The first courtroom face-off between attorneys for Richard Mellon Scaife’s children and those of three trustees on Thursday set the stage for a potentially bitter legal fight to come.
Attorneys for two of the trustees told a judge that they were within their rights in December, when they aired details of the finances of David Scaife, 49, and Jennie Scaife, 51, including their receipt of $1 million a month, each.
The son and daughter “launched an attack” by accusing the trustees of mismanagement, said attorney David Strassburger, representing trustee H. Yale Gutnick, and the trustees “are entitled to respond.”
Ms. Scaife’s attorney, William Pietragallo, countered that the two trustees’ court filings were laced with “rank hearsay and innuendo, and worst of all, public and private criticism of Jennie Scaife and David Scaife,” which should be stricken from the record.
Jennie Scaife of Florida and David Scaife of Shadyside asked five months ago how a family trust fund went from $210 million in 2005, to zero upon their father’s July death.
They suggested that Mr. Gutnick and the other trustees, James M. Walton and PNC Bank, let Richard Mellon Scaife drain the fund to prop up his Tribune-Review newspapers, ignoring their grandmother’s wish that they should receive its balance upon their father’s death.
The increasingly bitter arguments since suggest “that the animosity between the parties involved is of long duration, and not likely to be easily resolved,” said Michael J. Hussey, an associate professor of law at Widener University's Harrisburg campus.
The trustees have agreed to file, by June 1, a detailed, 20-year history of the so-called 1935 Trust. Before reaching that agreement, Mr. Gutnick and Mr. Walton disclosed in court filings the son’s and daughter’s income from the separate Grandchildren’s Trust, which contained $560 million.
Mr. Gutnick and one of his attorneys, E.J. Strassburger, have been trustees to the Grandchildren’s Trust.
Mr. Pietragallo told Common Pleas Judge Kathleen Durkin that the disclosure showed what can happen when you demand accountability.
“You get your finances — part of your finances — walked through the media with no other purpose but to ridicule you,” he said.
He noted that the trustees’ attorneys also wrote that Richard Mellon Scaife gave “over a quarter of a billion dollars to charity.”
“He spent $700 million, three times that amount, on a losing newspaper,” said Mr. Pietragallo, who represented Mr. Scaife's second wife — Margaret Ritchie Battle — in their divorce. “Nobody, but nobody, spent more money than Richard Mellon Scaife.”
E.J. Strassburger, an attorney for Mr. Gutnick, declined to comment on the Tribune-Review’s finances. Mr. Gutnick, who was not at the hearing, is chairman of the newspaper’s board.
Mr. Strassburger said during the hearing that Sarah Mellon Scaife, the publisher’s mother, “provided handsomely for [the Grandchildren’s Trust] because she knew that the other trust assets would not be available to them.”
That trust’s existence shows that she created the 1935 Trust for her son, he said.
The son and daughter are expected to contend that the trustees owe them hundreds of millions of dollars.
Judge Durkin did not say when she will decide whether to strike the disclosures.
After the accounting is filed “the children’s lawyers and advisers are going to go through that accounting line by line and try to identify every distribution that they think is questionable,” Mr. Hussey predicted.
“And they are going to be looking at those and trying to pick them apart one by one.”
First Published: April 2, 2015, 4:26 p.m.
Updated: April 3, 2015, 3:29 a.m.
