In re Raymond G. Perelman Charitable Remainder Unitrust, Nos. 151

• Court: Superior Court of Pennsylvania
• Writing for the Court: OPINION BY WECHT, J.
• Citation: 113 A.3d 296,2015 PA Super 53
• Parties: In re RAYMOND G. PERELMAN CHARITABLE REMAINDER UNITRUST Under Agreement of Trust Dated April 25, 1996. Appeal of Jeffrey E. Perelman, Appellant. In re Raymond and Ruth Perelman Community Foundation Under Agreement of Trust Dated August 21, 1995, as Amended. Appeal of Jeffrey E. Perelman, Appellant. In re Raymond and Ruth Perelman Education Foundation Under Agreement of Trust Dated August 21, 1995, as Amended. Appeal of Jeffrey E. Perelman, Appellant. In re Raymond and Ruth Perelman Judaica Foundation Under Agreement of Trust Dated August 21, 1995, as Amended. Appeal of Jeffrey E. Perelman, Appellant. In re Raymond and Ruth Perelman Family Charitable Foundation Under Agreement of Trust Dated April 25, 1996, as Amended. Appeal of Jeffrey E. Perelman, Appellant.
• Decision Date: 17 March 2015
• Docket Number: Nos. 151

113 A.3d 296
2015 PA Super 53

In re RAYMOND G. PERELMAN CHARITABLE REMAINDER UNITRUST Under Agreement of Trust Dated April 25, 1996.

Appeal of Jeffrey E. Perelman, Appellant.

In re Raymond and Ruth Perelman Community Foundation Under Agreement of Trust Dated August 21, 1995, as Amended.

Appeal of Jeffrey E. Perelman, Appellant.

In re Raymond and Ruth Perelman Education Foundation Under Agreement of Trust Dated August 21, 1995, as Amended.

Appeal of Jeffrey E. Perelman, Appellant.

In re Raymond and Ruth Perelman Judaica Foundation Under Agreement of Trust Dated August 21, 1995, as Amended.

Appeal of Jeffrey E. Perelman, Appellant.

In re Raymond and Ruth Perelman Family Charitable Foundation Under Agreement of Trust Dated April 25, 1996, as Amended.

Appeal of Jeffrey E. Perelman, Appellant.

Nos. 151

Superior Court of Pennsylvania.

Argued Dec. 10, 2014.
Filed March 17, 2015.
Reargument Denied May 21, 2015.

113 A.3d 298

Joseph A. Del Sole, Pittsburgh and James F. Mannion, King of Prussia, for appellant.

Margaret E.W. Sager, West Conshohocken, for Raymond G. Perelman, appellee.

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

Opinion

OPINION BY WECHT, J.:

Jeffrey Perelman appeals the decrees¹ of the Philadelphia County Court of Common Pleas Orphans' Court sustaining the preliminary objections of 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.

113 A.3d 299

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 foundations ¹ 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 ]}

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

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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, 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 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

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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

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