Crespo, A. v. Hughes, W. ( 2021 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
ANTHONY CRESPO AND EDWARD : IN THE SUPERIOR COURT OF
TORRALVO : PENNSYLVANIA
:
:
v. :
:
:
WILLIAM B. HUGHES, M.D., AND :
HUGHES & HENSELL ASSOCIATES, : No. 2184 EDA 2020
P.C., :
:
:
APPEAL OF: WILLIAM B. HUGHES, :
M.D. :
Appeal from the Order Entered October 1, 2020
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): No. 120703490
BEFORE: LAZARUS, J., KUNSELMAN, J., and COLINS, J.*
MEMORANDUM BY LAZARUS, J.: FILED DECEMBER 10, 2021
William B. Hughes, M.D., appeals from the order, entered in the Court
of Common Pleas of Philadelphia, granting Arch Insurance Company’s (Arch)
application to enforce judgment against Hughes in the limited liability
company Hughes Holdings, LLC (HH). Upon review, we affirm.
The trial court summarized the factual and procedural history of this
case as follows:
[Hughes] is a medical doctor and burn specialist. [He] is a partner
at Hughes & Hensell Associates, P[.]C[.], a medical practice
operating [in Philadelphia]. Edward Torralvo [] is an adult
individual who resides [in Philadelphia]. Arch is a Missouri based
corporation with local offices [in Philadelphia]. The underlying
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* Retired Senior Judge assigned to the Superior Court.
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action is shrouded in medical malpractice against [Hughes],
involving permanent hand injuries suffered by Torralvo and
Anthony Crespo [].
In 2011, Torralvo and Crespo were exposed to diluted hydrofluoric
acid while cleaning a property owned by Torralvo. Crespo and
Torralvo presented to the Temple University Emergency Room []
where [Hughes], the attending burn specialist, formulated a
treatment plan which included injections of lidocaine and calcium
gluconate directly into the patients’ effected digits. Subsequently,
Torralvo’s index finger became necrotic and Crespo’s left index
and middle fingers were eventually amputated.
On January 29, 2016, Crespo and Torralvo proceeded to trial
against [Hughes], [HH], and [Temple]. In this action, [Hughes]’s
defense was indemnified by Healthcare Providers Insurance
Exchange (HPIX). On February 12, 2016, a duly impaneled jury
found [Hughes] guilty of medical malpractice and returned a
verdict in favor of Crespo, in the gross amount of $4,526,000.00,
and in favor of Torralvo, in the gross amount of $538,422.00, with
liability apportioned 100% to the Defendants.
On July 12, 2016, [Hughes] appealed the jury verdicts to the
Superior Court of Pennsylvania[.] . . . HPIX contracted with Arch
to enter a supersedeas bond on the appeal[.] On May 7, 2018,
the Superior Court affirmed the [judgment with respect to
Torralvo. Crespo v. Hughes, 167 A.3d 168 (Pa. Super. 2017)].
Subsequently, HPIX declared bankruptcy.
On August 27, 2018, Torralvo signed an Assignment of Judgment
to the use of Arch[,] assigning his interest in the February 12,
2016, Judgment [(Torralvo Judgment) and expressing his intent
to be legally bound]. On November 8, 2019, Arch filed a Motion
to Enforce the Judgment against [Hughes]. In [Arch]’s Motion to
Enforce, [] Arch sought to attach the assets of [HH], of which
[Hughes] is the sole owner, for purposes of executing upon the
2016 Judgment.
On December 2, 2019, [Hughes] opposed the Arch Motion to
Enforce on the grounds that the 2018 Torralvo Assignment was
invalid. [Hughes subsequently served a notice of intent to serve
subpoena upon the law firm of Torralvo’s counsel of record,
seeking information pertaining to the Assignment, which Arch
opposed; after full briefing, the trial court sustained Arch’s
objections to the subpoena.] On September 29, 2020, oral
argument was held on the Arch Motion to Enforce before the trial
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court. On October 1, 2020, the trial court docketed an order
granting the Arch Motion to Enforce, and charging 100% of the
unsatisfied Torralvo Judgment debt to [HH], in favor of [] Arch.
On October 23, 2020, [Hughes] timely filed a notice of appeal[,
docketed at] 2184 EDA 2020. On November 2, 2020, the trial
court docketed a [Pa.R.A.P.] 1925(b) Order seeking [Doctor
Hughes]’s Statement of Matters Complained Of [on Appeal] within
twenty-one [] days. On November 13, 2020, [Doctor Hughes]
timely filed the required 1925(b) Statement.
