J-A15016-17 & J-A15017-17


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

IN RE: ESTATE OF JAMES CAPORUSSO,         IN THE SUPERIOR COURT OF
A/K/A JAMES SALVATORE CAPORUSSO,                PENNSYLVANIA
DECEASED




APPEAL OF: FRANCIS CAPORUSSO AND
CHRISTINA CAPORUSSO TREITZ

                                              No. 1267 MDA 2016

              Appeal from the Order Entered June 30, 2016
          In the Court of Common Pleas of Lackawanna County
              Orphans’ Court Division at No(s): 35-12-0025

IN RE: ESTATE OF TRUDY CAPORUSSO,         IN THE SUPERIOR COURT OF
A/K/A TRYNTJE CAPORUSSO                         PENNSYLVANIA




APPEAL OF: FRANCIS CAPORUSSO AND
CHRISTINA CAPORUSSO TREITZ

                                              No. 1268 MDA 2016

              Appeal from the Order Entered June 30, 2016
          In the Court of Common Pleas of Lackawanna County
            Orphans’ Court Division at No(s): 258-OCD-2009
                                              35-09-00258

IN RE: ESTATE OF CAPORUSSO, T.            IN THE SUPERIOR COURT OF
                                                PENNSYLVANIA




APPEAL OF: CAPMAR REALTY CORP.,
GRUMA REALTY CORP., CAPIT REALTY
CO., INC., AND FRANKMAR REALTY
CORP.
J-A15016-17 & J-A15017-17


                                                 No. 1269 MDA 2016

               Appeal from the Order Entered June 30, 2016
           In the Court of Common Pleas of Lackawanna County
              Orphans’ Court Division at No(s): 35-09-00258

IN RE: ESTATE OF CAPORUSSO, J.              IN THE SUPERIOR COURT OF
                                                  PENNSYLVANIA




APPEAL OF: CAPMAR REALTY CORP.,
GRUMA REALTY CORP., CAPIT REALTY
CO., INC., AND FRANKMAR REALTY
CORP.

                                                No. 1270 MDA 2016

               Appeal from the Order Entered June 30, 2016
          In the Court of Common Pleas of Lackawanna County,
              Orphans’ Court Division at No(s): 35-12-0025

BEFORE: PANELLA, J., SOLANO, J., and MUSMANNO, J.

MEMORANDUM BY SOLANO, J.:                   FILED DECEMBER 27, 2017

     We address the appeals filed by Francis Caporusso and Christina

Caporusso Treitz, docketed at Nos. 1267 & 1268 MDA 2016, and the appeals

filed by Capmar Realty Corp., Gruma Realty Corp., Capit Realty Co., Inc.,

and Frankmar Realty Corp. (the “Corporations”), docketed at Nos. 1269 &

1270 MDA 2016, from the order granting a petition to disallow the

Corporations’ claims against the estates of James S. and Trudy Caporusso.

We vacate, and remand for proceedings consistent with this memorandum.

     Trudy Caporusso and James S. Caporusso (“Decedents”) died in 2009

and 2011, respectively. At the time of their deaths, the Decedents owned


                                  -2-
J-A15016-17 & J-A15017-17


shares of stock in Capmar, Gruma, Capit, and Frankmar, each of which is a

closely-held New York corporation of which James S. Caporusso had been

the president. The three adult children of the Decedents — James F.

Caporusso, Francis Caporusso, and Christina Caporusso Trietz — were also

shareholders and officers in the Corporations 1 ; Christina Caporusso Trietz

was the Treasurer.2

           To a large extent, this is a dispute among the Caporosso family

members. On one side are Francis and Christina, who are aligned with the

four Corporations. They contend that James F. improperly borrowed money

from the Corporations and never repaid it, and that the Corporations should

be able to collect the unpaid debt from the estates of Trudy and James S.

because the Decedents signed a Guaranty pledging to repay the debt. On

the other side are the two estates, through their Administrator, Robert T.

Kelly, Jr. (“Administrator”), who denies an obligation to pay the debt.

Aligned with Administrator is James F., who admits borrowing the money,

but denies any obligation to repay it or to have it repaid by the estates. 3


__________________________________________________________________

1 It appears that the Corporations’ other shareholders included members of
the extended Caporusso family.
2 For ease of reference, we sometimes refer to the Caporusso family
members in the remainder of this memorandum by their first names. James
F. Caporusso is variously referenced in the record as “James F. Caporusso,”
“James F. Caporusso, Jr.,” and “James S. Caporusso, Jr.”; we refer to him as
“James F.” and to his father as Decedent or “James S.”

3 No party has contested the three Caporusso siblings’ standing to
participate in this litigation.

                                                                     -3-
J-A15016-17 & J-A15017-17


           On January 18, 2013, the Corporations filed Notices of Claim against

each of the estates, seeking to recover “for an obligation of the [Decedents]

as set forth on a Guaranty and Pledge Agreement dated January 1, 2007.” In

February 2013, the Corporations also filed a civil complaint against the

estates (through their executor).4 The Corporations argued that (1) between

1997 and 2000, the Corporations loaned a total of $1,750,000 to James F.

and to his wholly owned business entities, including Pocono Brewing

Company and Caporusso Investment Group; (2) these loans had been

guaranteed by the Decedents in a Guaranty and Pledge Agreement executed

on January 1, 2007; and (3) the loans had never been repaid. The

Corporations claimed that the Decedents breached the Guaranty and Pledge

Agreement made with the Corporations. Their complaint requested an order

requiring specific performance of the Guaranty and Pledge Agreement by

each estate.

