Schmalz v. Manufacturers

• Decision Date: 12 March 2013
• Citation: 67 A.3d 800,2013 PA Super 52
• Court: Pennsylvania Superior Court
• Parties: Marlene Fait SCHMALZ, Appellant, v. MANUFACTURERS & TRADERS TRUST COMPANY d/b/a M & T Bank, Appellee.

67 A.3d 800

2013 PA Super 52

Marlene Fait SCHMALZ, Appellant,

v.MANUFACTURERS & TRADERS TRUST COMPANY d/b/a M & T Bank, Appellee.

Superior Court of Pennsylvania.

Argued March 12, 2013.

Filed March 12, 2013.

Kristopher J. Januzzi, Shavertown, for appellant.

Mark D. Bradshaw, Harrisburg, for appellee.

BEFORE: BOWES, OLSON, and WECHT, JJ.

OPINION BY BOWES, J.:

Marlene Fait Schmalz appeals from the judgment entered in favor of Manufacturers & Traders Trust Company (“M & T Bank”) following a non-jury trial. Upon review, we affirm.

The dispute in this matter centers on whether a certificate of deposit (“CD”), purchased from First Federal Savings Loan Association of Wilkes Barre, Pennsylvania (“First Federal”) on March 3, 1970, was redeemed. The CD was in the names of Mrs. Mildred Fait, Appellant's mother, and Appellant, and was in the amount of $12,000.¹ First Federal later merged with another bank, which was subsequently acquired by M & T Bank. Appellantand her mother sought to redeem the CD on August 29, 2003, but M & T Bank refused. Mildred Fait passed away at the age of ninety-nine in June 2008. Thereafter, Appellant filed a writ of summons on July 30, 2009, followed by a complaint filed on September 23, 2009. The complaint set forth four separate counts, but the matter proceeded to a non-jury trial solely on the count relative to M & T Bank's failure to pay upon demand.

Prior to trial, M & T Bank filed a motion in limine seeking to preclude statements from Appellant's mother, Mildred Fait. Specifically, M & T Bank contended that any purported conversations in which Mildred Fait allegedly stated that she did not redeem the CD were inadmissible hearsay. Appellant did not respond to the motion with a filing, but the trial court permitted Appellant to reply orally before trial. According to Appellant, the statements were not hearsay because they were not being introduced to establish the truth of whether the CD was redeemed or, alternatively, the statements were admissible as a state of mind exception to the hearsay rule.² The trial court permitted the testimony subject to a continuing objection by M & T Bank and later determined that any such conversations were hearsay.

The evidence adduced at trial revealed that Appellant was in possession of the original CD, which was not stamped as surrendered or redeemed. M & T Bank had no paper or computer record of the CD. M & T Bank retains records relative to CD accounts for seven years. The funds from the CD had not escheated to the Commonwealth. A CD holder is required to receive an IRS 1099 form indicating yearly interest income and a maturity and renewal notice are sent to the holder approximately three weeks before the CD is due. No IRS form 1099, maturity notice, or renewal notice was in the possession of Appellant, her mother's estate, or M & T Bank. Relying on the principle that a debt is presumed paid after twenty years, the trial court determined that Appellant failed to rebut this presumption and found in favor of M & T Bank. This appeal ensued.

Appellant raises two issues for our consideration.

1. Whether the trial court erred when it granted Bank's Motion in Limine when any statements by Marlene's deceased mother to the effect that the CD had not been paid are either (1) not impermissible hearsay or, (2) if found to be hearsay, are admissible as meeting the state of mind or excited utterance exceptions under Pa.R.E. 803(3).

2. Whether the trial court abused its discretion in entering judgment for Bank when the evidence was such to overcome Pennsylvania law providing that a debt is presumed paid after the lapse of twenty (20) years.

Appellant's brief at 3.

Appellant's first challenge is to the court's evidentiary ruling on M & T Bank's motion in limine declaring that statements made by Appellant's mother that she did not redeem the CD were inadmissible hearsay. We recently stated,

Generally, a trial court's decision to grant or deny a motion in limine is

subject to an evidentiary abuse of discretion standard of review. The term discretion imports the exercise of judgment, wisdom and skill so as to reach a dispassionate conclusion, within the framework of the law, and is not exercised for the purpose of giving effect to the will of the judge. Discretion must be exercised on the foundation of reason, as opposed to prejudice, personal motivations, caprice or arbitrary actions. Discretion is abused when the course pursued represents not merely an error of judgment, but where the judgment is manifestly unreasonable or where the law is not applied or where the record shows that the action is a result of partiality, prejudice, bias or ill will.

Catlin v. Hamburg, 56 A.3d 914, 922 (Pa.Super.2012).

