fiduciary exception in Pennsylvania

2022J-A06008-22 2022 PA Super 93 IN RE: TRUST ESTABLISHED UNDER : IN THE SUPERIOR COURT OF AGREEMENT OF SARAH MELLON : PENNSYLVANIA SCAIFE, DECEASED DATED MAY 9, : 1963 : : : APPEAL OF: PNC BANK, N.A. : : : No. 722 WDA 2021 Appeal from the Order Entered May 25, 2021 In the Court of Common Pleas of Allegheny County Orphans’ Court at No. 02-20-2506 BEFORE: MURRAY, J., SULLIVAN, J., and COLINS, J.* OPINION BY MURRAY, J.: FILED: MAY 23, 2022 In this collateral appeal pursuant to Pa.R.A.P. 313,1 we consider whether the fiduciary exception to the attorney-client privilege and attorney work product doctr

2022J-A06007-22 NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37 IN RE: TRUST AGREEMENT : IN THE SUPERIOR COURT OF ESTABLISHED UNDER AGREEMENT : PENNSYLVANIA OF SARAH MELLON SCAIFE, : DECEASED DATED MAY 9, 1963 : : : APPEAL OF: STRASSBURGER : MCKENNA GUTNICK & GEFSKY : : No. 697 WDA 2021 Appeal from the Order Entered May 25, 2021 In the Court of Common Pleas of Allegheny County Orphans’ Court at 02-20-2506 BEFORE: MURRAY, J., SULLIVAN, J., and COLINS, J.* MEMORANDUM BY MURRAY, J.: FILED: MAY 23, 2022 In this collateral appeal pursuant to Pa.R.A.P. 313, we consider whether the fiduciary

2025The fiduciary exception came before this Court in In re Estate of McAleer, 194 A.3d 587 (Pa.Super. 2018) (“McAleer I”).

2022The orphans’ court concluded “a fiduciary exception is not inconsistent with Pennsylvania law.” Id.

2025See Interrogatories (Estate), 5/8/24, at 5-6; Request for Production of Documents (Estate), 5/8/24, at 6- 7. -6- J-A15006-25 J-A15007-25 Deeming this Court’s decision in In re: Trust Established Under Agreement of Sarah Mellon Scaife, Deceased Dated May 9, 1963, 276 A.3d 776 (Pa.Super. 2022) (“Scaife”), to be directly on point, the master concluded that the communications in question fell within the fiduciary exception to the attorney-client privilege recognized in that case.

2025The orphans’ court granted the estate’s motion to compel upon determining that “a fiduciary exception [to attorney-client privilege and work product doctrine] is not inconsistent with Pennsylvania law.” Scaife, 276 A.3d at 782 .

2019Derivative Plaintiffs also cite a federal decision recognizing that the fiduciary exception has been applied outside of the trust context to relationships between "unions and members, lawyers and other lawyers, banks and clients, and general partners in both general and limited partnerships." Pls.' Reply Br. at 12-13 (quoting Lugosch v. Congel , 219 F.R.D. 220 , 243 (N.D.N.Y. 2003) ).

2019Derivative Plaintiffs also cite a federal decision recognizing that the fiduciary exception has been applied outside of the trust context to relationships between “unions and members, lawyers and other lawyers, banks and clients, and general partners in both general and limited partnerships.” Pls.’ Reply Br. at 12-13 (quoting Lugosch v. Congel, 219 F.R.D. 220, 243 (N.D.N.Y. 2003)).

2025See BouSamra, 210 A.3d at 976–77 (explaining purpose of work product doctrine); Yocabet, 119 A.3d at 1027 - 30 - J-A15006-25 J-A15007-25 (same as to attorney-client privilege).

2022The Commonwealth’s Argument9 The Commonwealth supports application of the fiduciary exception on three bases: (1) the “alternative holding” of the Superior Court in McAleer I constitutes binding precedent recognizing the exception, see Commonwealth’s Brief at 16; (2) the fiduciary exception is embedded in Pennsylvania’s trust law, which requires the disclosure of information about trust administration to beneficiaries, see id. at 20; and (3) the beneficiaries ____________________________________________ 9 “The responsibility for public supervision [of charitable trusts] traditionally has been

2022The Estate asserts, “even the United States Supreme Court has expressly recognized Riggs as “the leading American case” on the fiduciary exception.8 Id. (quoting United States v. Jicarilla Apache Nation, 564 U.S. 162, 171 (2011)).

2021See, e.g., In re Long Island Lighting Co., 129 F.3d 268 , 271 (2d Cir. 1997) (referring to the fiduciary exception as a “settled common-law principle[]”); Solis v. Food Emp’rs Labor Relations Ass’n, 644 F.3d 221, 228 (4th Cir. 2011); Wildbur v. ARCO Chem.

