Snizaski v. Pub. Sch. Employees' Ret. Bd.
| Decision Date | 13 August 2014 |
| Docket Number | No. 1329 C.D. 2008,1329 C.D. 2008 |
| Court | Pennsylvania Commonwealth Court |
| Parties | Karen E. Snizaski and Christine M. Vilsack, Petitioners v. Public School Employees' Retirement Board, Respondent |
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE BERNARD L. McGINLEY, Judge (P) HONORABLE PATRICIA A. McCULLOUGH, Judge
OPINION NOT REPORTED
This matter is on remand from the Supreme Court with instructions to consider three outstanding issues raised by Karen Snizaski and Christine Vilsack (Friends/Appellants) in their original appeal from the order of the Public School Employees' Retirement Board (Board) which declared Willette Gallman (Gallman) the Principal Beneficiary of the balance of Six-Hundred Eighty-Eight Thousand Five-Hundred Fourteen dollars ($688,514.00) in Sandra Lapcevic's (Decedent) Public School Employees' Retirement System (PSERS) Account.
On May 29, 2009, this Court reversed an order of the Board which upheld as valid a Nomination of Beneficiary Form, which was altered by Gallman with "Wite-Out" to designate herself the Principal Beneficiary of 100% of Decedent's PSERS Account. This Court held that the altered Form did not meet the technical statutory and regulatory requirements of Section 8507(e) of the Public School Employees' Retirement Code (Retirement Code), 24 Pa.C.S. §8507(e), because the Decedent did not re-execute it and the changes made by Gallman using "Wite-Out" were not initialed by Decedent.
Based on this Court's ruling that the altered Form was per se invalid under 24 Pa.C.S. §8507(e), this Court did not address three alternative issues raised by Friends/Appellants.1
The Supreme Court granted Gallman's petition for allowance of appeal to consider one issue:
Whether the Commonwealth Court correctly interpreted 24 Pa.C.S. §8507(e) to require in this case that a Public School Employees' Retirement System nomination of benefits form must have been completed entirely in the hand of the member/decedent in order to effectuate a valid change of beneficiary designation.
In a decision dated May 28, 2013, the Supreme Court reversed this Court and held that 24 Pa.C.S. §8507(e) does not require nomination of beneficiary forms to be completed by the member or that changes must be made in themember's own hand and that any such requirements are unreasonable and impractical.
The Supreme Court remanded the matter to this Court to review the following remaining issues raised by Friends/Appellants:2 (1) whether the Board erred because it failed to consider the "confidential and fiduciary relationship" between Gallman and Decedent and the resulting presumption of "undue influence;" (2) whether the Board erred because it failed to shift the burden to Gallman to show the absence of deception, that she took no unfair advantage of her relationship with Decedent and that Decedent's designation of Gallman as Principal Beneficiary was fair and beyond suspicion; and (3) whether the Board erred because it failed to exclude Gallman's self-interested testimony about her conversations with Decedent under the Dead Man's Statute.3
Decedent was a school teacher in the Penn Hills Area School District for 35.5 years. She was a member of PSERS.
Gallman was Decedent's tax accountant for over 30 years. Gallman began her business relationship with Decedent when Gallman was employed by H&R Block. Gallman saw Decedent about once a year. Transcript ofProceedings, September 12, 2007, (H.T.) at 37-38; Reproduced Record (R.R.) at 96-97.
In 2001, Gallman learned that Decedent, who lived alone, had Parkinson's disease. At the time, Decedent was still working as a teacher but she was assisted by an aid in her classroom. H.T. at 40; R.R. at 98.
On May 6, 2002, Decedent completed an Application for Retirement (Form PSRS-8).4
In Section 7 of the Application for Retirement, Decedent designated her elderly and infirm mother, Helen Lapcevic, (Mother), as Principal Beneficiary who was to receive 100% of Decedent's PSERS Account. Decedent nominated two "friends," "Friends/Appellants," as Contingent Beneficiaries, each of whom was to receive 50% of Decedent's PSERS Account in the event Mother predeceased Decedent. June 7, 2002, Application for Retirement, at 5; R.R. at 166.
The record reflects that the "Principal Beneficiary(ies)" and "Contingent Beneficiary(ies)" Sections of the Application for Retirement werecompleted by Decedent in her own handwriting and that the percentage under each category of beneficiary was correct in that they each added up to 100%.
PSERS received Decedent's Application for Retirement on June 7, 2002.
Decedent's Mother died on July 15, 2002.
Three months after the Application for Retirement was submitted and two weeks after Decedent's Mother died, PSERS received a Nomination of Beneficiaries Form (Form PSERS-187) dated August 2, 2002, (hereinafter "August 2002 Nomination of Benefits Form").
The Principal Beneficiary was changed to "Willette B. Gallman."
