HomeMy WebLinkAbout2009-1716 Civil
TERRY J. SHETRON : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
:
v. :
: CIVIL ACTION - LAW
SHETRON WELDING AND :
FABRICATION, INC., :
Defendants : NO. 09-1716 CIVIL TERM
IN RE: DEFENDANT’S PETITON TO STRIKE
OR OPEN CONFESSED JUDGMENT
BEFORE OLER, J.
OPINION AND ORDER OF COURT
OLER, J., June 23, 2009.
1
In this civil action in ejectment, counsel for Plaintiff appeared on behalf of
2
Defendant, pursuant to a warrant of attorney, and confessed judgment in ejectment in
favor of Plaintiff and against Defendant for possession of real property located on Kutz
3
Road, Carlisle, Cumberland County, Pennsylvania.
For disposition at this time is a petition by Defendant to strike or, alternatively,
45
open the judgment entered by confession on March 19, 2009. The bases for the petition
to strike the confessed judgment are (1) lack of a valid warrant of confession, (2) failure
6
to attach a necessary writing, and (3) failure to elect remedies. The basis for the petition
1
This immediate action is one of three pending before this court relating to the sale of Shetron
Welding and Fabrication, Inc. The other pending actions are docketed at 09-661 Civil Term and
06-3096 Civil Term.
2
The language alleged by Plaintiff to constitute the warrant of attorney and permitting
confession of judgment is found in Paragraph 12 of the commercial property lease agreement
entered into between Plaintiff, as Lessor, and Defendant, as Lessee. Defendant’s Petition To
Strike and Open Confessed Judgment, Exhibit A, filed April 8, 2009.
3
Confession of Judgment, filed March 19, 2009.
4
Defendant’s Petition To Strike and Open Confessed Judgment, filed April 8, 2009.
5
Rule 236 Notice of Entry of Order or Judgment, March 19, 2009.
6
Defendant’s Petition To Strike and Open Confessed Judgment, filed April 8, 2009.
to open is a meritorious defense of, inter alia, fraud, fraud in the inducement and
7
misrepresentation.
For the reasons set forth in this opinion, Defendant’s Petition To Strike will be
denied and Defendant’s Petition To Open will be granted.
STATEMENT OF FACTS
In the instant ejectment action, (a) Defendant requested that a confessed judgment
against it be stricken or opened, (b) the court issued a rule upon Plaintiff pursuant to
Pennsylvania Rule of Civil Procedure 206.6 to show cause why the relief requested
should not be granted, (c) Plaintiff filed an answer in response to the rule to show cause,
and (d) a further evidentiary record was made pursuant to Pennsylvania Rule of Civil
Procedure 206.7 by taking the depositions of Kirk Naugle, Ray Cullen and Terry Shetron.
Based upon a review of the balance of the record, an examination of judicially-noticeable
8
records in this court, and consideration of undisputed matters, the pertinent facts may be
summarized as follows:
In January of 2004, Defendant, Shetron Welding and Fabrication, Inc. (Shetron
Welding), a Pennsylvania corporation with its primary place of business at 85 Kutz Road,
9
Carlisle, Cumberland County, Pennsylvania, entered into a commercial property lease
agreement with Plaintiff, Terry Shetron, an adult individual residing at 1505 Walnut
10
Bottom Road, Newville, Cumberland County, Pennsylvania. This commercial property
lease agreement was incidental to the sale of Shetron Welding from Mr. Shetron to Mr.
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Naugle and Mr. Cullen. In the commercial property lease agreement, Shetron Welding
7
Defendant’s Petition To Strike and Open Confessed Judgment, filed April 8, 2009.
8
See Pa. R. Evid. 201.
9
Defendant’s Petition to Strike and Open Confessed Judgment, filed April 8, 2009.
10
Defendant’s Petition to Strike and Open Confessed Judgment, filed April 8, 2009.