           Attached to both the Notices of Claim and civil complaint were copies

of the Guaranty and Pledge Agreement, dated January 1, 2007. After

identifying the Decedents and Corporations as parties to the Agreement, the

Agreement sets forth the following recitals:




__________________________________________________________________

4 The contract action was docketed in the Court of Common Pleas of
Lackawanna County at No. 2013-civ-860. That action is not before us in this
appeal, but its claims substantially duplicate those in the orphans’ court
appeals that are before us.


                                                                     -4-
J-A15016-17 & J-A15017-17


                 WHEREAS, James [F.] Caporusso, Jr.[5] and/or his wholly
           owned corporations, Caporusso Investment Group and Pocono
           Brewing Corp. (collectively, “Obligor”) have taken loans from
           each of the Corporations dating back to 1997 on various dates
           and in differing amounts (collectively the “Loans”); and

                 WHEREAS, the Obligor has not previously paid any
           interest on the Loans and has not repaid any of the outstanding
           principal of the Loans; and

                 WHEREAS, the Obligor has not entered into an agreement
           with any of the Corporations or signed any Promissory Note to
           repay the Loans, nor has it signed any form of security
           agreement to secure the repayment of the outstanding Loans;
           and

                 WHEREAS, it is agreed among the Guarantors and the
           Corporations for the purpose of this Agreement only, and without
           prejudice to any future accounting, that as of December 31,
           2006 (assuming that there are no repayments before that date)
           the Obligor owes the following amounts to each of the
           Corporations:

                                 To    Capmar, the sum of $335,000;
                                 To    Gruma, the sum of $240,000;
                                 To    Capit, the sum of $440,000;
                                 To    Frankmar, the sum of $735,000;

           (such amounts hereinafter collectively referred to as           the
           “Obligations” and each individually an “Obligation”); and

                 WHEREAS, James [F.] Caporusso, Jr. disputes that any
           monies paid to the Obligor were loans, does not believe that the
           Obligations are required to be repaid to the [Corporations] and
           refuses to enter into any agreement with the [Corporations] to
           secure or repay any of the Obligations; and

                 WHEREAS, Guarantors acknowledge that it is in their
           desire that the Obligations be repaid to the [Corporations] and

__________________________________________________________________

5 The Guaranty names “James S. Caporusso, Jr.,” but the parties agree that
this is a reference to James F. Caporusso, and, to avoid confusion, we have
corrected the middle initial in quotations from the Guaranty and related
documents.

                                                                     -5-
J-A15016-17 & J-A15017-17


           Guarantors therefore wish to guaranty payment of                                           the
           Obligations by Obligor as set forth in this Guaranty; and

                  WHEREAS, the Obligations are presently due and payable,
           but [Corporations] have agreed to forebear in respect of
           collecting the Obligations, as more fully set forth in this Guaranty
           and Pledge Agreement; and

                  NOW, THEREFORE, in consideration of the foregoing
           recitals and for other good and valuable consideration,
           Guarantors agree as follows . . .

Guaranty and Pledge Agreement, 1-2.

           The Guaranty then provides that a portion of the Decedents’ stock in

the Corporations will be transferred to Iven R. Taub, Esq. (the “Escrow

Agent”) as security for “the timely payment of all obligations,” and pledges

that the transferred stock shall be used to satisfy any remaining balance on

the obligations “[i]f all or any part of the Obligations remain unpaid on the

date that is nine (9) months after the date of the death of the last surviving

[Decedent].” Id. at 2-7.6 The Guaranty also states that it shall be “governed

by and construed in accordance with the internal laws of the State of New

York.” Id. at 6. Page 7 of the Guaranty displays the signatures of

Decedents; Salvatore Caporusso, another family member, who signed as

Vice President of each of the Corporations; and Attorney Taub. Page 8

includes a notarization by Attorney Taub, which states that on November 13,

2007,         the       Decedents               acknowledged               that   they   executed   the   “within

__________________________________________________________________

6The terms of the Guaranty provide for the accumulation of interest and a
method for the valuation of the stock. The Guaranty states that stock in
excess of the outstanding obligations shall be returned to the Decedents’
estates.

                                                                     -6-
J-A15016-17 & J-A15017-17


instrument.” The signature of Salvatore Caporusso was not notarized. The

Guaranty’s pagination (e.g., “Page 1 of 9”) indicates that it is nine pages in

length, but only the first eight pages of the Guaranty were attached to the

Notices and complaint.

      The Corporations also attached copies of Decedents’ wills to their

complaint. In relevant part, James S. Caporusso’s will, dated April 22, 2010,

provided as follows:

      I devise and bequeath to each of my daughter, CHRISTINA, and
      my son, FRANCIS, a sum equal to the value of all of my shares
      that I may own in Capmar Realty Corp., Gruma Realty Corp.,
      Capit Realty Co., Inc., and Frankmar Realty Corporation,
      (individually the “Corporation” or collectively the “Corporations”)
      which were pledged and used to satisfy certain obligations of my
      son, JAMES, to the Corporations which I guaranteed the
      repayment of pursuant to a certain Guaranty and Pledge
      Agreement dated December 6, 2006 entered into among myself,
      my late wife, TRUDY CAPORUSSO (hereinafter “TRUDY”) and
      each of the Corporations (the “Agreement”). My Executors shalt
      attempt to satisfy this specific bequest by distributing to
      CHRISTINA and FRANCIS the same number of shares in each of
      the Corporations as was used to satisfy the obligations
      guaranteed under the Agreement.

