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HomeMy WebLinkAbout03-6395 CivilJAMES P. GREENE and JENNIFER J. GREENE, his wife, Plaintiffs IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION--LAW WILLIAM T. PHILLIPY, IV and PATRICIA R. PHILLIPY, his wife, Defendants NO. 03-6395 CIVIL TERM IN RE: DEFENDANTS' PETITION TO STRIKE AND/OR OPEN CONFESSION OF JUDGMENT BEFORE HOFFER, P.J., and OLER, J. OPINION and ORDER OF COURT OLER, J., July 9, 2004. This case arises out of a real estate transaction between James P. and Jennifer J. Greene (Plaintiffs/Sellers), William T. and Patricia R. Phillipy (Defendants/Buyers), and John M. Clark, II (Buyer) for a parcel of land known as 2027 Herr Street, Harrisburg, Dauphin County, Pennsylvania. Defendants allegedly defaulted on the Installment Agreement of Sale; therefore, Plaintiffs filed a Complaint, and a confession of judgment was entered against Defendants in the amount of $14,504.41 for past-due monthly installment payments, water bill payments, real estate tax bills, late-payment fees, attorney's fees, and interest.~ For disposition at this time is Defendants' Petition To Strike and/or Open the Confession of Judgment. For the reasons stated in this opinion, Defendants' petition to strike the confession of judgment will be granted. ~ Pls.' Confession of J., filed Dec. 10, 2003 (hereinafter Pls.' Confession of J.). STATEMENT OF FACTS Plaintiffs are James P. Greene and Jennifer J. Greene, husband and wife, who currently live at 4700 Hunt Circle, Harrisburg, Dauphin County, Pennsylvania.2 Defendants are William T. Phillipy, IV, and Patricia R. Phillipy, husband and wife, who currently live at 236 Erford Road, Camp Hill, Cumberland County, Pennsylvania.3 On March 30, 1999, Defendants, along with John M. Clark, II, entered into an Installment Agreement of Sale with the Plaintiffs for the purchase of a parcel of land known as 2027 Herr Street, Harrisburg, Dauphin County, Pennsylvania.4 The purchase price of the parcel of land was $125,000.00, which, along with any interest accrued, was to be paid in full no later than February 28, 2003.5 The Installment Agreement of Sale specified minimum monthly "mortgage" payments which the Buyers were required to make by the 30th day of each month.6 The amount of these monthly payments varied over the term of the agreement.7 In addition to the monthly mortgage payments, the Buyers were also required to pay the water bills, sewer bills, refuse bills, utility bills, and real estate taxes associated with the parcel of land.8 The Installment Agreement of Sale was void of any indication as to how these payments would be apportioned among the Buyers, or how liability would be assigned if the Buyers defaulted on the contract.9 2 Pis.' Compl., filed Dec. 10, 2003, ¶1 (hereinafter Pls.' Compl. ~; Answer of Defs. William T. Phillipy, IV, and Patricia R. Phillipy, His Wife, to Pls.' Compl., filed Jan. 8, 2004, ¶1 (hereinafter Defs.' Answer 3 Pls.' Compl. ¶2; Defs.' Answer ¶2. 4 Pls.' Compl. ¶3; Defs.' Answer ¶3; Installment Agreement of Sale, Pls.' Compl. Ex. A, (hereinafter Installment Agreement of Sale). 5 Pls.' Compl. ¶4; Defs.' Answer ¶4; Installment Agreement of Sale. 6 Installment Agreement of Sale. Paying only the minimum monthly payments each month would not have resulted in the principal balance being paid in full by February 28, 2003. 7 Installment Agreement of Sale. 8 Installment Agreement of Sale. 9 Installment Agreement of Sale. 2 On February 28, 2003, the Buyers had not yet paid in full the purchase price of the property, including the interest which had accrued,l° Furthermore, according to Plaintiffs, the Buyers failed to pay the monthly payments for January and February of 2003, as well as the water bill and real estate taxes for the property.~ Because the Buyers failed to finalize the purchase, and because of the Buyers' alleged failure to make the mortgage payments and pay the water bill and real estate taxes, Plaintiffs claimed the Buyers were in default of the Installment Agreement of Sale. ~2 Paragraph thirteen of the Installment Agreement of Sale defined default as: 13. Default--Any failure of the Buyer to make payment of any monies required by this Agreement within thirty (30) days after the due date for such payment, or any acts, or the performance of any act required by this Agreement, or the failure to perform any act required by this Agreement, may constitute a default, at the option of the Seller. In the case of default by Buyer, Seller shall retain any and all monies received under the provisions of this Agreement (whether on account of purchase money or otherwise) as compensation for Buyer's use and occupancy of said premises and as liquidated damages for breach of this Agreement and said payments shall be deemed to be rent and non-refundable. ~3 Because the