A legal battle over the estate of the daughter of the late billionaire Richard Mellon Scaife gained new momentum this week, with lawyers suing over trustees’ management of a $660 million fund arguing that the case should not be dismissed from federal court.
Lawyers for the estate of Jennie K. Scaife filed suit in U.S. District Court in April against PNC Bank and other trustees, saying her share of the fund, called the 1935 Trust, should be split from that of her estranged brother to be used for charitable causes she supported.
PNC Bank and the other trustees have moved to have the case dismissed, arguing that the case should continue to be heard in Allegheny County Orphan's Court.
Lawyers for the Jennie K. Scaife Charitable Foundation and David Zywiec, the personal representative of her estate, are arguing that the case should continue in federal court on a breach-of-trust claim.
In a brief filed Tuesday, they argue that as a result of the defendants' "inexcusable failure to create separate trusts, the Charitable Foundation has been denied a distribution of approximately $330 million of trust assets."
Lawyers say the trustees knew that Jennie, who had no children, intended for her half of the trust to go to charity instead of to her brother David and should have split the funds into separate trusts.
They argue that the trustees knew that her intention was to give her half of the estate to charity and knew that Jennie and David were estranged.
"The last thing Jennie would have wanted was for her share of the trust to go to David and his children, who already have millions of dollars, and certainly need the money far less than Jennie's charitable priorities," attorney Jay Freiberg said in a statement about the filing.
The foundation and Jennie Scaife's estate claim that PNC and trustees Blaine Aiken, Matthew Groll, Laura Gutnick, Corbin Miller and Frederick Wedell II breached their fiduciary duty by not splitting the trust and causing it all to go to David after Jennie's death in 2018.
The trust was created by Sarah Mellon Scaife, inheritor of the family's fortune, in 1963. Until 1984 its income was to go to charity, according to the suit. After that year, the income would go to her grandchildren, their spouses and their children.
If the trust were split, the beneficiaries could assign part of it to their spouses, children or to charities. Jennie Scaife assigned her part to charity in her 2015 will, but when she died all of it went to David's side of the family, according to the suit.
Lawyers said Jennie Scaife had used some of her family's money to support charitable causes in Pennsylvania, Florida and New York, including women's and children's health and welfare, addiction prevention and animal welfare.
"The claims by the Charitable Foundation and the Estate of Jennie Scaife should be resolved by the Orphans’ Court, which has jurisdiction over the trust at issue," said Marcey Zwiebel, director of corporate public relations for PNC Bank, in an email. "The claims have no merit. The trustees had no duty to create separate trusts. Moreover, neither Ms. Scaife nor her personal representative or her lawyer ever requested that separate trusts be created."
The federal court fight is separate from another battle in Allegheny County Orphan's Court over another Scaife fund, called the 1929 Trust. In that case, Jennie and David claimed that the trustees of that fund, which once contained $450 million, allowed Richard Scaife to use the money to support his newspapers, including the Pittsburgh Tribune-Review.
First Published: July 22, 2020, 5:40 p.m.