James S. Caporusso’s Will at Art. III, ¶ A. Trudy Caporusso’s will contained a

materially identical provision, except that it referenced her husband, James

S., as the other party to the Guaranty. Trudy Caporusso’s Will, Dec. 6, 2006,

at Art. III, ¶ B.

      In April 2013, James F. served interrogatories on the Corporations,

seeking any and all documentation supporting the existence of the loans.

After the Corporations objected, James F. filed a motion to compel, which



                                     -7-
J-A15016-17 & J-A15017-17


was granted by an order dated August 27, 2013.7 On October 9, 2013, the

Corporations provided amended responses to interrogatories, including

copies of checks made to James F.’s wholly-owned corporations. The checks

were signed by Christina, and many have the word “Loan” written in the

memo line.

           In December 2014, Robert T. Kelly Jr., Esq. was appointed as the

estates’ Administrator. 8 On November 24, 2015, the Administrator filed a

petition to disallow the Corporations’ claims.9 First, the Administrator argued

that the Corporations had not proven the validity of the claims because of

facial irregularities in the Guaranty, pointing out that the wills reference a

Guaranty dated December 6, 2006, while the document produced by the

Corporations is dated January 1, 2007 and notarized November 13, 2007,

and that only eight of the nine pages of the Guaranty had been provided.

__________________________________________________________________

7The order was clarified by a further order of the court on September 9,
2013.
8 Francis was the initial executor of Decedents’ estates. In August 2013, the
orphans’ court removed Francis as executor of the estate for Trudy. Francis
appealed that decision, and this Court affirmed. In re Caporusso, No. 1751
MDA 2013, 2014 WL 10803083, at *1-*2 (Pa. Super., Aug. 19, 2014)
(unpublished memorandum). Francis then voluntarily relinquished his
position with respect to the estate of James S.
9 Before Orphans’ Court Rule 7.3 became effective in 2016, the Orphans’
Court Rules made no specific provision for a motion for summary judgment.
The Administrator’s petition was the equivalent of such a motion, as it
explicitly invoked Pa.R.C.P. 1035.2, stated the standard of review for
summary judgment, and requested entry of judgment. See Administrator’s
Pet. for a Rule to Show Cause Whether Claims Against the Estates Should Be
Disallowed, 5/24/15, at 1, 15, 32. In this memorandum, we sometimes refer
to the petition as a summary judgment motion.

                                                                     -8-
J-A15016-17 & J-A15017-17


Second, the Administrator argued that the Guaranty lacked consideration, as

at the time it had been signed (either in 2006 or 2007), the four-year

statute of limitations applicable to collections on the 1997-2000 loans had

expired. 10 Third, the Administrator preemptively argued that the Guaranty

could not provide a basis to bypass the statute of limitations and revive the

obligation because it was not signed by James F. as the debtor. On

December 7, 2015, James F. joined the Administrator’s petition, and on

December 10, 2015, James F. filed a motion for summary judgment that

raised similar arguments.

           Francis and Christina filed an answer on December 31, 2015. They

argued that the Corporations’ claims did not depend on the validity of the

Guaranty, because “the wills of the Decedents demonstrate the [Decedents’]

intent to have the Corporations be compensated.” Answer, 12/30/15, at

¶ 15. They also argued that the Guaranty was enforceable as a stand-alone

contract, irrespective of the wills or the intent of the Decedents. Francis and

Christina further argued that the Guaranty was valid under New York law,



__________________________________________________________________

10 The Administrator argued that the applicable statutes of limitation on the
collection of the loans would be four years under Pennsylvania law (citing 42
Pa.C.S. § 5525(a)(3)), and six years under New York law (citing N.Y. CPLR
213), and that the court should apply Pennsylvania’s statute of limitations
pursuant to 42 Pa.C.S. § 5521, which states, “The period of limitation
applicable to a claim accruing outside this Commonwealth shall be either
that provided or prescribed by the law of the place where the claim accrued
or by the law of this Commonwealth, whichever first bars the claim.” No
party has argued that a different statute of limitations should be applied to
this case.

                                                                     -9-
J-A15016-17 & J-A15017-17


despite the expiration of the statute of limitations on the loans, because it

had been signed by the Decedents. Id. at 32.

        Francis and Christina attached to their answer a copy of an unsigned

Guaranty and Pledge Agreement dated December 6, 2006. Answer,

12/30/15, at Ex. B. This document appears to be identical to the Guaranty

dated January 1, 2007, except that it includes a ninth page that contains a

schedule of the amount of shares to be pledged to each Corporation. Each

valuation on page 9 references the obligation “As of December 31, 2006,” as

do the amounts listed on the first page of the document. Francis and

Christina argued that, although the document was drafted on December 6,

2006,    it   contemplated   the   obligation   and   relevant   shares   through

December 31, 2006, which is why it was re-dated and executed the following

day, on January 1, 2007.

