Estate of Kendall

• Decision Date: 15 September 2009
• Docket Number: No. 3448 EDA 2008,3448 EDA 2008
• Citation: 2009 PA Super 184,982 A.2d 525
• Parties: ESTATE OF Terry L. KENDALL, Deceased. Appeal of Susan L. Kendall.
• Court: Pennsylvania Superior Court

982 A.2d 525

2009 PA Super 184

ESTATE OF Terry L. KENDALL, Deceased.

Appeal of Susan L. Kendall.

No. 3448 EDA 2008

Superior Court of Pennsylvania.

Argued June 23, 2009.

Filed September 15, 2009.

Ann C. Lebowitz, Philadelphia and James P. Mannion, King of Prussia, for appellant.

Vincent V. Carissimi, Philadelphia and Mason Avrigian, Blue Bell, for Participating Parties.

BEFORE: FORD ELLIOTT, P.J., BENDER and GANTMAN, JJ.

OPINION BY BENDER, J.:

¶ 1 Susan L. Kendall appeals from the order entered by the orphans' court on November 14, 2008, that granted the motion for summary judgment filed by PNC Bank, N.A., executor of the Estate of Terry L. Kendall, deceased, and denied Susan's cross motion for summary judgment. The order also granted PNC's petition for declaratory judgment, providing that Susan's interest in the Estate was to be determined by a formula interpreting subparagraph G.(1) of Susan's and Terry's prenuptial agreement.¹ We affirm.²

¶ 2 Susan and Terry were married on February 1, 1994, and the marriage continued until the time of Terry's death on June 20, 2005. Terry had been previously married and had two children, Jennifer Kendall and Bryan Kendall, with his former wife. Prior to Susan's and Terry's marriage, they entered into a prenuptial agreement that contains the following pertinent paragraph:

G.(1) If Terry predeceases Susan and at the time of Terry's death there has been no Separation, then Terry shall provide by Will, Codicil, joint ownership of property or otherwise for Susan to receive Property with a value at the time of Terry's death equal to at least One Hundred Percent (100%) of the value of all Marital Property reduced by the amount of Marital Debt, said Property passing to Susan to bear its proportionate share of estate taxes as hereinafter provided.... If Terry shall fail to make the provision contained in this Subparagraph, Susan shall be entitled to receive the Property described in this Subparagraph from Terry's estate.

Prenuptial Agreement, at ¶ G.(1). The prenuptial agreement also contains the following definitions of "Property," "Separate Property" and "Marital Property":

(2) "Property" means real and personal property, of every kind, tangible and intangible, wherever situated.

(3) "Separate Property" means:

(a) Property acquired by Susan or Terry, as the case may be, before the Marriage, including, but not limited to, any interests in retirement, pension and/or profit sharing plans;

(b) Property acquired by Susan or Terry, as the case may be, during the Marriage by bequest, devise, descent or gift from anyone, including interspousal gifts from Terry to Susan or from Susan to Terry;

(c) any increase in the value of any Property referred to in (a) or (b);

(d) the proceeds of any disposition of any property referred to in (a), (b) or (c), howsoever held, invested or reinvested; and

(e) any increase in the value of any Property referred to in (d); and

(f) as to Terry, his interests as of December 31, 1993 in CD Alternatives of America, Inc. and CDA, Inc. (hereinafter referred to collectively as "CDA, Inc."), said interests having a value on December 31, 1993 of $350,000. For purposes of this Agreement, said value of $350,000 shall be deemed to be the value of CDA, Inc. as of the date of the Marriage.

(4) "Marital Property" means all Property acquired by either or both of Susan and Terry during their Marriage and before the Separation, as hereinafter defined, including without limitation, any increase in the value of the Property described in Subparagraph 3.(f) of this Paragraph A. over the value set forth in said Subparagraph, and specifically excluding the Property described in Paragraph A.(3) of this Agreement.

Prenuptial Agreement, at ¶ A.(2), (3) and (4).

¶ 3 Terry's will, which he executed on February 23, 2005, provided the following designated gifts:

I. Personal and Household Effects: I give all my articles personal or household use, including automobiles, together with all insurance relating thereto, to my wife, SUSAN L. KENDALL, if she survives me.....

II. Pre-residuary Instruction: On February 1, 1994, I entered into a prenuptial agreement with SUSAN L. GEHN, who is now my wife, SUSAN L. KENDALL. If at my death she survives me, and we have not separated, then I authorize my executors to carry out the provisions of such prenuptial agreement to the extent I have not otherwise done so.

III. Residuary Estate: I give the residue of my estate, real and personal:

A. In equal share to such of my children as survive me....

Terry's Will, 2/23/05. The will also provided for the appointment of PNC as the executor.

