J-A33031-14

                           2015 PA Super 53

IN RE: RAYMOND G. PERELMAN                  IN THE SUPERIOR COURT OF
CHARITABLE REMAINDER UNITRUST                     PENNSYLVANIA
UNDER AGREEMENT OF TRUST DATED
APRIL 25, 1996


APPEAL OF: JEFFREY E. PERELMAN

                     Appellant                   No. 151 EDA 2014


              Appeal from the Decree of December 9, 2013
          In the Court of Common Pleas of Philadelphia County
                 Orphans' Court at No.: 529 IV of 2013


IN RE: RAYMOND AND RUTH PERELMAN            IN THE SUPERIOR COURT OF
COMMUNITY FOUNDATION UNDER                        PENNSYLVANIA
AGREEMENT OF TRUST DATED AUGUST
21, 1995, AS AMENDED


APPEAL OF: JEFFREY E. PERELMAN

                     Appellant                   No. 155 EDA 2014


              Appeal from the Decree of December 9, 2013
          In the Court of Common Pleas of Philadelphia County
                 Orphans' Court at No.: 520 IV of 2013


IN RE: RAYMOND AND RUTH PERELMAN            IN THE SUPERIOR COURT OF
EDUCATION FOUNDATION UNDER                        PENNSYLVANIA
AGREEMENT OF TRUST DATED AUGUST
21, 1995, AS AMENDED


APPEAL OF: JEFFREY E. PERELMAN

                     Appellant                   No. 162 EDA 2014


              Appeal from the Decree of December 9, 2013
          In the Court of Common Pleas of Philadelphia County
                 Orphans' Court at No.: 519 IV of 2013
J-A33031-14




IN RE: RAYMOND AND RUTH PERELMAN                 IN THE SUPERIOR COURT OF
JUDAICA FOUNDATION UNDER                               PENNSYLVANIA
AGREEMENT OF TRUST DATED AUGUST
21, 1995, AS AMENDED


APPEAL OF: JEFFREY E. PERELMAN

                            Appellant                No. 163 EDA 2014


                  Appeal from the Decree of December 9, 2013
              In the Court of Common Pleas of Philadelphia County
                     Orphans' Court at No.: 521 IV of 2013


IN RE: RAYMOND AND RUTH PERELMAN                 IN THE SUPERIOR COURT OF
FAMILY CHARITABLE FOUNDATION                           PENNSYLVANIA
UNDER AGREEMENT OF TRUST DATED
APRIL 25, 1996, AS AMENDED


APPEAL OF: JEFFREY E. PERELMAN

                            Appellant                No. 164 EDA 2014


                  Appeal from the Decree of December 9, 2013
              In the Court of Common Pleas of Philadelphia County
                     Orphans' Court at No.: 528 IV of 2013


BEFORE: LAZARUS, J., WECHT, J., and STRASSBURGER, J.*

OPINION BY WECHT, J.:                               FILED MARCH 17, 2015

       Jeffrey Perelman appeals the decrees1 of the Philadelphia County Court

of Common Pleas Orphans’ Court sustaining the preliminary objections of

____________________________________________


*
       Retired Senior Judge assigned to the Superior Court.



                                           -2-
J-A33031-14



Raymond Perelman to Jeffrey’s2 petitions. In those petitions, Jeffrey seeks

production of a broad array of documents pertaining to various charitable

trusts (the “Charitable Entities”) established by Raymond as settlor and

administered by Raymond as an original trustee, as well as records from

various entities that allegedly are controlled by Raymond.        Jeffrey alleges

that these Raymond-controlled entities improperly did business with the

Charitable Entities.       The orphans’ court sustained Raymond’s preliminary

objections solely upon the basis that Jeffrey lacked standing to seek the

production in question.         Although we do not pass upon any of Jeffrey’s

specific document requests, we conclude that the orphans’ court erred in

finding that Jeffrey lacked standing to attempt to establish a legal basis for

the production in question.           Accordingly, we reverse the orphans’ court

decrees sustaining Raymond’s preliminary objections, and we remand for

further proceedings.


                       _______________________
(Footnote Continued)
1
       As the caption indicates, this decision encompasses five separate
appeals, which this Court consolidated sua sponte pursuant to Pa.R.A.P. 513
by order entered on February 27, 2014. As explained at greater length,
infra, the substance of the underlying proceedings, the orphans’ court’s
rulings, and the appeals at issue enables us to provide a unitary discussion
that applies equally to all five appeals.
2
       The parties, the orphans’ court, and now this Court, adopt the
convention of referring to the various members of the Perelman family
involved in this action, or its genesis, by their given names to minimize
confusion. Our employment of this convention is a convenience, but by no
means suggests that this Court views the parties informally.




                                            -3-
J-A33031-14



       The orphans’ court has provided the following factual and procedural

background of this case:

       On June 27, 2013, Jeffrey Perelman (“Jeffrey”) filed amended
       petitions seeking a court order requiring his father, Raymond
       Perelman (“Raymond”), to produce for inspection and copying all
       books and records related to the administration, distribution and
       investment of the following charitable foundations1 established
       by Raymond and his Wife, Ruth Perelman [“Ruth”][3]:

          The Raymond and Ruth Perelman Judaica Foundation[,]

          The Raymond and Ruth Perelman Community Foundation,
          and[]

          The Raymond and Ruth Perelman Education Foundation[.]

