In re: Jack Buncher Foundation ~ Appeal of: A. Rubinoff

CourtCommonwealth Court of Pennsylvania
DecidedJanuary 19, 2024
Docket291 & 345 C.D. 2022
StatusPublished

This text of In re: Jack Buncher Foundation ~ Appeal of: A. Rubinoff (In re: Jack Buncher Foundation ~ Appeal of: A. Rubinoff) is published on Counsel Stack Legal Research, covering Commonwealth Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re: Jack Buncher Foundation ~ Appeal of: A. Rubinoff, (Pa. Ct. App. 2024).

Opinion

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

In re: Jack Buncher Foundation : CASES CONSOLIDATED : Appeal of: Amy Rubinoff, Caryn : Rubinoff, Michael Rubinoff, and : Daniel Rubinoff : No. 291 C.D. 2022 : : In Re: Jack Buncher Foundation : : Appeal of: H. William Doring, : Thomas J. Balestrieri, Joseph M. : Jackovic and The Jack Buncher : No. 345 C.D. 2022 Foundation : Argued: May 10, 2023

BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ANNE E. COVEY, Judge HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE CHRISTINE FIZZANO CANNON, Judge HONORABLE ELLEN CEISLER, Judge HONORABLE STACY WALLACE, Judge

OPINION BY JUDGE WALLACE FILED: January 19, 2024

In these consolidated cross-appeals, Amy Rubinoff, Caryn Rubinoff, Michael Rubinoff, and Daniel Rubinoff (Rubinoffs) appeal from the order dated January 28, 2022, by the Court of Common Pleas of Allegheny County, Orphans’ Court Division (orphans’ court), directing them to pay $500,000 in attorneys’ fees and costs to The Jack Buncher Foundation (Foundation). The Rubinoffs contend the Foundation was not entitled to fees and costs, or, alternatively, should have received fees and costs in a lesser amount. In addition, the Rubinoffs contend the orphans’ court judge displayed bias against them and should have recused himself. H. William Doring (Doring), Thomas J. Balestrieri (Balestrieri), Joseph M. Jackovic (Jackovic), and the Foundation (collectively, Directors) appeal from the same order, but maintain the orphans’ court should have awarded the full amount of fees and costs they requested, totaling approximately $1.5 million. After review, we reverse the award of fees and costs but conclude the Rubinoffs failed to preserve their allegations of bias.1 I. Background We detailed the extensive history of this case in a prior decision, In Re: Jack Buncher Foundation (Pa. Cmwlth., No. 306 C.D. 2019, filed July 1, 2020). Briefly, the Foundation is a charitable nonprofit corporation named for prominent Pittsburgh businessman Jack Buncher (Jack). Jack had two children, Bernita Buncher (Bernita) and Stephen Buncher. The Rubinoffs are Bernita’s children. Jack and several family members, including Bernita, formed the Foundation in 1974. Jack died in 2001. The Foundation’s Board of Directors subsequently amended the articles of incorporation and bylaws in 2011 (2011 articles and bylaws). At the time of the amendments, the Board of Directors included Bernita, Balestrieri, Doring, and Jackovic. On April 12, 2017, the Rubinoffs filed a petition for rule to show cause.2 The Rubinoffs alleged Balestrieri, Doring, and Jackovic exercised undue influence over Bernita and breached their fiduciary duties by adopting the 2011 articles and bylaws. Among other things, the Rubinoffs alleged the 2011 articles and bylaws contravened

1 The Commonwealth, through its counsel, the Office of Attorney General, filed a statement in this Court indicating it would not be taking a position in these cross-appeals.

2 The Rubinoffs initially filed a complaint in the Civil Division on July 26, 2016. The matter was transferred to the orphans’ court, where the Rubinoffs filed the petition for rule to show cause.