Trial Court Opinion, 2/23/21, at 1-3.
On appeal, Doctor Hughes raises the following issues for our
review:
1. [Whether the trial court] committed an abuse of discretion and
an error of law by virtue of the September 29, 2020 order
because Arch is not a proper party in interest nor does Arch
have any standing or right (legal or otherwise) to enforce the
judgment because the judgment was paid in full by Arch
pursuant to the terms of the bond and as a result the
assignment of the satisfied judgment to Arch[] prevents any
recovery from Hughes[,] and because the assignment of the
judgment was made without consideration[?]
2. [Whether the trial court] committed an abuse of discretion and
an error of law by virtue of the September 29, 2020 order
because Arch is prohibited from any recovery from Hughes due
to lack of privity with Hughes because, in this case, the cost of
Hughes’ defense was paid and the damages assessed by the
jury were indemnified by HPIX, which filed the appeal[] and
secured the bond from Arch[] on behalf of Hughes[, and
because] Hughes was never a direct party to the bond
arrangements between HPIX and Arch[ and] Hughes never
signed any document related to the bond which Arch posted at
the request of HPIX to enable the appeal to proceed[?]
3. [Whether the trial court] committed an error of law and an
abuse of discretion pursuant to the July 7, 2020 order when it
failed to undertake a full inquiry into the facts concerning the
assignment of judgment Arch obtained from Torralvo after the
judgment was paid in full by Arch as required by the bond[?]
Brief of Appellant, at 9-10.
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We are mindful that, “[g]enerally, on review of an order concerning
discovery, an appellate court applies an abuse of discretion standard.” Linde
v. Linde, 222 A.3d 776, 786 (Pa. Super. 2019). When reviewing questions
of law, however, our standard of review is de novo and the scope of review is
plenary. Bastian v. Sullivan, 117 A.3d 338, 342-43 (Pa. Super. 2015).
Instantly, Hughes argues that the trial court abused its discretion by
granting Arch’s motion to enforce the Torralvo Judgment against HH because
(1) the Torralvo Assignment was made without valid consideration, (2) the
judgment was satisfied upon Arch’s payment of the supersedeas bond, and
(3) no privity exists between Hughes and Arch. Hughes further argues that
the trial court abused its discretion in sustaining Arch’s objections to his post-
judgment subpoena upon Torralvo’s counsel of record. These claims are
without merit.
First, Dr. Hughes argues that the Torralvo Assignment is invalid,
rendering enforcement thereof an error of law, because it lacks consideration.
See Brief of Appellant, at 26-37. We disagree. It is well-settled that “a writing
. . . shall not be invalid or unenforceable for lack of consideration[] if the
writing [] contains an [] express statement in any form or language[] that the
signer intends to be legally bound.” 33 P.S. 6. This Court has long recognized
that, under the Uniform Written Obligations Act (UWOA), 33 P.S. § 6, such a
statement of intent “removes lack of consideration as a ground for avoiding
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the contract.” McGuire v. Schneider, 534 A.2d 115, 118 (Pa. Super. 1987);1
See also Socko v. Mid-Atlantic Systems of CPA, Inc., 126 A.3d 1266,
1277 (Pa. 2015) (concluding, in light of clear and unambiguous language of
UWOA, and consistent with our prior caselaw, contract containing written
express statement of intent to be “legally bound” supplies necessary
consideration to support its enforceability). Here, the Assignment signed by
Torralvo indicates that he “intend[ed] to be legally bound.” Torralvo
Assignment, 8/27/18. Therefore, we reject Hughes’ contention that the
Torralvo Assignment is invalid or unenforceable for lack of consideration.
McGuire, supra; Socko, supra.
In the same vein, we reject Hughes’ argument that, by virtue of the
supersedeas bond, Arch simultaneously satisfied and extinguished the
Torralvo Judgment, leaving nothing for Arch to collect. See Brief of Appellant,
at 28-34. Specifically, Hughes argues that:
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1 Hughes asserts, to the contrary, that “failure of consideration . . . goes to
the heart of any claim based on an agreement and is always available as a
defense[.]” Brief of Appellant, at 27 (quoting McGuire, supra at 118). His
reliance on McGuire is misplaced. Principally, failure of consideration refers
to a situation “where a contract contemplates the exchange of consideration,
but a party fails to provide it.” See Nicholas v. Hofmann, 158 A.3d 675,
698 n.20 (Pa. Super. 2017). Meanwhile, Hughes argues in his appellate brief
that that the Torralvo Assignment had no consideration whatsoever. See Brief
of Appellant, at 23, 28, 31, 34, 37 (arguing consideration was invalid or
nonexistent). Moreover, in addition to finding appellant’s claim of failure of
consideration “inapplicable” in McGuire, this Court noted in that, even if a
lack of consideration existed, it would not render the agreement a nullity
because the parties expressed, therein, their intent to be legally bound.
