Caruso v. Caruso (In re Est. Caruso), 2024 Pa. LEXIS 1334 (Pa. Super., September 11, 2024) (Todd, J.)
CHIEF JUSTICE TODD
In this appeal by allowance, we consider whether an individual – here, the spouse of a deceased business partner – who was not an original party to a partnership agreement, nor a third-party beneficiary of that agreement, and where the terms of the agreement do not permit assignment of a deceased partner’s interest to a non-party, may be permitted to “step into the shoes” of the deceased partner and enforce the partnership agreement. We conclude such an individual may not, and so reverse the order of the Superior Court.
Although there was no evidence of any oral or written agreement between Peter and Geraldine regarding the manner in which the business affairs of HLC would be conducted after John’s death, the evidence of record showing that Peter and Geraldine continued to carry on the business of HLC after John’s death, and shared in the profits thereof, supports the lower courts’ conclusion that Peter and Geraldine had formed a partnership with respect to operating HLC after John’s death. Critically, however, evidence of this newly formed partnership, in and of itself, does not establish that they also intended that their respective rights and duties under the new partnership would be governed by the terms of the 1983 Partnership Agreement; rather, such intent would also need to be established.
The evidence that Peter and Geraldine jointly conducted the business of HLC after John’s death, dividing its revenues in accordance with their 50% ownership interests, would suggest an intent to form a superseding partnership for the limited purpose of maintaining HLC and deriving income from it. However, there was no evidence establishing that they intended any of the provisions of the Partnership Agreement to govern this superseding partnership.
we conclude that the lower courts erred in determining that Geraldine “stepped into the shoes” of John for purposes of enforcing the Partnership Agreement, either by assignment or otherwise. Furthermore, the courts erred in concluding that Peter and Geraldine agreed to be bound by Paragraph 14 of the Partnership Agreement in forming a new partnership, after John’s death, to operate HLC. Accordingly, the trial court erred in directing the specific performance of the buy-out provision in Paragraph 14 against Sandra, and so the order of the Superior Court, affirming the trial court’s grant of this remedy, must be reversed.
Order reversed. Jurisdiction relinquished.
