Hollywood v. First Nat. Bank of Palmerton

• Decision Date: 19 August 2004
• Citation: 859 A.2d 472
• Parties: Estate of Cletus J. HOLLYWOOD, James C. Hollywood, D.B.N.C.T.A. and James C. Hollywood, Appellants v. FIRST NATIONAL BANK OF PALMERTON, First Union National Bank and Citizens Bank and Trust Company, Appellees.
• Court: Pennsylvania Superior Court

859 A.2d 472

Estate of Cletus J. HOLLYWOOD, James C. Hollywood, D.B.N.C.T.A. and James C. Hollywood, Appellants v. FIRST NATIONAL BANK OF PALMERTON, First Union National Bank and Citizens Bank and Trust Company, Appellees.

Superior Court of Pennsylvania.

Argued February 25, 2004.

Filed August 19, 2004.

Reargument Denied October 27, 2004.

Joseph C. Hollywood, Easton, for appellants.

James A. Wimmer, Palmerton, for Citizens Bank, appellee.

Marianne J. Gilmartin, Scranton, for First Union National Bank, appellee.

Carl J. Poveromo, Scranton, for First Union National Bank of Palmerton, appellee.

Before: TODD, PANELLA, and JOHNSON, JJ.

OPINION BY JOHNSON, J.:

¶ 1 In this appeal, we consider whether the limitations periods established under Uniform Commercial Code (UCC) sections 3-118(g) and 4-406(f) apply mechanically to bar actions for conversion and related claims without regard to the alleged incapacity of the aggrieved party when the alleged conversion occurred. Plaintiff James C. Hollywood, Administrator of the Estate of Cletus J. Hollywood (the Estate), contends that mechanical application is neither required nor appropriate under such circumstances, and that the limitations periods should be tolled by the "discovery rule" until such time as the plaintiff's incapacity is lifted and he or she reasonably could have determined the underlying Code violation. The trial court disagreed and concluded that, regardless of the defendants' apparent violation of section 3-420, the applicable limitations periods could not be tolled absent a demonstration that the defendants had fraudulently concealed their conduct. We concur in the trial court's determination. Notwithstanding the alleged inability of plaintiff's decedent to discover the Code violations at issue, the plain language of the UCC counsels mechanical application of the respective statutes of limitation, making no allowance for importation of the discovery rule or any other principle of equitable tolling. Accordingly, we affirm the trial court's order granting summary judgment in favor of the defendants.

¶ 2 In this case, the Estate of Cletus J. Hollywood seeks to recoup from the defendant banks financial losses sustained by the Decedent at the hands of his daughter, Mary Ann Andersen, who allegedly converted the Decedent's assets to her own use during a time when the Decedent was under her care and mentally unable to secure his own affairs. The Decedent's son, James C. Hollywood (Son), seeks, in addition, to recover individually on claims of Wrongful Interference with Testamentary Expectancies and the Right to Inherit under the Restatement (Second) of Torts, section 774B, citing the banks' collective failure to prevent Andersen's conduct. The trial court, the Honorable Roger Nanovic, summarized the occurrences underlying these claims as follows:

On January 27, 1999, Cletus J. Hollywood (the "Decedent"), 84 years of age, died testate.

* * * * * *

Decedent was survived by one daughter, Mary Ann Andersen, and two sons: James C. Hollywood and Joseph C. Hollywood.

Between April 12, 1987 and July 6, 1995, Decedent resided with his daughter Mary Ann and her husband, Daniel T. Andersen, at the Andersens' home in New Tripoli, Pennsylvania. During this time, Decedent's mental status progressively worsened: on September 1, 1987, Decedent sustained a closed head injury in a motor vehicle accident; on January 7, 1990[,] Decedent was admitted to a Texas hospital with a diagnosis of weakness/confusion, chronic atrial fibrillation, and febrile illness; on March 9, 1990, Decedent was diagnosed with the beginning stages of Alzheimer's disease; on July 6, 1995, Decedent was hospitalized for complications associated with dementia. Following hospitalization both at the Institute of Pennsylvania Hospital and the Lehigh Valley Hospital, and a brief stay at the Lehigh Manor Nursing and Rehabilitation Center, Decedent was discharged into the care of his son James and daughter-in-law, Merle Hollywood, with whom he resided until his death. Decedent was never adjudicated incompetent.

Decedent's will, dated February 2, 1989, was probated in Carbon County on March 19, 1999. Decedent's son James C. Hollywood was duly appointed as Administrator D.B.N.C.T.A. of the Estate. While administering the Estate, the Administrator discovered that the Decedent's accounts at various financial institutions where Decedent had been a customer were either closed or substantially diminished during the time Decedent resided with the Andersens. Further inquiry revealed that checks drawn on the accounts were signed in Decedent's name by Mrs. Andersen.