       According to Jeffrey, these three foundations were established
       by separate, identical Agreements of Trust dated August 21,
       1995.    Jeffrey also filed amended petitions relating to the
       Raymond G. Perelman Charitable Remainder Unitrust under
       Agreement of Trust dated April 25, 1996 and the Raymond and
       Ruth Perelman Family Charitable Foundation under Agreement of
       Trust dated April 25, 1996.[4]
____________________________________________


3
       Jeffrey requested, in the alternative, that Raymond be directed “to
prepare and file with the [orphans’ court] accountings of the administration
of the [Charitable Entities].” Amended Petition for Inspection of Books and
Records (521 of 2013) ¶¶ 65. Given the sweep and nature of Jeffrey’s
requests, it is difficult to distinguish those requests from an overarching
request for an accounting, except insofar as they also seek records from
outside entities that he alleges did improper business with the Charitable
Entities. Because the requests are effectively indistinguishable from an
accounting, we view them as the latter, as to which there is far more
relevant case law.
4
      Based upon the parties’ approaches to these cases and our review of
the record, we understand that these various entities are all subject to
materially identical governing documents, and that Jeffrey’s arguments are
identical as to each. Accordingly, we address all of the petitions, docketed in
the Philadelphia County Orphans Court at 519, 520, 521, and 528 IV
(Footnote Continued Next Page)


                                           -4-
J-A33031-14


      ____________________
          1
             Jeffrey had initially filed a petition seeking this
          information on April 24, 2013.       When preliminary
          objections were filed by Raymond and Ronald Perelman,
          however, Jeffrey responded by filing his amended
          petitions.

      In addition to inspecting and copying the books and records of
      the Charitable Entities, Jeffrey also seeks to inspect and copy
      “the books and records of the entities with whom the Education
      Foundation engaged in business and/or financial transactions”
      that were owned or controlled by Raymond [or Jeffrey’s brother,
      Ronald Perelman (“Ronald”)5], individually or as trustee.
      [Raymond and Ronald] vigorously opposed these petitions,
      asserting, inter alia, that they should be dismissed because
      Jeffrey lacks standing to pursue them. It is undisputed, for
      instance, that Jeffrey was not a beneficiary of any of these
      charitable foundations. In addition to Jeffrey’s lack of standing,
      Raymond asserts that Jeffrey’s petition should be dismissed for
      failure to join or identify indispensable parties. He claims that it
      is also factually defective in failing to name the business entities
      whose corporate books and records are sought. Raymond also
      maintains that Ruth [Perelman’s] estate [“Ruth’s Estate” or the
      “Estate”]6 faces no liability attributable to the administration of
      the Foundation during her trusteeship for various reasons. In
      response, Jeffrey argues that he has standing as the executor of
      [Ruth’s E]state and as a successor trustee. . . .

      Factual Background

      An analysis of [Jeffrey’s] standing to gain access to the books
      and records of the [Charitable Entities] hinges on the various
      documents and amendments to those documents that were
      executed to establish the [C]haritable [Entities]. On August 21,
                       _______________________
(Footnote Continued)

of 2013, in a unitary discussion.        As noted, supra, we refer to them
collectively as the “Charitable Entities.”
5
      Ronald is not a party to the instant appeal.
6
      Ruth was an original trustee for the Charitable Entities, although her
trusteeship allegedly was terminated several years before her death.



                                            -5-
J-A33031-14


     1995, [Ruth and Raymond] executed an Agreement of Trust
     (“August 21, 1995 Trust Agreement” or “1995 Trust
     Agreement”) to establish the Raymond and Ruth Perelman
     Education Foundation.       In this agreement, they designated
     themselves as trustees or original trustees. As Raymond notes,
     this foundation is exempt from income taxation as a private
     foundation within the meaning of the Internal Revenue Code of
     1986. One key provision of this initial 1995 trust agreement
     that is at the heart of the present dispute is Item FOURTH which
     provides:

       FOURTH—Irrevocability: This trust is expressly stated to be
       irrevocable, provided, however, that this trust, except for
       this Item FOURTH, may be amended at any time or times
       by written instrument or instruments signed and
       acknowledged by the Original Trustees then serving.
       However, no amendment shall authorize the Trustees to
       conduct the affairs of this trust in any manner or for any
       purpose contrary to the provisions of Section 501(c)(3) of
       the Code.

     Another key provision of the initial 1995 trust agreement is Item
     SEVENTH, which states:

       SEVENTH—Trustees: Additional and Successor Trustees
       may be appointed as follows:

          1. The Original Trustees may, if they deem it
             appropriate, by joint action, or by the sole action of
             the latter to serve of them, appoint at any time, or
             from time to time, Additional or Successor Trustees;
             and by joint action, or by the sole action of the latter
             to serve of them, dismiss any such Additional or
             Successor Trustee, with or without cause, and
             without any requirement to appoint a replacement.
             This authority to appoint Additional Successor
             Trustees does not foreclose a decision by the Original
             Trustees, or by the latter to serve of them, to
             administer the Foundation without Additional and
             Successor Trustees until such time as both of the
             Original Trustees are no longer serving.

          2. Upon the termination of service by any Trustee, for
             whatever reason, no accounting shall be required,
             unless an original Trustee, or a majority of all
             Trustees other than the terminating Trustee, shall

                                   -6-
J-A33031-14


              insist, and the release by the remaining Trustees of
              the terminating Trustee shall be a complete
              discharge to the terminating Trustee of all liability for
              his or her service.

