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In re Estate of Caruso

Superior Court of Pennsylvania

December 12, 2017

IN RE: ESTATE OF PETER J. CARUSO, III, DECEASED APPEAL OF: GERALDINE CARUSO

         Appeal from the Order Entered October 18, 2016 In the Court of Common Pleas of Allegheny County Orphans' Court at No(s): 3623 of 2015

          BEFORE: BOWES, LAZARUS, AND OTT, JJ.

          OPINION

          BOWES, J.

         Geraldine Caruso appeals from the October 18, 2016 order granting summary judgment in favor of Sandra A. Caruso, the Executrix of the Estate of Peter J. Caruso, III, ("Executrix") in this equity action. After thorough review, we reverse the grant of summary judgment and remand for further proceedings consistent with this opinion.

         Geraldine commenced this action against Executrix in the Court of Common Pleas of Allegheny County. In her complaint, she alleged the following. Hays Land Company ("HLC") was a general partnership formed on or before December 12, 1983. The original partners were Mary Ann Caruso and her sons, Peter J. Caruso, III, and John D. Caruso, Geraldine's deceased husband. On December 31, 1997, Mary Ann sold her interest in the Partnership to the remaining partners in equal shares, and Peter and John operated it until John's death in 2003. Geraldine pled that, thereafter, she and Peter were general partners each owning a fifty percent interest in HLC.

         Peter died on May 18, 2015. Geraldine averred that at the time of Peter's death, the 1983 Partnership Agreement was in full force and effect. In accordance with the Agreement's buy-sell provision governing dissolution upon the death of a partner, Geraldine notified Executrix that she intended to purchase Peter's partnership interest. That provision stated that, upon dissolution due to the death of a partner, the "remaining Partner shall have the obligation within ninety (90) days from the date of death of the deceased Partner to purchase the interest of the deceased Partner in the Partnership and to pay to the personal representative of such deceased Partner the value thereof . . ." Complaint, at ¶20.

         Geraldine calculated that the sum of $117, 762.50 was due for Peter's interest, and she tendered the first of nine payments towards the purchase on August 12, 2015. On that same date, counsel for Executrix advised Geraldine's counsel that the 1983 Partnership Agreement was not in effect at Peter's death, and returned the check. Geraldine pled that she was "ready, willing, and able to purchase the partnership interest of Peter, " as required under the terms of the Partnership Agreement, but that Executrix "has refused, and continues to refuse to honor" the duty to sell. Id. at ¶¶ 34, 35. Geraldine asked the court to order Executrix "to perform specifically the provisions of the Partnership Agreement as they relate to the sale and purchase of the deceased Partner's interest." Id. at ¶ 36.

         At count II, Geraldine pled that Peter formed a limited liability company known as Hays Land Company-Pittsburgh, LLC. Id. at ¶40. On or about April 30, 2015, without her knowledge, he executed a Joint Written Consent of Partner and Member in Lieu of Meeting on behalf of the Partnership, purporting to merge the Partnership with the newly-formed LLC. She alleged that Peter did not have the authority under the law or the Partnership Agreement to cause the merger, and she asked the court to declare the merger null and void. Id. at ¶¶49, 50, 51.

         Executrix filed an answer and new matter in which she averred that the original partnership was dissolved upon the death of John D. Caruso, and that Geraldine and Peter formed a new partnership that was not governed by any agreement. Answer, ¶ 7. She alleged that the Partnership Agreement and, specifically, the buy-sell provision, had no application to the second partnership formed by Peter and Geraldine. Moreover, she pled that when Peter merged the HLC partnership into the LLC on or about April 30, 2015, Geraldine's fifty percent interest in the partnership was exchanged for a fifty percent interest in the LLC. As a result of the merger, all assets of the Partnership were held by the LLC as of Peter's death. Finally, Executrix pled that Peter was within his rights to execute the Joint Consent and to merge the Partnership into the LLC.

