In Re: Estate of Caporusso, J.
1267 MDA 2016
| Pa. Super. Ct. | Dec 27, 2017Background
- Decedents James S. and Trudy Caporusso held shares in four closely‑held New York corporations (Capmar, Gruma, Capit, Frankmar); their three adult children (including James F., Francis, Christina) were officers/shareholders.
- Between 1997–2000 the Corporations made transfers/checks to James F. or his entities totaling roughly $1.75M; many checks were memoed "Loan." James F. admitted receipt but disputed obligation to repay.
- In 2007 the Corporations obtained a written Guaranty and Pledge Agreement signed by the Decedents that (1) acknowledged the Obligations as of Dec. 31, 2006, (2) pledged Decedents’ corporate stock to secure payment, and (3) provided for enforcement against the pledged stock if unpaid nine months after last survivor’s death.
- The Corporations filed claims against the Decedents’ estates seeking to enforce the Guaranty; the estates’ Administrator moved to disallow the claims arguing lack of consideration and that the underlying debt was time‑barred.
- The orphans’ court granted summary judgment for the estates, holding the Guaranty lacked consideration because the statute of limitations on the underlying loans had already run when the Guaranty was executed. The Corporations and two heirs appealed.
Issues
| Issue | Plaintiff's Argument (Corporations) | Defendant's Argument (Estates/James F./Administrator) | Held |
|---|---|---|---|
| Whether a written guaranty can revive a time‑barred debt under applicable law | A signed written promise by the Decedents can revive an expired debt under New York law (GOL §17‑101); the Guaranty acknowledged the debt and manifested intent to pay | The estates argued the underlying loans were time‑barred and thus the Guaranty lacked consideration and could not revive the debt | Court held New York law permits a signed writingby the party to be charged to revive a stale debt; the Guaranty met that standard on its face and summary judgment was erroneous |
| Whether the Guaranty lacked consideration because the alleged forbearance was of a legally unenforceable right | Corporations: the transactions were wrongful takings (not legitimate loans) and fiduciary breaches tolled/restarted limitation; in any event NY law permits enforcement based on past consideration when properly memorialized | Administrator/estates: forbearance of a time‑barred claim conferred no legal value and thus could not be consideration for a later guaranty | Court found NY law (GOL §5‑1105 and related caselaw) allows written recitals of past consideration to support enforcement; past consideration can suffice if adequately described in writing, so summary judgment was improper |
| Whether defects/ambiguities in the Guaranty and its production (dates, notarization, missing page) preclude enforcement | Corporations/Francis & Christina produced a draft dated Dec. 6, 2006 and later executed versions; disputed signature/production issues raise factual questions | Estates/James F. argued facial irregularities and incomplete production defeat the Corporations’ proof so summary judgment was proper | Court declined to resolve record‑intensive factual disputes at summary judgment and remanded for further proceedings — vacated summary judgment |
| Whether New York substantive law governs and supplies different rules than Pennsylvania on revival/consideration | Corporations relied on New York substantive authorities (revival by signed writing; exception for past consideration) | Administrator invoked policy/precedent suggesting lack of consideration renders guaranty unenforceable; argued Pennsylvania limitations principles should bar recovery | Court applied New York law principles regarding revival and past consideration and concluded those statutes/cases permit enforcement against Decedents’ estates; remanded for further fact‑finding |
Key Cases Cited
- Johnson v. Albany & Susquehanna R.R. Co., 54 N.Y. 416 (N.Y. 1873) (early authority recognizing revival of obligation by a written acknowledgement)
- Banco do Brasil S.A. v. State of Antigua & Barbuda, 707 N.Y.S.2d 151 (N.Y. App. Div. 2000) (letter by guarantor after limitations period can revive time‑barred claim under GOL §17‑101)
- Mutual Life Ins. Co. v. United States Hotel Co., 144 N.Y.S. 476 (N.Y. Sup. Ct. 1913) (statute of limitations does not extinguish the underlying debt and debt may be revived by later writing)
- Delinsky v. Brodow, 113 N.Y.S. 7 (N.Y. Sup. Ct. 1908) (discussing necessity of consideration for guaranty where prior consideration is executed)
- Bellevue Builders Supply Inc. v. Audubon Quality Homes Inc., 623 N.Y.S.2d 407 (N.Y. App. Div. 1995) (GOL §5‑1105 permits enforcement of promises based on past consideration when the writing identifies that consideration)
- AXA Inv. Managers UK Ltd. v. Endeavor Capital Mgmt. LLC, 890 F. Supp. 2d 373 (S.D.N.Y. 2012) (third‑party benefit can constitute consideration for a guaranty; consideration need not flow to guarantor)