McGuire, supra at 118.
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Torralvo received, and Arch tendered, no valuable consideration
for the purported assignment of the Judgment as Arch was already
obligated to pay Torralvo under the imposition of the Bond. . . .
[T]he transaction . . . was clearly payment on the Judgment to
Torralvo, which Arch was required to do anyway, and not legal
consideration. As such, any agreement and/or contract made by
and between Arch and Torralvo resulted in a satisfaction and/or
discharge of the Judgment by operation of law.
Id. at 34 (emphasis added). This Court has recognized that, “[p]rima facie,
payment by a third party of a debtor’s obligation is not a discharge of the debt
but a purchase of it.” Ertel v. McCloskey, 74 A.2d 652, 654 (Pa. Super.
1950). In determining whether such a payment constitutes the discharge or
purchase of the debt, “[t]he intentions of the parties govern.” Id. Here, the
language of the Assignment expressly “grant[s],” “sell[s],” “convey[s],”
“transfer[s],” and “assign[s]” the Torralvo Judgment to Arch—including “all of
the benefits and advantages” thereof with the “full power to enforce and
recover the judgment.” Torralvo Assignment, 8/27/18. Because the Torralvo
Assignment does not reflect the parties’ intent to satisfy the Torralvo
Judgment, it does not operate to do so. Ertel, supra at 652.
Next, Hughes argues that the trial court erred in granting Arch’s motion
to enforce because Arch is prohibited from any recovery from Hughes due to
lack of privity with him. See Brief of Appellant, at 38-44. Our Supreme Court
has explained, however, that “ultimately, an assignee stands in the shoes of
the assignor. Privity is not an issue in cases involving assignment claims; an
assignee does not pursue a cause of action in its own right.” Crawford Cent.
School Dist. v. Commonwealth, 888 A.2d 616, 620 (Pa. 2005). Hughes
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cites no authority to the contrary. See Brief of Appellant, at 38-43. Therefore,
we find this claim meritless.
Lastly, Hughes argues that the trial court abused its discretion by
sustaining Arch’s objections to Hughes’ notice of intent to subpoena Torralvo’s
counsel. No relief is due.
Hughes submits that he “was, and is, entitled to the benefit of the
information from either Arch or Torralvo regarding the transaction
[under]lying the [] Assignment”—specifically, “[w]hat th[e] bargained for
exchange was.” See id. at 46-49. We disagree. Rule 3117 of the
Pennsylvania Rules of Civil Procedure authorizes a plaintiff, at any time after
judgment, to take the testimony of any person “for the purpose of discovery
of assets of the defendant[.]” Pa.R.C.P. § 3117. Hughes cites to no authority
for the proposition that he, as defendant/judgment-debtor, is entitled to any
post-judgment discovery in this case. Moreover, Hughes asserts that the
subpoena, if allowed, “would have provided additional evidence that . . .
demonstrated the lack of sufficiency of the consideration exchanged for the
Assignment.” Id. at 50. Having concluded that the Torralvo Assignment was
supported by consideration where Torralvo expressed an intent to be legally
bound, we find that this “evidence” is irrelevant as a matter of law. McGuire,
supra. Therefore, the trial court did not abuse its discretion in sustaining
Arch’s objections to Hughes’ post-judgment subpoena of Torralvo’s counsel.
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Order affirmed.2
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 12/10/2021
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2 We disagree with Hughes that Arch alone is liable for the judgment proceeds
where Hughes was found guilty of medical malpractice against Torralvo and
Arch was not involved in this matter until it entered a supersedeas bond on
behalf of Hughes’ malpractice insurer, HPIX. HPIX should have informed
Hughes prior to its bankruptcy that Hughes was not effectively covered under
its policy in the event he was found guilty of malpractice. Its failure to do so
results in Hughes being treated as not having insurance—i.e., liable for the
costs of his malpractice.
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