Medisys, Inc. v. Hunsberger, S.
2594 EDA 2016
| Pa. Super. Ct. | Dec 8, 2017Background
- Stephanie Hunsberger, sole owner of Solutions, executed a Guaranty to secure a $400,000 promissory note from Solutions to Medisys arising from an asset purchase; the Guaranty contained broad waiver language and a confession-of-judgment clause.
- The promissory note required 60 monthly payments; Solutions defaulted after making only the first two payments and issued a check asserting an offset.
- Solutions/ Hunsberger claimed contractual "reductions" (offsets) under the asset purchase agreement for alleged breaches by Medisys, asserting losses exceeding the note balance.
- Medisys confessed judgment against Hunsberger under the Guaranty for approximately $399,470 and filed a complaint in confession of judgment.
- Hunsberger petitioned to strike/open the confessed judgment, asserting meritorious defenses including offset/contractual reductions and misrepresentation/breach by Medisys. The trial court denied the petition; Hunsberger appealed.
- The Superior Court affirmed: the Guaranty’s plain, unconditional waiver language precluded Hunsberger from asserting offsets, recoupment, counterclaims, or other defenses to reduce the guaranty liability.
Issues
| Issue | Hunsberger's Argument | Medisys's Argument | Held |
|---|---|---|---|
| Whether the Guaranty precludes Hunsberger from challenging the confessed judgment by asserting contractual reductions/offsets taken by Solutions | Guarantor may challenge amount "due and owing"; Solutions exercised an express contractual right to reduce the note so the debt was extinguished or reduced | Guaranty contains unambiguous, unconditional waiver of "any defense" and rights of setoff, recoupment, counterclaim; Section 6 keeps guaranty enforceable even if maker's obligations are invalid | Waiver is effective; Guaranty bars Hunsberger from asserting contractual reductions or offsets against Medisys; challenge barred |
| Whether Hunsberger alleged meritorious defenses and produced evidence warranting submission to a jury | Hunsberger presented facts of misrepresentation, breach, and quantifiable losses that would support offsets exceeding the note | Any such defenses were waived by the Guaranty; thus merits need not be reached | Merits not considered because defenses were waived; petition to open properly denied |
Key Cases Cited
- Homart Dev. Co. v. Sgrenci, 662 A.2d 1092 (Pa. Super. 1995) (standard for opening confessed judgment: promptness, meritorious defense, sufficient evidence).
- Iron Worker’s Sav. & Loan Ass’n v. IWS, Inc., 622 A.2d 367 (Pa. Super. 1993) (same standard; view evidence like directed verdict analysis).
- Germantown Sav. Bank v. Talacki, 657 A.2d 1285 (Pa. Super. 1995) (appellate review for abuse of discretion in refusing to open confessed judgment).
- Continental Leasing Corp. v. Lebo, 272 A.2d 193 (Pa. Cmwlth. 1970) (defines unconditional guaranty as guarantor agreeing to pay/perform without limitation).
- Ford Motor Credit Co. v. Lototsky, 549 F. Supp. 996 (E.D. Pa. 1982) (recognizes that a guarantor’s contractual undertaking can be broader than the principal debtor’s liability).