Est. of Michael A. Mastromatteo ( 2018 )

J. A19039/18
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
IN RE: ESTATE OF MICHAEL A. : IN THE SUPERIOR COURT OF
MASTROMATTEO, DECEASED : PENNSYLVANIA
:
APPEAL OF: : No. 243 MDA 2018
GEORGE MASTROMATTEO, EXECUTOR :
Appeal from the Decree Entered January 15, 2018,
in the Court of Common Pleas of Lancaster County
Orphans’ Court Division at No. 2016-1252
BEFORE: GANTMAN, P.J., NICHOLS, J., AND FORD ELLIOTT, P.J.E.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED: NOVEMBER 9, 2018
George Mastromatteo, executor of the estate of Michael A.
Mastromatteo, deceased (“Executor”), appeals from the January 15, 2018
decree entered in the Court of Common Pleas of Lancaster County that
confirmed the final account of the estate and ordered distribution of the estate
assets. We affirm.
The orphans’ court set forth the following:
The Account of [Executor] was called for audit on
September 5, 2017.
Michael A. Mastromatteo [(“Decedent”)] died on
May 17, 2016 having disposed of his estate by will,
the pertinent provisions of which are as follows:
FIRST: I give all of my estate, real and
personal, in equal shares, to each of my
three sons, MICHAEL MASTROMATTEO, II,
[EXECUTOR] and JAMES
MASTROMATTEO, and my wife, ROSA T.
MASTROMATTEO, if they survive me. . . .
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[Decedent] was survived by the following
beneficiaries:
Michael Mastromatteo, son
[Executor], son
James Mastromatteo, son
Rosa T. Mastromatteo, wife
Objections to the account were filed by Rosa T.
Mastromatteo [(“Wife”)] on September 1, 2017. The
parties agreed that the objections could be addressed
solely through briefs without a hearing.
Briefs were filed by the November 2, 2017 deadline by
the respective parties. A reply brief was submitted by
counsel for [Executor] on November 6, 2017. The
matter is now ripe for disposition.
On May 22 ,2008, [Decedent] and [Wife] entered into
a Prenuptial Agreement [(“Prenuptial Agreement”])
prior to their marriage. The pertinent provisions of
the Prenuptial Agreement state:
3. RETENTION OF SEPARATE PROPERTY
A. Each party shall, except as otherwise
provided, during his or her remaining
lifetime, retain the sole ownership of all of
his or her respective Separate Property,
and shall have the exclusive right to
dispose of any and all such Separate
Property during his or her remaining
lifetime by inter vivos, or by any and all
dispositions, and/or to encumber, pledge,
or sell, transfer or hypothecate the same,
without any interference by or the
necessity of the joinder of the other, in
such manner as shall be determined in the
sole discretion of such owner thereof, as
if the aforesaid marriage has not taken
place.
....
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D. The parties agree that at no time
during their relationship shall there be any
transmutation of any of their separate
property interests into marital or jointly
owned property except by an express
written agreement. The purchase or
acquisition of any asset in joint title, or the
deposit of funds in a joint account, shall
be held by [Decedent/Wife] as tenants in
common and not as tenants by the
entireties and not as joint tenants with
right of survivorship, and such property
shall be divided equally between the
parties or their respective legal
representatives, in the event of the death
of either party or dissolution of the
marriage. The following events, but not
limited to only these events, shall under
no circumstances be evidence of an
intention by any party or of any
agreement between the parties to
transmute their separate property
interest into marital or jointly owned
property or into marital or joint
income:. . . .
(d) any written statement by
either party other than a
written agreement expressly
stating the change of
separate property into marital
or joint property . . . .
On June 14, 2008, [Decedent and Wife] were married.
On October 8, 2009, [Decedent] executed a new last
Will and Testament which provided equal shares of his
estate to his children and [Wife] (see relevant
provision recited above).
On February 7, 2014, [Decedent and Wife] executed
a written Residence and Care Agreement with
Pleasant View Retirement Community, a continuing
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care retirement community. The pertinent provisions
of the Residence and Care Agreement are as follows:
THIS RESIDENCE AND CARE AGREEMENT
(called “Agreement”), made this 7th day of
February, 2014 between Pleasant View
Retirement Community, a Pennsylvania
non-profit corporation (called
“Community,” and referred to by the
words “we,” “us” and “our”), and
[Decedent and Wife] (called
“Resident”). . . .
....
7.4 Termination by Death. Following
your death, this Agreement shall
terminate when the Residence has been
surrendered to us. Any applicable refund
shall be paid in accordance with the
refund provisions of this Agreement. If
the Residence remains occupied by a
Co-Resident, then this Agreement shall
remain in full force and effect as to the
surviving or remaining Co-Resident, and
no refund shall be due at that time.
....
9.3 Double Occupancy-Limitation on
Availability of Refund. It is the intention
of the parties that any applicable refund
will only be made in accordance with
Section 9.5 after the last surviving Co-
Resident vacates and surrenders the
Residence, and this Agreement is
terminated.
....