     August 21, 1995 Trust Agreement, Item SEVENTH.

     On February 12, 1996, Raymond and Ruth amended this initial
     August 21, 1995 Trust Agreement for the Education Foundation
     with the “First Amendment and Restatement of the Raymond
     and Ruth Education Foundation” (hereinafter “February 12, 2006
     Amended Trust Agreement”). Item FOURTH was amended as
     follows to give Raymond sole authority to amend the trust prior
     to his death:

       FOURTH—Irrevocability: This trust is expressly stated to be
       irrevocable; provided, however, that this trust, except for
       this item FOURTH, may be amended at any time or times
       by written instrument or instruments signed and
       acknowledged by RAYMOND PERELMAN.            However, no
       amendment shall authorize the Trustees to conduct the
       affairs of this trust in any manner or for any purpose
       contrary to the provisions of Section 501(c)(3) of the
       Code. In addition, after RAYMOND PERELMAN’s death,
       resignation or permanent incapacity, at any time, or from
       time to time, the then surviving Trustees shall have the
       power to amend this Agreement or any of its terms in any
       manner required for the sole purpose of ensuring that the
       trust qualifies and continues to qualify under Section
       501(c)(3) of the Code.

     Significantly, this amendment was signed by both original
     settlors and trustees who were then serving: Ruth and Raymond
     Perelman.

     Item SEVENTH of the February 12, 1996 Amended Trust
     Agreement likewise continued to provide that “no accounting”
     would be required upon the termination of “service by any
     Trustee, for whatever reason” unless an original trustee “shall
     insist.” Moreover, “the release by the remaining trustees of the
     terminating Trustee shall be a complete discharge to the
     terminating Trustee of all liability for his or her service.”

     On November 12, 2007, Raymond amended the February 12,
     1996 Amended Trust Agreement. Two years later, on August
     18, 2009 Raymond revoked in its entirety the February 12, 1996

                                    -7-
J-A33031-14


     Amended Trust Agreement. In so doing, he removed Ruth as
     original trustee. He also changed the successor trustees upon
     Raymond’s death from his sons Jeffrey and [Ronald] to Ronald
     and Debra Perelman [“Debra”]. Ruth died [on] July 31, 2011.

     In 2013, Raymond executed more amendments to the trust
     document. On May 13, 2013, Raymond, serving as the sole
     Original Trustee of the trust, revoked the November 12, 2007
     Amendment and the August 18, 2009 Amendment in their
     entirety. This May 13, 2013 Amendment further provides that
     the successor trustees upon Raymond’s death would be [Ronald
     and Debra]. A few weeks later, on May 29, 2013, Raymond
     once again amended the trust to provide in Item SEVENTH that
     “at no time” shall [Jeffrey] serve as a successor trustee for this
     foundation. By document dated June 11, 2013[,] Raymond
     amended and restated the trust for the Raymond and Ruth
     Perelman Education Foundation. It appoints Ronald and Debra
     to serve with him as additional trustees of the foundation upon
     acceptance of that appointment. It states Jeffrey shall never
     serve as successor trustee. According to Raymond, this June 11,
     2013 Amendment and Restatement is the “operative governing”
     trust document for the Education Foundation.

Orphans’ Court Opinion (“O.C.O.”), 12/6/2013, at 1-4 (footnoted citations to

the record omitted).

     Citing Jeffrey’s non-beneficiary status, the breadth of his requests for

disclosure, Ruth’s failure to seek compensation for her service while she was

alive, and the absence of any imminent tax liability as well as Raymond’s

commitment individually to indemnify Ruth’s Estate for any liability arising

from Ruth’s trusteeship for the Charitable Entities, by decrees dated

December 4, 2013, docketed on December 6, 2013, and transmitted to the




                                    -8-
J-A33031-14



parties on December 9, 2013,7 the orphans’ court determined that Jeffrey

lacked standing to request the information in question and sustained

Raymond’s preliminary objections to Jeffrey’s petitions. This timely appeal

followed.8

       Before this Court, Jeffrey raises the following issues:

       1.    Does [Jeffrey], as Executor of [the Estate], have standing
       to bring the petitions below seeking discovery in support of a
       request, by [Ruth’s] Estate, for compensation through the date
       of her death for Ruth’s service as trustee?

       2.     Does Jeffrey, as Executor of [Ruth’s] Estate, have standing
       to bring the petitions below seeking discovery relating to
       management of the [Charitable Entities] during Ruth’s service as
       a trustee to assess the Estate’s potential liability to the Internal
       Revenue Service for transactions engaged in by the [Charitable
       Entities] during her tenure?

Brief for Jeffrey at 2-3.




____________________________________________


7
      Jeffrey purported to appeal the December 4, 2013 decrees. However,
pursuant to Pa.R.A.P. 108(a)(1), “the day of entry [of an appealed-from
order] shall be the day the clerk of the court . . . mails or delivers copies of
the order to the parties,” as required by Pa.R.C.P. 236(a)(2). Our docket
has been corrected to reflect this fact.
8
      The orphans’ court did not direct Jeffrey to file a concise statement of
the errors complained of on appeal pursuant to Pa.R.A.P. 1925(b). The
court relies upon the opinion it issued contemporaneously with the appealed-
from orders in satisfaction of its obligation to furnish this Court with an
opinion under Rule 1925(a). That opinion provides an explanation of the
basis for the orphans’ court’s rulings that is sufficient to enable our thorough
review of the issues presented.