¶ 4 As to the present litigation, the orphans' court set forth the following as an introductory explanation regarding the parties' positions on the issues presented to it:

This matter is now before us pursuant to competing motions for summary judgment — one by the Executor and one by decedent's surviving spouse, Susan L. Kendall.... On January 22, 2008, PNC Bank, N.A., the Executor of the Estate of Terry L. Kendall, ... filed a Motion for Summary Judgment seeking a determination as to whether Mrs. Kendall is a creditor or beneficiary of the Estate and a ruling upon its underlying Declaratory Judgment Petition filed on March 8, 2007. In the Declaratory Judgment Petition, PNC proposes that decedent's Will and the Prenuptial Agreement that he entered into with Mrs. Kendall provide a formula for determining the specific amount of property to be given to Mrs. Kendall rather than giving her an interest in any specific Estate property. PNC maintains that these issues are questions of law and no material facts are involved or disputed. Decedent's children, Jennifer Kendall and Bryan Kendall, residuary beneficiaries under decedent's Will ... have filed a reply to the underlying Petition for Declaratory Judgment and a memorandum in support of PNC's Motion for Summary Judgment.

Mrs. Kendall filed an Answer and New Matter to PNC's Declaratory Judgment Petition. On March 24, 2008, Mrs. Kendall filed a response in opposition to PNC's Motion for Summary Judgment and cross-moved for summary judgment in her favor based upon two alternate theories. First, Mrs. Kendall argues that this [c]ourt has already ruled adversely to PNC in its Opinion, Decree and Order of December 22, 2006 awarding certain property to her in kind. In the alternative, Mrs. Kendall contends that decedent's Will and Prenuptial Agreement should be interpreted as giving her the specific property in kind.

....

Other than a minor checking account, decedent's Estate consists solely of CIGNA stock, CIGNA stock options, and cash representing unpaid vacation time and monetary bonus awards under CIGNA's strategic performance plan (hereinafter collectively referred to as the "CIGNA benefits"). Per our Opinion, Decree and Order of December 22, 2006, we determined that all CIGNA benefits received by decedent's Estate accrued during his marriage to Mrs. Kendall, and therefore were Marital Property.

The issue now being raised by PNC's Declaratory Judgment Petition and the two competing motions for summary judgment is whether Mrs. Kendall is entitled to these CIGNA benefits in kind or whether she is entitled [to] receive property equal in value to a specific amount calculated through a formula that would include the date of death value of these CIGNA benefits. Subparagraph G(1) of the Prenuptial Agreement is the operative paragraph. That provision gives certain rights to Mrs. Kendall in lieu of her spousal right to claim an elective share in decedent's estate.

Orphans' Court Opinion, 11/14/08, at 1-2 (citations to the record omitted).

¶ 5 The orphans' court recognized that Susan's interest in the Estate was determined by subparagraph G.(1) of the prenuptial agreement and indicated that PNC's interpretation of G.(1) centered on a formula, which would result in a specific amount and could be zero. PNC's formula provides:

(1) First, all property owned by Terry L. Kendall at the time of his death, whether subject to probate or not, must be identified;

(2) Second, the character of such property as Marital Property or Separate Property under the Prenuptial Agreement must be determined;

(3) Third, the date of death value of all property characterized as Marital Property on the date of Terry L. Kendall's death must be calculated.

(4) Fourth, the amount of all Marital Debt must be determined and subtracted from the sum value of all Marital Property.

(5) Fifth, the sum of the date of death values of all Marital Property that Terry L. Kendall provided for Mrs. Kendall to receive through Paragraph I of the Will, joint ownership of property, beneficiary designations, or otherwise must be determined.

(6) Sixth, the sum determined in Subparagraph (5) above must be subtracted from the sum determined in Subparagraph (4) above.

(7) If the result of Subparagraph (6) above is zero or a negative amount, then Mr. Kendall has fulfilled his obligations to Mrs. Kendall under Paragraph G of the Prenuptial Agreement and she has no claim as creditor against any Estate assets. If the sum is a positive amount, Mrs. Kendall has a claim against the Estate in that amount.

PNC's Petition for Declaratory Judgment, ¶ 16.

¶ 6 The orphans' court opinion dated November 14, 2008, references an earlier opinion and order it issued on December 22, 2006, that determined the status of the CIGNA benefits that were paid into the Estate.³ Due to the issues raised in this appeal and the orphans' court's revision of the 2006 opinion and order in its 2008 decision, we must also examine that prior decision.

¶ 7 On December 22, 2005, Susan filed a petition for declaratory judgment requesting the court to direct that the CIGNA benefits held by the Estate were marital property as defined by the prenuptial agreement and that she was entitled to those benefits in accordance with ITEM II of Terry's will. The Children likewise filed a petition for declaratory judgment...