it should be able

02:18 - 53.191 to manage the assets of the trust on its own,

02:18 - 56.461 and that having a trustee limits VMware's ability to.

02:18 - 02.434 Use the funds to implement the vision and purpose of the trust as intended by Mr.

02:19 - 05.537 Wells. The Orphans Court denied the request.

02:19 - 07.305 The Court reasoned that Mr.

02:19 - 11.109 Wells clearly intended to create a permanent charitable trust

02:19 - 14.179 and that the intent of the trust creator

02:19 - 16.414 is paramount and must prevail.

02:19 - 20.151 The Superior Court affirmed the decision of the Orphans Court

02:19 - 22.654 and VMI appealed to the Supreme Court.

02:19 - 25.924 VMI argues two main points.

02:19 - 30.328 First, VMI argues that the Wells Trust is subject to taxes,

02:19 - 34.632 administrative expenses, reporting requirements and other burdens

02:19 - 38.837 that have no benefit and divert assets away from the fund

02:19 - 41.873 and its use intended by Mr.

02:19 - 42.707 Wells.

02:19 - 45.243 Second, the intent of Mr.

02:19 - 48.580 VMI argues, should not be controlling in light

02:19 - 51.316 of the provisions of the charitable trust termination statute,

02:19 - 55.954 which only considers administrative expenses or other burdens in determining

02:19 - 59.724 whether a trust can be terminated and not the intent of the trust creator.

02:20 - 05.296 PNC responds that VMI did not meet its burden of showing sufficient evidence

02:20 - 09.000 that the administrative expenses were excessive or that the trust

02:20 - 12.971 was burdensome another way as clearly required by the statute.

02:20 - 17.575 Now, let's listen to the Supreme Court as it considers how to interpret,

02:20 - 21.179 imply and apply the charitable trust termination statute.

02:20 - 24.716 In the case of trust, the trust of Richard H.

02:20 - 25.183 Wells

02:20 - 29.988 Anthony of, good afternoon.

02:20 - 31.222 And this appeal.

02:20 - 35.794 A public charity filed a petition to terminate a charitable trust

02:20 - 38.930 of which it the sole beneficiary pursuant

02:20 - 41.866 to the charitable trust termination statute.

02:20 - 48.406 It sought to transfer the trust assets to itself outright free of the trust,

02:20 - 51.943 so that it could fulfill the settlers charitable purposes

02:20 - 56.481 unencumbered by expenses and burdens that arise from.

02:20 - 59.250 The trustees administration of the trust.

02:20 - 05.457 Both the trustee and the Attorney General intervening as parents.

02:21 - 08.326 Patrick oppose termination,

02:21 - 12.497 contending that the public charity failed to satisfy

02:21 - 15.934 the statutory requisites for the Trust's termination.

02:21 - 21.873 The trial court refused to terminate the trust and the Superior Court affirmed.

02:21 - 25.477 We granted review to interpret for the first time

02:21 - 28.713 the Charitable Trusts Termination Statute

02:21 - 33.718 and to determine whether the lower courts properly applied it here in

02:21 - 36.421 May. Please.

02:21 - 39.691 The Court Madam Chief Justice and Members of the Court.

02:21 - 43.194 I'm George Roberts, and I'm here on behalf of the VMI

02:21 - 45.597 Foundation, appearing pro hoc V.J..

02:21 - 49.534 I express my appreciation to the court for the opportunity to appear

02:21 - 54.639 before you today and also express my appreciation to your staff.

02:21 - 55.740 They are an incredibly,

02:21 - 00.211 very gracious group of people, and I really appreciate it.

02:22 - 00.879 Thank you.

02:22 - 04.983 You might as well comment with them.

02:22 - 07.051 This is a unique statute.

02:22 - 09.621 It's a unique case.

02:22 - 12.056 It involves the interplay between

02:22 - 16.094 the General Assembly, the Congress of the United States, and one

02:22 - 19.631 in which the fundamental decision for the court will be

02:22 - 22.667 focusing on

02:22 - 25.303 what do the words the statute mean

02:22 - 31.476 when the separate existence of trust established solely for charitable purposes

02:22 - 34.712 result will result

02:22 - 38.716 in administrative expenses and other burdens,

02:22 - 44.589 unreasonably out of proportion to the charitable benefits?

02:22 - 47.592 A starting point of this certainly should be

02:22 - 51.596 they, except the facts are not in dispute.

02:22 - 53.831 Mr. Wells created a trust.

02:22 - 55.567 It's very straightforward.

02:22 - 58.503 It provides an income only trust,

02:22 - 00.505 a charitable gift,

02:23 - 05.877 providing annual income to BMI Foundation, which exists to support

02:23 - 08.913 higher education, and in particular the VMI,

02:23 - 12.350 Virginia Military Institute.

02:23 - 16.087 The charitable benefits are not defined.

02:23 - 20.191 When we suggest and the attorney general, I believe, agrees,

02:23 - 24.629 Chair, will benefits are different from your charitable purposes?

02:23 - 28.099 They are the actual cash to be provided

02:23 - 31.502 each year from the fund that Mr.

02:23 - 36.941 Wells created, and those funds are then available for use

02:23 - 41.879 in the support unrestricted aid for supporting

02:23 - 46.751 the Army and the Act and the activities of the VMI Foundation.

02:23 - 50.822 So the case is centered around

02:23 - 54.726 how will benefits be determined?

02:23 - 59.831 And it requires an examination of Mr.

02:23 - 05.637 Wells history, the history of a number of statutes in Pennsylvania

02:24 - 09.374 to include the Principle in Income Act,

02:24 - 13.411 which has well defined income,

02:24 - 16.914 dividends and interest.

02:24 - 20.218 It requires us to examine the response

02:24 - 26.524 of the General Assembly to the to the establishment by Congress.

02:24 - 29.761 In 1969, the year after Mr.

02:24 - 33.331 Wells died, in an effort

02:24 - 36.934 to force charities which they then defined

02:24 - 40.171 as private foundations,

02:24 - 41.973 were we going to

02:24 - 45.943 now be required to make annual distributions to assure

02:24 - 49.814 that their charitable purposes are being fulfilled

02:24 - 54.185 and thus it creates this mandatory

02:24 - 58.589 establish in 1976 5%

02:24 - 01.392 annual distribute tution requirement.

02:25 - 04.796 It's fixed.

02:25 - 09.934 It's not subject to averaging the asset base beyond one year.

02:25 - 13.171 As a result, the

02:25 - 16.374 Commonwealth responds as it needed to,

02:25 - 19.210 to amend the existing

02:25 - 22.647 trust to bring them into compliance

02:25 - 26.250 with the requirements of the private foundation rules.

02:25 - 30.121 They include this mandatory payout.

02:25 - 33.991 They also include certain administrative restrictions

02:25 - 38.229 on things like excess business holdings, self-dealing,

02:25 - 42.066 that by statute you are required to have those

02:25 - 44.836 as part of your governing documents.

02:25 - 48.906 It response in 1970

02:25 - 53.544 excuse me, in 1971, the acts adopted in December

02:25 - 56.581 excuse me private foundation

02:25 - 00.017 statutes adopted in December of 1969.

02:26 - 03.554 The General Assembly responds by the adoption

02:26 - 11.162 of the Charitable Instruments Act in 1971, and it then provides

02:26 - 14.365 that you can use principal

02:26 - 19.670 to meet the annual 5% payout requirements.

02:26 - 24.475 Mr. Wells Trust was very consistent with the patterns of trust documents

02:26 - 27.712 in those days in which income only

02:26 - 30.181 was being distributed to the charity

02:26 - 33.684 and principle was to be kept intact.

02:26 - 36.554 And your principle and Income Act

02:26 - 40.892 amends that or codifies it.

02:26 - 43.361 Going back to I think the 1947

02:26 - 48.833 and so this 5% test required payout

02:26 - 52.170 if you don't make it, there are serious penalties for underpaying

02:26 - 56.674 in an era just as we've seen in the last decade or

02:26 - 01.078 so when interest was and dividends were less than 2% a year.

02:27 - 05.249 The Charitable Instruments Act cures that problem

02:27 - 08.219 by allowing the use of principal

02:27 - 12.423 to make up that difference.

02:27 - 15.092 It also provides in the fish section

02:27 - 20.998 of the Act that the Court retains course retain

02:27 - 25.436 the jurisdiction to order deviations from the terms of a trust.

02:27 - 29.740 In 1972,

02:27 - 32.543 if I get your legislative history right,

02:27 - 37.515 we record of your rules with respect to charitable

02:27 - 40.017 trust gifts.

02:27 - 45.156 When we adopt the predecessor to the current

02:27 - 49.193 trust termination statute in 2017,

02:27 - 53.130 70, 40, 79, 40.3,

02:27 - 54.765 in which

02:27 - 58.669 we have three specific cases in which the General Assembly

02:28 - 02.773 addressed changes in circumstances.

02:28 - 06.510 Subsection A is your classic separate.

02:28 - 09.981 Subsection D

02:28 - 12.216 is your small trust.

02:28 - 16.187 The only time the Attorney General and the trustee must agree

02:28 - 20.024 that you would terminate the trust because it's not economical

02:28 - 23.461 and we have the trust termination

02:28 - 27.031 statute, which is very strange in its language,

02:28 - 30.635 because it's not speaking to just a change in circumstances.

02:28 - 34.405 It starts with it's a separate existence

02:28 - 37.275 and separate compared to what,

02:28 - 42.213 and it applies almost into this case,

02:28 - 47.985 because the separate existence in this case means that Mr.

02:28 - 50.521 Wells trust

02:28 - 53.224 is a private foundation and is governed

02:28 - 55.893 by the rules established by Congress.

02:28 - 59.964 By contrast, the VMI Foundation

02:29 - 03.267 is not a private foundation.

02:29 - 07.905 The statutory scheme is all 501c3 Organizations start

02:29 - 12.743 as private foundations unless you have an exemption.

02:29 - 14.178 Being my

02:29 - 17.448 foundation, we be one of those we call the public charity.

02:29 - 22.053 It's supported by large individual donations over time.

02:29 - 25.690 There are other provisions that relate to

02:29 - 29.393 supporting organizations.

02:29 - 31.829 There a governmental relationship

02:29 - 34.098 with your supported charity

02:29 - 37.268 in this case that would be like of the I

02:29 - 41.973 and if we had administrative control over the trust,

02:29 - 45.209 then we're out from under the requirements

02:29 - 47.345 of the private foundation rules.

02:29 - 51.615 Now in that status that we have, we're stuck

02:29 - 54.585 with the private first for the Principal Income Act.

02:29 - 57.688 We've got this arbitrary distinction

02:29 - 01.726 with respect to, the allowance of principle,

02:30 - 05.596 and we go through a series of legislative acts

02:30 - 09.867 that I think are instructive because.

02:30 - 15.006 Your ultimate decision you will be making in this case, you have only two options.

02:30 - 16.407 You're

02:30 - 20.478 going to decide whether this Wells trust will be forever

02:30 - 23.214 bound as a private foundation,

02:30 - 29.520 and its annual distributions will be determined by Congress.

