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July 3, 2026
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Mae Gabel v. Site Ready Construction, Darren M. Haile and Proscape Landscape Supply, LLC, No. 24-12733 (Berks Cty. C.C.P. Mar. 3, 2026) (Gavin, J.)

For practitioners handling business acquisitions, successor liability disputes, and commercial loan enforcement, this case offers important guidance on how Pennsylvania courts assess whether a purchaser has assumed a seller’s debts, particularly where the agreements were drafted without legal counsel and contain ambiguities. The decision also reinforces the “leading object” or “main purpose” exception to the Statute of Frauds in the context of asset acquisitions. In this case, the Purchaser has filed a Notice of Appeal.

Key takeaways:

• Course of performance carries significant weight. Courts will look beyond the four corners of an ambiguous agreement to pre-contractual communications and post-execution conduct, such as making payments and listing a debt as accounts payable, to determine whether a purchaser intended to assume a seller’s obligations.
• The “leading object” exception to the Statute of Frauds remains potent. Where a purchaser’s main purpose in assuming debt is to serve its own pecuniary or business ends, the Statute of Frauds will not bar enforcement, even absent a clear written assumption.
• A promissory note is “fundamentally a contract.” An agreement to purchase a business, including its “contracts,” may encompass outstanding promissory notes, exposing the Purchaser to liability on those instruments.
• Retain counsel for business transactions. The Court repeatedly emphasized the dangers of proceeding with complex business transactions without legal counsel. Ambiguous documents invite litigation and unpredictable outcomes.
• Appeal pending. The Purchaser has appealed, likely raising issues regarding the proper interpretation of the purchase agreement, whether the evidence supported the Court’s finding of assumed debt, and whether the Statute of Frauds should bar the claim. The Superior Court’s resolution should provide additional guidance on the interplay between successor liability doctrines and the Statute of Frauds in the context of informal business acquisitions.

Background

The Lender loaned money to the Seller, a construction business owned and operated by its principal (the Seller’s Principal). The loan was memorialized in a promissory note prepared by a non-attorney that provided for interest, late charges, and attorney’s fees.

When the Seller began struggling financially, the Seller’s Principal reached out to the Purchaser’s Principal to discuss an investment or purchase of the business. After due diligence and negotiations, the Purchaser’s principal sent an email outlining a plan in which the Purchaser would “assume current AP and AR” and “work on a payment plan” for the Lender.

The parties executed a “Business Bill of Sale (Purchase Agreement),” also not prepared by an attorney, in which the Purchaser acquired the Seller, including “all it’s [sic] assets, shares, leases, contracts, trademarks, copyrights, and other tangible or intangible interest” for a purchase price of zero dollars. The Seller’s Principal entered into employment with the Purchaser.

Following execution, the Purchaser began making interest payments to the Lender. The Purchaser also issued the Lender a 1099-NEC for the payments and listed the Lender as an accounts payable on its records. The Seller’s Principal eventually terminated his employment with the Purchaser, and the Purchaser stopped making loan payments.

Disputed issues

The central dispute was not whether the money was owed, but who owed it.

The Purchaser argued that it had only purchased the Seller’s assets, not its stock, and that under general corporate law, a purchaser of assets does not assume the debts of the selling corporation. The Purchaser further contended that it never expressly agreed to assume the debt but only agreed to “work on” a payment plan, and that the payments made were conditional on the Seller’s Principal’s continued employment. The Purchaser also raised the Statute of Frauds as a defense, arguing there was no signed writing evidencing an assumption of the debt owed to the Lender.

The Court’s analysis

Breach of contract/assumption of liability. The Court found the Purchase Agreement ambiguous and considered extrinsic evidence, including pre-execution negotiations, the agreement itself, and post-execution conduct. The Court concluded that the Purchaser intended to purchase the Seller “in its entirety”, not merely its assets, and that the assumption of the debt to the Lender was intended. The Court placed significant weight on the Purchaser’s course of performance: making approximately a year of interest payments and listing the loan as its own accounts payable.

Statute of frauds. The Court rejected this defense on two independent grounds. First, the Purchase Agreement’s reference to “contracts” constituted a writing sufficient to satisfy the statute, as a promissory note is fundamentally a contract. Second, even if the assumption was not in writing, the “leading object” or “main purpose” exception applied because the Purchaser’s main purpose in entering the Purchase Agreement and assuming the debt was to serve its own pecuniary and business ends.

Unjust enrichment. The Court dismissed this claim as inapplicable where a written contract governs the parties’ rights.

The Purchaser’s crossclaim. The Court dismissed the Purchaser’s crossclaim, finding that the Seller’s Principal was not personally a party to the Purchase Agreement and that neither employment agreement overcame the presumption of at-will employment.

Damages. The Court entered a verdict in favor of the Lender and against the Purchaser for principal, interest, attorney fees, and late charges.

A copy of the Court’s opinion can be found here.