Fleetway Capital Corp. v. SH&T Express, LLC
Fleetway Capital Corp. v. SH&T Express, LLC No. 1853 EDA 2016
| Pa. Super. Ct. | May 15, 2017Background
- Fleetway and SH&T entered a Master Lease (with Equipment Schedules) for trucks/trailers; guaranties (individual and entity) included warrants of attorney/confession-of-judgment clauses.
- SH&T returned three trucks and three trailers after defaulting on lease payments; Fleetway filed a confession of judgment on March 3, 2016.
- Appellants (SH&T and guarantors) petitioned to open the confessed judgment arguing, inter alia, Fleetway acted in bad faith/unclean hands and failed to mitigate damages; they also sought discovery.
- Trial court denied the petition (May 10, 2016), finding Appellants failed to plead a prima facie meritorious defense and thus no rule to show cause or discovery was required.
- Appellants appealed; Pennsylvania Superior Court reviewed for abuse of discretion and affirmed the denial, concluding the petition did not present a meritorious defense requiring submission to a jury.
Issues
| Issue | Fleetway's Argument | Appellants' Argument | Held |
|---|---|---|---|
| Whether trial court erred by denying petition to open without allowing discovery | No—court properly disposed of petition on pleadings because petition did not state prima facie grounds to trigger a rule to show cause or discovery | Petition alleged facts (mitigation failure, prospective assignees, promised reference letter, promised private sale) that would support discovery and a meritorious defense | Held: No error — petition failed to state prima facie meritorious defense; court not required to order discovery |
| Whether Appellants stated a meritorious defense (failure to mitigate / set-off) sufficient to open confessed judgment | The allegations are counterclaims/set-offs, not defenses; unliquidated counterclaims do not warrant opening a confessed judgment | Alleged failure to mitigate and wrongful retention/handling of repossessed equipment deprived Appellants of offset and could lead to double recovery by Fleetway | Held: No meritorious defense shown. Claims alleged counterclaims/set-offs and unverified assertions; judgment remained affir med |
Key Cases Cited
- Neducsin v. Caplan, 121 A.3d 498 (Pa. Super. 2015) (standard for appellate review of petition-to-open abuse-of-discretion and meritorious-defense inquiry)
- Ferrick v. Bianchini, 69 A.3d 642 (Pa. Super. 2013) (petition-to-open requires evidence that would, at jury trial, submit the issue to the jury)
- Graystone Bank v. Grove Estates, LP, 58 A.3d 1277 (Pa. Super. 2012) (court may consider matters dehors the record when deciding petition to open)
- Century Surety Co. v. Essington Auto Center, LLC, 140 A.3d 46 (Pa. Super. 2016) (elements for opening a judgment: prompt filing, excuse for failure to appear, meritorious defense)
- Dollar Bank v. Northwood Cheese Co., 637 A.2d 309 (Pa. Super. 1994) (failure to read a confession-of-judgment clause does not justify opening)
- Liazis v. Kostka, Inc., 618 A.2d 450 (Pa. Super. 1992) (trial court abused discretion where petition did allege prima facie grounds; remand for further proceedings)