02:30 - 33.691 Or you will rule in favor of the VMI Foundation.

02:30 - 37.294 And it is not a private foundation

02:30 - 40.531 and its annual

02:30 - 43.067 of what the charitable benefits will be

02:30 - 45.903 are determined by the General Assembly.

02:30 - 49.673 What about what the settlor said and what wanted?

02:30 - 51.542 In this case?

02:30 - 55.446 The settlor made it very clear he provided an income only trust.

02:30 - 00.785 He entrusted the VMI Foundation with the ability to properly use

02:31 - 03.854 those funds, while he preserved his trust in

02:31 - 08.059 for two in perpetuity.

02:31 - 11.529 Is that relevant to us what his intention was?

02:31 - 15.366 I believe it's relevant because we were asking for the transfer

02:31 - 18.869 of the assets on the same terms and conditions.

02:31 - 22.840 A permanent fine, professionally managed,

02:31 - 27.812 but free of the judge freed from the expense burdens

02:31 - 32.016 that are that are brought under the of private foundation rules.

02:31 - 36.554 It makes that makes a lot of sense as a practical matter.

02:31 - 39.123 But I guess I was focused on what Mr.

02:31 - 41.659 Wells wanted and what he stated.

02:31 - 45.362 Well, when you're dealing with the question

02:31 - 48.966 of a settlor intent first,

02:31 - 53.070 is it solely for charitable purposes?

02:31 - 54.805 There's no question

02:31 - 55.973 on that.

02:31 - 58.742 He wants an annual distribution of cash

02:31 - 03.848 to be used as determined by the college endowment.

02:32 - 07.351 The relief we seek

02:32 - 09.820 will the transfer of the funds

02:32 - 14.225 to the VMI Foundation freed of the burdens

02:32 - 16.694 of the private foundation rules

02:32 - 20.898 to be held as a permanent trust

02:32 - 24.201 and to help jump in there.

02:32 - 27.872 Before you move on, sir, to just follow on the chief's question.

02:32 - 31.142 Under our precedents,

02:32 - 33.244 the settlers intent is not only

02:32 - 36.580 relevant, it's the Pollstar and

02:32 - 41.318 here we have a man who who knew his way around

02:32 - 44.188 trusts probably better than just about anybody in this room.

02:32 - 47.424 Certainly better than me.

02:32 - 48.292 So his.

02:32 - 52.062 His intent is particularly worth focusing on, I would think.

02:32 - 55.266 I wonder if if you think

02:32 - 57.968 we ought to consider

02:32 - 00.971 that in repeatedly

02:33 - 05.075 settling these trust the way he did,

02:33 - 08.412 or at least in the final iteration, the way he did,

02:33 - 10.881 whether

02:33 - 14.852 we ought to consider the possibility

02:33 - 18.989 that he wanted

02:33 - 24.028 his alma mater, the murder of George Marshall,

02:33 - 27.798 and three generations of patents, or two and a half generations patents, right?

02:33 - 29.166 Yes, Your Honor.

02:33 - 33.437 Two to think about him

02:33 - 36.740 and the class of 1924, each and every year.

02:33 - 41.345 Rather than dissolving this and sending it into the

02:33 - 44.715 the the general treasury

02:33 - 48.185 of VMI on a one time shot.

02:33 - 51.121 That's my first question for you to answer.

02:33 - 54.124 And my second one is, if you prevail,

02:33 - 57.595 what is the principal distinction

02:33 - 03.367 between your case and every other case, because every other private foundation

02:34 - 06.870 is going to line up seeking the same relief as you are.

02:34 - 09.540 So with respect to his

02:34 - 12.309 his intent, we have subsequent events

02:34 - 15.646 and the just

02:34 - 18.382 his will provides in my foundation

02:34 - 23.387 maintains 1500 restricted funds and his fund

02:34 - 29.260 will be named in honor of his class just as his estate document calls for it.

02:34 - 33.897 And it will be among the 1500 restricted funds.

02:34 - 37.268 It can do everything from funding scholarships to faculty chairs

02:34 - 39.436 and so forth.

02:34 - 43.674 So you do have that annual recognition of annual

02:34 - 46.076 in the sense that we maintain records

02:34 - 50.414 of that generosity. So

02:34 - 52.116 that's what he

02:34 - 55.185 called for in his will in honor of his class.

02:34 - 59.690 And we're going to honor his class just as he provided

02:35 - 04.695 the distinguishing factor, I believe, between the two cases.

02:35 - 08.098 The settlor intent is the difference between his intent

02:35 - 13.771 to use a vehicle of a trust, which we believe

02:35 - 17.908 is, as the lower court did, we think that vitiated the statute.

02:35 - 23.380 If you stop right there, what's the purpose of the trust termination statute?

02:35 - 26.950 It recognizes there were changes in circumstances,

02:35 - 30.854 the occurrence, whether it was resulted.

02:35 - 34.892 Result, excuse me, it results from that separate existence

02:35 - 40.264 or reason or result or result will result or result.

02:35 - 41.799 A will result.

02:35 - 44.268 So it speaks in the future as well.

02:35 - 50.040 And that causes these burdens to be incurred, the taxes.

02:35 - 55.946 But the most important is it takes it puts us in the position

02:35 - 00.617 that the General Assembly now loses the control.

02:36 - 04.688 It normally has in defining

02:36 - 07.491 this income versus principal distinction.

02:36 - 12.596 And when you look at the series of statutory changes,

02:36 - 15.833 you see that the General Assembly, in determining

02:36 - 20.270 that annual district distribution would be perhaps one of the most at once.

02:36 - 25.943 The dollars are in the most important part of charitable management is

02:36 - 31.014 how do I determine what that annual distribution will be?

02:36 - 31.515 Counsel.

02:36 - 33.350 Your argument

02:36 - 37.621 is well stated and certainly plausible, except for the fact that

02:36 - 41.825 the General Assembly I gave to

02:36 - 44.762 the Orphans Court the discretion

02:36 - 50.033 to terminate if it finds that the fees and expenses

02:36 - 52.936 are an out of proportion

02:36 - 58.041 and with it with the benefits of the of the the charitable trust.

02:36 - 01.178 Now, I find it

02:37 - 04.381 hard you don't suggest that P.A.

02:37 - 07.618 fees are extraordinary in any sense, as a matter of fact.

02:37 - 13.424 You think they're reasonable with to penses fees in and of itself.

02:37 - 18.395 The payment of in quotes reasonable trustee fees would not be a ground

02:37 - 21.465 for the termination of trust.

02:37 - 26.437 On that point alone, I would say it's an ancillary benefit

02:37 - 30.541 if we make the transfer, which would go ultimately

02:37 - 33.811 if we are allowed to actually go through, bring Mr.

02:37 - 38.615 Wells into the courtroom. And

02:37 - 41.385 but we can't ignore

02:37 - 45.088 how the General Assembly has rejected

02:37 - 49.493 the determination for how that charitable benefit

02:37 - 52.129 should be determined as established by Congress.

02:37 - 56.667 So when you go through the statute and we certainly start

02:37 - 00.704 with principle income, I understand that, counsel and as I said, your

02:38 - 04.141 I follow your argument except for the fact

02:38 - 08.412 that the statute mandates a finding

02:38 - 13.317 that the expenses and burdens are unreasonably out of proportion.

02:38 - 17.454 Your argument seems to suggest that

02:38 - 22.526 any fees and expenses incurred as a result of the manner

02:38 - 27.264 in which this trust is set up are unreasonably out of proportion.

02:38 - 28.699 I would disagree.

02:38 - 28.932 Okay.

02:38 - 32.002 So the obvious reason why is that why is that the case there?

02:38 - 34.471 A quid pro quo there?

02:38 - 36.940 There's a service that's being purchased.

02:38 - 39.877 We have we have taxes.

02:38 - 42.613 We have administrative expenses.

02:38 - 47.784 And we have the most important part of this is the conflict between

02:38 - 53.490 how Congress wants the charitable benefit to be determined, the methodology.

02:38 - 56.927 And that's where the real crux of this case.

02:38 - 58.962 The taxes are there forever.

02:38 - 01.098 They're 1.39%.

02:39 - 05.369 We acknowledge that you can call you can you can you can conclude that there

02:39 - 08.572 that they're not material.

02:39 - 12.242 We respond, but they're in perpetuity

02:39 - 15.612 and they don't by a single dollar of benefit.

02:39 - 21.184 They take out of the well's trust with no corresponding benefit.

02:39 - 24.555 And they're not there to help the fund meet.

02:39 - 25.289 What can't.

02:39 - 28.792 What the General Assembly to determine for how

02:39 - 31.895 you are to determine those charitable benefits

02:39 - 34.665 in response to.

02:39 - 36.833 So let me just clarify.

02:39 - 40.170 You're saying in this case, as a matter of law,

02:39 - 44.241 these fees and expenses are unreasonably burdensome.

02:39 - 46.143 There's only one.

02:39 - 51.248 And remember, they're not the only criteria for applying the statute.

02:39 - 54.217 The first criteria is something first criteria.

02:39 - 55.786 It's not the only one, though.

02:39 - 58.689 What? Well, how about as to the first one?

02:39 - 03.694 Are you saying as a matter of law, under the circumstances,

02:40 - 07.864 the fees and expenses are unreasonably?

02:40 - 08.932 Because that's what I'm hearing.

02:40 - 13.870 I mean, and and I can't mesh that with the discretion

02:40 - 17.274 that's placed in orphan's court to that determination

02:40 - 19.676 as would come

02:40 - 23.280 back on the taxes there in perpetuity.

02:40 - 27.050 They buy nothing for the charitable benefit.

02:40 - 31.421 Would that mean, counsel, if I can follow up, would that mean because, you know, we

02:40 - 36.627 as as you know as well as I do, what we do in this case isn't just for this case.

02:40 - 38.428 It affects so

02:40 - 40.864 that's, you know, the importance of this

02:40 - 44.101 from our perspective is what what this ruling would mean.

02:40 - 47.404 So we

02:40 - 50.340 your if if I take your argument correctly,

02:40 - 53.076 you're saying essentially that

02:40 - 56.313 our Pennsylvania trust

02:40 - 58.682 ought to

02:41 - 01.284 ought to be determined,

02:41 - 05.255 according to what Congress may on any given day promulgate

02:41 - 09.393 in the Internal Revenue Code or the IRS might promulgate by way of regulations

02:41 - 13.497 that what our courts in Pennsylvania

02:41 - 17.734 ought to do is be open on a continuing basis to

02:41 - 23.573 two accounting or mathematical arguments

02:41 - 27.778 by beneficiaries on when the dollars and cents

02:41 - 31.915 argue for dissolving a trust.

02:41 - 37.521 I just I don't know where that process ends.

02:41 - 42.192 Is there any kind of yardstick other than the

02:41 - 47.164 the bottom line of the tax calculation is going to result

02:41 - 55.605 in a bigger amount, if we just dissolve it and send it all of the beneficiary,

02:41 - 59.976 you don't get there until you can make the transfer and eliminate tax.