9.5 Condition and Due Date for Refund
Payments. . . . all applicable refunds will
be made after you have surrendered your
Residence and only after it has been
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re-occupied by another resident from
whom we have received full payment of
the applicable Entrance Fee.
Orphans’ court adjudication, 1/16/18 at 1-3 (ellipses in original).
The orphans’ court determined that the residence and care agreement
executed by Decedent and Wife and the Community (“Residence Agreement”)
transmuted the $263,700 entrance fee (“Entrance Fee”) paid to the
Community from Decedent’s separate property to a marital asset which was,
therefore, not subject to the provisions of the Prenuptial Agreement regarding
retention of separate property and, consequently, not included as an estate
asset subject to distribution under Decedent’s will.
The record reflects that following entry of the January 15, 2018 decree,
Executor filed a timely notice of appeal. The orphans’ court then ordered
Executor to file a concise statement of errors complained of on appeal
pursuant to Pa.R.A.P. 1925(b). Executor timely complied. The orphans’ court
then filed its Rule 1925(a) opinion.
Executor raises the following issues for our review:
1. Did the [orphans’] court commit an error of law
in finding the Entrance Fee to the Pleasant View
Retirement Community was joint property, and
not property held as tenants in common as
required by the Decedent’s Prenuptial
Agreement?
2. Did the [orphans’] court error [sic] in finding the
Residence and Care Agreement expressly
changed the Decedent’s separate property into
marital or joint property when the Residence
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and Care Agreement contained no such
expressed statement?
3. Did the [orphans’] court error [sic] in finding
Section 10 of the Prenuptial Agreement, the
right to reside in residence, did not apply to the
Decedent and [Wife’s] residence at the time of
Decedent’s death?
Executor’s brief at 5.
“Our standard of review of the findings of an orphans’ court is
deferential.” In re Ware, 814 A.2d 725, 731 (Pa. Super. 2002) (citation
omitted). “When reviewing a decree entered by the Orphans’ Court, this Court
must determine whether the record is free from legal error and the court’s
factual findings are supported by the evidence.” In re Estate of Rosser, 821
A.2d 615, 618 (Pa.Super. 2003) (citation omitted), appeal denied, 831 A.2d
600 (Pa. 2003).
In his first issue, Executor complains that the orphans’ court erred in
finding that the Entrance Fee paid to the Community was marital property
because the terms of the Prenuptial Agreement require that the Entrance Fee
was property held by Decedent and Wife as tenants in common. (Executor’s
brief at 11-12.) In his second issue, Executor complains that the orphans’
court erred in finding that the Entrance Fee to the Community constituted
marital property because the Residence Agreement created a property interest
in the Entrance Fee, but did not modify the Prenuptial Agreement, and the
terms of the Prenuptial Agreement require that the Entrance Fee was property
held by Decedent and Wife as tenants in common. (Id. at 13-19.) In his
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third issue, Executor complains that because a portion of the Entrance Fee is
an estate asset because Decedent and Wife held the Entrance Fee as tenants
in common, paragraph 10 of the Prenuptial Agreement requires that Wife
vacate the Community residence so that the estate may obtain Decedent’s
one-half interest in the Entrance Fee refund. (Id. at 16-19.) Throughout his
brief to this court, Executor argues that the terms of the Prenuptial Agreement
require that the Entrance Fee was property held by Decedent and Wife as
tenants in common. (Id. at 10-22.)
As noted by the orphans’ court, and as reflected in the record, Executor
failed to raise this issue in the orphans’ court. (Trial court opinion, 3/14/18
at 2.) Stated differently, Executor never argued that the terms of the
Prenuptial Agreement require that the Entrance Fee was property held by
Decedent and Wife as tenants in common. The record reflects that Executor’s
argument in the orphans’ court was that “Wife does not have a claim to
[Decedent’s] individual payment of the remaining balance of the $263,700.00
[E]ntrance [F]ee to [the] Community because the monies are separate funds
from a separate account paid to a third party, and not jointly commingled with
[Wife].” (Executor’s brief in support of petition for adjudication/statement of
proposed distribution pursuant to Pa.O.C. Rule 2.4, 10/27/17 at 6-7.)
Although Executor concedes that he initially “argu[ed] for the return of ALL of
the Entrance Fee” in his petition before the orphans’ court, Executor claims
that that “is not fatal to this appeal as the argument did not in any way
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preclude the [orphans’] court from determining whether the refund of the
Entrance Fee is an asset of the Estate consistent with applicable law.”
(Executor’s brief at 21; emphasis in original.) Executor further claims that
the issue of whether Decedent and Wife held the Entrance Fee property as
tenants in common is properly before this court because the orphans’ court
“reviewed the written contracts in a de novo fashion.” (Id.) Executor is
mistaken.
It is well settled that “[i]ssues not raised in the lower court are waived
and cannot be raised for the first time on appeal.” Pa.R.A.P. 302(a); see also
Moranko v. Downs Racing LP, 118 A.3d 1111, 1115-1116 (Pa.Super. 2015)
(en banc) (reiterating that arguments not raised initially before the trial court
cannot be raised for the first time on appeal). Consequently, on appeal,
Executor waives the issue of whether the terms of the Prenuptial Agreement
require that the Entrance Fee was property held by Decedent and Wife as
tenants in common for failure to raise it in the orphans’ court.