Appellant argues that her mother's statements were admissible as a state of mind exception to the hearsay rule as well as an excited utterance. Insofar as Appellant neglected to raise the excited utterance argument before the trial court, the issue is waived. Pa.R.A.P. 302(a); Commonwealth v. Mollett, 5 A.3d 291, 311 (Pa.Super.2010). With respect to her argument pertaining to the state of mind hearsay exception, Appellant contends that her mother was extremely upset about M & T Bank's refusal to honor the CD and its representation that it had no record of the CD. She asserts that this testimony was circumstantial evidence that the CD was not redeemed and “indicative of [her mother's] state of mind that she was upset and worried constantly about the CD that Bank refused to honor.” Appellant's brief at 10.

In addition, Appellant alleges that evidence that her mother said she purchased the CD as an investment for a rainy day and did not need to redeem the CD until later in her life is analogous to the situation presented in Hooker v. State Farm Fire & Casualty Company, 880 A.2d 70 (Pa.Cmwlth.2005). In Hooker, a homeowner testified that she did not complete home repair work because she was told by a contractor that the repairs would be temporary. The Commonwealth Court determined the out-of-court statement by the contractor was not hearsay, but if it were, it could be admissible under the state of mind exception.³

M & T Bank replies that Appellant did not introduce evidence of her mother's statements for any other purpose than to establish that the CD was not paid. Thus, it submits, the evidence was classic hearsay. Furthermore, it maintains that the trial court alternatively held that, even assuming the evidence was admissible, Appellant still failed to carry her burden. Hence, any perceived error in not considering the evidence was harmless.

The state of mind hearsay exception is set forth pursuant to Pa.R.E. 803(3). The rule reads:

The following statements, as hereinafter defined, are not excluded by the hearsay rule, even though the declarant is available as a witness:

(3) Then existing mental, emotional, or physical condition. A statement of the declarant's then existing state of mind, emotion, sensation, or physical condition, such as intent, plan, motive, design, mental feeling, pain, and bodily health. A statement of memory or belief offered to prove the fact remembered or believed is included in this exception only if it relates to the execution, revocation, identification, or terms of declarant's will.

Pa.R.E. 803(3).⁴

The exception, of course, is inapplicable if the statements are not being introduced for the truth of the matter asserted, as such statements are not hearsay.⁵ However, where a statement is being introduced for the truth of the matter asserted, then it may be admissible if it is a declaration concerning “the declarant's then existing state of mind ... such as intent, plan, motive, design, mental feeling, pain, and bodily health.” Pa.R.E. 803(3). Of course, the statement must be relevant to the issue in the case. Commonwealth v. Laich, 566 Pa. 19, 777 A.2d 1057, 1060–1061 (2001); see also Commonwealth v. Moore, 594 Pa. 619, 937 A.2d 1062, (2007) (Castille, J. concurring). The statement must be “instinctive, rather than deliberate [.]” Kemp v. Qualls, 326 Pa.Super. 319, 473 A.2d 1369, 1373 n. 2 (1984). Moreover, a statement relating to past events based on memory or belief is not permissible to establish the truth of those events, absent relation to the execution, revocation, identification, or terms of the declarant's will. Pa.R.E. 803(3); Commonwealth v. Levanduski, 907 A.2d 3 (Pa.Super.2006) ( en banc ).

Traditionally, statements of the declarant's then existing state of mind are considered reliable based on their spontaneity. Commonwealth v. Hess, 378 Pa.Super. 221, 548 A.2d 582, 585 (1988) (citing Packel & Poulin, Pennsylvania Evidence, § 803(3)). There are ordinarily three instances in which the state of mind exception is applicable. First, the exception may apply to prove the declarant's state of mind when that state of mind is an issue directly related to a claim or defense in the case. See Laich, supra. Second, the exception can apply to demonstrate that a declarant did a particular act that was in conformity with his or her statement after having made the statement. See Commonwealth v. Riggins, 478 Pa. 222, 386 A.2d 520, 526 (1978); Ickes v. Ickes, 237 Pa. 582, 85 A. 885, 887–888 (1912). Finally, an out of court statement related to the person's memory or belief is admissible in the limited instance where it relates to the “execution, revocation, identification or terms of the declarant's will.” Pa.R.E. 803(3).

Appellant's mother's emotions over M & T Bank declining to redeem the CD is only relevant as circumstantial evidence of the truth of her belief that she had not redeemed the CD. This latter evidence is classic hearsay that does not fall within any exception. Phrased differently, we may consider as substantive evidence that Appellant's mother was upset based on her out-of-court statements; however, a court cannot utilize this statement as substantive evidence regarding whether the reason she was upset is truthful, i.e., th...