On November 30, 2000, the Estate commenced suit, by writ of summons and complaint, against a number of banking and financial institutions. The Defendants, First National Bank of Palmerton ("First National") and First Union National Bank ("First Union"), were included in this original filing. The Defendant, Citizens National Bank ("Citizens"), was included in the amended complaint filed by Plaintiffs on December 8, 2000.

Trial Court Opinion, 6/19/03, at 1-3.

¶ 3 The allegations of the Amended Complaint, although factually intricate, focus on theories of unauthorized payment under UCC section 4-406, and negligent conversion under UCC section 3-420. The Estate alleges that First National, First Union, and Citizens (the Banks) paid checks on Decedent's accounts that had been forged by Mary Ann Andersen, and permitted Andersen to make unauthorized withdrawals from the Decedent's certificate of deposit accounts. The Estate alleges, in addition, that First Union allowed unauthorized advances on a line of credit and allowed Andersen to abscond with the contents of the Decedent's safe deposit box, which included over 100 United States Savings Bonds and a collection of gold and silver coins. Son, in support of his Wrongful Interference claim, alleges that the banks' collective failure to monitor activity on the Decedent's respective accounts deprived him of a substantial inheritance to which he would otherwise accede under his father's will.

¶ 4 In response, all Defendants filed preliminary objections in the nature of a demurrer asserting, inter alia, that Son's individual assertions of Wrongful Interference with Testamentary Expectancies failed to state an actionable claim. Upon review, the Honorable John P. Lavelle, Senior Judge, ordered stricken Son's Wrongful Interference claims and ordered the Estate to file a more specific pleading of its remaining claims. The Estate filed a series of amendments and, ultimately, a Third Amended Complaint. The Defendants responded in New Matter that neither the Decedent nor anyone else had ever apprised them of the alleged forgeries and improper withdrawals and that more than one year had passed since the dates of their respective occurrences. The Defendants argued accordingly that the Estate's claims were barred by the one-year limitations period prescribed by UCC section 4-406(f). See 13 Pa.C.S. § 4406(f).

¶ 5 Following extensive discovery, First National, First Union, and Citizens each sought summary judgment asserting the one-year limitations period for payment of instruments on an unauthorized signature under section 4-406(f), the three-year limitations period for conversion under section 3-118(g), and the three-year "catch-all" period under section 4-111 for other claims under UCC Article 4. Upon review, Judge Nanovic found counts 1, 2, 5-11, and 14 of the Estate's Third Amended Complaint time-barred. The court determined, in addition, that the Estate's claims concerning unlawful removal of items from Decedent's safe deposit box arose from a bailment contract and, therefore, were barred by the statute of limitations on common law contract actions prescribed by section 5525 of Pennsylvania's Judicial Code. See 42 Pa.C.S. § 5525. Therefore, the court concluded that the Estate's Counts 3, 4 were also time-barred. The Estate now files this appeal raising the following questions for our review:

1. Did the trial Court, contrary to its prior ruling on applicable Preliminary Objections, err in ruling that the Uniform Commercial Code ... displaced and pre[-]empted common law control over the accrual of, running of, and tolling of the statute of limitations and erroneously apply a mechanical statute of limitations?

2. Did the trial Court err by not applying the discovery rule?

3. Did the trial Court grant summary judgement [sic] when there are genuine issues of material fact in dispute and violate the province of and function of the jury?

4. Did the trial Court err when it determined that causes of action accrued and were suable forthwith and immediately actionable for frauds and forgeries committed against a victim of Alzheimer's Disease during his mental incapacity?

5. Did the trial Court err by not applying the rule of Peaceman v. PNC Bank, N.A., 16 Fiduc. Rep.2d 363 (C.P.Mont. 1996) which precludes the mechanical application of the statute of limitations applied in Menichini v. Grant, 995 F.2d 1224, 1229 (3d Cir.1993)?

6. Did the trial Court err by dismissing Plaintiffs' claims for wrongful interference with testamentary expectancies and the right to inherit pursuant to the Restatement of Torts 2d § 774B pursuant to Defendants['] Preliminary Objections?

7. Did the trial Court abuse its discretion by erroneously determining material facts in controversy, determining material facts not of and unsupported by the record, by not viewing the record in the light most favorable to Plaintiffs, not accepting as true all well-pleaded facts plead by Plaintiffs, not giving Plaintiffs the benefit of all reasonable inferences from the facts plead, and not resolving any doubt as to material factual disputes against Defendants?

Brief for Appellant at 3.

¶ 6 Upon review of the foregoing Statement, we note that the Estate's recitation poses only two controlling legal issues, facets of which are variously focused in its seven...