In the orphans’ court, Executor consistently argued that nothing in the
Prenuptial Agreement and nothing in the Residence Agreement transmuted
the Entrance Fee from Decedent’s separate property into marital property.
That is the sole issue that is properly before this court.
“As to interpretation, enforcement, and remedies, in Pennsylvania,
antenuptial agreements are interpreted in accordance with traditional
principles of contract law. Moreover, [t]he law of contracts requires
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contractual terms that are clear and unambiguous to be given effect without
reference to matters outside the contract.” Estate of Kendall, 982 A.2d 525,
534 (Pa.Super. 2009) (internal citations and quotes omitted). “[T]he
interpretation of the terms of a contract is a question of law for which our
standard of review is de novo, and our scope of review is plenary.” McMullen
v. Kutz, 985 A.2d 769, 773 (Pa.Super. 2009) (citation omitted).
When interpreting a prenuptial agreement, the court,
as in dealing with an ordinary contract, must
determine the intention of the parties. When the
words of a contract are clear and unambiguous, the
intent of the parties is to be discovered from the
express language of the agreement.
Where ambiguity exists, however, the courts are free
to construe the terms against the drafter and to
consider extrinsic evidence in so doing.
Raiken v. Mellon, 582 A.2d 11, 13 (Pa.Super. 1990) (citations omitted).
Here, and as noted by the orphans’ court, the Prenuptial Agreement
permitted transmutation of separate property into marital property by express
written agreement. (Trial court adjudication, 1/6/18 at 4; see also Prenuptial
Agreement 5/22/08 at 5, ¶ D (providing that “[t]he parties agree that at no
time during their relationship shall there be any transmutation of any of their
separate property interests into marital or jointly owned property except by
an express written agreement” (emphasis added)). The Prenuptial
Agreement also gave Decedent and Wife “the unqualified and exclusive right
and authority” to manage and dispose of their separate property in any way
they desired during their lifetimes. (Prenuptial Agreement, 5/22/08 at 6, ¶ 4.)
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Therefore, the Prenuptial Agreement did not prohibit Decedent and Wife from
acquiring a marital interest in property, but merely required an express writing
to transmute separate property into marital property. The issue, of course, is
whether the written Residence Agreement transmuted Decedent’s separate
property into marital property.
Where property or an account is placed in the names
of husband and wife, the creation of an estate by the
entireties is presumed. In re Holmes Estate, 414
Pa. 403, 200 A.2d 745 (1964); Margarite v. Ewald,
252 Pa.Super. 244, 381 A.2d 480 (1977); Brown v.
Brown, 352 Pa.Super. 267, 507 A.2d 1223, 1225
(1986). This presumption is not hindered by the fact
that one spouse contributed the funds to purchase the
property. In re Holmes, supra, 200 A.2d at 747;
Nachman v. Nachman, 417 Pa. 389, 208 A.2d 247
(1965).
Raiken, 582 A.2d at 14.
Here, the record reflects that Decedent and Wife entered into the
Residence Agreement with the Community as co-residents in a double
occupancy. (Residence Agreement at 1, preamble.) As reflected in the
Residence Agreement, Decedent and Wife agreed to pay the $263,700
Entrance Fee to the Community as consideration for their residence. (Id. at
4.2.) Decedent and Wife opted for a residence plan that required both to
acknowledge that “[u]nder this plan, you or your estate generally will not be
entitled to a refund of the Entrance Fee following termination” because after
an occupancy period of 60 months, the Community earns the Entrance Fee.
(Id. at 4.3(c), 4.5(c).) Additionally, as co-residents, Decedent and Wife were
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“jointly and severally liable for each other’s financial obligations and for all
payments due” to the Community. (Id. at 4.9.) Moreover, in the event of
the death of Decedent or Wife, the surviving co-resident remained “liable for
all financial obligations incurred by either” of them. (Id.) The Residence
Agreement further provides that it will terminate only upon surrender of the
residence by both co-residents or upon the death of the last to die. (Id. at
7.4, 7.5.) In the event of a co-resident’s death, any refund due is to be paid
to the surviving co-resident, but only if the survivor surrenders the residence.
(Id. at 9.2(c).) In the event that the surviving co-resident does not surrender
the residence, upon the death of the surviving co-resident, any refund due is
to be paid to the estate of the surviving co-resident. (Id.)
Our review of the record compels the conclusion that the determination
of the orphans’ court that the Entrance Fee is marital property is free of legal
error because the terms of the Prenuptial Agreement clearly and
unambiguously permitted transmutation of separate property to marital
property with an express writing, and the written Residence Agreement
transmuted Decedent’s separate property to marital property because its
terms created a marital interest in the Community residence and any refund
of the Entrance Fee that may be due is due to Wife as the surviving co-resident
under the terms of the Residence Agreement.
Decree affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/9/2018
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