The August 2002 Nomination of Benefits Form purported to give Gallman, as the new Principal Beneficiary, 50% of Decedent's PSERS Account. Friends/Appellants were again listed as Contingent Beneficiaries; but on this Form, they each were to receive 25% of Decedent's PSERS Account. August 2002 Nomination of Benefits Form, at 1; R.R. at 173.5
The Principal Beneficiary(ies) and Contingent Beneficiary(ies) sections of the August 2002 Nomination of Benefits Form were filled in by Gallman, not the Decedent. Unlike the percentages for each class of beneficiary in the Application for Retirement, which were filled-in accurately by Decedent just three months earlier, the percentages in the August 2002 Nomination of Beneficiaries Form did not add up to 100%.
By letter dated October 19, 2002, PSERS rejected and returned the August 2002 Nomination of Beneficiaries Form because the percentages for each class of beneficiary did not add up to 100%. Letter from PSERS to Sandra Lapcevic, October 19, 2002, at 1; R.R. at 174.
On October 29, 2002, PSERS received the same August 2002 Nomination of Beneficiaries Form, but with "corrections" made to the percentages next to the named beneficiaries (hereinafter "October 2002 Modified Nomination of Beneficiaries Form"). Specifically, "Wite-Out" was used and the percentage next to the Principal Beneficiary, Willette Gallman, was changed from 50% to 100%. The percentage next to each Contingent Beneficiary, Karen Snizaski and Christine Vilsack was changed from 25% to 50%.
PSERS accepted the October 2002 Modified Nomination of Beneficiaries Form and indicated that the form was "received and processed." Letter from PSERS to Sandra Lapcevic, December 27, 2002, at 1; R.R. at 176.
At some point in the four months between the time Decedent signed the October 2002 Modified Nomination of Beneficiaries Form and March 6, 2003,arrangements were made to have Gallman's nephew, Zinford Mitchell (Attorney Mitchell), prepare a Power of Attorney and Last Will and Testament for Decedent.
On March 6, 2003, Gallman accompanied Decedent to Attorney Mitchell's office where Decedent signed a Power of Attorney which named Gallman as her "Attorney-in-Fact." The Power of Attorney gave Gallman immediate and complete control over Decedent's personal and financial affairs. The Power of Attorney named Gallman's relative, Shirley Marie Gallman-Posey, as "Attorney-in-Fact" if Gallman predeceased Decedent.
On that same date, Decedent executed her Last Will and Testament which named Gallman the sole beneficiary of Decedent's entire estate. The Last Will and Testament, again, named Gallman's relative, Shirley Marie Gallman-Posey, as sole beneficiary if Gallman predeceased Decedent.
The Power of Attorney and Last Will and Testament were notarized by Doreen Mitchell.6
In early August 2004, Decedent was rushed to the hospital "for blood loss via her rectum." Telephone Deposition of Ronald Stiller, M.D. (Dr. Stiller Deposition), August 23, 2004, at 4; R.R. at 23. Her treating physician, Ronald Stiller, M.D. (Dr. Stiller) testified that Decedent required an "emergency guardian" because she needed life-saving surgery. The medical records indicate that Decedent had a history of depression. She was admitted with a gastrointestinalbleed, severe malnutrition, and possible intestinal perforation, and she was delirious, in renal failure, and had mouth sores. UPMC Shady Side Hospital Records, August 8, 2004; R.R. at 26-28. A psychiatric evaluation performed by Kurt Ackerman, M.D. (Dr. Ackerman) concluded that Decedent was unable to make decisions. His notes also indicate there were "allegations of possible neglect or abuse which warrant an independent guardian." UPMC Shady Side Hospital Records, August 8, 2004; R.R. at 26.
On October 18, 2004, Decedent was adjudicated a totally incapacitated person by the Court of Common Pleas of Allegheny County. The Court appointed Diane Spivak (Guardian), a social worker, to serve as Decedent's permanent plenary guardian.
Decedent was moved to a personal care home. Gallman was barred from visiting Decedent. H.T. at 67; R.R. at 125.
On December 9, 2004, Guardian submitted a Nomination of Beneficiaries Form (hereinafter "2004 Nomination of Beneficiaries Form"). Decedent's niece and nephew, Laura and Joseph Lapcevic, were named as Principal Beneficiaries.
Decedent died on February 11, 2006, leaving $688,514 in her PSERS Account. Stipulation of Fact No. 5, September 12, 2007.
Following Decedent's death, the 2004 Beneficiaries (Laura and Joseph Lapcevic) and Gallman made separate demands upon PSERS for payment of the death benefits.
PSERS took the position that the 2004 Nomination of Beneficiaries Form filed by Decedent's Guardian was valid. Gallman appealed and challenged the validity of the 2...
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