                                           -9-
J-A33031-14



       Both issues address Jeffrey’s standing, in his capacity as executor of

Ruth’s estate, to request certain documentation of the Trusts and other

related entities.9

       A party seeking judicial resolution of a controversy must, as a
       prerequisite, establish that he has standing to maintain the
       action. Standing requires a party to have a substantial interest
       in the subject matter of the litigation; the interest must be
       direct; and the interest must be immediate and not a remote
       consequence. The inquiry into standing ascertains whether a
       party is the proper party entitled to make the legal challenge to
       the matter involved. A person who has no stake in the matter
       has no standing to obtain judicial resolution of his challenge to
       the matter.

       A trustee must file an accounting when directed to do so by the
       Orphans’ Court division, and may file an account at any other
       time. 20 Pa.C.S.A. § 7181. The court may cite the trustee, on
       application of a person in interest, to file an account of the
       management of a trust estate. Further, a trustee must file an
       accounting upon the request of the beneficiary of the trust.
       However, even the next of kin of a beneficiary of a trust has no
       interest in the trust, which would automatically entitle such
       person to demand that the trustee file an accounting. If, upon
       citation to file a formal account, the trustee acquiesces without
       challenge and provides a formal accounting to the next of kin of
       the beneficiary of the trust, then the trustee cannot be heard to
       argue that the next of kin lacks standing to demand a filing of an
       account.




____________________________________________


9
       In the orphans’ court, Jeffrey also sought to establish standing as a
successor trustee, opining that Raymond’s amendments to the Charitable
Entities’ governing documents purporting to remove him from that status
were improper and ineffective. The orphan’s court rejected this argument.
Jeffrey does not appeal, and we need not consider, that aspect of the
orphans’ court’s ruling.



                                          - 10 -
J-A33031-14



Rock v. Pyle, 720 A.2d 137, 142 (Pa. Super. 1998) (case citations

omitted).

      Although the factual background, as condensed above, is somewhat

confusing, Jeffrey’s issues on appeal are straightforward.          First, Jeffrey

submits that Ruth’s Estate, for which he serves as executor, has standing to

examine the Charitable Entities’ records to determine whether Ruth, and by

extension the Estate, are entitled to compensation for her administrative role

vis-à-vis the Charitable Entities. Second, Jeffrey submits that the Estate has

standing to seek the records in question to determine whether the Estate

might be exposed to liability to the IRS for any actions or transactions by the

Charitable Entities that occurred while Ruth shared responsibility for the

Charitable Entities’ administration.

      Jeffrey’s issues pertain to the orphans’ court’s rulings sustaining

Raymond’s     preliminary   objections     to   Jeffrey’s   disclosure   requests.

“Preliminary objections, the end result of which would be dismissal of a

cause of action, should be sustained only in cases that are clear and free

from doubt.” Bower v. Bower, 611 A.2d 181, 182 (Pa. 1992).

      A demurrer admits as true all well-pleaded facts and all
      inferences reasonably deducible from them, but not any
      conclusions of law. Only if upon the facts averred, the law says
      with certainty that no recovery is permitted will this Court
      sustain the demurrer. Where a doubt exists as to whether a
      demurrer should be sustained, this should be resolved in favor of
      overruling it.




                                       - 11 -
J-A33031-14



Buchanan v. Brentwood Fed. Sav. & Loan Ass’n, 320 A.2d 117, 120

(Pa. 1974) (citations and internal quotation marks omitted); see Stahl v.

First Pa. Banking & Trust Co., 191 A.2d 386, 389 (Pa. 1963). The scope

of our review of an order sustaining preliminary objections is plenary.

Solomon v. Gibson, 615 A.2d 367, 368 (Pa. Super. 1992). We begin with

Jeffrey’s second issue, which concerns the Estate’s potential exposure to IRS

liability.

       In rejecting Jeffrey’s argument that he had standing to seek discovery

to assess the Estate’s potential exposure to IRS liability associated with the

administration of the Charitable Entities, the orphans’ court explained as

follows:

       In the initial August 21, 1995 Perelman Education Foundation
       Trust Agreement, the settlors expressed their intent that “the
       release by the remaining Trustees of the terminating Trustee
       shall be a complete discharge of the terminating Trustee of all
       liability for his or her services.” This same position is expressed
       in the June 11, 2013 Amendment and Restatement of the
       Perelman Education Foundation Agreement[,] which states in
       Item TENTH (G) that “the release by the Original Trustee, or a
       majority of the trustees then serving other than the terminating
       trustee if the Original Trustee is not then serving, shall be a
       complete discharge to the terminating trustee of all liability for
       the terminating trustee’s service.” With this clear, unambiguous
       language Ruth and Raymond, and after Ruth’s removal and
       death[] Raymond alone[,] reiterated a straightforward
       mechanism for providing a complete discharge for a terminating
       trustee such as Ruth.