        Francis and Christina also attached a summary of a December 6, 2006

meeting of the Corporations (which was prepared on November 8, 2007, by

Attorney Taub), which, they claimed, “describes the intention of the

[Decedents] to guarantee certain sums to the Corporations, as well as the

[Decedents’] intent to execute a Guaranty and Pledge Agreement.” Answer,

12/30/15, at ¶ 15. The summary, which was addressed to the directors of

the Corporations, states:

        During the meeting we discussed the various loans which had
        been forwarded to James [F.] Caporusso, Jr. from each of the
        Corporations in the collective sum of approximately $1,375,000.
        The collective outstanding balance of these loans with accrued
        interest as of December 31, 2006 totals $1,750,000. Under the

                                      - 10 -
J-A15016-17 & J-A15017-17


     terms of the Guaranty and Pledge Agreement to be executed by
     Jim and Trudy Caporusso, they have agreed to guarantee the
     repayment of the outstanding loans plus accruing interest. They
     will pledge the appropriate amount of shares in each of the
     Corporations to guarantee the repayment of the outstanding
     loans. Schedule A attached to the Guaranty and Pledge
     Agreement lists the number of shares of each Corporation
     pledged including the calculation of the appropriate amount of
     shares to be pledged. Under the terms of the Agreement, if the
     outstanding loans, including accrued interest, have not been paid
     in full within three (3) years after the death of the survivor of
     Jim and Trudy to allow sufficient time for the Internal Revenue
     Service to conduct an estate tax audit of the estate of the
     survivor, pledged shares valued in an amount equal to the
     amount of the outstanding loan shall be forfeited to the
     respective Corporations. This forfeiture of shares will serve, in
     essence, to repay the shareholders because it will increase their
     respective interests in each of the Corporations.

     Francis and Christina supplemented their Answer with the affidavit of

Salvatore Caporusso, who stated that he is an officer of the Corporations

and became aware of the payments made to James F. in 2005. Salvatore

understood at that time that the payments were made as loans, but that

James F. “had never intended to repay the [C]orporations and . . . had taken

the monies from the [C]orporations under false pretenses.” Aff. at ¶ 6.

Christina and Francis argue that this affidavit, in addition to minutes of a

shareholder meeting in 2012 (attached to a prior pleading in relation to

Francis’ removal as Administrator), evidenced that the first time the

Corporations   discussed   the   payments    and    a   guaranty     was   at    the

December 6, 2006 meeting.

     The   Corporations    responded   to    the   Administrator’s    petition   on

March 18, 2016. The Corporations asserted that the statute of limitations


                                    - 11 -
J-A15016-17 & J-A15017-17


governing the collection of loans was irrelevant to their claims, because their

claims were “founded on an unlawful taking of monies from the Corporations

by James F. Caporusso . . . without the authority or knowledge of the

Corporations.” Corporations’ Brief, March 18, 2016, at 2. The Corporations

attached to their brief an affidavit by Christina. In it, she stated that she

wrote the checks to James F. with the understanding that the monies would

be repaid. She acknowledged that she wrote “loans” on the memo lines of

the checks and said she did not advise her Father of the payments until

2005. The Corporations argued that because the payments were wrongful

takings and not loans, the applicable statute of limitations governing actions

to collect the money was tolled until their 2005 discovery by the

Corporations.    The   Corporations   also     argued   that,   regardless   of   the

mischaracterization of the payments to James F. as loans, a guaranty under

New York state law is not void for want of consideration, even where the

statute of limitations on the underlying debt has expired. Corporations’ Brief

at 5.

        The Corporations attached as an exhibit a copy of the Guaranty dated

January 1, 2007, that, for the first time, included the Guaranty’s ninth page

displaying the stock schedule. The Corporations also attached copies of

Stock Powers executed on November 13, 2007, in which the Decedents

transferred some stock to Attorney Taub with instructions to transfer the

stock to the Corporations.



                                      - 12 -
J-A15016-17 & J-A15017-17


           On June 30, 2016, the orphans’ court entered judgment in favor of the

estates. 11 The court held that the underlying debt became unenforceable

when the four-year statute of limitations expired, and that the Guaranty

pledging to pay that debt in exchange for a forbearance of legal action was

unenforceable on the date it was signed due to lack of consideration:

           In both New York and Pennsylvania, unless a loan agreement
           otherwise specifies, a debt becomes instantly due. In re
           Michael Angelo Corry Inn, Inc., 297 B.R. 4[35] (Bankr. W.D.
           Pa. 2003). Thus, the four year statute of limitations relevant to
           the enforcement of the debt begins to run from the date the loan
           is made. 42 Pa. C.S.A. § 5521. The statute of limitations for
           money advanced on separate dates accrues separately for each
           advance. Skiadas v. Terovolas, 706 N.Y.S. 2d 138 (N.Y. App.
           Div. 2000). James F. Caporusso never repaid any money to the
           Corporations. The Guaranty and Pledge Agreement lacks
           consideration, as the statute of limitations on the alleged loans
           expired prior to the date of that document. Because the
           Guaranty and Pledge Agreement acknowledges that there is no
           actual promissory note to support the loans between the
           Corporations and James F. Caporusso . . . his subsequent failure
           to repay any principal or interest on the loans must be deemed
           to have occurred immediately after receiving the loans[.]