2 Jack’s intent because they eliminated the right of his decedents to serve on the Board of Directors and redirected the Foundation’s assets to causes he did not support. The Rubinoffs requested the orphans’ court declare the 2011 articles and bylaws invalid; reinstate prior versions of the articles and bylaws; remove Balestrieri, Doring, and Jackovic from the Board of Directors; appoint one of the Rubinoffs to the Board of Directors; and award attorneys’ fees and costs. The Directors filed an answer and new matter on May 8, 2017, in which they denied the Rubinoffs’ allegations and included their own request for attorneys’ fees and costs. The Directors based their request on Count III of the petition for rule to show cause, which the Rubinoffs brought “derivatively on behalf of the Foundation and individually as presumptive directors” against Balestrieri, Doring, and Jackovic under Section 5782 of the Nonprofit Corporation Law of 1988 (Law), 15 Pa.C.S. § 5782. Reproduced Record (R.R.) at 201a-02a (unnecessary capitalization omitted). The Directors contended the Rubinoffs lacked standing to bring a derivative claim because they were not and never had been “members” of the Foundation as Section 5782 required.3 Additionally, the Directors argued the Rubinoffs failed to comply

3 The Law defines a “member” as any of the following:

(1) A person that has voting rights in a membership corporation.

(2) When used in relation to the taking of corporate action by a membership corporation, a delegate to a convention or assembly of delegates of members established pursuant to any provision of this subpart who has the right to vote at the convention or assembly in accordance with the rules of the convention or assembly.

(3) A person that has been given voting rights or other membership rights in a membership corporation by a bylaw adopted by the members pursuant to section 5770 (relating to voting powers and other rights of certain securityholders and other entities) or other provision of law, but only to the extent of those rights. (Footnote continued on next page…)

3 with Section 5782(c), which required them to post security for reasonable expenses, including attorneys’ fees, that the Foundation might incur. The Rubinoffs filed a reply and answer to new matter on May 19, 2017. The Rubinoffs asserted they had standing to pursue a claim under Section 5782 but denied it was necessary for them to post security “under the facts and law applicable to this matter.” Reply to Answer and New Matter, 5/19/17, ¶ 3.4 On May 31, 2017, counsel for the Rubinoffs, William Pietragallo, II, Esquire (Pietragallo), e-mailed counsel for the Directors, Joseph F. McDonough, Esquire (McDonough), to propose a “compromise.” R.R. at 20a. Pietragallo explained the Rubinoffs would provide him with $100,000 to be deposited in an interest-bearing account, as security for attorneys’ fees “should the [orphans’ c]ourt enter an [o]rder awarding [attorneys’] fees to [the Directors] and after any final appeal thereof.” Id. McDonough agreed to the compromise, proposing the Rubinoffs make their deposit “without prejudice to [Pietragallo’s] position that no fees/expenses are recoverable and also without prejudice to [McDonough’s] position that they are recoverable in an amount (whether more or less than the $100,000 deposit) to be determined by final [c]ourt [o]rder including available appeals.” Id. at 21a. The parties memorialized the compromise in a letter signed by Pietragallo and McDonough and dated June 1, 2017. In the letter, Pietragallo explains:

Our law firm will establish an escrow account in the principal sum of One Hundred Thousand Dollars ($100,000) for the purpose of

(4) A shareholder of a corporation, if the corporation issues shares of stock.

Section 5103(a) of the Law, 15 Pa.C.S. § 5103(a).

4 Some of the Rubinoffs’ pleadings, including their reply and answer to new matter, do not appear in the reproduced record.

4 providing security for any claim that the [Directors] may have regarding attorneys’ fees . . . should [the Directors] be awarded any such attorneys’ fees by the [c]ourt and, if appealed, sustained by a final order of an appellate court.

R.R. at 23a. Moreover, a stipulated case management order, dated June 20, 2017, explains the compromise as follows:

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Bluebook (online)
In re: Jack Buncher Foundation ~ Appeal of: A. Rubinoff, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-jack-buncher-foundation-appeal-of-a-rubinoff-pacommwct-2024.