Court Opinion

ID: 4329583
Source: CourtListenerOpinion
Date Created: 2018-11-09 18:36:41.97924+00
Date Added: 2024-06-11T14:47:34.029064
License: Public Domain

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NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37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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