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Home My WebLink About00-6778 CivilFERN L. WILSON, Plaintiff V. IRA J. McMANUS, JR., LESLIE J. McMANUS, JAMES R. DUNKLE, and KAREN L. DUNKLE, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA · CIVIL ACTION - LAW · No. 00-6778 CIVIL TERM IN RE: DEFENDANTS' PETITION TO OPEN CONFESSED JUDGMENT BEFORE HOFFER, P.J., OLER and GUIDO, JJ. ORDER OF COURT AND NOW, this ~ Jf~ day of February, 2001, upon consideration of Defendants' Petition To Open Confessed Judgment, and for the reasons stated in the accompanying opinion, this matter is stricken from the December 6, 2000, argument court list, and it is ordered that: 1. A Rule is issued upon Plaintiff to show cause why the Defendants are not entitled to the relief requested; 2. Plaintiff shall file an answer to the petition within 21 days of the date of this order; 3. The petition shall be decided under Pa. R.C.P. 206.7; 4. Depositions shall be completed within 49 days of the date of this order; 5. Argument shall be held on Thursday, April 5, 2001, at 1:30 p.m., in Courtroom No. 1, Cumberland County Courthouse, Carlisle, Pennsylvania; 6. Briefs shall be submitted at least seven days prior to argument. BY THE COURT, ~sley Oler, ~?/J. Barbara Sumple-Sullivan, Esq. 549 Bridge Street New Cumberland, PA 17070-1931 Attorney for Plaintiff Anna Marie Sossong, Esq. Skarlatos & Zonarich LLP 204 State Street Harrisburg, PA 17101 Attorney for Defendants FERN L. WILSON, Plaintiff Vo IRA J. McMANUS, JR., LESLIE J. McMANUS, JAMES R. DUNKLE, and KAREN L. DUNKLE, Defendants · IN THE COURT OF COMMON PLEAS OF · CUMBERLAND COUNTY, PENNSYLVANIA : CIVIL ACTION - LAW : · No. 00-6778 CIVIL TERM IN RE: DEFENDANTS' PETITION TO OPEN CONFESSED JUDGMENT BEFORE HOFFER, P.J., OLER and GUIDO, JJ. OPINION and ORDER OF COURT Oler, J., February , 2001 In this breach of contract case, Plaintiff filed a complaint and confession of judgment for possession of real estate on October 3, 2000, after Defendants allegedly defaulted on payments required under an installment sales agreement. The agreement was entered into in connection with the transfer of commercial real estate located at 401-403 Market Street, New Cumberland, Cumberland County, Pennsylvania, and of "certain assets used and useful in operation of a bar, restaurant and catering business known as Pete's Cafe .... "~ The association between the installment sales agreement, pursuant to which the confession of judgment for possession was entered, and the sale of assets relating to operation of the business, ~vas evidenced by incorporation of the asset agreement into the installment sales agreement. The latter agreement includhd these recitals, according to Plaintiff's complaint: WHEREAS, Buyers are additionally purchasing from FernRock-Snyder, Inc., a Pennsylvania corporation of which Seller is the principal, certain assets used and useful in operation of a bar, restaurant and catering business known as Pete's Cafe, which [Asset Purchase] Agreement is attached I See Plaintiff's Complaint To Confess Judgment for Possession of Real Estate, Exhibit B. hereto as Exhibit "B" and incorporated herein by reference; [and] WHEREAS, purchase of real estate by Buyers pursuant to this Agreement is contingent upon successful consummation of Buyers' purchase of said assets of Pete's Cafe and complete satisfaction of all payments due pursuant to said [Asset Purchase] Agreement attached as Exhibit "B"....2 On November 2, 2000, Defendants filed a timely petition to open the confessed judgment pursuant to Pennsylvania Rule of Civil Procedure 2959(a)(3), which provides that such a petition is to be filed within thirty days after service of written notice of the confession of judgment. In the petition to open, Defendants raised the defense of fraud in the inducement by asserting that their entry into the agreement was predicated upon fraud on the part of Plaintiff.3 Defendants allege that Plaintiff made fraudulent misrepresentations and omissions of material facts, including omission of the fact that she had paid a number of employees "under the table," resulting in unexpectedly higher out-of-pocket costs to Defendants,4 and an overreport as to sales volume as shown on the financial records of the business, prior to Defendants' purchase.5 Defendants argue that whether their entry into the agreement was the product of fraud is a question of fact, and that they therefore are entitled to have the judgment opened under Pennsylvania Rule of Civil Procedure 2959(3)(e). 