02:42 - 01.311 That's the whole point of.

02:42 - 06.083 The trust termination statute, if that's if you change that status,

02:42 - 09.653 then these are the consequences

02:42 - 12.456 and consequences in case and I was

02:42 - 17.194 certainly urge is you have to look the big picture here

02:42 - 22.432 is determining what that annual chair will benefit.

02:42 - 25.102 And here the General Assembly

02:42 - 28.371 has been faced with this issue

02:42 - 33.043 and it resolves that in charitable cases and in particular

02:42 - 37.681 that it adopts a different methodology.

02:42 - 42.519 Looking at the total long term management of a charitable fund.

02:42 - 46.389 So we have the charitable instrument where we start with Principle

02:42 - 48.992 in Income Act, easily understood

02:42 - 51.094 income.

02:42 - 53.430 Well, I don't I don't know if any of this is easily understood.

02:42 - 56.099 Well, but counsel, can I just interrupt you for a second?

02:42 - 57.434 Because I think you're going you're going back

02:42 - 00.804 to repeating all these multitude of federal and state.

02:43 - 05.142 I'm trying to boil this down to something that I can sort of understand

02:43 - 06.309 at the time.

02:43 - 09.746 Mr. Wells created this trust, the VMI Foundation existed, correct?

02:43 - 10.814 Yes Sir.

02:43 - 11.381 So Mr.

02:43 - 14.084 Wells could have just given the money, the VMI Foundation.

02:43 - 20.524 It had an intervening life to take care of, which was his wife. But.

02:43 - 22.192 Yes, but he. Yes, he could have.

02:43 - 22.692 He could have.

02:43 - 27.731 But he he he chose not to give the my foundation control over the corpus

02:43 - 31.201 and instead wanted to have a private trust administer the corpus.

02:43 - 33.303 That was the intent. Yes.

02:43 - 37.007 What you seem to be arguing, and it's an interesting argument, is that

02:43 - 42.112 his other intent was not only to have

02:43 - 45.916 the trust, administer the money and not the foundation, but to make sure

02:43 - 50.954 that interest only was the benefit that went out of the trust.

02:43 - 53.123 That the trust would retain the corpus, correct?

02:43 - 54.558 Correct. Okay.

02:43 - 58.762 And you're saying that there has been an intervening change in

02:44 - 02.966 since that was created in that tent was created

02:44 - 07.737 that now prevents that from that intent, from being satisfied?

02:44 - 13.243 Yes, sir And because that intent can no longer be satisfied,

02:44 - 17.447 that triggers this provision

02:44 - 21.885 to allow you to essentially terminate the trust, place

02:44 - 24.721 everything in the hands of the foundation directly

02:44 - 31.061 to ensure that the intent of only can continue.

02:44 - 34.998 Is that is that your argument?

02:44 - 38.768 What I think it misses is the General Assembly's response,

02:44 - 42.572 which I don't I don't want to I want to go back to the seems to me

02:44 - 45.175 the general assemblies, the general what the General Assembly did,

02:44 - 48.511 who was create an exception to the intent of the settlor.

02:44 - 51.248 This is a circumstance where the intent of the settlor can be

02:44 - 54.417 ignored, not ignored, but

02:44 - 58.188 but satisfied, but not under the vehicle that the settlor chose.

02:44 - 02.158 So I'm trying to understand you gave us this great historical

02:45 - 06.263 tapestry of federal and state statutes.

02:45 - 09.032 I'm trying to understand if it boils down to simply

02:45 - 13.603 because of an intervening change in the law, the intent to distribute

02:45 - 17.307 only interest cannot be satisfied with the current vehicle

02:45 - 23.480 and it's a it's an out of proportion, burdensome expense that Mr.

02:45 - 28.251 Wells never would have wanted, and therefore the trust should be terminated.

02:45 - 30.153 In essence, it is.

02:45 - 33.990 But again, back he operated on the Principal Income Act

02:45 - 38.895 when the change in investment management occurred in the 1990s,

02:45 - 42.098 the General Assembly responded

02:45 - 44.634 and it redefines income

02:45 - 49.072 and it does this in the context of the nationwide movement

02:45 - 52.842 that that arbitrary income only test

02:45 - 57.781 was not serving the charitable purposes of the industry,

02:45 - 01.418 and it did so in this way

02:46 - 05.088 it adopts 1550 548

02:46 - 09.159 and subsequently 2080 113.

02:46 - 11.161 And what does that do?

02:46 - 14.364 It redefined income to a new formulation

02:46 - 16.499 that's based upon

02:46 - 19.035 a percentage of the asset base

02:46 - 23.606 rather than this income only.

02:46 - 28.712 Remember, in the last decade when interest was only two interest

02:46 - 31.581 and dividends were only 2% or less a year

02:46 - 36.486 that was deemed a inappropriate way

02:46 - 40.924 to maximize the charitable purposes of these gifts.

02:46 - 44.327 So the redefinition simulated

02:46 - 48.331 what a reasonable income number would be

02:46 - 52.836 if if circumstances were better economic.

02:46 - 58.808 So if you look at commentary to 8113, it makes it very clear

02:46 - 03.813 that these amendments were to provide in, quote, needed flexibility.

02:47 - 07.450 And so the criteria that the General Assembly

02:47 - 10.787 has come up with, it says the flexibility.

02:47 - 15.725 And it's unlike other states, it says you will use a percentage

02:47 - 20.263 within these bans, not less than to no more than 7%.

02:47 - 25.201 We're also going to mandate that you use an average of

02:47 - 28.571 not less than three years of the asset values

02:47 - 31.474 in determining what that

02:47 - 33.510 annual distribution will be

02:47 - 37.080 and the range allow you to change that.

02:47 - 40.283 As economic circumstances change,

02:47 - 43.353 that investment returns can change

02:47 - 46.022 the needs of the charities can change,

02:47 - 49.759 and that flexibility is denied

02:47 - 55.231 solely because of its status as a private foundation.

02:47 - 59.436 And so when they've adopted these acts, again, you had Mr..

02:47 - 05.241 Well said income only defined by statute.

02:48 - 09.679 The Congress said a fixed 5% one year averaging

02:48 - 13.383 the General Assembly in response rejects

02:48 - 19.289 what the Congress did and creates a new methodology for how income

02:48 - 25.128 meaning how that annual charitable distribution is to be determined.

02:48 - 28.565 And the public policy is the flexibility

02:48 - 32.302 as returns change

02:48 - 34.504 and that they can change it over time.

02:48 - 38.041 Eminently evidenced

02:48 - 40.276 when you had the pandemic

02:48 - 44.914 in the General Assembly changed for three years

02:48 - 48.017 and allowed charities to use up to have

02:48 - 51.521 a valuation of up to 10% a year.

02:48 - 53.456 And so

02:48 - 57.927 it changes that whole methodology so that if you brought Mr.

02:48 - 00.063 Wells into the room today

02:49 - 03.633 and you said he's an experienced

02:49 - 08.471 and a president, president of a bank and a trust company,

02:49 - 14.511 he knew well what income how income was be calculated.

02:49 - 16.312 He would be the perfect individual

02:49 - 19.816 to be serving on your endowment board, your college board.

02:49 - 22.952 And now we bring him forward and.

02:49 - 27.524 We say, here are the changes in circumstances of why

02:49 - 30.426 the General Assembly changed from this

02:49 - 33.163 well understood income. Only

02:49 - 36.633 to this more flexible arrangement.

02:49 - 42.505 He would then also understand why it imposed this obligation

02:49 - 46.509 to average over a period of not less than three years,

02:49 - 49.612 to take out the peaks and valleys

02:49 - 54.350 of of how market values change over time.

02:49 - 56.019 He also would have appreciated

02:49 - 59.322 that the General Assembly, in adopting these two statutes,

02:49 - 04.427 sets out an obligation to eliminate this

02:50 - 08.131 distinction between income and principle and driving that distribution,

02:50 - 13.436 but also gives you a charge to preserve the real value.

02:50 - 16.806 The Fund If you if you're successful counsel

02:50 - 21.511 I know I'm perhaps returning to something I raised earlier, but put it differently,

02:50 - 25.081 if you're successful here that the trial

02:50 - 28.551 court abused its discretion,

02:50 - 32.622 what possible,

02:50 - 37.193 what possible defense would any trustee or the attorney general

02:50 - 41.130 have to any similar claim made by any other

02:50 - 44.634 foundation as a public charity?

02:50 - 49.272 Well, first of all, it's only coming about because its status

02:50 - 52.742 as a private foundation triggers

02:50 - 58.648 these expenses and the denial of the application

02:50 - 01.684 of how the General Assembly has determined

02:51 - 05.255 the annual charitable benefit should be determined.

02:51 - 07.323 We have lots and lots of those foundations,

02:51 - 09.459 including right here in Pittsburgh, where they have to be.

02:51 - 10.560 Brings me to the question.

02:51 - 16.165 Well, earlier, as a matter of law, you are you are saying as a matter of law

02:51 - 21.104 in this circumstance where this trust turns into a private foundation,

02:51 - 26.109 a trial court abuses its discretion by not terminating

02:51 - 29.912 the trust, it has to meet two other requirements.

02:51 - 33.983 One, can the transfer be made on conditions

02:51 - 37.186 as nearly as possible to those set by the set law

02:51 - 39.422 or meaning?

02:51 - 41.224 They're identical.

02:51 - 43.960 It's just supporting unrestricted aid.

02:51 - 47.797 Secondly, the trust, the beneficiary must be able

02:51 - 49.599 to properly

02:51 - 55.471 say that the beneficiary must be able

02:51 - 00.777 to properly use and administer the fund.

02:52 - 03.913 And so when you look at your prior case law

02:52 - 06.182 about supporting charities,

02:52 - 08.518 well understood.

02:52 - 11.087 And in

02:52 - 12.755 we've got a wonderful case.

02:52 - 16.259 I suggest that that helps give some context

02:52 - 19.862 about supporting charity.

02:52 - 20.630 If those are those

02:52 - 23.199 those two elements you're talking about on an issue in this case,

02:52 - 24.901 nobody's disputing those.

02:52 - 30.206 The the issue is what Justice Donahue said is the unreasonable in proportion.

02:52 - 32.942 And again, I again, I maybe I just,

02:52 - 35.345 you know, try to make things too simple,

02:52 - 38.881 but you seem to be

02:52 - 40.083 to finish with what Mr.

02:52 - 42.785 Wells would do, because you were going down this list.

02:52 - 45.722 Mr. Wells would appreciate this, and therefore, Mr.

02:52 - 51.794 Wells would want what he would want transfer first.

02:52 - 53.096 He's starting now

02:52 - 57.066 in the change of events first, what the General Assembly has done.

02:52 - 57.533 Yeah.

02:52 - 57.767 Okay.

02:52 - 00.770 So, so that's why you're so you're basically agreeing with me.

02:53 - 03.873 Your argument is there's been a change in the law that

02:53 - 07.710 that there's been an intervening change in the law that Mr.