       Raymond followed through with the option set forth in the trust
       agreements by executing a “Release, Indemnification and Waiver
       of Accounting Agreement” on May 29, 2013.             With this
       document[,] which specifically references the Ruth and Raymond
       Perelman [Education] Foundation Trust Agreement of August 21,


                                     - 12 -
J-A33031-14


      1995, and its subsequent amendments, Raymond released “Ruth
      Perelman from any liability for her service, if any, as a Trustee of
      the Trust” while waiving “the preparation and filing of an account
      of the administration of the Trust during the period Ruth served
      as a Trustee of the Trust.” Based on the clear language of these
      documents, the [Estate] has been discharged from any liability
      relating to the management of the Perelman Education
      Foundation so that Jeffrey, as her executor, cannot claim to be
      aggrieved or have standing.

O.C.O. at 7-8.

      In his Omnibus Memorandum of Law in Opposition to Preliminary

Objections (“Jeffrey’s Memorandum”), Jeffrey presented the            following

argument:

      Raymond’s claim that Ruth’s Estate has no potential liability [to
      the IRS] because of his “release” is almost comical.         The
      potential liability of Ruth’s Estate that Jeffrey raised in the
      Amended Foundation Petitions is to the IRS for the way
      Raymond has administered the Foundations, stripped them of
      cash and made investments in business interests controlled by
      Ronald. The IRS is not bound by Raymond’s “release” if Ruth’s
      Estate has potential liability, and given his own potential
      exposure, Raymond’s indemnification is likely worthless.

Jeffrey’s Memorandum at 21.       Before this Court, Jeffrey largely repeats

these assertions, noting that in his petitions he provided ample basis for

concern in the Foundations’ IRS 990-PF forms. He emphasizes that, in the

context of preliminary objections, the orphans’ court was obligated to

assume the truth of those averments, and should have granted discovery on

that basis. See Brief for Jeffrey at 30-31. In support of the insufficiency of

Raymond’s indemnification commitment, Jeffrey quotes this Court’s decision




                                     - 13 -
J-A33031-14



in   Woodburn          v.    Consolidation         Coal   Co.,   590   A.2d   1273

(Pa. Super. 1991):

       [F]or a party responsible [for] complying with safety regulations,
       to ignore those regulations because of an indemnity clause in a
       contract is very risky. That clause only has meaning if the
       indemnitor has the assets to satisfy its agreed indemnification.
       In these cases, the plaintiff can seek collection of his entire
       judgment against any party found liable. The indemnitee may
       be required to pay the full judgment and, if the indemnitor is
       financially weak, not be compensated.

Id. at 1277.10

       Identifying Jeffrey’s IRS concerns as a “puzzling gambit,” Raymond

essentially responds that Jeffrey’s petition properly was denied because

there is no present IRS claim against the Charitable Entities or the Estate,

and the Estate has been released and indemnified for any such liability.

Brief for Raymond at 40. In support of his first point, Raymond notes that

the statutes cited by Jeffrey as possible bases for IRS liability provide that

liability can be imposed upon a trust manager only upon a showing that the

manager knowingly “participated” in improper conduct.             See id. at 41-42

(citing 26 U.S.C. §§ 4941, 4944).              “While Jeffrey alleges misconduct by

Raymond,” Raymond observes, “he portrays Ruth as an innocent bystander,

which would shield her and her Estate from any liability to the IRS under the

____________________________________________


10
       Notably, the promise of personal indemnification that Raymond cites
was created years after Ruth’s death, and more years still after her service
as a trustee was terminated. Consequently, Ruth could not have relied upon
it in any way.



                                          - 14 -
J-A33031-14



very statutes he cites. . . .       As such, there simply is no basis that [the]

Estate can be held liable for any violation of federal law relating to private

foundations.” Id. at 42 (emphasis in original).

       In one of several instances in which Raymond directly impugns

Jeffrey’s motives, he explains as follows:

       These are yet additional indicators confirming personal, ulterior
       motives are driving Jeffrey, i.e., his stated desire to oust
       Raymond from the Charitable Entities he created and funded,
       and to take control of them (and their millions of dollars)
       himself.

Id. at 43. Raymond argues that “this Court should not countenance such

conduct, just as the Orphans’ Court did not.” Id.11 Consequently, Raymond

contends, Jeffrey’s concerns regarding the Estate’s exposure to IRS liability

are “entirely speculative.”        Id.    As such, these concerns, being “wholly

contingent on future events,” cannot support standing.               Id. (citing

Pittsburgh Palisades Park, LLC v. Commonwealth, 888 A.2d 655, 660

(Pa. 2005)).
____________________________________________


11
       In the same passage alone, Raymond refers to Jeffrey’s “personal
animus for Raymond” and his “reprehensible and troubling” “harassment.”
Brief for Raymond at 43. Elsewhere, Raymond cites Jeffrey’s “personal and
inappropriate motives,” his “enmity toward Raymond, and his related
“confus[ion] regarding the proper discharge of his fiduciary duties to Ruth’s
Estate.” Id. at 49. Raymond cites no sources to establish a foundation for
his serial imputations regarding Jeffrey’s allegedly improper motives.
Because Jeffrey’s interests or motives have no bearing whatsoever on the
pure questions of law concerning his standing that we are called upon to
consider, we will treat these insinuations as no more than the irrelevant
surplusage that they are.



