Hazer v. Zabala
26 A.3d 1166
| Pa. Super. Ct. | 2011Background
- Lease dated Sept. 29, 2008 between Hazers (lessors) and Zabala on behalf of Zabala Broker, LLC for commercial space at 1635 Centre Ave., Reading, PA.
- Hazers filed confession of judgment against Zabala on July 16, 2010 alleging nonpayment of rent.
- Zabala moved to strike or open the confessed judgment; hearing on rule to show cause held Sept. 24, 2010.
- Trial court denied Zabala’s petition to strike/open in an order filed Oct. 21, 2010; Zabala appealed.
- Appellant contends he did not bind Zabala Broker, LLC personally and that the cognovit clause is invalid, among other issues.
- Court reverses and remands to strike the confessed judgment due to invalid cognovit clause and improper signing connections.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Zabala is a proper party given signature in individual capacity. | Zabala signed as an individual; D/B/A does not bind LLC. | Lease shows Zabala obligated personally; checks show individual liability. | Yes; Zabala personally bound; petition to strike/open rejected on this basis. |
| Whether a Delaware corp can be sued in PA absent fictitious-name filing. | Transacts business in PA; Pennsylvania law applies. | Lacks fictitious-name registration; unresolved validity. | Court treated as part of broader issues; insufficient to sustain confession. |
| Whether the addendum cognovit clause was properly incorporated and signed. | Cognovit clause within addendum; addendum unsigned; incorporated by reference. | Cognovit clause should be binding if within lease and intended. | Cognovit clause invalid and unenforceable; improper instrument to confess judgment. |
| Whether the cognovit clause must meet strict formalities to be valid. | Clause negotiated; reflects intent to confect judgment. | Clause not properly signed or conspicuously placed. | Yes; strict compliance required; clause invalid on face. |
| Whether the damages/draft amount was correctly calculated and entered. | Hazers’ counsel calculation correct. | Calculation improperly supported by record. | Merits of damages not crucial since cognovit clause invalid. |
Key Cases Cited
- Resolution Trust Corp. v. Copley Qu-Wayne Assocs., 546 Pa. 98 (1996) (limits considered record for petition to open/strike judgments; matters outside record may be considered when opening)
- First Union Nat’l Bank v. Portside Refrigerated Services, Inc., 827 A.2d 1224 (Pa. Super. 2003) (strict compliance with confession of judgment rules)
- ESB Bank v. McDade, 2 A.3d 1236 (Pa. Super. 2010) (confession of judgment rules strictly construed)
- Frantz Tractor Co. v. Wyoming Valley Nursery, 384 Pa. 213 (1956) (warrant of attorney must be signed and in direct relation to the warrant)
- Egyptian Sands Real Estate, Inc. v. Polony, 222 Pa. Super. 315 (1972) (second-page warrant not conclusive against signer)
- L.B. Foster Co. v. Tri-W Constr. Co., 409 Pa. 318 (1962) (signatures must bear direct relation to warrant of attorney)
- Hillbrook Apartments, Inc. v. Nyce Crete Co., 237 Pa. Super. 565 (1975) (extension of personal liability principles to LLC context)