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SPRINGFIELD OIL SERVS. v. COSTELLO

October 8, 1996

SPRINGFIELD OIL SERVICES, INC.,
v.
JAMES COSTELLO



The opinion of the court was delivered by: DUBOIS

 AND NOW, to wit, this 8th day of October, 1996, upon consideration of Defendant's Motion to Dismiss Complaint (Document No. 3), Plaintiff's Memorandum of Law in Opposition to Defendant's Motion to Dismiss Complaint (Document No. 6), and Defendant's Rebuttal Brief in Support of Motion to Dismiss Complaint (Document No. 10), IT IS ORDERED that Defendant's Motion to Dismiss Complaint is DENIED.

 Defendant's Motion to Dismiss Complaint will be denied for the following reasons:

 1. On December 29, 1995, Springfield Oil Services, Inc., a New York corporation with its principal place of business in New York state, brought suit against defendant, James Costello, a resident of Pennsylvania, for failure to make payments on each of three "Subscription Notes" ("Notes") that he executed and delivered on December 20, 1982, to Martin Associates ("Martin"), a Texas limited partnership. Martin assigned the Notes to plaintiff in December 1989;

 2. The Notes required defendant to pay $ 25,000 on each of three dates--December 31, 1992, December 31, 1993, and December 31, 1994. Plaintiff alleges that after it made a written demand for payment on November 30, 1995, defendant refused to pay. Plaintiff further alleges that the amount due under the Notes is $ 103,662.94, including interest, attorneys' fees, and an adjustment reflecting $ 502.74 due defendant from drilling production revenue under the Partnership Agreement between defendant and Martin;

 3. Defendant moves to dismiss plaintiff's Complaint alleging that claims regarding all three-Notes are barred by Pennsylvania's one-year statute of limitations, 42 Pa.C.S.A. § 5523(2) (Supp. 1996). This statute provides that an "action upon a bond given as security by a party in any matter, except a bond given by a condemnor in an eminent domain proceeding," must be commenced within one-year. Id. Defendant asserts that plaintiff's causes of actions on all three Notes accrued on December 31, 1992, and were barred when plaintiff filed the Complaint in this case on December 29, 1995; *fn1"

 5. In evaluating a motion to dismiss the court accepts the veracity of the plaintiff's allegations and will not dismiss the complaint unless the plaintiff clearly will not be able to prove any set of facts in support of its claim which would entitle it to relief. See Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974); Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). In addition to looking to the complaint, the court may also look to exhibits attached to the complaint. See In re Westinghouse Securities Litigation, 90 F.3d 696, 707 (3d Cir. 1996);

 6. Because this is a diversity action, the court will apply the choice of law rules of Pennsylvania, the state in which this Court sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941). "Pennsylvania courts generally honor the intent of the contracting parties and enforce choice of law provisions in contracts executed by them." Kruzits v. Okuma Mach. Tool. Inc., 40 F.3d 52, 55 (3rd Cir. 1994) (citations omitted). In the instant case, the parties provided in the Partnership Agreement that Texas substantive law applies. See P 11.4 ("This Agreement, the application or interpretation hereof and the liability of the parties hereto shall be governed exclusively by the laws of the State of Texas."). *fn2" Because Texas law provides that the law of the forum state controls as to procedural matters, including statute of limitations, State of California v. Copus, 158 Tex. 196, 309 S.W.2d 227, 230-231 (Tex.), cert. denied, 356 U.S. 967, 2 L. Ed. 2d 1074, 78 S. Ct. 1006 (1958); Hollander v. Capon, 853 S.W.2d 723, 727 (Tex. Ct. App. 1993), this Court applies the substantive law of Texas and the statutes of limitations of Pennsylvania; *fn3"

 7. Because plaintiff brought this action on December 29, 1995, within three years of December 31, 1992, the date defendant defaulted on the first Note, its claims upon all three Notes will not be barred if either the six- or four-year statute of limitations applies;

 8. The six-year statute of limitations, provided in 13 Pa.C.S.A. § 3118 (a) and applicable to negotiable instruments, governs this action because the Notes are negotiable instruments. A "negotiable instrument" is

 
an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

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