In re Atkinson
| Decision Date | 06 April 2020 |
| Docket Number | No. 1352 EDA 2019,1352 EDA 2019 |
| Citation | 231 A.3d 891 |
| Court | Pennsylvania Superior Court |
| Parties | IN RE: ESTATE OF Joseph B. ATKINSON Jr., Deed of Trust of June 30, 1995 for the Benefit of Carolyn Atkinson Brady Appeal of: Wells Fargo & Company, Wells Fargo Clearing Services LLC, and William J. Michetti |
Julie E. Ravis, Reading, for appellant.
Jay R. Wagner, Reading, for appellant.
Paul C. Troy, Norristown, for Fackenthal, appellee.
Alfred V. Meitner, Blue Bell, for Brady, appellee.
Thomas A. Boulden, Fort Washington, for Joseph Atkinson, appellee.
Glen H. Ridenour, II, Philadelphia, for James Atkinson, appellee.
This is an appeal from an order of the Court of Common Pleas of Montgomery County Orphans’ Court Division (Orphans’ Court) overruling preliminary objections filed by Appellants Wells Fargo & Company and Wells Fargo Clearing Services LLC (collectively, Wells Fargo) and Wells Fargo financial advisor William J. Michetti that sought to compel arbitration of claims asserted against them by Appellee Carolyn Atkinson Brady (Brady) in proceedings in the Orphans’ Court concerning a trust of which she is the beneficiary. For the reasons set forth below, we reverse and remand.
The record on the preliminary objections established the following facts. By Deed of Trust dated June 30, 1995, Joseph B. Atkinson, Jr. (Settlor), Brady's father, created trusts for the benefit of his children and named Edward Fackenthal (Trustee) as trustee of each of these trusts. Brady is the beneficiary of one of these trusts (the Brady Trust).
In March 2002, Trustee opened a First Union Securities CAP Account for the Brady Trust (the Brady CAP Account) and separate First Union Securities CAP Accounts for the other trusts created under Settlor's June 30, 1995 Deed of Trust. Fackenthal Dep. at 15, 17, 53-57; 3/25/02 Fackenthal Letter; Brady CAP Account Application. The Brady CAP Account was a financial services account that included a brokerage account with First Union Securities and a bank checking account with First Union National Bank. CAP Account Agreement at 1 ¶A(1). To open the Brady CAP Account, Trustee signed an account application in which he represented and agreed:
I hereby certify that the information on this Application is true and correct and agree to notify First Union immediately if at any time any of such information should change. I have reviewed and read the accompanying CAP ACCOUNT CUSTOMER AGREEMENT (the "CAP Agreement"), including the documents incorporated by reference in the CAP Agreement, and agree to be bound by the terms and conditions contained therein.
Brady CAP Account Application at 4 (emphasis added); Fackenthal Dep. at 15, 17, 53. Immediately above Trustee's signature, the Brady CAP Account application stated in bold font and all capital letters:
THE CAP AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE. BY SIGNING THIS APPLICATION, I ACKNOWLEDGE RECEIPT OF A COPY OF THE AGREEMENT CONTAINING SUCH CLAUSE.
Brady CAP Account Application at 4. Both the CAP Account Agreement and the General Account Agreement and Disclosure Document that it incorporated by reference contained agreements to arbitrate claims concerning the brokerage account. CAP Account Agreement at 1 ¶B, 11-12 ¶E(3); General Account Agreement and Disclosure Document at 6-7 ¶17.
The CAP Account Agreement provided that "[t]he Brokerage Account is governed by the terms and conditions contained in the [First Union Securities] General Account Agreement and Disclosure Document and this Agreement" and that "[i]f there is any conflict between the terms and conditions set forth in such documents incorporated by reference and the terms and conditions of this Agreement, ... the terms and conditions set forth in the [First Union Securities] General Account Agreement and Disclosure Document shall supersede the terms and conditions of this Agreement for your Brokerage Account." CAP Account Agreement at 1 ¶B. The CAP Account Agreement stated:
Your signature on the Account Application shall constitute your agreement to the terms and conditions contained in the [First Union Securities] General Account Agreement and Disclosure Document and this Agreement, as the same may be modified or amended by us from time to time.