Buyers were in default, an attorney of any court of record in the Commonwealth of Pennsylvania, under paragraph fourteen of the Installment Agreement of Sale, was authorized to file a confession of judgment against the Buyers.TM Paragraph fourteen stated: 14. Confession of Judgment--In the event of default of payment of any sum of principal or interest herein agreed to be paid for the space of thirty (30) days after the same shall become due and payable by the terms hereof, or the breach of any other of the terms of this Agreement, the whole of said principal sum, at the option of Seller, shall become due and payable forthwith, anything hereinbefore contained to the contrary notwithstanding. In such cause of default, Buyer hereby authorizes and empowers any l0 Pis.' Compl. ¶5; Defs.' Answer ¶5. ~ Pis.' Compl. ¶¶5-7. l: Pls.' Compl. ¶¶5-7. ~ Installment Agreement of Sale. ~4 Installment Agreement of Sale. 3 attorney of any court of record in the Commonwealth of Pennsylvania or elsewhere to appear for Buyer and confess a judgment for the entire principal sum and interest remaining unpaid hereon, with 15% attorney's commission or fees, hereby waiving the right of exemption and inquisition, so far as the land herein described and any property or building thereon may be concerned. Said Seller, at Seller's option, among other remedies available to Seller, may proceed by action or ejectment on this Agreement after default made as aforesaid for the recovery of said premises; in such case, Buyer hereby authorizes and empowers any attorney of any court of record in the Commonwealth of Pennsylvania, or elsewhere, to appear for Buyer and confess judgment of ejectment, and authorizes the immediate issuing of a writ of possession and execution (without asking leave of court) for the costs and 15% attorney's commission or fees, waiving all stay and exemption laws. 15 On December 10, 2003, an attorney filed a Confession of Judgment against Defendants for $14,504.41.16 The Confession of Judgment included: $2,571.54 for the January and February mortgage payments, $4,795.56 for the water bill, $3,600.32 for real estate taxes, $128.58 for a late payment fee, $257.15 for interest on the unpaid mortgage payments, $1,259.38 for interest on the unpaid real estate taxes and water bill, and $1,891.88 for the fifteen percent attorney's fee.l? No confession of judgment was filed against the other buyer, John M. Clark, II. la On January 8, 2004, Defendants filed a Petition To Strike and/or Open Confession of Judgment.19 Defendants argued that the Confession of Judgment should be stricken because it did not name the third buyer, John M. Clark, II.20 Defendants further argued that the Confession of Judgment should be stricken because it included claims for water services, real estate taxes, late payment fees, interest on unpaid bills, and attorney's fees, ~5 Installment Agreement of Sale. 16 Pis.' Confession of J. ~7 Pis.' Confession of J. ~8 Defs.' Pet. To Strike and/or Open Confession of J., filed Jan. 8, 2004, ¶5 (hereinafter Defs.' Pet. To Strike and/or Open Confession of J. ~. 19 Defs.' Pet. To Strike and/or Open Confession of J. Included with Defendants' Petition To Strike and/or Open Confession of Judgment was Defendants' Answer to Plaintiffs' Complaint, as well as a two-count Counterclaim. 20 Defs.' Pet. To Strike and/or Open Confession of J. ¶5. 4 none of which was permitted by the warrant of attorney that was contained in the Installment Agreement of Sale.2~ Alternatively, Defendants also argued that the Confession of Judgment should be opened because there were disputes as to whether amounts listed in the Confession of Judgment had already been paid, or were required to have been paid at all by Defendants.22 According to Defendants, the January mortgage payment was made by Vincent Gladfelter, a tenant at the Herr Street property, and the February payment was made by John M. Clark, II.23 Defendants also alleged that Vincent Gladfelter paid the real estate taxes for 2002, and that Defendants properly owed only a pro-rata share of the taxes (for January and February) for 2003.24 Defendants further claimed that Plaintiffs included amounts for water bills which were incurred prior to Defendants' entering into the Installation Agreement of Sale.25 Finally, because of their above claims, Defendants alleged that they should not have been assessed interest on the water bill and real estate taxes to the extent stated in the Confession of Judgment.26 Both parties have submitted briefs on Defendants' Petition To Strike and/or Open Confession of Judgment.27 The matter was argued before the above court en banc on March 24, 2004. DISCUSSION Statement of Law Striking or Opening a Confession of Jttdgmen~Generally. Striking or opening a confession of judgment are two separate remedies aimed at curing separate defects in a 2~ Defs.' Pet. To Strike and/or Open Confession of J. ¶9. 