2021See, e.g., In re Long Island Lighting Co., 129 F.3d 268 , 271 (2d Cir. 1997) (referring to the fiduciary exception as a “settled common-law principle[]”); Solis v. Food Emp’rs Labor Relations Ass’n, 644 F.3d 221, 228 (4th Cir. 2011); Wildbur v. ARCO Chem.

2021Ct. Nov. 8, 2010) (unreported); Batt v. Manchester Oaks Homeowners Assoc., Inc., 80 Va. Cir. 502 , 2010 WL 7371240 , *3 (Va. Cir. Ct. July 6, 2010) (unreported); see also Murphy v. Gorman, 271 F.R.D. 296, 318 (D.N.M. 2010) (stating the court’s “belie[f] that the Supreme Court of New Mexico would not permit a judicially-created expansion of the exceptions to the attorney-client privilege to add a fiduciary exception, which has not been recognized in the New Mexico Constitution or in the New Mexico Rules of Evidence”). [J-18-2020] - 25 reveal legal advice and strategy in violation of the privile

2021In 1994, the Supreme Judicial Court of Massachusetts declined “[t]o impose a [fiduciary] duty on a trustee’s attorney to beneficiaries,” which it feared “could create situations antithetical” to disciplinary rules requiring the preservation by attorneys of “secrets and confidences gained in the course of representing a client.” Spinner v. Nutt, 631 N.E.2d 542, 545 (Mass. 1994).

2021Co., 974 F.2d 631, 645 (5th Cir. 1992); United States v. Evans, 796 F.2d 264, 265-66 (9th Cir. 1986) (per curiam); Washington-Balt.

2021Co., 974 F.2d 631, 645 (5th Cir. 1992); United States v. Evans, 796 F.2d 264, 265-66 (9th Cir. 1986) (per curiam); Washington-Balt.

2021In re Estate of Larson, 694 P.2d 1051, 1054 (Wash. 1985).28 The high-water mark for state court adoption of the fiduciary exception came in 1988, when the Third Department of the Appellate Division of the New York Supreme Court recognized it as part of New York common law.

2021See, e.g., In re Long Island Lighting Co., 129 F.3d 268 , 271 (2d Cir. 1997) (referring to the fiduciary exception as a “settled common-law principle[]”); Solis v. Food Emp’rs Labor Relations Ass’n, 644 F.3d 221, 228 (4th Cir. 2011); Wildbur v. ARCO Chem.

2021See, e.g., In re Long Island Lighting Co., 129 F.3d 268 , 271 (2d Cir. 1997) (referring to the fiduciary exception as a “settled common-law principle[]”); Solis v. Food Emp’rs Labor Relations Ass’n, 644 F.3d 221, 228 (4th Cir. 2011); Wildbur v. ARCO Chem.

2021Because the Court presently is divided on whether the fiduciary exception should be recognized in this Commonwealth, however, resolution of that issue must await another day. the trust corpus—from which, Justice Donohue acknowledges, Beneficiaries are entitled to derive an equitable benefit, id. (citing Lewis v. Alexander, 685 F.3d 325, 332 (3d Cir. 2012))—is demonstrable on its face.

2021It must be noted, however, that these courts predicated their decisions upon the existence of statutes codifying both the privilege and [J-18-2020] - 23 its recognized exceptions.30 Because those statutes did not list the fiduciary-beneficiary relationship as one such exception, the courts declined to recognize one by judicial fiat.31 Capped by Canarelli, the last decade has witnessed the high courts of Nevada and Georgia, and lower courts in Alabama, Illinois, Connecticut, and Virginia, reject the fiduciary exception outright, either because recognition was foreclosed by statute or 30 See Wel

2021First, the Court explained that “material fact[s]” about trust management could always be obtained through discovery in the event of disputes between beneficiaries and trustees. 990 P.2d at 597 n.2 (quoting Huie, 922 S.W.2d at 923 ).

2021The court began by eschewing “[c]onceptualistic phrases describing the corporation as an entity separate from its stockholders” as useless “tools of analysis,” reasoning that “[t]hey serve only to obscure the fact that management has duties which run to the benefit ultimately of the stockholders.” Id. at 1101 . 24 For federal decisions recognizing the exception as applied to trustee-beneficiary relations, see Comegys v. Glassell, 839 F. Supp. 447, 448-49 (E.D.

2021It must be noted, however, that these courts predicated their decisions upon the existence of statutes codifying both the privilege and [J-18-2020] - 23 its recognized exceptions.30 Because those statutes did not list the fiduciary-beneficiary relationship as one such exception, the courts declined to recognize one by judicial fiat.31 Capped by Canarelli, the last decade has witnessed the high courts of Nevada and Georgia, and lower courts in Alabama, Illinois, Connecticut, and Virginia, reject the fiduciary exception outright, either because recognition was foreclosed by statute or 30 See Wel

2021First, the Court explained that “material fact[s]” about trust management could always be obtained through discovery in the event of disputes between beneficiaries and trustees. 990 P.2d at 597 n.2 (quoting Huie, 922 S.W.2d at 923 ).