           The default on all purported loan checks occurred on various
           dates approximately fifteen years ago, the latest being
           September 9, 2000. The obligations of James F. Caporusso . . .
           were, by law, unenforceable as of the date of the Guaranty, even
           taking into account the conflicting dates of the Guaranty, which
           are December 6, 2006, January 7, 2007, and November 13,
           2007. . . . The day after the statue has run against liability,
           obligors “by operation of the statute . . . [are] just as free from
           liability as though they had on that day paid the amount paid
           . . . in cash.” [Mutual] Life Ins. Co. of [New York] v. [United
           States] Hotel Co., 144 N.Y.S. 476, 485 (N.Y. Sup. Ct. 1913).

           The consideration for the Guaranty and Pledge Agreement was
           explicitly the agreed forbearance on collecting on the obligations.
           The right to collect on the loans had expired as of the date of the
__________________________________________________________________

11   The court heard argument on the petition and motion on March 31, 2016.

                                                                     - 13 -
J-A15016-17 & J-A15017-17


     Guaranty. “The rule is that where the consideration between a
     principal and a creditor has passed and become executed before
     the contract of the surety or guarantor is made, and such
     contract was no[t] part of the inducement to the creation of the
     original debt, such consideration is not sufficient to sustain such
     contract.” Delinsky v. Brodow, 113 N.Y.S. 7 (1908).
     Accordingly, the Corporations were not actually forbearing or
     waiving a legal right, as they did not have a legal right to collect
     the loans. We agree with the Administrator that the Corporations
     did not forebear from seeking anything of value and as a result,
     consideration was absent from the Guaranty and Pledge
     Agreement. It is not sufficient consideration for an individual or
     an entity to refrain from collecting a debt that [it] is no longer
     entitled to collect. The claims made by the Corporations against
     the Caporusso Estates fail for want of consideration.

Trial Ct. Op., 6/30/16, at 3-5 (unpaginated).

     Regarding the facial inconsistencies within the Guaranty, and between

the Wills and Guaranty, the court stated:

     [James F. Caporusso] points out that the Corporations bear the
     burden of proving the validity of the Guaranty and pledge
     agreement. James F. Caporusso states that the Agreement sued
     upon is incomplete; that the Wills of the deceased Caporusso
     parents refer to a Guaranty and Pledge Agreement dated
     December 6, 2007. On the contrary, the signatures of the
     deceased Caporusso parents were affixed to a document on
     November 13, 2007, more than ten months later. The
     notarization of the Agreement does not identify the document
     executed. Also, the signature of Salvatore Caporusso, who
     allegedly signed four times on behalf of the corporations, is not
     notarized and he is not identified in the notary’s narrative.
     Further, despite this Court’s Order of August 27, 2013 directing
     the Corporations to answer the Request for Production of
     Documents and Interrogatories, the Corporations have never
     produced any complete Guaranty and Pledge Agreement
     executed January 1, 2007, or any such Agreement dated
     December 6, 2006.

     To summarize the point advanced by this moving party,
     James F. Caporusso maintains that the Corporations have
     admitted that all of their claims rely solely on a Guaranty and
     Pledge Agreement that was executed on January 1, 2007, or

                                    - 14 -
J-A15016-17 & J-A15017-17


      perhaps executed on [November 13] of 2007, or possibly
      executed on December 6, 2006. None of these documents have
      ever been produced in a complete fashion. Therefore, James F.
      Caporusso maintains that the Corporations are precluded from
      offering any substituted document in support of their demands,
      such as the one attached to the Collection Complaint and Notices
      of Claim, and these demands must fail.

Trial Ct. Op. at 4-5 (unpaginated). The court then stated:

      The Court will not allow the responding parties to cure the date-
      related facial irregularities by arguing that extrinsic evidence
      should be utilized to interpret the reference to the 2006
      Guaranty in Trudy Caporusso’s Will. The extrinsic evidence put
      forth offers no legal fix to the facial ambiguities. Said evidence is
      a memorandum authored by Attorney [Iven] R. Taub purporting
      to be a summary of the “2006 Annual Meeting” of the four
      Caporusso Corporations . . . and this document offers nothing of
      substance regarding the intent of the deceased Caporusso
      parents, individually or together.

Id. at 5.

      The court concluded its opinion by returning to the inadequate

consideration for the Guaranty, stating:

      As suit was filed in 2013, more than twelve years after the loan
      checks were given out, and the statute of limitations had well
      run by the time suit was filed, the claims against the Estate are
      time-barred and fail. In the attached Order, we grant the
      dispositive motions of the Administrator, Robert Kelly, Esq. and
      heir to the Caporusso parents’ Estates, James F. Caporusso.

Trial Ct. Op. at 5 (unpaginated).

      The Corporations and Francis and Christina appealed. The Corporations

raise four issues:

      I.    Whether the trial court erred in granting the
      Administrator’s application for dismissal of [the Corporations’]
      claims and respondent [James F.] Caporusso’s motion for
      summary judgment where there exists material issues of fact
      pertaining to the [consideration] for the Guaranty on which the

                                     - 15 -
J-A15016-17 & J-A15017-17


           claims are founded, and the nature of the underlying takings
           upon which the Guaranty is based?