02:53 - 12.515 Wells would not have chosen trust as the vehicle today if given that opportunity.

02:53 - 14.150 And therefore, because Mr.

02:53 - 17.920 Wells would want to avoid all of the things that are

02:53 - 21.290 are either applying hamstringing the private foundation,

02:53 - 24.861 he would want to dissolve the trust and give it to VM.

02:53 - 26.763 I think that's exactly right.

02:53 - 29.332 And the change in the status of the the foundation

02:53 - 31.501 at the

02:53 - 34.704 time he was dying had three and a half million dollars in assets.

02:53 - 39.409 Four years ago, it had over half a billion dollars in assets.

02:53 - 40.309 It was

02:53 - 45.047 one of the largest endowments per student of any public university in America.

02:53 - 48.284 So Mr. Wells would appreciate that.

02:53 - 52.422 Here's the problem that we can't conduct a science and depose Mr.

02:53 - 57.927 Wells, so we have to go by what he said and presume that he meant what he said.

02:53 - 59.162 That's that's the problem.

02:53 - 03.266 I'm but your whole statutory scheme and it's

02:54 - 09.572 720 7790.440.9.3.

02:54 - 12.975 You do this and you've got it under the

02:54 - 17.647 the Cyprys statute, you have it with the trust being too small.

02:54 - 20.349 You have this unique situation

02:54 - 26.522 in which it is because of its status that creates these extra burdens

02:54 - 30.092 and the burdens in this case directly impact

02:54 - 34.497 the ability of the trust, the charitable trust in this case

02:54 - 40.069 to achieve its objectives as the General Assembly has determined.

02:54 - 43.239 Are there benefits to some of those burdens, though?

02:54 - 44.340 The trustee

02:54 - 47.777 coordination and supervision

02:54 - 50.012 by PNC, is there a burden to that?

02:54 - 54.550 I mean this or a benefit to that?

02:54 - 56.085 Well, I would argue

02:54 - 01.023 that when you the test for that is, as the attorney general found,

02:55 - 04.293 that there's no question that the VMI Foundation

02:55 - 07.830 can properly use and administer the science.

02:55 - 12.301 There is no question that these funds do not become a part

02:55 - 15.805 of the general assets of the foundation.

02:55 - 20.009 That's well established in the Enright Craig estate,

02:55 - 23.579 which makes it very clear,

02:55 - 28.150 and I can certainly read that if you look, that's that's a great answer,

02:55 - 32.822 but it doesn't answer my question with respect to the current status,

02:55 - 38.394 is there a benefit associated with the trustee?

02:55 - 40.463 No benefit that can't be replicated.

02:55 - 44.734 But remember, the statute speaks to the very fact that you would continue.

02:55 - 47.770 If you continue the exercise terms

02:55 - 52.742 it says other than the continuation of the trust the governor on

02:55 - 58.648 this is a finding that the VMI foundation absolutely is not contested

02:55 - 02.418 can't properly use and administer the sun

02:56 - 08.190 the draining of assets for no reciprocal benefit,

02:56 - 12.361 we suggest, does in fact constitute an unreasonable.

02:56 - 16.132 BERGER Well, again, I don't mean to quarrel

02:56 - 19.235 with you on this, but it's not that there's no reciprocal benefit.

02:56 - 24.240 It's that there is a reciprocal benefit that you say could be replicated.

02:56 - 28.911 Well, again, I think would I would refer to your rules

02:56 - 30.379 of statutory construction

02:56 - 33.950 with some trepidation, because you know those far better than I do

02:56 - 39.021 when you begin look at your various rules of statutory construction here.

02:56 - 43.559 You do have to cross that hurdle about the intent is to benefit

02:56 - 46.495 the public interest, not the private interest.

02:56 - 51.667 And here the private interest is what's keeping this case in play.

02:56 - 55.938 And that is what benefit is served

02:56 - 59.642 by having this continued status as a private foundation.

02:57 - 05.147 It's no answer to say, well, you got your 5% a year.

02:57 - 07.183 What are you complaining about?

02:57 - 09.452 Well, I'm complaining about your year.

02:57 - 14.824 The General Assembly has set up an entirely different paradigm.

02:57 - 16.859 A different paradigm.

02:57 - 19.562 It's irrelevant what has happened in the past, because

02:57 - 24.066 you're not looking at it through the lens of what the General Assembly did.

02:57 - 28.704 The Counsel If you're if you if your argument was as solid

02:57 - 32.274 as you believe it to be, the statute would not give discretion

02:57 - 37.480 to the court to make a decision whether or not to terminate.

02:57 - 42.752 I mean, your argument is essentially all of these three, three elements are met.

02:57 - 45.955 Therefore, the trust must be terminated.

02:57 - 48.290 But that's not how the statute is written.

02:57 - 53.162 The statute is written to allow the Orphans Court to weigh

02:57 - 57.967 its insights into the intent

02:57 - 00.636 of the trust store.

02:58 - 03.239 I mean, in and

02:58 - 06.108 if this said the trust must be terminated,

02:58 - 09.445 if A, B and C happens, you'd be on solid ground.

02:58 - 12.715 But we have to look for an abuse of discretion here.

02:58 - 15.284 Well, and I think it's still as a matter of law,

02:58 - 19.689 because you've still got the governor on this, which is you had to have the terms

02:58 - 23.826 and conditions as close as possible to what the settlor wrote.

02:58 - 28.097 But the seller wanted an independent third party to manage the investments.

02:58 - 30.766 They can't have that with the foundation.

02:58 - 35.738 That is the whole import the trust termination statute is.

02:58 - 38.274 But you do continue a trust.

02:58 - 42.278 You're still going to have an independent and the discretion of the office court

02:58 - 47.283 is applied when it looks to see a are your terms the same?

02:58 - 50.119 They will be other than the content.

02:58 - 51.754 Why do you have the language in there?

02:58 - 53.856 Other the continuation of the trust.

02:58 - 00.029 The next point is we had to be satisfied that this particular beneficiary

02:59 - 02.832 can properly use and administer the fund

02:59 - 06.635 in which there's no debate about that, there's no debate

02:59 - 11.841 about that proposition probably with respect to 98% of the

02:59 - 13.375 that are going

02:59 - 16.145 to parade in here after you in your case,

02:59 - 20.182 I mean, the the hypothesis

02:59 - 24.220 there are any number of similarly situated

02:59 - 29.191 beneficiaries, which is why I continue asking you the same slippery

02:59 - 32.328 slope question and I don't perceive

02:59 - 34.463 any real good answer to that

02:59 - 38.701 other than you would, I suppose. One

02:59 - 42.338 Orphans Court individual orphans court judges around

02:59 - 46.075 Pennsylvania idiosyncratically to make that call.

02:59 - 51.213 I don't mean idiot, I mean idiosyncratically to make that call based.

02:59 - 56.385 Whatever strikes them is the equities of or the math of a given case.

02:59 - 59.021 Well, you would step back first.

02:59 - 02.892 The statutes have been in effect since 1969.

03:00 - 07.296 So people who are putting trust in place

03:00 - 11.133 would know full well when they're subjecting

03:00 - 14.170 that charitable gift to the rules

03:00 - 17.239 of the private foundation.

03:00 - 21.110 So we don't have a flood of cases that are out there

03:00 - 24.013 that have come to this conclusion.

03:00 - 25.447 The rules of statutory

03:00 - 29.051 also cause us to look at

03:00 - 33.255 other cases, for example, but also administrative rulings.

03:00 - 36.392 And we have an administrative in this case,

03:00 - 39.895 and that was the attorney general and Schlegel,

03:00 - 42.932 it was asked, do you object

03:00 - 46.802 to the termination of this trust was a very different case.

03:00 - 50.072 That was a schlegel was a very different wasn't our case.

03:00 - 51.707 It was in Lancaster case. Right. Right.

03:00 - 54.243 But it was a very different case. Right.

03:00 - 57.213 They having all kinds of problems

03:00 - 58.981 distributing the benefits.

03:00 - 00.683 In that case, they didn't know how to

03:01 - 04.720 find the right kids or they didn't have the right entities

03:01 - 06.789 there to be on their committee or whatever.

03:01 - 08.691 This is not that case.

03:01 - 11.126 Well, Your Honor, but that

03:01 - 15.865 what's what's different is that these still

03:01 - 19.935 just because they were having trouble, they should have been

03:01 - 24.206 under the Cypress Statute as an alternative.

03:01 - 29.311 They took the case on the basis of the private foundation rules,

03:01 - 32.681 those taxes and other burdens

03:01 - 36.485 were the were the basis upon which

03:01 - 39.622 to terminate that trust.

03:01 - 41.991 It had to then decide, was this

03:01 - 44.627 new foundation, community foundation,

03:01 - 47.796 can they properly use and administer

03:01 - 51.567 on the same terms and conditions as Mr.

03:01 - 53.535 Schlegel provided?

03:01 - 56.171 And so you have and while that's not precedent,

03:01 - 58.207 I'm not talking about the decision of the court.

03:01 - 00.342 I'm talking about the administrative ruling

03:02 - 04.346 that the attorney general did not object in that case.

03:02 - 07.683 And I think it's disingenuous when it argues now.

03:02 - 10.452 Well, but the trustee asked for it.

03:02 - 13.622 Well, the trustee and the attorney general were the only ones

03:02 - 17.927 who could have brought the case under the trust termination statute,

03:02 - 23.565 because there was undefined group of charitable beneficiaries.

03:02 - 27.569 So, yes, that was an administrative ruling

03:02 - 30.873 that we suggest that you do take into account.

03:02 - 35.077 And sometimes we have cross purposes here.

03:02 - 39.348 And I would refer the court to the more state case

03:02 - 41.884 in which there was a

03:02 - 45.821 statutory change in the inheritance tax law,

03:02 - 49.725 civil case, 1954.

03:02 - 50.793 Mr. Moore dies.

03:02 - 53.662 He leaves his estate in trust for the benefit of his wife.

03:02 - 55.965 He gives her a power of appointment.

03:02 - 01.370 1956 The General Assembly amends the inheritance tax statute

03:03 - 05.240 and provides an exemption for transfers of property to charity.

03:03 - 10.746 In 1964, she dies exercises

03:03 - 13.315 the power of appointment in of charity.

03:03 - 17.920 The court then is faced with the attorney general

03:03 - 21.857 who's got those dude jobs protecting charity on one side

03:03 - 27.463 and the independent states fisc on the other argues

03:03 - 31.100 that the exemption for charity does not apply

03:03 - 36.005 because the power of appointment was exercised was granted

03:03 - 39.174 prior to the adoption of the charitable exemption.

03:03 - 42.344 The court rules against

03:03 - 45.848 the Commonwealth and rules in favor

03:03 - 50.019 of the charities and I think this is something

03:03 - 53.889 to be considered in looking at all the aspects of this case.