22 Defs.' Pet. To Strike and/or Open Confession of J. ¶¶17, 28. 23 Defs.' Pet. To Strike and/or Open Confession of J. ¶¶20-21. It is not clear from the pleadings when Vincent Gladfelter became a tenant at the Herr Street property. 24 Defs.' Pet. To Strike and/or Open Confession of J. ¶¶23-24. 25 Defs.' Pet. To Strike and/or Open Confession of J. ¶22. 26 Defs.' Pet. To Strike and/or Open Confession of J. ¶¶25-27. 27 Pls.' Br. in Opposition to Defs.' Pet. To Strike and/or Open the Confession of J., filed Mar. 18, 2004; Br. of Defs. William T. Phillipy, IV, and Patricia R. Phillipy, His Wife, in Supp. of Pet. To Strike and/or Open the Confession of J., filed Mar. 12, 2004. confession of judgment proceeding. Manor Bldg. Corp. v. Manor Complex Assoc., 435 Pa. Super. 246, 251 n.2, 645 A.2d 843, 845 n.2 (1994). Striking a confession of judgment is appropriate when there are "defects apparent on the face of the record," while opening a confession of judgment is appropriate when "the defendant can prove a defense to all or part of the plaintiff' s claim." Id Relief from a confession of judgment must be sought by a single petition, with all grounds for striking or opening the confession of judgment asserted in the petition. Pa. R.C.P. 2959(a)(1). The court must then determine whether or not the confession of judgment should be stricken. Pa. R.C.P. 2959(e). As noted, a confession of judgment will be stricken when there are defects which are apparent on the face of the record. Manor Bldg. Corp., 435 Pa. Super. at 251, 645 A.2d at 846. When the plaintiff commences a proceeding for a confession of judgment by filing a complaint, "the complaint and confession of judgment clause must be read together to determine whether there are defects on the face of the record." Crum v. ShafJkr, 693 A.2d 984, 986 (Pa. Super. Ct. 1997). Furthermore, any apparent defects found on the face of the record must also be alleged in the petition for striking the confession of judgment in order for the court to strike the confession of judgment. See Manor Bldg. Corp., 435 Pa. Super. at 252, 645 A.2d at 846. If the confession of judgment is not stricken, the court must then determine whether there is a prima facie case for opening the confession of judgment. See Pa. R.C.P. 2959(b). If the court finds there is a prima facie case for opening the confession of judgment, the court will issue a rule to show cause, the plaintiff will file an answer, and the court--based upon the petition, answer, and any testimony, depositions, admissions, or other evidence--will rule on whether or not the confession of judgment should be opened. See Ohio Pure Foods v. Barbe, 548 Pa. 373, 375, 697 A.2d 252, 253 (1997); Pa. R.C.P. 2959. The confession of judgment will be opened when the defendant has "act[ed] promptly, alleg[ed] a meritorious defense and present[ed] sufficient evidence of that defense to require submission of the issues to the jury." Dollar Bank, Fed Say. Bank v. Northrvood Cheese Co., 431 Pa. Super. 541, 546, 637 A.2d 309, 311 (1994), 6 quoting First Seneca Bank v. Laurel Mountain Dev. Corp., 506 Pa. 439, 443, 485 A.2d 1086, 1088 (1984); Ohio Pure Foods, 548 Pa. at 375-76, 697 A.2d at 253. Petition To Strike~lleged Defect: Failure To Name a Party. According to Pennsylvania Rule of Civil Procedure 2229(d): A plaintiff who asserts a cause of action ex contractu may join as defendants all or any one or more persons alleged to be liable to the plaintiff on or by reason of the breach of the contractual obligation sued upon, regardless of the capacities in which such persons are respectively liable or whether they are primarily or secondarily liable or whether their liabilities arise from the same or separate acts or undertakings; but where the liability of any defendant is solely joint, the plaintiff shall join all other persons jointly liable with such defendant. Pa. R.C.P. 2229(d) (emphasis added). Liability for a promise made by two or more parties will be considered solely joint "in the absence of an apparent intention to the contrary." Meinhart v. Heaster, 424 Pa. Super. 433, 437, 622 A.2d 1380, 1382 (1993), quoting Levin v. Fidelity-Philadelphia Trust Co., 358 Pa. Super. 124, 128, 56 A.2d 239, 241 (1948). The language of the contract will be used to determine whether the parties intended to create joint, several, or joint and several liability for any possible breaches of the contract. Meinhart, 424 Pa. Super. at 437, 622 A.2d at 1382; Levin, 358 Pa. Super. at 128, 56 A.2d at 241. Petition To Strike~lleged Defect: Exceeding Scope of the Warrant of Attorney. A confession of judgment must be entered "in rigid adherence" to the warrant of attorney, and the language of the warrant of attorney must be strictly construed. Scott Factors, Inc. v. Hartley, 425 Pa. Super. 