In re Castelli, 1084 WDA 2021

CourtSuperior Court of Pennsylvania
Writing for the CourtMcLAUGHLIN, J.
PartiesIN RE: TRUST UNDER AGREEMENT OF JAMES CASTELLI DATED OCTOBER 9, 1985 APPEAL OF: DARIETTA OLIVERIO AND ANITA NAPOLI
Docket Number1084 WDA 2021,J-A18036-22
Decision Date22 November 2022

IN RE: TRUST UNDER AGREEMENT OF JAMES CASTELLI DATED OCTOBER 9, 1985 APPEAL OF: DARIETTA OLIVERIO AND ANITA NAPOLI

No. 1084 WDA 2021

No. J-A18036-22

Superior Court of Pennsylvania

November 22, 2022


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

Appeal from the Order Entered August 11, 2021 In the Court of Common Pleas of Washington County Orphans' Court at No(s): C-63-OC-2015-83

BEFORE: STABILE, J., MURRAY, J., and McLAUGHLIN, J.

MEMORANDUM

McLAUGHLIN, J.

Darietta Oliverio and Samuel F. Napoli, Personal Representative of the Estate of Anita Castelli Napoli,[1] ("Appellants") appeal from the order denying their petition to remove AmeriServ Trust & Financial Services Company ("AmeriServ") and Nora Gieg Chatha, Esq. (collectively, "Successor Trustees") as trustees of the Trust Under Agreement of James Castelli, Dated October 9, 1985 ("Trust"). They argue, among other things, that the court erred in failing to issue a rule to show cause. They also challenge the order denying their motion for recusal of the Honorable John F. DiSalle ("Trial Judge"). We affirm in part and reverse in part.

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In 2016, Victor Castelli, Jr. ("Victor"), filed a petition to remove Anita Napoli ("Napoli") as a trustee of the Trust. He alleged, among other things, that Napoli had transferred assets from the Trust to an entity owned by Napoli and her sister, Oliverio. During the pendency of the case, after many years in which she was the sole trustee,[2] Napoli appointed Oliverio co-trustee. Victor filed a petition to declare the appointment null and void, which the trial court granted. The court held a multi-day trial on Victor's petition to remove Napoli as trustee. Victor presented the testimony of representatives of two corporate fiduciaries, AmeriServ and First Commonwealth Bank, as potential replacement trustees. N.T., Jan. 28, 30, and 31, 2020, at 59-100. On cross-examination, the AmeriServ representative testified he had reviewed the Trust and a history of the various entities involved, which he received from Victor's counsel. Id. at 87.

Before the final day of trial, in February 2020, Napoli resigned as trustee. At a March 5, 2020 hearing, the court and the parties discussed appointing either AmeriServ or First Commonwealth Bank as the corporate trustee. The court entered an order removing Napoli as trustee and appointing

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AmeriServ as co-trustee.[3] Napoli did not object. Further, at the hearing, Napoli's counsel asked the court to defer its selection of the second trustee until it could identify an appropriate member of the bar. Counsel stated he did not think the court should request lists from the parties and would prefer that the court choose a co-trustee. He stated that the court "know[s] the bar far better than [counsel does] . . . and equally as well as [Victor's counsel]." N.T., Jan. 31, 2020 and Mar. 5, 2020, at 434-35. In April 2020, the court selected Chatha to serve as co-trustee. Napoli did not object to this appointment.

Approximately six months later, in October 2020, Successor Trustees commenced a civil action against Napoli and Oliverio and several others - Sam Napoli, Castelli Brothers Company, L.P., Salem Management Company, LLC, and Super Outdoor Theaters - alleging a breach of fiduciary duties as trustee, shareholder suppression, breach of fiduciary duties to Super Outdoor Theaters and its shareholders, and unjust enrichment, and seeking an accounting and the appointment of a receiver ("Complaint"). The defendants filed preliminary objections seeking dismissal of the suit.

In July 2021, Oliverio filed a petition for rule to show cause why Successor Trustees should not be removed as trustees, and Napoli joined the

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petition.[4] The petition alleged Successor Trustees had breached their fiduciary duties and were partisan actors, not independent trustees. It claimed Successor Trustees had filed a frivolous lawsuit against them "in what can only be viewed as attempted extortion and a malicious use of process." Petition for Rule to Show Cause Why AmeriServ Trust and Financial Services Company and Nora Gieg Chatha Should Not Be Removed as Trustees, filed July 21, 2021, at ¶ 9. It also alleged Victor "held AmeriServ out as his 'expert witness'" prior to its appointment. Id. at ¶ 5. Appellants asserted that Successor Trustees had merely parroted Victor's claims against them without conducting an independent investigation, and had put their financial interests ahead of those of the trust beneficiaries. Id. at ¶¶ 6-8.

In support, Appellants pointed out that in April 2019, Victor's counsel sent a letter to AmeriServ forwarding documents related to the Trust and asking AmeriServ to treat the documents as subject to attorney/client privilege and attorney/expert privilege. Rule to Show Cause at Ex. 1. They also noted that Chatha stated the Trial Judge's law clerk had called her to ask if she would consider serving as co-trustee. Id. at Ex. 2, Answer to Interrogatory No. 2. Chatha stated AmeriServ "casually mentioned to [her] in passing . . . a trust in Washington County on a no-name basis for which it may need counsel and did send a [request for proposals to Chatha's firm] Tucker Arensberg, P.C.," before Chatha was "independently approached by [the Trial Judge's]

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Law Clerk." Id. Chatha disclosed that she discussed the parties and the general nature of the matter with the clerk, as well as that her firm, Tucker Arensberg, had represented AmeriServ in other matters and had been contacted to act as potential counsel in what was likely this matter. Id.

The petition for a rule to show case pointed out that as of the petition's filing, the trial court had ruled in favor of Successor Trustees on all filings - a petition for approval of the retention of Tucker Arensberg, P.C. as counsel for the trustees, a motion to intervene, and objections to the accounting. Rule to Show Cause at ¶ 51-54. The petition also mentioned the civil suit, which Appellants characterized as frivolous. Id. at 55. Appellants' petition further pointed out that if the court grants their preliminary objections and dismisses the suit, the Trust will have no funds to pay Successor Trustees. Id. at ¶ 75.

Oliverio also filed a motion for recusal,...

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