Heritage Hills Assoc. v. Heritage Hills Businesses
2024 Pa. Super. 301
Pa. Super. Ct.2024Background
- In 2019, Heritage Hills Businesses I, LLC (Appellant) executed a promissory note with Heritage Hills Associates, L.P. (Appellee) for a commercial loan, which included a warrant of attorney (cognovit clause) permitting confession of judgment.
- In 2020, the parties entered a management agreement regarding resort operations; this agreement included an option to purchase the property but did not reference any warrant of attorney.
- In 2022, the parties executed an amendment to the promissory note, materially changing its terms (reducing principal, releasing certain borrowers, and revising the interest rate and payments). The amendment did not restate or reference the warrant of attorney from the original note.
- In 2023, Appellee confessed judgment based on a default under the management agreement (not the note), citing the original warrant of attorney.
- Appellant moved to strike or open the confession of judgment; the trial court denied the petition, and Appellant appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the warrant of attorney in the original note allowed confession of judgment after the amendment, which did not restate or reference the warrant | The warrant in the original note remained in effect and authorized confession | The amendment was a new agreement: no direct reference to the warrant means no authority to confess judgment | For Appellant: judgment by confession stricken for lack of express, direct warrant in the amended note |
Key Cases Cited
- Shidemantle v. Dyer, 218 A.2d 810 (Pa. 1966) (warrant of attorney to confess judgment must be explicit, in writing, and bear a direct relation to the signature)
- L.B. Foster Co. v. Tri-W Constr. Co., 186 A.2d 18 (Pa. 1962) (general reference to external terms is insufficient to bind parties to a warrant of attorney)
- Scott v. 1523 Walnut Corp., 447 A.2d 951 (Pa. Super. 1982) (Pennsylvania courts will not assume a modified contract intends to perpetuate a warrant of attorney without express reference)
- Dollar Bank, Federal Sav. Bank v. Northwood Cheese Co., Inc., 637 A.2d 309 (Pa. Super. 1994) (entry of judgment by confession must strictly comply with the warrant's terms)