290, 293,228 A.2d 887, 888 (1967). A confession of judgment which includes amounts which were not authorized by the warrant of attorney is void in its entirety and must be stricken. Germantown Say. Bank v. Talacki, 441 Pa. Super. 513, 526, 657 A.2d 1285, 1292 (1995); Scott Factors, Inc. 425 Pa. Super. at 293, 228 A.2d at 888. "[A]ny doubt as to the validity of such judgments must be resolved against the party entering the judgments." Scott Factors, Inc. 425 Pa. Super. at 293,228 A.2d at 888. 7 Application of Law to Facts Defendants'Petition To Strike. In the present case, the court believes that Defendants' petition to strike the confession of judgment should be granted because (1) Plaintiffs failed to name a party who was jointly liable for breaches of the Installment Agreement of Sale, and (2) amounts were included in the Confession of Judgment which were not authorized by the warrant of attorney. Plaintiffs erred in failing to name John M. Clark, II, as a party to the action. The Installment Agreement of Sale made no reference to whether Defendants and Mr. Clark would be held jointly, severally, or jointly and severally liable for breaches of the Installment Agreement of Sale. Because the Installment Agreement of Sale is void of any language which would demonstrate an intention of the parties to subject the Buyers to solely several or joint and several liability, it is assumed under law that the liability is joint.28 Because Pennsylvania Rule of Civil Procedure 2229(d) requires that, "where the liability of any defendant is solely joint, the plaintiff shall join all other persons jointly liable with such defendant[,]" the Plaintiffs erred by not naming John M. Clark, II, the third buyer, as a party to the action.29 It was also incorrect to include claims in the Confession of Judgment which were not authorized by the warrant of attorney. The warrant of attorney stated that an attorney could file a confession of judgment for "any sum of principal or interest" on which the Buyers had defaulted, as well as fifteen percent attorney's fees.3° There is nothing in the language of the warrant of attorney, however, which authorizes a claim for water bills, real estate taxes, late payment fees, or interest on any of these amounts. Furthermore, these claims cannot be read into the warrant of attorney's allowance for claims for "any sum of principal or interest" because the language of the warrant of attorney must be strictly construed, with any ambiguity resolved against the party entering the 28Meinhartv. Heaster, 424 Pa. Super. 433, 437, 622 A.2d 1380, 1382 (1993). 29 Pa. R.C.P. 2229(d). 30 Installment Agreement of Sale. judgments.3~ By virtue of the inclusion of claims for water bills, real estate taxes, late payment fees, or interest on any of these amounts, the Confession of Judgment was not filed "in rigid adherence" to the warrant of attorney, as a consequence of which the Confession of Judgment was improper.32 Defendant~" Petition To Open. Because the court has concluded that the Confession of Judgment should be stricken, it is unnecessary to assess the merits of the Defendants' petition to open the confession of judgment. ORDER OF COURT AND NOW, this 9th day of July, 2004, after careful consideration of Defendants' Petition To Strike and/or Open Confession of Judgment, and for the reasons stated in the accompanying opinion, the Confession of Judgment, as entered on December 10, 2004, is stricken. BY THE COURT, Jerome J. McDonald, Esq. 439 Walton Ave. Hummelstown, PA 17036 Attorney for Plaintiffs Donald L. Carmelite, Esq. Kelly, Hoffman & Goduto, LLP Commerce Towers, l0th Floor 300 North Second Street P.O. Box 62003 Harrisburg, PA 17106 Attorney for Defendants s/ J. Wesley Oler, Jr. J. Wesley Oler, Jr., J. Installment Agreement of Sale. Scott Factors, Inc. v. Hartley, 425 Pa. Super. 290, 293,228 A.2d 887, 888 (1967). 9 10 JAMES P. GREENE and JENNIFER J. GREENE, his wife, Plaintiffs IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Vo CIVIL ACTION--LAW WILLIAM T. PHILLIPY, IV and PATRICIA R. PHILLIPY, his wife, Defendants NO. 03-6395 CIVIL TERM IN RE: DEFENDANTS' PETITION TO STRIKE AND/OR OPEN CONFESSION OF JUDGMENT BEFORE HOFFER, P.J., and OLER, J. ORDER OF COURT AND NOW, this 9th day of July, 2004, after careful consideration of Defendants' Petition To Strike and/or Open Confession of Judgment, and for the reasons stated in the accompanying opinion, the Confession of Judgment, as entered on December 10, 2004, is stricken. BY THE COURT, Jerome J. McDonald, Esq. 439 Walton Ave. Hummelstown, PA 17036 Attorney for Plaintiffs Donald L. Carmelite, Esq. Kelly, Hoffman & Goduto, LLP Commerce Towers, l0th Floor 300 North Second Street P.O. Box 62003 Harrisburg, PA 17106 Attorney for Defendants J. Wesley Oler, Jr., J.