GUARDIAN OF ESTATE IS SURCHARGED FOR SELF DEALING
The court surcharged an accountant appointed as guardian of an elderly woman’s person and estate where funds went inexplicably missing from the estate and the guardian engaged in self-dealing. The court sustained objections to a final accounting.
The Philadelphia Corporation for Aging received a report in 2016 that Estelle Segal needed protective services. Thus, PCA petitioned for an adjudication of incapacity and appointment of a plenary guardian. PCA later nominated accountant Gloria Byars to serve as Segal’s guardian. In August 2016, the court found that Segal was totally incapacitated and appointed Byars as the plenary guardian of Segal’s person and estate. Byars filed an initial guardian inventory in November of that year. She stated that Segal owned two Philadelphia properties – one on Battersby Street and another on Halderman Ave. as well as assets held in bank and investment accounts. In August 2017, the court learned of Byars’ record of criminal financial misconduct in Virginia and her self-dealing by hiring her husband’s company, CEPCO, LLC, to clean out the homes of wards. Byars failed to disclose this conflict of interest. The court ordered Byars’ removal and directed her to file an account of her actions. Here, attorney James Tyler, the administer of Segal’s estate, filed objections to Byars’ final accounting. He alleged that Byars engaged in self-dealing, made improper expenditures and failed to account for both assets received and expended. Objector sought to surcharge Byars for losses to Segal’s estate due to missing funds, to surcharge her for payments to DEPCO and a home repair company and for guardianship fees already collected. When a fiduciary breaches any of her duties resulting in a loss to the principal’s estate, a surcharge is the appropriate remedy, the court explained. Byars failed to account for $35,405 of Segal’s estate. “The fact these funds are missing at all is inexcusable and evinces an utter failure on accountant’s part to exercise the sort of common prudence one expects from a guardian in the management of their ward’s estate,” the court stated in its opinion sustaining this objection. Moreover, Byars’ payment to DEPCO, her husband’s company, to clean the houses of her wards was patent self-dealing. Byars’ personal interest in the outcome of the subject transactions was so substantial that it may have materially affected her judgment in choosing to procure DEPCO service, the court reasoned. Since the payment to DEPCO was “completely at odds” with Byars’ fiduciary duties as guardian, the court surcharged Byars for the $8,400 paid to DEPCO. The court also addressed a “peculiar” $6,106 payment to Tri-State Home Repairs for work performed in August 2017 on Segal’s properties, months after both properties already had been sold. Byars’ inexplicable payments to Tri-State resulted in a $6,106 loss to Segal’s estate, for which the court surcharged Byars. Finally, the court held that Byars was not entitled to keep the $2,500 in fees she collected while purporting to act as guardian of Segal’s person and estate. “To allow accountant to retain such fees would allow accountant to profit from her misconduct.”
Reference: Digest of Recent Opinions, Pennsylvania Law Weekly, 41 PLW 957 Tuesday, October 9, 2018, In re: Estate of Segal, PICS Case No. 18-1157 (C.P. Philadelphia, Sept 10, 2018)
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