                                          - 15 -
J-A33031-14



       In his second argument, Raymond argues that the Estate’s interest is

wholly unfounded by virtue of the Charitable Entities’ governing documents’

express release and discharge of any terminating trustee’s “liability for his or

her service.”     Id. at 44.      Raymond avers that Ruth “consented to this

mechanism for releasing a trustee when she signed the 1995 Agreements

and the 1996 Agreements.”             Id. at 44-45.   He further maintains that

subsequent amendments to the agreements that were executed after Ruth

died did not substantively modify the effect of this provision.      Id. at 45.

Raymond further argues that, in his individual capacity, Raymond provided

the Estate “a broad indemnification from ‘any and all liabilities’ (including tax

liabilities and penalties) for [Ruth’s] service as trustee,” and in support of

that contention quotes Raymond’s May 24 2013 “Release, Indemnification

and Waiver of Accounting Agreement.” Id. at 46 (citing, inter alia, Raymond

and Ruth Perelman Judaica Foundation Release, Indemnification and Waiver

of Accounting Agreement, 5/24/2013, at 2 ¶ 7).12

       There is scant Pennsylvania authority relative to the standing

questions presented. But it seems clear to us that the question lying at the

heart of the issues presented is a practical one: While it may be true that
____________________________________________


12
       Raymond asserts that “[t]hese binding provisions are broad enough on
their own to foreclose any potential liability for Ruth’s Estate to the IRS.”
Brief for Raymond at 46. However, he cites no legal authority to support the
proposition that the IRS would consider itself bound in its enforcement, or
must do so under any applicable law, by any discharge agreement between
private parties.



                                          - 16 -
J-A33031-14



Jeffrey’s pleadings do not assert present misconduct with certainty, Jeffrey

submits that the information he seeks will enable him to determine whether

the Estate for which he is responsible is at risk of exposure to IRS liability.

In suggesting that Jeffrey is on an unbounded fishing expedition motivated

by animus rather than fiduciary concern, Raymond disregards Jeffrey’s

detailed recitation of potentially wrongful transactions and relationships

entered into by the Trusts during Ruth’s tenure.       Jeffrey’s allegations are

fortified by reference to the publicly available 990-PF forms for the

Charitable Entities and span fourteen detailed paragraphs of specific

allegations concerning various business relationships that, at first blush,

might be problematic for the Charitable Entities’ Subsection 501(c)(3) status

under the Internal Revenue Code.

       Among the averments that the orphans’ court was obligated by law to

accept as true for pleading purposes were the following:

          The schedules attached to the Charitable Entities’ IRS Form
           990s indicate that those entities have ownership interests in
           land, buildings, and equipment that are leased to entities,
           which are named by Jeffrey, that allegedly are owned or
           controlled by Raymond “either individually [or] as a trustee of
           the Charitable Remainder Unitrust” in violation of the Internal
           Revenue Code, which violation can expose managers to a 5%
           excise tax,13 Amended Petition for Inspection of Books and
           Records (521 IV of 2013) at ¶¶ 42, 43-45.

____________________________________________


13
      Although the orphans’ court is not obligated to defer to Jeffrey’s
conclusions of law, Buchanan, 320 A.2d at 120, that does not mean the
court may turn a blind eye to averments of fact that establish a question
(Footnote Continued Next Page)


                                          - 17 -
J-A33031-14


         These holdings included a $34 million stake in Revlon, Inc.,
          and Revlon Worldwide, entities substantially owned by
          Ronald, who also was a disqualified person under the Internal
          Revenue Code, id. at ¶¶ 49-50;

         Certain of these outside entities had not made lease
          payments due to the Charitable Foundations, and receivables
          to the Charitable Entities had “swelled to more than $150
          million,” id. at ¶¶ 46, 48,

The documents requested by Jeffrey, putatively to evaluate the tax

implications of these and other alleged misdealings, included “[l]eases,

rental agreements or any other agreements that support the rental income

amounts reported by the [Charitable Entities] and identify the parties who

were charged rent”; “accounts receivable records that support the amounts

reported” by the Charitable Entities to the IRS; “documents relating to any

collection activities in connection with the amounts reported as accounts

receivable”; and “[b]ills of sale, agreements, [etc., that] relate to the

ownership, purchase, sale or transfer of title to any assets owned or held by

the Foundations.” Id. at ¶ 63.

      It cannot credibly be disputed that, were Jeffrey to learn that Ruth was

associated in any way with any misconduct by the Charitable Entities vis-à-

vis the Internal Revenue Code such that the Estate might be held liable or

that her service as a trustee was merely contemporaneous with such

                       _______________________
(Footnote Continued)

regarding compliance. For example, while a court need not accept a
plaintiff’s averment that a defendant was negligent as a matter of law, it
should not grant a demurrer when the facts as pleaded set forth a prima
facie case of negligence.



                                           - 18 -
J-A33031-14



misconduct by another trustee, his best course would be to inform the IRS

and work proactively to rectify the situation. This approach plainly is more

likely to minimize the Estate’s exposure, not only because it will reduce the

fines and/or penalties associated with the oversight or misconduct but also,

less quantifiably, because it can be expected to engender good will.

