273 A.3d 1098
Pa. Super. Ct.2022Background
- Appellants Walter and Wynton Bernard signed a six-year commercial lease on July 7, 2017 (commencing Nov. 1, 2018) to operate an escape-room business at premises owned by 9795 Perry Highway Management, LLC.
- Tenants fell into arrears (made only a half-payment in April 2020), sent a letter terminating the lease on June 5, 2020, and thereafter made no further payments.
- Landlord filed a Complaint in Confession of Judgment on July 22, 2020; tenants filed a Petition to Open/Strike on August 4, 2020 contesting the confessed judgment.
- Tenants argued they were excused from rent by COVID-19 closure orders (frustration/impracticability and de facto taking), asserted defects on the face of the confession process, and claimed landlord’s re-letting created a double recovery.
- The trial court denied the petition to open/strike on July 7, 2021; tenants appealed and the Superior Court affirmed.
Issues
| Issue | Bernard's Argument | Perry Highway's Argument | Held |
|---|---|---|---|
| 1) Face‑of‑record defects (service/Act 6) | Confessed judgment must be stricken for defects (e.g., no Return of Service). | Service was accepted by tenants' counsel; tenant incorporation-by-reference waived argument and failed to develop authority. | Waived for inadequate briefing; no strike of judgment. |
| 2) Frustration / impracticability due to COVID closure | Closure made lease purpose impossible; doctrines discharge lease obligations. | Lease lacks force‑majeure; tenant’s performance is paying rent; closure was temporary and reopenings occurred. | Doctrines inapplicable; no meritorious defense to open judgment. |
| 3) De facto taking / eminent domain clause | Closure order amounted to a temporary taking absolving lease obligations under the lease’s eminent‑domain clause. | Closure was a valid exercise of police power and not a taking; Friends of Danny DeVito controls. | Following Friends of Danny DeVito, no regulatory taking—claim fails. |
| 4) Double recovery where landlord re‑let premises | Landlord recovered accelerated rent and also leased to a new tenant (double recovery). | Landlord concedes tenant is entitled to credit at execution; confession remains valid. | Not a defense to opening; remedy is credit against judgment at execution per Ferrick. |
Key Cases Cited
- Courtney v. Ryan Homes, Inc., 497 A.2d 938 (Pa. Super. 1985) (standard for appellate review of denial of petition to open/strike confessed judgment)
- Ferrick v. Bianchini, 69 A.3d 642 (Pa. Super. 2013) (landlord may seek accelerated rent and re‑let; tenant gets credit at execution)
- Midwest Fin. Acceptance Corp. v. Lopez, 78 A.3d 614 (Pa. Super. 2013) (distinction between striking for facial defects and opening when factual disputes exist)
- Step Plan Services, Inc. v. Koresko, 12 A.3d 401 (Pa. Super. 2010) (elements and narrow application of frustration of purpose)
- Albert M. Greenfield & Co., Inc. v. Kolea, 380 A.2d 758 (Pa. 1977) (example where destruction of leased building justified discharge under impossibility/frustration)
- U.S. v. Winstar Corp., 518 U.S. 839 (U.S. 1996) (impossibility defense requires that nonoccurrence of event was a basic assumption and risks foreseeable should be contractually allocated)
- Friends of Danny DeVito v. Wolf, 227 A.3d 872 (Pa. 2020) (temporary COVID closure orders were a valid exercise of police power and did not constitute a regulatory taking)