214 A.3d 259
Pa. Super. Ct.2019Background
- Tony’s Famous Tomato Pie Bar & Restaurant, Inc. (borrower) executed a promissory Note to Dominic’s Inc. (lender) as part of an Agreement of Sale for a tavern; the Note contained a warrant of attorney authorizing confession of judgment upon an Event of Default.
- The Note required notice of default and a 10‑day cure period before lender could exercise remedies, and included an integration clause in the Agreement of Sale.
- Borrower missed two monthly payments; lender confessed judgment for the accelerated unpaid balance plus costs and 5% attorneys’ collection fee (minimum $5,000).
- Borrower filed a petition to strike or open the confessed judgment seeking discovery, alleging fraud/misrepresentations (fraud in the inducement), failure to give required notice, and that the confessed amount and fees were excessive.
- Trial court denied the petition to open (no meritorious defense shown; parol evidence/integration clause barred fraud‑in‑the‑inducement allegations) but the court concluded the complaint to confess failed to aver the required notice/cure and therefore the confessed judgment and related attorney fees should be stricken.
- Superior Court affirmed denial of the petition to open, reversed denial of the petition to strike, vacated the judgment and related attorneys’ fees, and permitted lender to refile in strict compliance with the Note.
Issues
| Issue | Dominic’s (Plaintiff) Argument | Tony’s (Defendant) Argument | Held |
|---|---|---|---|
| Whether trial court erred by not entering borrower’s proposed rule to show cause and by denying discovery/hearing | Automatic rule was issued by clerk; no due‑process deprivation; discovery/hearing discretionary | Needed discovery and hearing to develop defenses and record | Denied: clerk issued equivalent rule; court did not abuse discretion in declining discovery/hearing |
| Whether borrower alleged meritorious defenses (fraud/misrep., breach) sufficient to open judgment | Written contract/integration clause bars parol evidence; borrower offered no admissible evidence of fraud‑in‑execution | Alleged fraud in inducement, misrepresentations about business, building, equipment — meritorious defenses that warrant opening | Denied: defenses were parol fraud allegations barred by integration clause and lacked evidentiary support; no meritorious defense shown |
| Whether complaint in confession properly averred notice/cure and whether judgment was grossly excessive (including attorneys’ fees) | Warrant authorized acceleration and confession for full accelerated balance and 5% fee; complaint was sufficient | Complaint failed to aver required notice and 10‑day cure; confessed amount far exceeded past‑due installments; fees unreasonable | Mixed: Judgment stricken for fatal defect—complaint did not aver required notice/cure; attorneys’ fees/costs tied to that defective judgment vacated; amount otherwise authorized if proper notice/cure alleged |
Key Cases Cited
- Neducsin v. Caplan, 121 A.3d 498 (Pa. Super. 2015) (three‑part test to open confessed judgment: promptness, meritorious defense, evidence to send issues to jury)
- Dime Bank v. Andrews, 115 A.3d 358 (Pa. Super. 2015) (failure to allege required notice/cure in confession complaint is fatal on the face of the record)
- A. B. & F. Contracting Corp. v. Matthews Coal Co., 166 A.2d 317 (Pa. Super. 1960) (allegation of required notice is essential to exercise of warrant of attorney; omission is fatal)
- West Penn Sand & Gravel Co. v. Shippingport Sand Co., 80 A.2d 84 (Pa. 1951) (formal defects in confession of judgment may be amendable unless they omit an essential element)
- Hart v. Arnold, 884 A.2d 316 (Pa. Super. 2005) (parol evidence of prior representations inadmissible where contract contains integration clause)
- Miller v. Sacred Heart Hosp., 753 A.2d 829 (Pa. Super. 2000) (abuse of discretion standard; judicial discretion defined)