      It is equally clear to us that Raymond’s putative indemnification of the

Estate   is   immaterial.    Should    the     IRS   detect   misconduct   in   the

administration of the Charitable Entities during Ruth’s tenure and determine

that it has cause to seek sanctions against the Charitable Entities and

trustees—an assessment that is wholly independent of whether Ruth

ultimately is exonerated—her Estate’s exposure will consist not only of the

prospect of surcharges, but of the potentially considerable expense to the

Estate of resolving the situation, whether favorably or not. Furthermore, the

terms of the putative indemnification concern, at most, only “any liability”

the Estate may suffer. It is not clear that Raymond willingly would read this

to refer also to the costs of the Estate’s defense, which could be

considerable, given the complexity and scale of the Charitable Entities and

what appear from Jeffrey’s pleading to be their elaborate transactional

histories. And finally, while Raymond asserts that he has ample resources to

follow through on the indemnification, Jeffrey can have no assurance that

Raymond will have those resources at some future time, or that Raymond

will not contest the applicability of the indemnification clause.




                                      - 19 -
J-A33031-14



      On the other hand, our law is clear that standing should be viewed

stringently, and we must assess Jeffrey’s asserted bases for standing with

some skepticism. Raymond is correct that speculative harm, standing alone,

does not create standing.     See Pittsburgh Palisades Park, 888 A.2d

at 660-61.    But Pittsburgh Palisades Park is inapposite, because it

involved the question of aggrievement in connection with litigation, not

standing to seek production or an accounting in advance of any specific

action to recover damages or to determine whether there is tax or other

exposure to the IRS that would best be resolved proactively.       In short,

neither Pittsburgh Palisades Park nor any other authority cited by

Raymond addresses standing to seek information to determine, rather than

seek indemnification for, the Estate’s exposure. Necessarily, what qualifies

as stringency must differ in the context of accountings and their equivalent,

which involve some element of speculation; one does not seek an accounting

to discover what he already knows.

      We find that the orphans’ court too quickly dismissed Jeffrey’s

concerns.    Given that the question arose on preliminary objections, the

orphans’ court was bound by law to assume the veracity of Jeffrey’s

averments and grant Jeffrey the benefit of all favorable inferences to be

derived therefrom.   See Buchanan, 320 A.2d at 120.         Based upon our

review, Jeffrey’s averments clearly and with ample detail set forth bases for

concern regarding the administration of the Trusts while Ruth was still a

director.

                                     - 20 -
J-A33031-14



      The remedy for this is to reverse the orphans’ court decrees sustaining

Raymond’s preliminary objections and to remand for further proceedings.

We intend no prejudice to Raymond’s right to challenge any particular

subcategory of Jeffrey’s requests for discovery. If any of the requests do not

appear to be calculated to lead to the discovery of admissible evidence, are

not tailored to the action, or reflect a fishing expedition, the orphans’ court

may reject them. See generally Pa.R.C.P. 4003.1 (providing that “a party

may obtain discovery regarding any matter, not privileged, which is relevant

to the subject matter involved in the pending action” and that even requests

that will produce only inadmissible evidence are permissible “if the

information sought appears reasonably calculated to lead to the discovery of

admissible evidence”); Berkeyheiser v. A-Plus Investigations, Inc.,

936 A.2d 1117, 1127 (Pa. Super. 2007) (holding that the trial court must

ensure that the requests “are tailored” to the specific action and that

discovery requests that reflect “a mere fishing expedition” should not be

allowed). We hold only that Jeffrey’s pleadings, in his capacity as executor

for Ruth’s Estate, satisfied the threshold standing requirements to allow the

production of documents or an accounting, provided that the requests are

appropriately fashioned to address Jeffrey’s stated concerns—i.e., whether




                                    - 21 -
J-A33031-14



the Charitable Entities have complied in full with the applicable requirements

of the Internal Revenue Code.14

       We now turn to Jeffrey’s first stated issue, in which he argues that the

orphans’ court erred in denying his discovery requests to the extent that

they served his effort to determine whether Ruth’s Estate is entitled to

compensation for Ruth’s service as an original trustee. Speaking generally,

a trustee’s right to reasonable compensation is well-established, without

regard to whether the governing trust document(s) expressly so provide. In

re Reed, 357 A.2d 138, 140-41 (Pa. 1976) (citing, inter alia, Restatement

(Second) of Trusts § 242 (1957)) (“It is well established that if a deed . . .

creating a trust is silent as to compensation, a trustee is entitled to receive a

reasonable allowance on the income passing through his hands during the

term of the trust . . . .”).       Moreover, in the instant case, during Ruth’s
____________________________________________


14
      Discovery such as that sought in the first case should be governed in
the first instance by Orphans’ Court Rule 3.6, which provides as follows:
“The local Orphans’ Court . . . may prescribe the practice relating to . . .
discovery [and the] production of documents . . . . To the extent not
provided for by such general rule or special order, the practice relating to
such matters shall conform to the practice in the Trial or Civil Division of the
local Court of Common Pleas.” Philadelphia County Orphans’ Court rule
3.6.A(1) provides, in relevant part, only that “leave to . . . obtain discovery
or the production of documents[] may be granted only on petition upon
cause shown.”      Consequently, for general standards we turn next to
Philadelphia County’s local civil rules. However, nothing in the Philadelphia
County Court of Common Pleas Civil Division’s local rules relevantly upsets
the application of the Pennsylvania Rules of Civil Procedure governing
discovery. Consequently, for purposes of resolving the instant matter, the
orphans’ court is governed by the prevailing general standards governing
discovery.