03:03 - 57.893 And it it writes because he hears

03:03 - 02.398 charitable purpose driving the in this area

03:04 - 06.735 and it writes this reading of the exemption statute,

03:04 - 10.706 the court's ruling to adopt the exemption statute

03:04 - 15.144 conforms comports with its obvious legislative purpose

03:04 - 20.749 as stated invalid at this stage of society's dedication

03:04 - 26.989 to human welfare, we need not pause to recall the Commonwealth's strong,

03:04 - 32.561 consistent and very broad policy of assistance to charities

03:04 - 36.298 and its long manifested encouragement to its citizens

03:04 - 40.969 and businesses to make charitable contributions.

03:04 - 45.040 It is difficult to conceive of a Commonwealth public policy

03:04 - 48.610 that is more fundamental or more meaningful

03:04 - 53.482 than its frequently restate policy of encouragement to charities

03:04 - 57.219 and charitable giving in the public interest, including

03:04 - 00.522 were we to accept the Commonwealth's view

03:05 - 04.793 in this appeal, this fundamental public policy

03:05 - 08.363 would be frustrated to a substantial degree.

03:05 - 11.133 I think that was an excellent conclusion.

03:05 - 14.336 Do we have any other questions from the justices?

03:05 - 16.939 Mr. ROBERTS I'm glad that

03:05 - 19.942 you came in from Virginia to give us that excellent argument.

03:05 - 21.944 And I don't believe that you introduced your.

03:05 - 23.912 But I thought Mr.

03:05 - 25.881 Robert Weinberg, my co-counsel.

03:05 - 29.351 Yes. Thank you.

03:05 - 31.653 Sager.

03:05 - 37.759 Good afternoon.

03:05 - 38.660 Your honors.

03:05 - 40.562 I'm Margaret Sager.

03:05 - 45.734 I've actually written and Sager and I appear today on behalf of PNC Bank

03:05 - 49.538 as trustee of the Perpetual Charitable Trust of Richard Wells.

03:05 - 54.877 I'm appearing today with my co-counsel, Kristin Del Sol of the firm of Porter,

03:05 - 58.947 Wright, Morris and Arthur, and also here today with Tony

03:05 - 03.152 Kovacic of the Office of attorney general representing the Commonwealth.

03:06 - 07.422 The Attorney General's Office and PNC Bank are united in this matter

03:06 - 10.726 in seeking to oppose the termination of Mr.

03:06 - 12.961 Wells trust and seeking.

03:06 - 15.931 We do seek performance of the of the decisions below.

03:06 - 17.900 This court has

03:06 - 21.770 asked us to advise the bench whether.

03:06 - 23.705 We will be dividing up the issues here.

03:06 - 24.740 It's a little difficult

03:06 - 28.076 in this particular case, although we'll try not to be duplicative.

03:06 - 31.680 I will address the standard under section

03:06 - 37.319 77 40.3 of the probate estates and fiduciary is code,

03:06 - 40.055 which is the PEMF code known as the PEMF code.

03:06 - 44.026 And It is Title 20 of the Pennsylvania Consolidated Statutes,

03:06 - 48.430 as well as the application of Section 8113,

03:06 - 52.401 also of the path code that a total return investment approach

03:06 - 55.270 and a adjusted distribution

03:06 - 58.140 approach for all charitable trusts

03:06 - 01.977 in Pennsylvania, including private foundations.

03:07 - 06.615 Mr. Kovacic will address primarily issues

03:07 - 10.986 pertaining to the Attorney General's role as parents, patriarchs.

03:07 - 15.357 It's important as an initial matter with respect to Mr.

03:07 - 19.027 Wells trust, to recognize some important factors.

03:07 - 23.765 This case does not involve allegations of mismanagement.

03:07 - 27.869 It does not involve any allegations of malfeasance,

03:07 - 31.039 abuse of discretion or excessive fees.

03:07 - 34.843 There has been no prior complaint by the beneficiary

03:07 - 37.145 about the administration of the trust.

03:07 - 40.449 There are also no material facts in dispute.

03:07 - 42.618 Mr. Wells

03:07 - 45.420 provided

03:07 - 48.390 for distributions on an annual basis

03:07 - 51.960 to the Virginia Military Institute Foundation,

03:07 - 55.230 and that trust was actually funded

03:07 - 57.966 when his wife died in 2004.

03:07 - 01.203 And that's when the Charitable Trust arose.

03:08 - 03.438 Previously, it was a trust for his wife.

03:08 - 08.744 In fact, almost $640,000

03:08 - 11.813 has been distributed to VMI Foundation

03:08 - 14.783 for the period 2010 through 2020.

03:08 - 19.388 During that same period, the trust has appreciated

03:08 - 23.625 by approximately 40% from about 1,000,005

03:08 - 26.295 to a $2.1 million.

03:08 - 30.432 In short, and not to be flip the trust of Mr.

03:08 - 32.401 Wells works.

03:08 - 37.072 The dispute before this court is caused by the fact, as we have heard, that

03:08 - 41.276 VMI Foundation is attempting to convince this court to rewrite

03:08 - 44.546 77 40.3 E

03:08 - 48.850 and to completely disregard the mandate

03:08 - 52.454 and prerequisites that are set forth clearly in that statute,

03:08 - 55.924 and also to disregard Pennsylvania's

03:08 - 59.328 legislative intent in enacting statute.

03:08 - 00.462 Furthermore,

03:09 - 05.701 yes, one question on the factual background

03:09 - 08.170 to your

03:09 - 10.605 readout.

03:09 - 14.743 I'm wondering if you have clarity here

03:09 - 18.113 that would reflect the out

03:09 - 21.183 in the event that the total return

03:09 - 26.588 statute was passed in 1998 and what the payout would be

03:09 - 30.892 without that statute, as well as if the previous four

03:09 - 34.663 then allow so that the expenses that arise

03:09 - 38.333 under the operation of the tax code.

03:09 - 39.801 I do not have those figures.

03:09 - 42.404 I can tell you based on the record that

03:09 - 45.841 in 2017, 18 and 19,

03:09 - 51.680 the average costs of, the trustees commissions and the federal excise tax

03:09 - 56.118 that's charged against all private foundations in the country

03:09 - 00.288 totaled on about $12,500.

03:10 - 04.326 And the distributions on average during that period to VMI

03:10 - 07.562 was about 71,000.

03:10 - 09.898 I don't have a comparison of the two,

03:10 - 13.702 but the fact of the matter is that the statute would

03:10 - 17.672 monitoring senior

03:10 - 22.744 figures that could be argued by the foundation

03:10 - 26.148 to the court of other burdens

03:10 - 28.483 that may

03:10 - 33.822 the burdens, those burdens and the administrative expenses,

03:10 - 37.058 the proportion to the charitable benefits

03:10 - 40.595 in that at time that the

03:10 - 44.266 founder of the trust created it,

03:10 - 47.269 have any idea that these

03:10 - 50.038 statutes were going to be passed and there would be that

03:10 - 55.644 financial impact on his intent to gift this money to the mine

03:10 - 59.147 for the purposes of the foundation and the.

03:11 - 02.150 Well, Your Honor,

03:11 - 05.620 the the the fact of the matter is, is that the fine is appreciated.

03:11 - 08.690 And so I think that's the most important aspect.

03:11 - 13.094 And what you appreciate is what I'm trying to tease out from you

03:11 - 17.766 that it's appreciated this time and the appreciation

03:11 - 22.938 if this trust had been left to prosper and go forward

03:11 - 28.109 without the impacts of those two,

03:11 - 31.146 the returns of the total return statute

03:11 - 35.250 that was passed in 1998, as well as the operation of pastoral care.

03:11 - 39.788 So the fact, the matter is, is that this statute

03:11 - 43.358 is in accord with Pennsylvania law in limiting

03:11 - 47.829 the two specific circumstances where a charitable trust

03:11 - 50.699 created by an individual can be terminated.

03:11 - 53.768 And the statute says unambiguously

03:11 - 58.240 that if the expenses and, other burdens

03:11 - 03.211 are reasonably and excuse me, unreasonably out of proportion

03:12 - 05.580 to the charitable benefits, and that unreasonably out of proportion

03:12 - 09.551 is a high standard, they unreasonably out of proportion to charitable benefits.

03:12 - 12.187 Then the trust may be terminated.

03:12 - 15.490 As Justice Donahue has noted, this is a permissive statute.

03:12 - 19.561 It does not say the trust shall be terminated at that point.

03:12 - 24.332 If a court determines maybe even that the expenses

03:12 - 28.203 and burdens are unreasonably of proportion of the charitable benefits,

03:12 - 32.307 the court could still choose to continue that trust for a variety of reasons.

03:12 - 33.475 That is not our case.

03:12 - 35.310 What are those reasons?

03:12 - 37.846 So in the context of

03:12 - 42.918 the statute 7740 pertaining to charitable trusts,

03:12 - 46.988 there are not just the Cyprus statute, which is about the failure

03:12 - 49.157 of terrible purpose, which is not this case.

03:12 - 51.860 There's also the provision allowing

03:12 - 54.162 a small trust to be terminated,

03:12 - 58.500 which is not about the failure of purpose or about the benefit.

03:12 - 01.336 And that's where a trust is under $100,000.

03:13 - 04.472 77 40.3 E

03:13 - 08.510 is like a between those two statutes.

03:13 - 12.847 And there's another provision about administrative deviation.

03:13 - 16.952 So, for example, a court could I could imagine a situation

03:13 - 21.723 where a court says, well, the expenses and burdens are out of proportion,

03:13 - 23.224 unreasonably out of proportion.

03:13 - 24.859 The terrible benefits.

03:13 - 29.130 We're not going to terminate the trust, but we're going to reduce those expenses

03:13 - 32.267 or we're going to change the trustee

03:13 - 36.771 under 77, 66 or 77, 68 have to we have to be

03:13 - 40.141 one. When the General

03:13 - 44.112 Assembly grants discretion, it can't grant an unfettered discretion.

03:13 - 45.480 It has to provide guidelines.

03:13 - 48.149 So there has to be statutory guidelines for the exercise,

03:13 - 50.619 the discretion and two we have to be able to review it. Mhm.

03:13 - 56.191 So, so it can't just be if the expenses are out of proportion

03:13 - 00.362 and all the other conditions are met, the orphans court can say

03:14 - 01.496 I'm still not doing it.

03:14 - 03.798 Well that can't be that, that can't be

03:14 - 08.069 that does that there has to be some basis

03:14 - 11.606 upon which the Orphans Court must articulate the exercise of discretion

03:14 - 15.677 such that we can review it on or the Superior Court can review it on appeal,

03:14 - 16.711 no doubt.

03:14 - 18.980 And I agree with that. And That is not this case.

03:14 - 21.383 This case. Well, that's why I'm sure I'm not sure why we went there.

03:14 - 25.053 You're talking about the discretion in the statute

03:14 - 28.289 so that just what Justice Donahue is quite are not just to start justice.

03:14 - 32.494 Monday's question to you was, is there anything in the record

03:14 - 37.399 or that you can point to that shows the difference that Delta

03:14 - 39.934 between the expenses and burdens

03:14 - 43.071 as the trust exists today

03:14 - 46.641 and the expenses and burdens that there would have been

03:14 - 52.647 if it would be if we terminated the trust and gave it to the foundation

03:14 - 57.552 in comparison to the charitable benefits, is there something in the record?