         Executrix filed a motion for summary judgment on September 1, 2016, in which she asserted the Dead Man's Act prevented Geraldine from offering oral testimony regarding the nature of her agreement with Peter, and thus effectively precluded Geraldine from proving her case. Geraldine opposed the motion, but the court granted summary judgment on October 17, 2016, without a hearing. Geraldine timely appealed and raises two questions for our review:

I. Did the trial court abuse its discretion and commit an error of law in granting the Estate's motion for summary judgment when there was substantial evidence, including admissions by the Decedent, that the partnership agreement remained in full force and effect?
II. Did the trial court abuse its discretion and commit an error of law in deciding that one partner, having 50% ownership interest in the partnership, could make fundamental changes to the partnership unilaterally, without the other 50% partner's knowledge or consent?

Appellant's brief at 4 (unnecessary capitalization omitted).

         Summary judgment can be entered "only in those cases where the record clearly demonstrates that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Summers v. Certainteed Corp., 997 A.2d 1152, 1159 (Pa. 2010) (quoting Atcovitz v. Gulph Mills Tennis Club, Inc., 812 A.2d 1218, 1221 (Pa. 2002). When the trial court considers such a motion, it must view "all facts of record and all reasonable inferences therefrom in a light most favorable to the non-moving party[, ]" and "resolve all doubts as to the existence of a genuine issue of material fact against the moving party." Id. Summary judgment is properly granted only "where the right to such judgment is clear and free from all doubt." Id.

         Our scope of review of an 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." Universal Health Services, Inc. v. Pennsylvania Property and Casualty Insurance Guaranty Assoc., 884 A.2d 889, 892 (Pa.Super. 2005) (citation omitted). "We examine the record, which consists of all pleadings, as well as any depositions, answers to interrogatories, admissions, affidavits, and expert reports, in a light most favorable to the non-moving party, and we resolve all doubts as to the existence of a genuine issue of material fact against the moving party." LJL Transp., Inc. v. Pilot Air Freight Corp., 962 A.2d 639, 647 (Pa. 2009) (citations omitted).

         Since the issue of whether there are genuine issues of material fact is a question of law, our standard of review on that issue is de novo, and we need not defer to the determination of the trial court in this regard. Id. Furthermore, in resolving a question of law, we review the issue in the context of the entire record. Weaver v. Lancaster Newspapers, Inc., 926 A.2d 899, 903 (Pa. 2007).

         Certain principles regarding general partnerships inform our review. Under the Uniform Partnership Act ("UPA"), whether a partnership exists depends upon whether the parties intended to be parties. No formal or written agreement is required. Murphy v. Burke, 311 A.2d 904 (Pa. 1973). A partnership may be found to exist by implication from the circumstances and manner in which the business was conducted. DeMarchis v. D'Amico, 637 A.2d 1029 (Pa.Super. 1994). Furthermore, under Pennsylvania's UPA, a partnership was not a legal entity separate from its partners and had no residence or domicile distinct from that of its partners.[1] "It is rather a relation or status between two or more persons who unite their labor or property to carry on a business for profit." Svetik v. Svetik, 547 A.2d 794, 797-798, (Pa.Super. 1988) (quoting Tax Review Board of the City of Philadelphia v. D.H. Shapiro Co., 185 A.2d 529, 533 (Pa. 1962)).

         Preliminarily, we note the following. There is no dispute that Geraldine and Peter were partners in HLC at the time of the purported merger on or about April 30, 2015. Geraldine maintained that neither the UPA nor the Partnership Agreement authorized Peter's unilateral merger of the Partnership into the LLC, and hence, the merger was null and void. The trial court concluded that, since partners "have equal rights in the management and conduct of the partnership business[, ]" the Dead Man's Act would bar Geraldine from producing any evidence that Peter could not have legally merged the partnership into the LLC unilaterally, and thus, summary judgment was ...


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