                                          - 22 -
J-A33031-14



service the governing documents for the Charitable Entities expressly

provided for trustee compensation.         See, e.g., The Raymond and Ruth

Perelman Judaica Foundation, 8/21/1995, Item FIRST ¶ 5 (“Trustees shall be

entitled to reasonable compensation for services rendered as Trustees as

well as for other services rendered [in other capacities] . . . .”).

      The orphans’ court explained its refusal to provide such discovery with

the following brief comment:

      Exactly why Jeffrey needs the extensive discovery he requests to
      determine whether Ruth may be due compensation as trustee as
      expressly provided for in the governing document is unclear. If,
      as Jeffrey suggests, Ruth was entitled to compensation by the
      document, wouldn’t that information suffice?              Moreover,
      Raymond notes that Ruth never sought compensation for her
      services as trustee for these charitable foundations during her
      lifetime. Since Jeffrey is one of the prime beneficiaries under her
      will, there is an element of self-serving in his requests. In any
      event, Jeffrey fails to explain why this discovery is necessary and
      therefore, his standing as to this request is unsupported.

O.C.O. at 8-9.

      We detect problems with this reasoning.        First, our case law is clear

that, in the absence of a specification in the underlying trust documents as

to how a trustee will be compensated, a court may determine what

constitutes the “reasonable” compensation provided by law.             See In re

Kennedy’s Trust, 72 A.2d 124, 126-27 (Pa. 1950); see also In re La

Rocca’s Trust Estate, 213 A.2d 666, 668 (Pa. 1965) (citing In re

Mastria’s    Estate,   196    A.2d   653    (Pa. 1964))   (observing    that   the

determination of proper compensation is “a matter peculiarly within the


                                      - 23 -
J-A33031-14



knowledge, competence and experience” orphans’ court). Inasmuch as one

permissible   method     of   calculating     compensation   involves   deriving

compensation as a percentage of trust assets under management, see

Kennedy, 72 A.2d at 126-27, the need is manifest for more information

than a mere trust provision indicating in general terms that compensation

may be awarded. Furthermore, much as does Raymond, the orphans’ court

appears to infuse its reasoning with assumptions about Jeffrey’s motives,

which do not bear upon the legal questions presented.         That Jeffrey is a

beneficiary of the Estate hardly strikes us as a sound reason to object to his

efforts to ensure that the Estate collect such monies as it is rightly entitled

to. Finally, the orphans’ court’s ultimate reliance upon the lack of specificity

as to how various items of discovery would inform the compensation inquiry,

while certainly reasonable taken in isolation, does not inform Jeffrey’s

standing to seek such discovery.

      We also find unpersuasive the orphans’ court’s and Raymond’s

contentions that, as a matter of law, no claim will lie for compensation

because Ruth failed to seek it during her lifetime and thereby waived any

such claim by the Estate.      While a trustee may waive, explicitly or by

conduct, her right to compensation, see In re Card’s Estate, 9 A.2d 557,

559 (Pa. 1939), merely declining to seek compensation is not sufficient to

defeat the right at a later time to seek it. Reed, 357 A.2d at 141-42. As

Reed makes clear, whether a trustee has waived the right to compensation

is a case-specific and fact-intensive inquiry, one seldom if ever suited to

                                     - 24 -
J-A33031-14



resolution in the context of a demurrer. While the orphans’ court may, on

remand, find upon a duly developed record, that Ruth intended to waive her

contractual right to reasonable compensation, it erred in doing so based

solely upon the pleadings.

     To be clear, the orphans’ court’s concern that the documents Jeffrey

seeks might not be relevant to the calculation of any compensation due

Ruth’s Estate certainly warrants consideration on remand.         However, were

the court to determine that the Estate is entitled to compensation, and that

such compensation should be calculated by percentage of assets or

transactions, certain records might be required to drill down into the assets

of the Charitable Entities beyond that information found in those entities’

Form 990s.     As well, additional information may assist in determining the

degree of Ruth’s involvement in the day-to-day activities of the Charitable

Entities, which reasonably could inform the assessment of how much

compensation would be reasonable.

     Jeffrey   does   not,   in   his   amended   petitions,   distinguish   which

documents would assist in determining whether the Estate might be liable to

the IRS from the documents that would assist in determining appropriate

compensation, if any.     Nonetheless, we find as a threshold matter that

Jeffrey has standing to seek such information as would be necessary to

determine the Estate’s right to compensation for Ruth’s service. As with the

document requests vis-à-vis tax compliance, because it dismissed Jeffrey’s

petition for want of standing, the orphans’ court made no effort to identify

                                        - 25 -
J-A33031-14



which requests, if any, were appropriately tailored to inform the potentially

meritorious concerns raised by Jeffrey.

      As with our analysis of the IRS issue, we will not make that

assessment in the first instance, nor will we conclude at this time that

Jeffrey is entitled to any discovery at all.   Rather, we will entrust that

assessment to the orphans’ court, underscoring that court’s broad discretion

to demand of Jeffrey that he proffer some tangible nexus between the

requested records and the IRS and compensation inquiries, as well as some

indication as to why those records will suffice where the records already in

his possession cannot.

      For the foregoing reasons, we reverse in their entirety the orphans’

court’s decrees sustaining Raymond’s preliminary objections to Jeffrey’s

document requests, and we remand for further proceedings consistent with

this opinion.

      Decrees reversed. Case remanded. Jurisdiction relinquished.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 3/17/2015




                                   - 26 -