03:14 - 00.422 And I would suggest it would be the appellant's burden

03:15 - 02.190 to put that on the record.

03:15 - 04.526 Is there something in the record that shows us that Delta?

03:15 - 05.593 There's nothing specific.

03:15 - 09.998 But I have to say that the the statute is about the

03:15 - 12.767 the expenses and the burdens

03:15 - 17.939 unreasonably being out of proportion to the charitable benefits.

03:15 - 19.808 And what are the charitable benefits?

03:15 - 24.379 Well, the charitable benefits here are force you to consider what Mr.

03:15 - 25.613 Wells intended.

03:15 - 26.114 So Mr.

03:15 - 32.187 Wells said, I will give my estate if my wife and my children all die,

03:15 - 36.424 I'm going to give all of my money basically to the which was what he did in.

03:15 - 37.425 1956.

03:15 - 39.994 Well, he said, I'm going to give the interest.

03:15 - 44.866 No, he said he was going to give the assets outright to I in 1956.

03:15 - 47.869 He then amended that trust four times

03:15 - 52.841 and in each of those four amendments he instead decided

03:15 - 56.344 no, I'm not going to give that money outright to me am I?

03:15 - 59.180 I'm going to put it into a perpetual charitable trust.

03:15 - 00.982 Could I ask you to follow up then?

03:16 - 03.518 What what? Looking at this statute,

03:16 - 06.955 what is the test,

03:16 - 10.425 if any, that you would propose we adopt

03:16 - 17.265 in applying this, in guiding our trial court's, because it

03:16 - 20.802 presumably should be this beneficiary, whatever the outcome in this case.

03:16 - 21.402 Right.

03:16 - 25.540 How our trial courts in Pennsylvania in your view

03:16 - 29.410 to apply 7743

03:16 - 32.580 e unreasonably out of proportion.

03:16 - 35.817 It's a facts and circumstances

03:16 - 38.753 statute that gives the court

03:16 - 42.157 discretion to not terminate the trust

03:16 - 44.959 because Pennsylvania values

03:16 - 48.329 are Pennsylvanians making charitable gifts

03:16 - 52.233 and also honors and treats

03:16 - 57.038 the intent of the donor as as you mentioned, Your Honor, the Pollstar.

03:16 - 59.908 And that is the most important thing in this bench.

03:17 - 04.112 Earlier this year in Garrison acknowledged the importance of settlor and ten.

03:17 - 06.548 Mr. wells. This was his money.

03:17 - 09.284 He could do what he wanted with his money.

03:17 - 12.320 He decided, well, actually, Brandeis wrote

03:17 - 15.657 a whole book called Other People's Money and How Bankers use it so.

03:17 - 17.725 Well,

03:17 - 19.594 exactly.

03:17 - 21.830 And he was a banker and he was the.

03:17 - 22.997 Yeah, exactly.

03:17 - 27.001 Your your argument could apply to every private trust.

03:17 - 29.370 I don't agree with that.

03:17 - 31.472 In the context of private foundations.

03:17 - 34.175 If you had, for example,

03:17 - 37.512 a private foundation, private charitable trust,

03:17 - 41.950 where the expenses exceeded the distributions to the charity,

03:17 - 44.152 that would be a case.

03:17 - 48.289 What does Justice Wells question So you were the test that you're adopting,

03:17 - 51.860 is that unreasonably out of proportion

03:17 - 54.562 means the expenses exceed the distributions.

03:17 - 55.964 I am not saying that.

03:17 - 57.699 I'm saying that would be an example.

03:17 - 59.367 It's a that's what's the test is.

03:17 - 01.302 It's a facts and circumstances case.

03:18 - 05.039 Schlegel, which we have to give some meaning to the general assemblies.

03:18 - 06.841 Do you? Well, you do.

03:18 - 10.078 What you have to do is you have to read the statute and apply it

03:18 - 13.514 and not let VMI Foundation rewrite the statute,

03:18 - 15.383 because the I agree with that.

03:18 - 17.452 I guess I'm yeah, I agree with you.

03:18 - 20.288 I'm just I'm I'm

03:18 - 23.858 I'm I'm I'm following Justice Week's question,

03:18 - 27.428 which you didn't really answer, which is what is the test.

03:18 - 29.097 What? What?

03:18 - 29.430 Okay.

03:18 - 35.103 So it's not it's not that it has to be more expenses than distribution.

03:18 - 37.272 So it's something short of that.

03:18 - 38.072 What is it?

03:18 - 41.175 Because there has to be something that cabins the discretion of the Orford Court.

03:18 - 43.244 Your Honor, with

03:18 - 47.282 all due, I think the orphans courts do pretty well in this category

03:18 - 50.318 and a lot of there's a right to appeal under the Constitution.

03:18 - 51.185 They have to have it.

03:18 - 52.654 We have to have appellate review.

03:18 - 57.692 The orphans courts are very capable of applying a facts and circumstances case.

03:18 - 59.494 And this statute,

03:18 - 03.431 I mean, the Pennsylvania legislature could have enacted a statute

03:19 - 07.335 that said, if the expenses are equal to the charitable distributions,

03:19 - 08.770 the trust terminates.

03:19 - 11.572 It could have said any number of bright line rules like

03:19 - 14.442 it did with the small charitable trust statute.

03:19 - 17.812 The challenge in your response and I understand I think I understand

03:19 - 21.015 why you're giving Justice Roberts the response to the challenge.

03:19 - 24.886 On the other side of that is suppose tomorrow what regardless

03:19 - 27.388 of what happens in this case, suppose tomorrow

03:19 - 30.525 that consistent with your view,

03:19 - 34.062 the orphans courts start exercising their discretion

03:19 - 39.334 in a way that PNC and other trustees really wouldn't like and start

03:19 - 43.338 terminating these trusts willy nilly.

03:19 - 47.141 Since you're saying it's facts and circumstances, discretion,

03:19 - 52.413 do you recognize you're going to have a hard time overturning those

03:19 - 55.817 on an abuse of discretion standard in the superior court?

03:19 - 00.388 Well, there hasn't exactly been a enormous onslaught of cases.

03:20 - 00.788 Right.

03:20 - 03.558 But but there's no principal reason that couldn't happen.

03:20 - 03.725 Right.

03:20 - 07.762 I mean, others there's like if they get skillful advocates

03:20 - 11.799 like appellant's counsel here in all these beneficiary cases,

03:20 - 15.069 right in the orphans courts around Pennsylvania, hypothetically,

03:20 - 18.573 since you're not offering us any and I'm not faulting

03:20 - 21.809 you just teasing it out here, you're not giving us any real

03:20 - 26.147 you're just saying let the orphans courts use their discretion.

03:20 - 27.415 Okay, fine.

03:20 - 31.352 So if that discretion starts going in a pro beneficiary direction

03:20 - 34.255 for whatever reason,

03:20 - 36.324 then the answer the answer

03:20 - 39.961 according to your standard as well, you know, there go those trusts.

03:20 - 41.462 Right?

03:20 - 46.801 Your Honor, the fact of the matter is that the statute really forces

03:20 - 49.837 a bench to look at subtler intent

03:20 - 55.576 and contrary to the argument and VMI Foundation's brief,

03:20 - 59.547 we are certainly not saying that the existence of a charitable

03:20 - 03.051 trust bars the application of 77 40.3.

03:21 - 05.686 We're saying you have to apply the standard.

03:21 - 08.823 The standard of that statute is the standard

03:21 - 13.995 and analysis of

03:21 - 16.431 the fact that

03:21 - 21.002 you whether or not one

03:21 - 29.710 what the administration expert

03:21 - 33.081 never said there's no

03:21 - 35.349 articulation by the orchestra

03:21 - 39.687 of the administrative expenses and other burdens

03:21 - 42.990 which could be applied,

03:21 - 47.028 mandatory pay out and how that affects the school

03:21 - 50.731 from operating as well as the charitable benefits.

03:21 - 55.570 And if you're looking to say, well, let's look at the intent of the

03:21 - 58.673 taxes

03:21 - 02.477 or money going to the BMI and less to the Commonwealth

03:22 - 05.880 than or to your bank and more to Commonwealth

03:22 - 09.450 under taxes to

03:22 - 12.887 support cadets being trained and educated at the AMA.

03:22 - 16.657 Well, Your Honor, the Orphans Court, in a supplemental opinion, in order

03:22 - 20.094 specifically hold that, quote, unreasonable expenses

03:22 - 23.064 out of proportion to the charitable benefit were not evidenced.

03:22 - 26.968 And the Superior Court concluded that BMI failed to meet its burden

03:22 - 30.338 of the standard under 77 40.3.

03:22 - 34.609 And I do want to talk for a minute about this issue of the 5%.

03:22 - 36.644 Okay.

03:22 - 39.981 I could spend the next couple of hours talking about

03:22 - 42.917 the change in trust law across the nation.

03:22 - 43.818 Oh, please do.

03:22 - 46.787 Oh, I thought you would enjoy that. Please don't.

03:22 - 50.258 But I will refrain from doing so.

03:22 - 52.593 But I'm happy to take questions on this.

03:22 - 56.197 But suffice it to say that there is a more modern approach

03:22 - 59.467 to the administration of trusts charitable and non charitable,

03:22 - 02.970 so that it used to be income to a remainder to be.

03:23 - 06.841 And the definition of income has now been modernized

03:23 - 10.545 so that the trusts in general are allowed to invest

03:23 - 14.382 on a total return basis and make a distribution

03:23 - 17.818 that is a percentage that approximates what the income would be

03:23 - 21.923 if the trust had been invested on a more balanced basis,

03:23 - 24.592 which, by the way, typically would result in less income.

03:23 - 29.263 So the the fact that this change has occurred

03:23 - 33.834 not only on the federal side with respect to private foundations,

03:23 - 35.770 because they wanted to make sure that money

03:23 - 39.574 just piling up in in private foundations, but money was being distributed

03:23 - 42.543 to the charitable purposes ultimately.

03:23 - 46.247 But the 5% is a red herring here.

03:23 - 47.515 That is not the issue.

03:23 - 51.185 And I not just a red herring, but I have to say that

03:23 - 56.123 Mr. Roberts mentioned a number of purported

03:23 - 00.127 unanticipated circumstances, the 5% as an example.

03:24 - 05.132 Putting aside that, I can speculate probably pretty confidently that Mr.

03:24 - 09.470 Wells, as the president of a bank and trust company, knew

03:24 - 12.573 that this was in the works. He died in 1968.

03:24 - 15.109 The Tax Reform Act is 1969.

03:24 - 17.345 It had been talked about for a long time.

03:24 - 19.914 It had been proposed several times.

03:24 - 21.382 It just hadn't been enacted.

03:24 - 23.417 So I would speculate that he knew.

03:24 - 28.923 But but speculate about that or not, the statute in this case does not include

03:24 - 33.060 as a standard for termination, unanticipated circumstances.

