Settlement approved in Scaife trust case

An Allegheny County judge has approved a settlement in the long-running battle over a 1935 trust left to conservative philanthropist Richard Mellon Scaife.

Common Pleas Judge Joseph K. Williams III docketed the order on Dec. 23, which approves a $200 million settlement proposed by some of the parties nearly one year ago.

Scaife, who owned the Tribune-Review, died on July 4, 2014.

His mother, Sarah Mellon Scaife, established a trust for him in 1935. According to the court, Richard Scaife made requests for distributions from that trust from 1996 through 2014. At the time of his death, the trust, which at one time had $450 million, had been depleted.

Scaife’s children, David N. Scaife and the late Jennie K. Scaife, claimed shortly after their father died that the trustees had improperly distributed the funds in it to run his newspaper properties.

For several years, the parties battled in orphan’s court over the depleted fund. However, according to the recent court order, Richard Scaife executed indemnification agreements which allow for the $200 million in the settlement to come out of his estate.

As part of the agreement, the judge was responsible for determining how much income that $200 million would have generated between the time of Scaife’s death and Jennie Scaife’s death in November 2018.

Under his order, Williams concluded that income to be $46.7 million.

According to the settlement order, both David N. Scaife and Jennie Scaife’s estate will split that amount equally.

The rest of the $200 million, as was defined by the trust, reverts to David Scaife.

In addition, the settlement agreement calls for the trustees to resign and be replaced by trustees appointed by the court.

Jennie Scaife’s estate, which was not a party to the $200 million settlement proposed in January, initially opposed the total settlement amount but reconsidered following a change in counsel and recently agreed to it.

There remains in Allegheny County Common Pleas Court a dispute over what is called the 1963 Grandchildren’s Trust, although, in April, the Jennie K. Scaife Charitable Foundation and its administrator filed a federal lawsuit against the trustees over the Grandchildren’s Trust.

U.S. Magistrate Judge Lisa Pupo Lenihan authored a report and recommendation in September suggesting the case should be decided in Common Pleas Court. That recommendation is pending a decision by U.S. District Judge J. Nicholas Ranjan.