           II.    Whether the trial court erred in granting the
           Administrator’s motion for dismissal of [the] Corporations’ claims
           and respondent [James F.] Caporusso’s motion for summary
           judgment on the grounds of latent ambiguities in Decedents’
           wills or facial irregularities in the [Corporations’] Guaranty?

           III. Whether the law of equitable tolling applies to effect an
           equitable estoppel against a corporate official who has breached
           his fiduciary duty to his employer by his wrongful taking and
           failure to disclose so that he cannot benefit from the operation of
           the statute of limitations?

           IV.    Whether New York law applicable to the Guaranty permits
           the revival of a debt beyond the expiration of the statute of
           limitations, and an agreement for the guaranty or security of
           such a debt does not require consideration?

Corporations’ Brief at 4 (capitalization omitted). Francis and Christina

Caporusso argue the following:

           1.   The guaranty is an enforceable, valid obligation of the
           Decedents.

           2.   The intentions of [James and Trudy Caporusso] are clear
           and should be enforced.

Caporussos’ Brief at 14, 26.12

           Our scope and standard of review follow:

           Our scope of review of a trial court’s order granting or denying
           summary judgment is plenary, and our standard of review is
           clear: the trial court’s order will be reversed only where it is
           established that the court committed an error of law or abused
           its discretion.

           Summary judgment is appropriate only when the record clearly
           shows that there is no genuine issue of material fact and that
__________________________________________________________________

12 The Caporussos raise four questions in their statement of questions
presented, but organize their argument along these two issues.

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J-A15016-17 & J-A15017-17


           the moving party is entitled to judgment as a matter of law. The
           reviewing court must view the record in the light most favorable
           to the nonmoving party and resolve all doubts as to the
           existence of a genuine issue of material fact against the moving
           party. Only when the facts are so clear that reasonable minds
           could not differ can a trial court properly enter summary
           judgment.

Murphy v. Karnek, 160 A.3d 850, 857 (Pa. Super. 2017) (citation omitted).

           We find the stated issues relating to enforceability of the Guaranty

dispositive.             The       orphans’ court held that although          the   Corporations

supposedly had withheld exercise of their right to collect on the debt owed

by James F. in exchange for Decedents’ guaranty to pay that debt, in fact

the Corporations had given up nothing because they had no right to collect

on the debt after the statute of limitations expired. Thus, in the orphans’

court’s view, the Guaranty was void for lack of consideration. The

Corporations contend that this holding by the orphans’ court was erroneous

as a matter of law. Corporation’s Brief at 30-39; Corporations’ Reply Brief at

1-8. According to the Corporations, “New York law is clear that a prior

‘expired’ debt obligation may be ‘revived’ by a third party guarantee because

the debt remains valid, even though the right of recovery at law has

expired.” Corporation’s Brief at 31-33 (citing Johnson v. Albany & S.R.

Co., 54 N.Y. 416 (1873); Bernstein v. Allstate Ins. Co., 288 N.Y.S.2d 646

(N.Y. Civ. Ct. 1968); In re Hess, 404 B.R. 747 (S.D.N.Y. 2009)).13


__________________________________________________________________

13Like the Corporations, Francis and Christina argue that the expiration of
the statute of limitations on a loan does not extinguish the debt. See
Caporussos’ Brief at 14-26; Caporussos’ Reply Brief to Administrator at 1-2.

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J-A15016-17 & J-A15017-17


      The orphans’ court based its holding on an examination of New York

caselaw, but the Corporations rebut the orphans’ court’s decision with

references to New York statutes that were not discussed by the orphans’

court and, the Corporations claim, should lead to a different result. In

particular, they rely on New York General Obligations Law § 17-101, which

provides that a writing can revive a time-barred claim:

      An acknowledgment or promise contained in a writing signed by
      the party to be charged thereby is the only competent evidence
      of a new or continuing contract whereby to take an action out of
      the operation of the provisions of limitations of time for
      commencing actions under the civil practice law and rules[.]

N.Y. GOL § 17-101. The Corporations argue that in Banco do Brasil S.A. v.

State of Antigua & Barbuda, 707 N.Y.S.2d 151 (N.Y. App. Div. 2000), the

court relied on Section 17-101 to hold “that a guarantor’s letter which

undertook to promise to pay the plaintiff the amount owed under the

underlying loan agreement that was sent after the statute of limitations had

run was sufficient to revive the plaintiff’s time-barred claims.” Corporation’s

Brief at 34 (citing also Estate of Vengroski v. Garden Inn, 495 N.Y.S.2d

200 (N.Y. App. Div. 1985)). The Corporations also argue that Section 17-101

and Brasil support their view that a promise to repay a formerly time-

barred debt need only be signed by “the party to be charged thereby,” which

in this case is the Decedents. Id. at 37.

      The Administrator argues that consideration is necessary to support

any guaranty. Administrator’s Brief at 25 (citing Hauswald v. Katz, 214

N.Y.S. 705 (N.Y. App. Div. 1926), 29 (citing Mazzella v. Lupinachi, 333

                                    - 18 -
J-A15016-17 & J-A15017-17


N.Y.S.2d 775 (N.Y. Civ. Ct. 1972)). Building on this premise, the

Administrator contends that forbearance of collection of a time-barred loan is

inadequate consideration for the Guaranty at issue. To support this position,

the Administrator relies on Rogowsky v. McGarry, 865 N.Y.S.2d 670 (N.Y.