03:24 - 36.831 What statute does 77 40.2,

03:24 - 42.270 which pertains only to non charitable trusts and in that case

03:24 - 47.208 trustees can the trustees can seek to have the court modify or terminate a trust.

03:24 - 49.577 That language doesn't exist here.

03:24 - 52.913 And if you're going to terminate this trust which has

03:24 - 55.950 excise taxes at

03:24 - 59.186 1.39% that are assessed against all

03:24 - 02.156 public private foundations,

03:25 - 07.995 which are conceded by the AMA Foundation to be small.

03:25 - 11.165 And you are going to look at the trustee fees here,

03:25 - 15.803 which are based on Pence's schedule of of of compensation,

03:25 - 20.274 which VMI foundations conceded are reasonable

03:25 - 22.777 and under 77, 68

03:25 - 26.881 fees that are arise under a competitive market or

03:25 - 31.152 are deemed to be reasonable unless there's compelling evidence to the contrary.

03:25 - 33.187 There's no evidence of that here.

03:25 - 34.855 And VMI has conceded it.

03:25 - 39.627 So when you start with this case and you say, well, the fees are reasonable,

03:25 - 43.964 the taxes are small, but we're going to terminate in any way

03:25 - 45.433 because there's this 5%.

03:25 - 48.269 Then what you're going to end up doing, sorry to interrupt you, but

03:25 - 52.340 and the investments of the funds have apparently been successful

03:25 - 54.842 and the distributions have been substantial

03:25 - 58.646 and the appreciation in the fund has been significant.

03:25 - 04.585 If you're going to terminate this particular trust under 77, 40.3,

03:26 - 07.621 then what you're going to have is what we refer to

03:26 - 12.693 as a tsunami, a tsunami of public charities

03:26 - 16.664 that are named beneficiaries of private foundations

03:26 - 21.969 who will come marching in to terminate pretty much every private foundation

03:26 - 25.840 it will under those under those facts, as you so eloquently laid them out,

03:26 - 28.576 it would be an abuse of discretion for the Orphans Court to do so.

03:26 - 32.880 It would be and it's absolutely clear that that

03:26 - 34.815 in this

03:26 - 37.818 case, this whole conversation, if Mr.

03:26 - 40.721 Wells were here today, what would he what would he want?

03:26 - 43.891 Well, we can speculate, but I can also say

03:26 - 47.361 this is just not a pure numbers calculation process.

03:26 - 50.965 There are many reasons that donors

03:26 - 54.001 to charity decide that they want to create

03:26 - 58.506 trusts, perpetual trusts, instead of making outright gift.

03:26 - 00.441 What do they include?

03:27 - 03.077 Well, a lot of donors who, by the way, of course,

03:27 - 07.581 let us all remember it's their money and they don't have to give it to charity.

03:27 - 09.984 And we have a policy of encouraging that.

03:27 - 12.987 And I think a finding to

03:27 - 16.056 not to affirm here would have an incredible

03:27 - 20.995 not only the tsunami effect, but a chilling effect on possible donors.

03:27 - 25.966 So could I get to the point that you discussed we discussed a while ago,

03:27 - 27.968 which is the discretion

03:27 - 32.106 of the trial court, is driven by the facts and circumstances. Yes.

03:27 - 36.544 If we don't have evidence of this record

03:27 - 41.949 that I believe that they doubt that Justice

03:27 - 46.954 was talking about, that that should be the end of the discussion.

03:27 - 49.690 What we know from this case is that there's a concession

03:27 - 53.794 that PNC fees are reasonable and the tax benefits

03:27 - 57.431 or the tax detriments are small.

03:27 - 02.703 Trial court looks at that and says that's not in reasonable

03:28 - 06.574 and reasonably out of proportion I detriment

03:28 - 10.644 as compared to the charitable benefits.

03:28 - 13.347 Isn't that the end of the discussion.

03:28 - 14.682 It is the end of the discussion.

03:28 - 18.519 And more than that, as I mentioned before, it's a permissive statute and the court

03:28 - 22.790 has discretion to not terminate the trust, which is what happened here.

03:28 - 27.061 And the fact of the matter is, is as going back to my point about

03:28 - 28.729 what are the other benefits here

03:28 - 31.198 for a man like Mr.

03:28 - 32.199 Wells, because there might be

03:28 - 35.269 an inclination to say, well, just give him the money.

03:28 - 36.237 Is that Mr.

03:28 - 40.407 Wells might have said to himself, I want a fine.

03:28 - 43.444 That's just fund with my name on it.

03:28 - 45.980 I don't want to be one of a zillion donors

03:28 - 48.616 to the endowment, whether it's segregated or not.

03:28 - 54.421 He might have said, I want independent management of these assets,

03:28 - 58.526 which makes sense because he was a banker and he said maybe.

03:28 - 00.594 He said to himself, I like independent management.

03:29 - 03.697 I like the idea of having

03:29 - 06.500 checks and balances where I have this trustee

03:29 - 10.137 and I have the beneficiary and I have the AG.

03:29 - 11.372 I like that.

03:29 - 13.974 And he liked banks and he loved banks.

03:29 - 17.545 Presumably he was a man before his time in terms of rolling up banks.

03:29 - 20.881 And I disagree with you all day, but

03:29 - 24.518 because I think that you can

03:29 - 26.987 have an administrative expense

03:29 - 30.824 that's totally appropriate,

03:29 - 34.194 but it could be found to be not

03:29 - 36.997 course you could.

03:29 - 41.802 And likewise, I can see a situation where you can have the charges

03:29 - 45.973 that are totally in the realm of reasonable, in fact low,

03:29 - 49.043 but in fact, that situation would

03:29 - 51.946 still be out of proportion to the pure class.

03:29 - 55.416 I think it's just a factor in that analysis.

03:29 - 57.551 It's not it's not engaged.

03:29 - 00.120 It is unreasonable or

03:30 - 01.822 maybe it's not reasonable.

03:30 - 04.825 It's a factor that you have to look at with the other

03:30 - 07.027 burdens of

03:30 - 10.531 trust.

03:30 - 16.270 Well, that's my whole point today, is that and I just looked at the opinion

03:30 - 20.307 there's a blue light aircraft when the trial court says,

03:30 - 26.146 oh, no, the expenses and the burden got on the portion.

03:30 - 28.716 But I have no idea really what they

03:30 - 32.653 balanced that consideration.

03:30 - 38.425 So I do think justice and justice Roberts's point is like,

03:30 - 39.994 where's the rule?

03:30 - 41.996 Like without regard to review, but

03:30 - 45.332 what are we supposed do you know the point?

03:30 - 47.101 Well, I don't think it's

03:30 - 49.837 your answer is we look at the full star entitlement.

03:30 - 51.572 Let's look at the intent of Mr.

03:30 - 53.540 Wells. Well, we know what he wanted.

03:30 - 55.342 He wanted his money.

03:30 - 58.212 Well, he wanted his money to be independently held and managed

03:30 - 01.348 in a separate perpetual trust trust, a charitable trust

03:31 - 04.051 which cannot be totally disregarded.

03:31 - 08.555 And the analysis doesn't work here, that this is not a trust

03:31 - 11.492 with expenses and burdens that are unreasonable

03:31 - 16.330 and on any level, let alone unreasonably out of proportion to charitable benefits.

03:31 - 21.368 And the fact of the matter is, is that, you know, some of the aspects that the

03:31 - 26.640 my foundation points to as a burden, the 5% distribution, that's not a burden.

03:31 - 28.142 That's a benefit.

03:31 - 30.778 The trial court or the orphans court should have discussed that.

03:31 - 34.348 So you can we could look at what the reasoning was.

03:31 - 36.016 The the orphans court

03:31 - 39.353 came to a conclusion and exercise this

03:31 - 43.390 discretion, decided that it was not going to terminate this particular trust.

03:31 - 47.895 And I would say to to Your Honor, that this is not the trust

03:31 - 53.834 to terminate, to use as a an opportunity,

03:31 - 57.304 so to speak, under 77 40.3,

03:31 - 02.743 to terminate a foundation that's working in a private foundation

03:32 - 07.047 that is not, by any stretch of the imagination, having expenses

03:32 - 10.250 and burdens that are unreasonably out of proportion to the charitable benefits.

03:32 - 13.120 Counsel Are there facts of record

03:32 - 18.125 that support the orphans court's conclusion in this case

03:32 - 21.328 that the administrative expenses and other burdens did

03:32 - 25.265 not were not unreasonably proportionate with the charitable benefit?

03:32 - 27.568 Well, as an initial matter,

03:32 - 30.471 the parties all agree there are no material issues in dispute

03:32 - 34.675 here, and the matter is determined based on the facts that support the trial

03:32 - 35.709 court's conclusion.

03:32 - 40.080 The court ruled on a motion for summary uncrossed motions for summary judgment.

03:32 - 44.818 So that's and you had a hearing and and that's how the court reached its decision.

03:32 - 47.588 And again, the Court has discretion, Mr.

03:32 - 50.390 Donoghue, as to what is the evidence what are the facts?

03:32 - 54.261 What are the facts that support that that they were

03:32 - 57.865 I've been reading about facts in the briefs and things of that nature.

03:32 - 59.566 Nobody seems to talk about it.

03:32 - 05.606 But I mean, the tax the tax benefits, for example, from the termination

03:33 - 10.477 would be about $16 a year.

03:33 - 11.812 Is that correct?

03:33 - 14.848 If this if this I mean, this is in the brief

03:33 - 18.485 synopsis, this in the record somewhere or I'm asking you what.

03:33 - 21.722 Yes, in the record supports what the trial court did here.

03:33 - 24.391 I believe in the record.

03:33 - 29.329 I have a good recollection of the motion for summary judgment,

03:33 - 32.599 but the excise taxes are indicated and they vary.

03:33 - 36.303 So they are on average were about 30 $100

03:33 - 40.107 over the course of 2017, 2018 and 2019.

03:33 - 44.444 The distributions during that period were on average of about $71,000,

03:33 - 47.381 and I believe that that's in the motion for summary judgment.

03:33 - 49.917 Trust motions. Okay.

03:33 - 54.021 So that supports the trial court's conclusion at 30 $100 compared

03:33 - 59.226 to the $70,000, supports the trial court's conclusion that the expenses

03:34 - 02.763 were not unreasonably out of proportion to the benefits.

03:34 - 03.964 Correct? Yeah. Okay.

03:34 - 06.667 That would be an aspect of the of the analysis. Absolutely.

03:34 - 07.401 Are there others

03:34 - 09.736 again, the

03:34 - 12.239 the I would call intangible benefits that

03:34 - 16.710 are to be taken into account that include the

03:34 - 19.780 the concept that the settlor chose

03:34 - 22.683 to have his assets be held in a perpetual charitable trust.

03:34 - 26.053 And I want to just I was going to go back to this point about what if Mr.

03:34 - 28.455 Wells were here today? What would he say?

03:34 - 28.922 I think.

03:34 - 30.924 Mr. Wells because we're going to speculate.

03:34 - 32.192 I would speculate that Mr.

03:34 - 32.659 what Mr.

