Disputes over tens of thousands of pages of documents and at least one key deposition have bedeviled a three-year-old court fight over the late publisher Richard Mellon Scaife's use of a family trust, attorneys revealed at a three-hour courtroom argument Tuesday.
Attorneys for David Scaife, 51, and Jennie Scaife, 54, contended that a trio of family trustees have withheld documents that could detail their father's plan to spend money that they would otherwise inherit, while preserving assets they would not receive.
Attorney James Mannion, representing David Scaife, accused trustees H. Yale Gutnick, James Walton and PNC Bank of "gamesmanship ... to purposely insulate documents" that could prove the case.
The trustees countered that the late publisher's son and daughter were asking for far too much information, and added that it had proved impossible to get Ms. Scaife to sit for a deposition.
The many disputes between the Scaifes and the trustees now rest with Allegheny County Common Pleas Judge Kathleen Durkin, who has set a schedule that envisions an end this year to discovery in the case, which could have nine-figure implications.
The disputed trust fund at the center of the case was created in 1935 by Richard Mellon Scaife's mother, Sarah Mellon Scaife. She dedicated it to supporting her son's welfare, with the balance upon his death to go to his children. But with the trustees’ consent, Mr. Scaife steered some $400 million from the fund to the Tribune-Review newspapers, and there was nothing left for Jennie Scaife and David Scaife upon the publisher's 2014 death. The publisher's daughter and son want the trustees to pay them upwards of a hundred million dollars.
Mr. Gutnick's willingness to spend down the trust fund worried fellow trustee PNC, Mr. Mannion said. "PNC was nervous not only about the tax issues, but also that the trustees, quote 'mechanically honored' Mr. Scaife's demands for distributions."
Mr. Mannion alleged "a scheme between Mr. Gutnick and Mr. Scaife to deplete the 1935 Trust," and use its funds to prop up the Tribune-Review, when other funds could have been used instead. He described as a conflict of interest Mr. Gutnick's former roles as trustee for numerous Scaife family funds, estate co-executor, Tribune-Review board chairman and personal lawyer to the publisher.
He showed Judge Durkin a chart outlining Mr. Gutnick's many roles in the Mr. Scaife's business life. "This is Mr. Gutnick, your honor -- Mr. Gutnick at the center of this equation, and what he knew and what he was sharing, or not sharing with the other trustees."
He said that Mr. Gutnick was now using his multiple roles as an excuse to justify withholding some 4,400 pages of documents from Jennie and David Scaife.
James Schadel, one of Mr. Gutnick’s attorneys, said the roles of the late publisher’s confidant "do not conflict." In any case, the trustees had a straightforward duty, he said: "All the trustees had to determine was that the distribution [from the trust fund] was in Mr. Scaife's best interests." He said they fulfilled that duty.
Jennie and David Scaife are also asking for documents held by PNC Bank related to their father's finances. PNC has identified some 4,750 documents as exempt from discovery.
Deborah Little, one of PNC's attorneys, held up one thick binder, and said, "We do have approximately 20 of these binders, your honor, stuffed approximately four inches thick, double-sided" of documents that may relate to Mr. Scaife's finances, but that don’t have to be disclosed.
Mr. Schadel said he has tried, since mid-2016, to schedule Ms. Scaife's deposition. She cancelled a deposition that was set for her home state of Florida, and later said she could not travel to Pittsburgh, for medical reasons. She later offered to be deposed in Florida in sessions of one or two hours, spread over multiple days, but declined to pay the costs of the attorneys who would have to travel and stay there.
"We are not unwilling to have her testify. She's actually looking forward to it," said William Pietragallo, one of Ms. Scaife's attorneys, after the court argument. "She had a couple of health episodes which she is responding nicely to, but it takes time."
Mr. Gutnick has sought to subpoena detailed financial records of the Pittsburgh Post-Gazette, and the newspaper has filed a motion to quash that document demand. Attorneys for the Post-Gazette argued Tuesday that the case revolves around the knowledge and states-of-mind of the trustees and of Mr. Scaife, none of which would depend on a rival newspaper's finances.
Attorney David Strassburger, representing Mr. Gutnick, argued that the Post-Gazette's finances could serve as a yardstick against which to measure Mr. Scaife's decisions to continue to fund the Tribune-Review.
Judge Durkin did not say when she expects to rule on the discovery disputes.
Rich Lord: rlord@post-gazette.com or 412-263-1542
First Published: January 23, 2018, 8:28 p.m.
Updated: January 23, 2018, 8:28 p.m.