App. Div. 2008), in which a party pledged to forbear from asserting a legal

right (the contesting of a will) — a right which the court held had no value

and could not be deemed consideration. Administrator’s Brief at 26-27. The

Administrator additionally argues that Banco do Brasil is inapposite on the

subject of consideration because the guaranty in that case was made

contemporaneously with the original loan and signed by the guarantor

whose admissions later revived the debt; here, on the other hand,

Decedents made no written promises at the time of the original loan and

received no consideration at that time, and they therefore did not qualify as

debtors who could revive the debt. Id. at 28-29. The Administrator also

contends that the Guaranty did not revive the original debt because James

F., the original debtor, did not sign it. Id. at 33.

           After careful consideration of the parties’ arguments, we conclude that

the orphans’ court erred in entering summary judgment for the Estates

because it is not apparent that “the record clearly shows that . . . the

moving party is entitled to judgment as a matter of law.” Murphy, 160 A.3d

at 857. 14 The arguments presented by the parties demonstrate that the

__________________________________________________________________

14In light of our disposition, we do not address the questions raised by the
appellants about the state of the record, which, they contend, contains
(Footnote Continued Next Page)
                                                                     - 19 -
J-A15016-17 & J-A15017-17


relevant New York statutory and caselaw is complex and contains substantial

authority supporting the view that the Corporations may be entitled to relief.

      First, we agree with the Corporations that, under New York law, a

written promise to pay a debt can revive a time-barred debt, so long as the

writing is signed by the party to be charged thereby. See New York GOL

§ 17-101;     Banco     do    Brasil,    707      N.Y.S.2d   at   152.   “The   critical

determination is whether the acknowledgement imports an intention to pay.”

Vengroski, 495 N.Y.S.2d at 202. In this connection, “The writing, in order

to constitute an acknowledgment, must recognize an existing debt and must

contain nothing inconsistent with an intention on the part of the debtor to

pay it.” Banco do Brasil, 707 N.Y.S.2d at 152. The Guaranty meets these

requirements. In addition, we note that, under New York law, the writing

acknowledging the debt can be made either before the expiration of the

statute of limitations or, as here, afterwards. Anonymous v. Anonymous,

568 N.Y.S.2d 599, 600 (N.Y. App. Div.), appeal denied 575 N.Y.S.2d (N.Y.

2001).15




(Footnote Continued) _______________________
unresolved factual disputes relating to the content and legitimacy of the
Guaranty. These issues remain to be addressed on remand.
15 In fact, Mutual Life Ins. Co., the case cited by the orphans’ court to
show that the expiration of the statute of limitations releases a debtor from
liability “as though they had on that day paid the amount unpaid . . . in
cash,” acknowledges that the statute of limitations would not negate the
debt, and that the debt could be revived pursuant to the then-active,
identically-worded precursor to Section 17-101 and existing caselaw. 144
N.Y.S. at 481.

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J-A15016-17 & J-A15017-17


           Here, the Decedents, in writing, acknowledged a debt, and expressed

nothing inconsistent with their intent to repay it. The debt therefore became

enforceable against them, and the statute of limitations began anew. NY

GOL § 17-101. According to the plain terms of the statute, it is the party to

be charged by the promise that must sign the promise to pay. Id. Here,

the promise to pay the debt was signed by Decedents, and it is their estates

which therefore are liable to pay it. See Mutual Life Ins. Co., 144 N.Y.S. at

481 (indicating that a guarantor could promise to repay a time-barred debt

of a third party).

           Second, even if New York law requires consideration for a guaranty,16

that law does not require that there be new consideration. A provision of the

New York General Obligation Law provides:

           A promise in writing and signed by the promisor or by his agent
           shall not be denied effect as a valid contractual obligation on the
           ground that consideration for the promise is past or executed, if
           the consideration is expressed in the writing and is proved to
           have been given or performed and would be a valid
           consideration but for the time when it was given or performed.

__________________________________________________________________

16 In light of our disposition, we need not decide that question. We agree
with the Administrator and James F., however, that the Corporations’
reliance on Section 3-408 of the New York Commercial Code, which states
that “no consideration is necessary for an instrument or obligation thereon
given in payment of or as security for an antecedent obligation of any kind,”
appears inapt. Section 3-408 addresses consideration “for an instrument or
obligation thereon.” An instrument must contain an unconditional promise to
pay a sum certain in money and be payable on demand or at a definite time.
N.Y. U.C.C. § 3-104. Here, the Guaranty provides for the transfer of stock,
not a payment of money, and is payable only upon the death of Decedents,
an event that would occur at an uncertain time. See N.Y. U.C.C. §§ 1-
201(b)(24), 3-109.


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J-A15016-17 & J-A15017-17


N.Y.       GOL          §     5–1105.           17     Under          this    provision,   there    was    adequate

consideration here.

