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Scaife trustees seek dismissal of siblings' lawsuit

| Monday, June 29, 2015, 11:39 p.m.

Trustees for a fund exhausted by late Tribune-Review publisher Dick Scaife asked an Allegheny County judge to dismiss an attempt by his daughter and son to recover hundreds of millions of dollars their father spent during his last 20 years.

In three court filings Monday, the trustees — Trib board chairman H. Yale Gutnick, Scaife relative James Walton and PNC Bank — each denied the siblings' allegations that they improperly allowed Scaife to spend about $455 million from the trust over 20 years.

Because Scaife exhausted the trust before his July 4, 2014, death, the trustees argue, Scaife's daughter and son have no claim to the money, the court filings state.

Jennie Scaife, 51, of Palm Beach, Fla., and David Scaife, 49, of Shadyside accused the trustees of breaching their fiduciary duty to them by allowing their father to “waste” the trust's assets by using the fund to support and expand his media companies, including the Tribune-Review. They would have inherited the fund had their father not spent it, according to the trust's language.

“What (Jennie and David Scaife) view as ‘a waste of trust assets,' ... was viewed by our Founding Fathers as so important that they made it part of the very First Amendment in the Bill of Rights,” Gutnick said in his filing.

Peter Wolff, an attorney with the Downtown law firm representing Jennie Scaife, said the trustees' filings “are nothing more than a restatement of what they have already claimed. We will now move forward with discovery on what the Trustees knew and considered when they authorized the use of money from the 1935 Trust to fund the losses of the Tribune-Review in an attempt to put the Post-Gazette out of business.”

Dick Scaife's mother, Sarah Mellon Scaife, set up the fund to be used for her son's “best interests,” in 1935, the same year she set up an identical trust fund for Cordelia Scaife May, her other child, according to court documents. Scaife May died in 2005.

“The trustees of that trust interpreted the same ‘best interests' language in identical fashion to (Gutnick, PNC Bank and Walton) when approving the distribution of the entire principal to Cordelia,” Gutnick's filing states.

Jennie and David Scaife knew for years before their father's death that he was spending down the fund's principal but didn't sue over the spending until after he died, the trustees each said in their filings.

Gutnick denied David Scaife's assertion that, at a meeting on Feb. 25, 2008, Gutnick assured him a specific amount of money would be left in the fund when his father died.

The trustees have made Sarah Mellon Scaife's intentions a key part of their defense. Gutnick and Walton noted that she established a separate trust for Jennie and David Scaife shortly before Jennie Scaife's birth, known as the Grandchildren's Trust, which pays each of the siblings about $1 million a month, they said.

The principal distributions from the 1935 Trust satisfied Mr. Scaife's “best interests” because they supported his two life passions, “his media properties and charity,” Gutnick's filing states.

Mike Wereschagin is a staff writer for Trib Total Media. He can be reached at 412-320-7900 or mwereschagin@tribweb.com.

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