2 Id. Plaintiff asserts that the asset purchase agreement and the installment sales agreement are unrelated. However, the court is of the view that, as evidenced by the language of the installment sales agreement, it would be premature to deny Defendants' petition to open on the ground that the two are unrelated. 3 Defendants' Petition To Open Confessed Judgment, paras. 3-6, filed November 2, 2000. 4 Id., para. 5. Id., para. 6. 2 Rule 2959(b) provides that, "[i]f the petition [to open a confessed judgment] states prima facie grounds for relief the court shall issue a rule to show cause .... "Rule 206.1, pertaining to petitions in general, is also instructive. Rule 206.5 provides: (a) The rule to show cause procedure prescribed by this rule shall apply if (1) the relief sought by the petition is the opening of a default judgment .... (b) A petitioner seeking the issuance of a rule to show cause shall attach to the petition a proposed order6 ... and give notice to all other parties of the intention to request the court to issue the rule. (c) If the petition is within the scope of subdivision (a), is properly pleaded, and states prima facie grounds for relief, the court shall enter an order issuing a rule to show cause .... Under both Rule 2959(b) and Rule 206.5, a petitioner seeking to open a judgment must aver prima facie grounds to open the judgment before a rule to show cause may issue to compel a response. Defendants' offer the defense of fraud in the inducement as the prima facie ground for relief. Section 162 of the Restatement (Second) of Contracts (1979) provides as follows: (1) A misrepresentation is fraudulent if the maker intends his assertion to induce a party to manifest his assent and the maker 6 In the case sub judice, Defendants' proposed order attached to their petition to open the confessed judgment mistakenly indicated that a rule had already been issued upon Plaintiff to show cause why the confessed judgment should not be opened. No such rule had been issued. (a) knows or believes that the assertion is not in accord with the facts, or (b) does not have the confidence that he states or implies in the truth of the assertion, or (c) knows that he does not have the basis that he states or implies for the assertion. (2) A misrepresentation is material if it would be likely to induce a reasonable person to manifest his assent, or if the maker knows that it would be likely to induce the recipient to do so. Furthermore, non-disclosure of a fact may be equivalent to a misrepresentation. See Restatement (Second) of Contracts § 161 (1979). Typically, the question of fraud is one of fact for the fact-finder. First Fed. Say. and Loan Ass'n ofPittstown v. Reggie, 376 Pa. Super. 346, 355, 546 A.2d 62, 66 (1988). Consequently, in order for a rule to issue in this case, Defendants' petition must allege facts which would support a defense of fraud in the inducement. In the case sub judice, the court is of the view that Defendants' allegations that Plaintiff made fraudulent misrepresentations and omissions of material facts, including the allegations that Plaintiff failed to mention that she had paid a number of employees "under the table," increasing the out-of-pocket costs to Defendants, and that Plaintiff misreported the sales volume on the financial records of the business, prior to Defendants' purchase, are sufficient to support a defense of fraud in the inducement. As a result, a rule will be issued, and Plaintiff will be afforded an opportunity to respond to the allegations contained in Defendants' petition. For the foregoing reasons, the following Order will be entered: ORDER OF COURT AND NOW, this ~'t~ day of February, 2001, upon consideration of Defendants' Petition To Open Confessed Judgment, and for the reasons stated in the accompanying opinion, this matter is stricken from the December 6, 2000, argument court list, and it is ordered that: 4 1. A Rule is issued upon Plaintiff to show cause why the Defendants are not entitled to the relief requested; 2'. Plaintiff shall file an answer to the petition within 21 days of the date of this order; 3. The petition shall be decided under Pa. R.C.P. 206.7; 4. Depositions shall be completed within 49 days of the date of this order; 5. Argument shall be held on Thursday, April 5, 2001, at 1:30 p.m., in Courtroom No. l, Cumberland County Courthouse, Carlisle, Pennsylvania; 6. Briefs shall be submitted at least seven days prior to argument. BY THE COURT, Barbara Sumple-Sullivan, Esq. 549 Bridge Street New Cumberland, PA 17070-1931 Attorney for Plaintiff Anna Marie Sossong, Esq. Skarlatos & Zonarich LLP 204 State Street Harrisburg, PA 17101 Attorney for Defendants /s/J. Wesley Oler, Jr. J. Wesley Oler, Jr., J. 6