           The Appellate Division of the New York Supreme Court recently

explained:

           [Section 5–1105] essentially codifies the notion that
           “[g]enerally, past consideration is no consideration and cannot
           support an agreement because ‘the detriment did not induce the
           promise.’ That is, ‘since the detriment had already been
           incurred, it cannot be said to have been bargained for in
           exchange for the promise’[”] (Samet v. Binson, 122 A.D.3d
           710, 711 [2d Dept 2014], quoting Umscheid v. Simnacher,
           106 A.D.2d 380, 381 [2d Dept 1984]). However, General
           Obligations Law § 5–1105 makes an exception where the
           past consideration is explicitly recited in a writing. To
           qualify for the exception, the description of the consideration
           must not be “vague” or “imprecise,” nor may extrinsic evidence
           be employed to assist in understanding the consideration (see
           Clark v. Bank of N.Y., 185 A.D.2d 138, 140 [1st Dept 1992],
           appeal withdrawn 81 N.Y.2d 760 [1992]).

Korff v. Corbett, ___ N.Y.S.3d ___, 2017 WL 4973817, at *3 (N.Y. App.

Div., Nov. 2, 2017) (emphasis added). In addition, the consideration for the

guaranty need not flow to the guarantor. See AXA Inv. Managers UK Ltd.

v. Endeavor Capital Mgmt. LLC, 890 F. Supp. 2d 373, 382 (S.D.N.Y.

2012).        18     Thus,         New         York         courts       have     consistently     held   that   past

__________________________________________________________________

17 Although the parties vigorously dispute whether any consideration was
required, the trial court’s main holding was that there was no valid
consideration on these facts, and the parties’ caselaw addresses both
questions. The New York cases identify Section 5-1105 as part of the matrix
of New York law relevant to these issues. See Mazzella, 333 N.Y.S.2d at
777 (case cited by Administrator that addressed past consideration under
Section 5-1105 as part of overall discussion of consideration question).
18   As the court in AXA explains,

(Footnote Continued Next Page)
                                                                     - 22 -
J-A15016-17 & J-A15017-17


consideration benefitting a third party is sufficient to support a subsequent

guaranty of repayment, provided that that the guaranty satisfies Section 5-

1105. See Lexington Owner LLC v. Kaplowitz, 53 N.Y.S.3d 35, 36 (N.Y.

App. Div. 2017); Burke v. N. Fork Bank & Tr. Co., 644 N.Y.S.2d 293, 293

(N.Y. App. Div. 1996); Bellevue Builders Supply Inc. v. Audubon

Quality Homes Inc., 623 N.Y.S.2d 407, 408 (N.Y. App. Div. 1995) 19 ;

Hudson Valley Paper Co. v. La Belle, 571 N.Y.S.2d 107, 109 (N.Y. App.

Div. 1991); Am. Bank & Tr. Co. v. Lichtenstein, 369 N.Y.S.2d 155, 157-

58 (N.Y. App. Div. 1975), aff’d 386 N.Y.S.2d 215 (N.Y. 1976).

(Footnote Continued) _______________________
        it is well established that “where one party agrees with another
        party that, if such party for a consideration performs a certain
        act for a third person, he will guarantee payment of the
        consideration by such person, the act specified is impliedly
        requested by the guarantor to be performed and, when
        performed, constitutes a consideration for the guarantee.” In
        other words, the consideration received by the primary obligor
        also serves as consideration for the guarantor.

AXA, 890 F. Supp. 2d at 382 (brackets and citations omitted).
19   For example, in Bellevue, the court held:

        General Obligations Law § 5–1105 provides that if the
        consideration for a promise expressed in a writing and signed by
        the promisor is proven to have been given, and would otherwise
        represent valid consideration for the promise, the mere fact that
        it is “past or executed” shall not bar enforcement of the contract.
        In view of the fact that conferral of a benefit upon [the debtor]
        would have been sufficient consideration for the guarantee had it
        been given prior to execution thereof, the suggested defense
        [(“that because the stated benefit flowed to [the debtor], as
        opposed to the individual guarantors, it cannot constitute valid
        consideration for the guarantee”)] is palpably meritless[.]

623 N.Y.S.2d at 408 (citations omitted).

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J-A15016-17 & J-A15017-17


       Here, the Decedents stated in writing that the Guaranty was based on

the consideration of a large sum of money that was advanced by the

Corporations to James F. The fact that the money changed hands well before

the Guaranty was executed does not invalidate that consideration under

General Obligations Law § 5-1105. As Section 5-1105 provides that past

consideration     is   sufficient   to   validate    a   contract    even      if    that   past

consideration has been “executed” (that is, if, for example, the past

consideration is a promise that has been fulfilled), the fact that the statute

of limitations has run on enforcement of the past consideration appears to

make no difference to the statute’s application. Section 5-1105 says that any

past consideration suffices, and it does not require the past consideration to

have been given prior to a date when the statute of limitations would bar

recovery. The parties have cited no authority to the contrary.

       Given the provisions in New York law allowing for the revival of a stale

debt   (by   an    unequivocal      promise     in   writing),      allowing        enforceable

agreements based on past consideration (described in writing), and allowing

enforceable guaranties that do not express consideration for the benefit of

the guarantor (in writing), we see no reason why the Decedents (in writing)

could not have revived the debt of James F. and promised to pay it, although

the claim against James F. individually remains stale. Accordingly, we hold

that the orphans’ court erred in entering summary judgment for the Estates.

       For these reasons, we vacate the order granting summary judgment.

Due to our disposition, we need not reach the other arguments presented on

                                          - 24 -
J-A15016-17 & J-A15017-17


appeal. We remand for proceedings consistent with this memorandum.

     Order vacated. Jurisdiction relinquished.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 12/27/17




                                   - 25 -