Id. The CAP Account Agreement also contained the following arbitration provision with respect to the brokerage account:
Arbitration agreement: You agree , and by carrying or introducing an account for you, we agree that all controversies which may arise between you and us concerning any transaction or the construction, performance or breach of this or any other agreement between you and us , whether entered into prior to, on, or subsequent to the date hereof, will be determined by arbitration , such arbitration will be conducted by, and according to the securities arbitration rules and regulations then in effect of, the National Association of Securities Dealers, Inc. or the arbitration facility provided by the New York Stock Exchange.1
Id. at 12 ¶E(3). The CAP Account Agreement further provided that "[t]his Agreement will inure to the benefit of our successors, assigns, and agents." Id. at 4 ¶B(17).
The General Account Agreement and Disclosure Document advised:
General Account Agreement and Disclosure Document at 2, Introduction. Paragraph 17 of General Account Agreement and Disclosure Document provided:
Arbitration agreement: You agree that any controversy arising out of our business or this agreement shall be submitted to arbitration conducted before The New York Stock Exchange, Inc. or any other national securities exchange on which a transaction giving rise to the claim took place ... or the National Association Of Securities Dealers, Inc., as you may elect and in accordance with the rules of the selected organization.
Id. at 6-7 ¶17 (emphasis added). The General Account Agreement and Disclosure Document likewise provided that "[t]his Agreement will inure to the benefit of our successors, assigns, and agents." Id. at 7 ¶23.
Michetti was the First Union financial advisor for the Brady Trust CAP Account brokerage account (Brady Trust Brokerage Account). Michetti Dep. at 5-13, 29-34, 40. First Union was subsequently acquired by Wells Fargo, and Michetti continued as the Wells Fargo financial advisor for the Brady Trust Brokerage Account through 2017. Id. at 5-9, 31-34, 49-51, 75-77.
On July 5, 2018, Trustee filed first and final accounts and petitions for adjudication for the Brady Trust and the other trusts under Settlor's June 30, 1995 Deed of Trust. On August 31, 2018, Brady filed objections to Trustee's first and final account and petition for adjudication asserting, inter alia , that Wells Fargo and Michetti (collectively, Appellants) had charged excessive fees and commissions and breached the contract governing the Brady Trust Brokerage Account, and that Trustee had failed to adequately supervise and investigate Appellants’ actions with respect to the Brady Trust Brokerage Account. Brady Objections to Trustee's First and Final Account and Petition for Adjudication ¶¶2-4, 6-10, 14, 16-21, 26-31.
On August 31, 2018, Brady also filed a petition to join Appellants as additional parties in the Orphans’ Court proceeding concerning the Brady Trust to assert claims against them for mismanagement of the Brady Trust Brokerage Account and fees charged to the Brady Trust Brokerage Account. Petition to Join Additional Parties ¶4. Appellants filed preliminary objections to this petition to join asserting three objections: 1) that Appellants were not subject to the Orphans’ Court's jurisdiction under Sections 7206 and 7777 of the Probate, Estates and Fiduciaries Code, 20 Pa.C.S. §§ 7206 and 7777, because they had not accepted a delegation of Trustee's fiduciary duties; 2) that Brady lacked standing because claims of a trust must be brought by the trustee, not a beneficiary; and 3) that the claims were subject to mandatory arbitration under the arbitration agreements that governed the Brady Trust Brokerage Account. On December 19, 2018, the Orphans’ Court granted Trustee permission to resign as trustee for the Brady Trust and appointed a substitute trustee for the Brady Trust (Substitute Trustee). By order dated January 4, 2019, the Orphans’ Court allowed the parties 60 days for discovery on Appellants’ preliminary objections to the petition to join and directed the parties to file briefs following that discovery period. On March 5, 2019, Substitute Trustee filed a joinder in Brady's petition to join Appellants as additional parties.
On March 27, 2019, the Orphans’ Court entered an order overruling Appellants’ preliminary objections in their entirety. Orphans’ Court Order, 3/27/19. With respect to Appellants’ challenge to Brady's standing, the Orphans’ Court ruled that the issue was moot because the Substitute Trustee was pursuing the same claims against Appellants. Id. ¶2. With respect to the issues of delegation and arbitration, the Orphans’ Court stated that it "will reconsider the issue of the application and enforcement of the contractual arbitration clause, pending a determination at the time of trial regarding Trustee Delegation." Id. ¶1. On April 26, 2019, Appellants filed the instant appeal.
Appellants argue in this appeal that the Orphans’ Court erred in refusing to compel arbitration because Trustee agreed to a...
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