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HomeMy WebLinkAbout00-5134 civilLANCASTER DEVELOPMENT: IN THE COURT OF COMMON PLEAS OF COMPANY, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff No. 00-5154 CIVIL TERM V. NORRIS EDUCATIONAL SERVICES INC, Defendant IN RE: DEFENDANT'S PETITION TO STRIKE OFF OR, IN THE ALTERNATIVE, OPEN CONFESSED JUDGMENT AND NOW, ~~1~ ~,,,(~ ,2001, upon careful consideration of the briefs submitted by both parties, Defendant's Petition to Open Confessed Judgment is hereby granted. By the Court, Allen C. Warshaw, Esquire Laurence W. Dague, Esquire Jeffrey P. Ouellet, Esquire Melissa A. Swauger, Esquire DUANE, MORRIS & HECKSCHER LLP SHUMAKER & WILLIAMS 305 North Front Street, 5th Floor P.O. Box 88 Harrisburg, PA 17108 Harrisburg, PA 17108 Attorneys for Plaintiff Attorneys for Defendant LANCASTER DEVELOPMENT · IN THE COURT OF COMMON PLEAS OF COMPANY, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff : No. 00-5134 CIVIL TERM V. NORRIS EDUCATIONAL SERVICES INC, Defendant IN RE: DEFENDANT'S PETITION TO STRIKE OFF OR, IN THE ALTERNATIVE, OPEN CONFESSED JUDGMENT OPINION HOFFER, P.J.;. In this opinion, the Court addresses Norris Educational Services, Inc.'s, Petition to Strike Off or, in the alternative, Open Confessed Judgment. On or about September 28, 1989, Lancaster Development Company (hereinafter "Lancaster Development") entered into an office lease agreement (hereinafter "Lease") with Norris Educational Services "hereinafter Norris", whereby Norris leased the premises known as 4909 Louise Drive, Suites 108-113 from Lancaster Development. The term of the lease was for twenty (20) years beginning August 1, 1990 and ending July 31,2010. From February 18, 1989 through July 13, 1994, a series of four lease amendments were executed between Lancaster Development and Norris. Of particular interest is the fourth lease amendment executed on July 13, 1994, which increased the monthly rent to six-thousand dollars or 21.5% of the revenue generated from the activities on the premises for the month ending thirty (30) days before the due date of the monthly rent installment. On July 21, 2000, Lancaster Development filed a Notice, Confession of Judgment for Money in the amount of $852,669.63 plus attorney fees and costs. Norris subsequently filed a Petition to Strike Off or, in the alternative, Open Confessed Judgment, pursuant to Pa. R. Civ. P. 2959. The standard of ascertaining whether a confessed judgment should be opened is when the entity seeking to have it opened acts promptly, alleges a meritorious defense, and presents sufficient evidence of that defense to require submission of the issues to the jury. See Dollar Bank, Fed. Say. Bank v. Northwood Cheese Co., Inc., 431 Pa. Super 541,546, 637 A.2d 309, 311 app. den., 539 Pa. 692, 653 A.2d 1231 (1994). Another well-established principle in Pennsylvania jurisprudence is that the standard of sufficiency of the evidence which a court must employ to open a confessed judgment "is that of the directed verdict viewing all the evidence in the light most favorable to the petitioner and accepting as true all evidence and proper inferences therefrom supporting the defense while rejecting adverse allegations of the party obtaining the judgment." Weitzman v. Ulan, 304 Pa. Super 204,209,450 A.2d 173, 176 (1982). Pursuant to Pennsylvania Rule of Civil Procedure 2959, a petition to open judgment must be filed within thirty (30) days after written notice is served upon the petitioner. In the instant case, Norris's petition was promptly filed on August 14, 2000, after service of Lancaster Development's complaint and confession of 2 judgment for money. Lancaster Development filed their notice, confession for judgment for money on July 21,2000. In order to meet the standard established in Dollar Bank, a party seeking to open a confessed judgment must allege a meritorious defense. While Norris alleged five separate defenses, we need only determine if Norris alleged one meritorious defense. One defense Norris raised was that Lancaster Development's confessed judgment in the amount of $720,000.00 for future rents is a penalty damage that is unlawful and unreasonable because Lancaster Development possesses the leased premises, and not Norris. Pennsylvania caselaw provides that a landlord cannot forfeit a lease for default by the tenant, and at the same time enter judgment against the tenant for the rent accruing after the eviction as if the lease were in full force and effect to the end of the term. See Homart Development Co. v. S.qrenci, 443 Pa. Super 538, 662 A.2d 1092 (1995). A landlord "cannot eject the tenant and hold him responsible for rent accruing under the lease after the tenant has been evicted." Id. at 556, 662 A.2d at 1100. As such, a landlord is permitted to eject a tenant, and at the same time enter judgment for the rent accrued when the tenant was evicted, but the landlord cannot recover both the possession and the rent for the balance of the term. Id. at 556, 662 A.2d at 1100, citing Grakelow v. Kidder, 95 Pa.Super 250 (1928). Moreover, a landlord can either accelerate for future rent accruing under the lease or eject the tenant, but not both. Pierce v. Hoffstot, 211 Pa. Super 380, 384,236 A.2d 828,830 (1967). 3 On November 19, 1996, Norris filed a voluntary petition in the United States Bankruptcy Court in the Middle District of Pennsylvania. Under the lease, instituting a proceeding under the Bankruptcy Act is an event of default. However, according to Norris, Lancaster Development did not terminate the lease based on the bankruptcy filing. Because Norris owed Lancaster Development past due rent, a dispute originated between Lancaster Development and Norris regarding the amount of late charges due under the lease. As such, counsel for Norris and counsel for Lancaster Development met to discuss the amount of rent and late charges due under the lease. Lancaster Development informed Norris that it did not want to continue the lease and an oral agreement was reached between the two parties. According to Norris, the lease would be terminated effective immediately and Norris would be obligated to leave the premise on or before June 30, 2000. Norris vacated the premises on June 30, 2000. Pursuant to Weitzman, in viewing all the evidence in the light most favorable to the defendant and accepting as true all the evidence and proper inferences therefrom supporting the defense, while rejecting adverse allegations of the party obtaining judgment, the court agrees that Norris has alleged a meritorious defense, and has presented sufficient evidence of that defense to require submission of the issues to the jury. Because this Court has granted Norris's petition to open confessed judgment, we need not address the petition to strike confessed judgment. 4