03:34 - 37.064 Wells would say, it's terrific that after 20 years,

03:34 - 41.468 that VMI Foundation has benefited by more than $640,000.

03:34 - 44.171 That was just for a ten year period. So it's been double that.

03:34 - 48.275 And that the assets of the fund have appreciated substantially

03:34 - 52.446 and and it's still a separate fund that presumably he wanted.

03:34 - 56.516 I think he would be happy with that but we won't know all we know is

03:34 - 59.720 we can look at the document and we can see what he said.

03:35 - 03.423 And he said, I'm going to have a perpetual charitable trust.

03:35 - 05.859 And I don't think that at any

03:35 - 08.896 there should be a view

03:35 - 11.832 that what's unreasonable are the standard

03:35 - 16.403 and quite modest excise taxes and the fees. Mr.

03:35 - 21.275 Wells, as a sophisticated banker who in his own trust said

03:35 - 25.646 pay the expenses out of the trust, and he was aware that there would be

03:35 - 30.817 expenses associated with the separate maintenance of an independent

03:35 - 33.387 private foundation.

03:35 - 37.224 And the fact of the matter is, is we're going to say that

03:35 - 41.395 that you have to have the lowest cost provider,

03:35 - 43.664 because that's part of the argument here, is

03:35 - 49.303 VMI Foundation is trying to get this bench to rewrite the statute to say

03:35 - 53.974 if somebody else can manage this money for less, give it to them.

03:35 - 55.575 He was aware of those expenses.

03:35 - 57.978 That's how he made all his money.

03:35 - 58.912 That's exactly correct.

03:35 - 01.481 He was a sophisticated set lawyer here.

03:36 - 03.050 He is not your average guy.

03:36 - 07.487 And you have this trail, extraordinary trail of his original gift

03:36 - 12.025 and the trust in 1956, where he does leave the money outright to VMI.

03:36 - 14.628 And then he changes his mind.

03:36 - 17.764 I mean, some people want to protect their own charitable

03:36 - 21.668 funds, even, for example, from the claims of creditors of the

03:36 - 25.038 of the charity schools and charities go out of business.

03:36 - 26.306 They get sued.

03:36 - 27.641 You know, there are any number of reasons

03:36 - 30.210 he would have wanted to have that separate, independent fund.

03:36 - 35.349 And he knew there were expenses and he directed that those expenses

03:36 - 38.652 in his trust, he directed that those expenses get paid from the trust.

03:36 - 42.356 He directed that the trustee here be paid

03:36 - 46.593 based on their schedule of compensation, which, by the way, I assume his own bank

03:36 - 49.529 had a schedule of compensation and he was very aware of that as well.

03:36 - 53.500 And we have to give sellers the ability to give their

03:36 - 56.570 to charity using the vehicle they choose.

03:36 - 00.974 For us to sit here years later and say, hey, the charity,

03:37 - 02.542 which can do it for less.

03:37 - 07.347 And by the way, charities always want their money outright, right?

03:37 - 08.882 They always do.

03:37 - 11.551 And they will always say that they can do it for less

03:37 - 14.054 and maybe they can do it for less.

03:37 - 17.924 But there are these other intangible benefits that presumably Mr.

03:37 - 21.561 Wells was interested in and that he knew all about.

03:37 - 24.164 And that was the thing he chose to do.

03:37 - 29.236 And maybe tangible benefits too, such as the degree of appreciation.

03:37 - 32.272 But what exactly are you have I mean,

03:37 - 35.242 this is not case where the assets are diminishing.

03:37 - 38.245 This is not a case where they get a little bit of money every year.

03:37 - 42.682 This is a situation where the where PNC has has, you know, masterfully

03:37 - 45.819 manage this money with a 5% distribution

03:37 - 49.056 and a 40% growth in a ten year span.

03:37 - 51.091 It's his money. It was his money.

03:37 - 52.626 He settled the trust.

03:37 - 56.163 It was his my come back to the it was at the end of the day, it was his money.

03:37 - 59.900 I do a lot of estate planning and I tell my clients all the time

03:38 - 01.334 that it's their money

03:38 - 04.504 and if they want, put it in the driveway and set it on fire, they can.

03:38 - 06.073 I don't recommend it.

03:38 - 09.276 Very few clients go that route, but I do have clients who say

03:38 - 13.180 I don't want that charity to get the money outright.

03:38 - 15.682 Well, if they're going to do that, they should pay your fee first,

03:38 - 16.883 that's for sure.

03:38 - 19.052 Of course, that goes without saying, Your Honor, over there.

03:38 - 22.255 My question is, when are you beginning that to history?

03:38 - 25.525 Yeah, well, you can hardly wait, I'm sure.

03:38 - 26.493 All right.

03:38 - 29.262 I think we I think we understand your argument, Mr.

03:38 - 31.698 Sager. Let's hear from the attorney general's office.

03:38 - 33.200 I thank you for your time today.

03:38 - 35.535 And I do ask that you affirm the court's below.

03:38 - 36.870 Thank you, Mr.

03:38 - 41.041 Roberts. You.

03:38 - 43.276 How'd I do with that pronunciation?

03:38 - 45.045 It's Kovacic. Thank, but that.

03:38 - 46.480 That's okay. That's close.

03:38 - 48.215 Thank you, Madam Chief Justice.

03:38 - 48.849 I thought.

03:38 - 52.052 I hit a home run this.

03:38 - 53.520 My name is Anthony Kovacic.

03:38 - 56.590 I'm a deputy attorney general for the Commonwealth of Pennsylvania.

03:38 - 58.892 And I'm here on behalf of the Commonwealth

03:38 - 00.760 in order to avoid

03:39 - 05.732 repetition I'm going to try to follow up on Justice Week's question and address

03:39 - 09.603 any other questions that that may come up in terms of the standard

03:39 - 12.839 for interpreting Section 77.3,

03:39 - 15.509 I tried to provide guidance in the brief,

03:39 - 21.615 and it actually relates very closely to what I was preparing to say anyway.

03:39 - 26.086 And that is if you look back at the history of your jurisprudence,

03:39 - 29.589 what the VMI Foundation is

03:39 - 32.192 essentially doing is trying to displace

03:39 - 36.530 over a century of precedent I'm aware of.

03:39 - 38.698 The earliest one that I'm specifically aware of

03:39 - 43.403 is the UNRWA's a state case which this this court decided in 1915

03:39 - 47.607 when it refused to terminate a trust that had been set up for an orphanage.

03:39 - 51.945 You know, at the request of the orphanage, the standard

03:39 - 55.282 for interpreting it, I'm not going to try to put numbers on it.

03:39 - 58.618 But the 1924 decision that you issued,

03:39 - 02.088 Bachmann's estate specifically says that

03:40 - 03.990 termination of a

03:40 - 07.861 trust in that case it was a church is not appropriate.

03:40 - 13.567 If the settlor designates that mechanism, forget for giving his or her gift.

03:40 - 17.938 Unless termination is necessary to facilitate

03:40 - 23.076 or give effect to the to the trust, the settlers expressed purpose.

03:40 - 26.513 And that standard,

03:40 - 28.982 I think, is actually very similar

03:40 - 31.084 many ways to what the Court

03:40 - 34.521 of Appeal of Illinois said in the Church of the Little Flower case,

03:40 - 38.792 which I also cite in the brief, which is the only case that I could

03:40 - 42.896 specifically find, where an appellate court addressed a request

03:40 - 47.601 to terminate a trust at the behest of a beneficiary,

03:40 - 51.871 specifically because the trust was classified as a private foundation.

03:40 - 55.442 And the Court of Appeal of Illinois that was 2012,

03:40 - 58.578 said it's inappropriate to simply terminate a

03:40 - 01.381 because the beneficiaries

03:41 - 04.084 would be a little bit better off or get a little bit more money

03:41 - 08.755 than they would if the private foundation were to continue what?

03:41 - 10.790 Okay, so

03:41 - 13.560 I see a little difference and maybe I misheard you between

03:41 - 16.963 your first articulation of the test and your second articulation of the test.

03:41 - 21.368 In the most recent article one being, it would unreasonably out of proportion

03:41 - 25.305 does not mean there would be less administrative expenses

03:41 - 28.775 or administrative burdens than there currently are.

03:41 - 29.142 Yeah.

03:41 - 32.479 Because reasonable has meaning. But but.

03:41 - 35.649 But you are first said something along the lines of

03:41 - 38.818 if the intent of the settlor

03:41 - 44.224 somehow wouldn't be fulfilled.

03:41 - 47.761 And certainly if that were just the test,

03:41 - 50.563 as long as there's a $1 distribution

03:41 - 53.566 and ridiculously high administrative expenses,

03:41 - 57.203 the intent of the settlers being satisfied because the distribution of $1.

03:41 - 01.741 So it has to be I link to your last articulation

03:42 - 06.012 over your first one, which is look at the charitable benefits

03:42 - 11.318 in toto and compare it to the burdens of this current thing

03:42 - 14.888 and are they unreasonably out of proportion is

03:42 - 18.992 is is is the administrative administrative burden.

03:42 - 23.163 You know and again I think the trial court the Orphans Court to Justice Donohue's

03:42 - 25.332 point has a lot of discretion here to determine

03:42 - 27.467 what is reasonable and unreasonable under the circumstances.

03:42 - 31.805 But is it is it so high that

03:42 - 35.942 that the General Assembly's decision

03:42 - 40.513 that we may displace the settlers chosen vehicle is triggered?

03:42 - 43.550 The standard is the standard that is so high

03:42 - 45.785 that it has to literally offset the dollar.

03:42 - 46.686 I don't I don't know.

03:42 - 49.923 But it can't it can't be your first articulation, which is

03:42 - 53.893 which is basically as long as as long as the settlers intent

03:42 - 57.564 of a distribution of income is is, you can't end it.

03:42 - 00.600 There has to be something else.

03:43 - 04.437 But where I was going with that was actually the Court of Appeal of

03:43 - 08.208 Illinois went on to say that in order for the trust to be term,

03:43 - 09.709 for termination, to be appropriate,

03:43 - 13.446 the trust must be so inefficient that it interferes with a trust purpose.

03:43 - 15.715 And what I was doing was drawing

03:43 - 19.386 a parallel between what they said in that particular instance

03:43 - 25.058 to what you said in 1924 and saying, even though we have a different standard

03:43 - 28.928 and even though they don't have the same statutory language, the test appears,

03:43 - 33.199 what they're saying is what they were calling the inappropriate

03:43 - 38.238 way to look at it is the exact test that this court applied in 1924.

03:43 - 41.007 So What tests were those tests interpreting the General Assembly's

03:43 - 43.710 use of the phrase unreasonably and they were not.

03:43 - 45.311 But the general have to give intent

03:43 - 49.549 to the General Assembly, not the Supreme Court of Illinois or Iowa.

03:43 - 52.185 Well, I. I agree with I agree with that.

03:43 - 56.523 But what I'm alluding to is the fact that the General Assembly is presumed

03:43 - 00.527 to be aware of the legal that exist when it legislates.

03:44 - 04.898 And it doesn't necessarily in in the appellate court of Illinois.