A case decided Thursday in the Superior Court has a certain Dickensian quality to it. It illustrates how fine the line can be between friendship and undue influence which might void a transaction. So, you be the judge.
Patricia Henninger was a woman in her 80s, widow of Carl. In the early 2000s she met Dr. Richard Bazylak, a physician in Meadville, PA who is perhaps a decade younger than she. In 2004 Patricia created a foundation named for her late husband and asked Dr. Bazylak to join its board of directors. In 2016 she signed a limited power of attorney conferring powers upon Dr. Bazylak to act on her behalf. He accepted the role but never used the power. Patricia would have dinner with Dr. Bazylak and his wife and the doctor would check in on her, sometimes bringing her food. At one point Patricia fractured her hip and stayed with the doctor for six (6) weeks during her recovery, In 2017 the doctor informed Patricia that he aspired to have his own rehabilitation facility. Patricia wrote him a check for $1,000,000. Roughly a year later, she added another $200,000 to support the cause. In October 2019, a third check was written to Dr. Bazylak, also in the amount of $1,000,000. It appears that the checks were unconditional and the doctor applied them to support his treatment center.
By the time Covid struck in 2020, Patricia was in her 90s and the isolation took a toll on her mental acuity. Ultimately, another person was appointed her guardian per the terms of another power of attorney she had signed. She died in 2024 and her 2022 will provided for her estate to be conveyed to a trust she had created in 2004.
The Estate sued Dr. Bazylak for an accounting, specifically looking to recover the $2.2 million in gifts made to him while he possessed authority as her “attorney.” To be clear, no suggestion was made that he had executed these checks on her behalf using that power. The contention was that the presence of the power coupled with his role as Patricia’s physician and the size of the checks was enough to show he had undue influence over Patricia. The doctor answered that these gifts were her doing made by her independent power over her assets.
This is an area of law with shifting burdens of proof.
[A] challenger to an inter vivos gift claiming undue influence bears no burden of showing that the donor had a weakened intellect. Rather, an inter vivos gift to one in a confidential relationship with the donee will be condemned, even in the absence of evidence of actual fraud, or of mental incapacity on the part of the donor, unless there is full and satisfactory proof that it was the free and intelligent act of the donor, fully explained to h[er], and done with a knowledge of its consequence. Trust under Deed of Walter R. Garrison 302 A.3d at 138.
Thus, the burden shifted to Dr. Bazylak to show he did not have a confidential relation at the time of the gift. Under Pennsylvania law, the power of attorney itself establishes a confidential relation. Hera v. McCormick, 625 A.2d 682,686 (Pa. Super 1995). Bazylak testified that he used the first $1 million gift to fund purchase of a rehab facility. The other checks funded operations and maintenance. The physician stated he had invested $ 2million of his funds to set up the Snug Harbor Rehabilitation Center in Erie, PA.
The trial court in Crawford County did conduct hearings at which the executor, the parish priest serving both Patricia and the doctor and the doctor himself testified. One of the oddities illuminated was the fact that the gifts were made to Dr. Bazylak directly when they could have been deductible had they been made to a charitable foundation. A non profit had been formed by June 2018.
So, have you ruled yet?
The trial court decided that, after considering the totality of the circumstances, the gifts were sustained and not subject to claw back. The appellate court affirmed that decision on appeal, holding there had been no abuse of discretion by the trial court. We don’t have some of the precise facts that would have been helpful. We have found that the decedent was the widow of the last Henninger to own the much-famed Kennywood Amusement Park in suburban Pittsburgh and the opinion notes that $2.2 million was a small portion of her estate. We also know that she was renown for her support of local charities, especially those associated with the Catholic Church. The key here, although mentioned only in passing, is that when she made her final will in 2022 her estate was given to the trust she had created in 2004 and her executor was not Dr. Bazylak.
The lesson here is that if you have a friend or family member who wants to equip you with a power of attorney, be extra careful how and when any gifts are made to you while that power subsists. You may someday have to explain the gift transactions and, it seems the Attorney General argues that you can’t testify once the donor dies. The Superior Court did not go for that argument but they may invoke it again as this is a non-precedential case.
The opinions: J-A06018-26m – 106742399353924828.pdfJ-A06019-26m – 106742465353934450.pdf