11
See Deposition of Raymond Cullen, 3-7, May 27, 2009 (hereinafter Cullen __); See Deposition
of Kirk Naugle, 5, May 27, 2009 (hereinafter Naugle __). The purchase agreement was also
composed of a stock purchase agreement signed concurrently with the commercial property lease
agreement. In the stock purchase agreement, Mr. Naugle and Mr. Cullen agreed to purchase all
issued and outstanding shares of common stock for a down-payment of $500,000 and a
2
agreed to lease a facility from Mr. Shetron at a rate of $8,250 per month for a period of
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ten years. The language of the lease pertinent to the instant action is found in Paragraph
12 of the commercial property lease agreement, and reads as follows:
12. Ejectment. When this lease shall be terminated by condition
broken, either during the original term of this lease or an renewal or
extension, and also when and as soon as the term hereby created or any
extension shall have expired, it shall be lawful for any attorney as attorney
for Lessee to file an agreement for entering in any competent court an
amicable action and judgment in ejectment against Lessee and all persons
claiming under Lessee for the recovery by Lessor of possession of the
demised premises, for which this lease shall be his sufficient warrant,
whereupon, if Lessor so desires, a writ of possession may issue, without
any prior proceedings whatsoever, and provided that if for any reason
after such action shall have been commenced the same shall be determined
and the possession of the premises hereby demised remain in or be
restored to Lessee. Lessor shall have the right upon any subsequent
default or defaults, or upon the termination of this lease, to bring one or
14
more amicable action or actions to recover possession of said premises.
On May 31, 2006, Mr. Naugle and Mr. Cullen, individually, along with Shetron
15
Welding, filed suit against Mr. Shetron alleging, inter alia, misrepresentation, fraud and
16
fraud in the inducement, relating to the stock purchase agreement. This action has
proceeded through multiple days of a non-jury trial before the undersigned judge, with
17
more dates pending. Shetron Welding continued to make payments to Mr. Shetron
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pursuant to the lease agreement through October of 2008. It is undisputed that Shetron
promissory note in the amount of $1,445,000 plus interest. Cullen 5; See Defendant’s Petition
To Strike and Open Confessed Judgment, filed April 8, 2009.
12
The Lease was executed on behalf of Shetron Welding by Kirk Naugle and Ray Cullen as
owners and officers of Shetron Welding. Cullen 20-21.
13
Naugle 6; Cullen 4-5; Deposition of Terry Shetron, 11-14, May 27, 2009 (hereinafter Shetron
__).
14
Plaintiff’s Complaint, Exhibit A, filed March 19, 2009.
15
See Naugle v. Shetron, No. 06-3096 (Pa. Ct. Com. Pl. filed May 31, 2006).
16
See Naugle v. Shetron, No. 06-3096 (Pa. Ct. Com. Pl. filed May 31, 2006).
17
See Naugle v. Shetron, No. 06-3096 (Pa. Ct. Com. Pl. filed May 31, 2006).
18
Cullen 22-23.
3
Welding failed to make the November, 2008, lease payment as well as each subsequent
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lease payment.
20
On February 9, 2009, Mr. Shetron filed suit against Mr. Naugle and Mr. Cullen,
individually, and Shetron Welding, seeking past and accelerated future rental payments
21
due under the commercial property lease agreement. Preliminary objections were filed
by Defendants relating to whether Mr. Naugle and Mr. Cullen were properly sued in their
2223
individual capacities. Those preliminary objections remain pending.
24
On March 19, 2009, Mr. Shetron filed his complaint and confession of judgment
25
in ejectment in the instant action, against Shetron Welding. The prothonotary entered a
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Rule 236 Notice of Entry of Order or Judgment on March 19, 2009. Shetron Welding
27
timely filed its petition to strike, or alternatively to open, the confessed judgment, the
bases of which have been stated at the beginning of this opinion. A rule was issued upon
19
Cullen 22-23. Shetron Welding alleges that the trial and discovery conducted at 06-3096
reveals that Mr. Shetron, and not Shetron Welding, breached his duties under the lease
agreement. Shetron Welding alleges that it lawfully stopped payment on the lease as a result of
Mr. Shetron’s failure to comply with the lease. Shetron Welding, therefore, alleges that it has a
meritorious defense in the instant action. Defendant’s Petition to Strike and Open Confessed
Judgment, filed April 8, 2009; See Naugle v. Shetron, No. 06-3096 (Pa. Ct. Com. Pl. filed May
31, 2006); see also Pa. R. Evid. 201 (relating to judicial notice of adjudicative facts).
20
See Shetron v. Naugle, No. 09-661 (Pa. Ct. Com. Pl. filed February 9, 2009).
21
See Shetron v. Naugle, No. 09-661 (Pa. Ct. Com. Pl. filed February 9, 2009).
22
See Shetron v. Naugle, No. 09-661 (Pa. Ct. Com. Pl. filed February 9, 2009).
23
See Shetron v. Naugle, No. 09-661 (Pa. Ct. Com. Pl. filed February 9, 2009).
24
Plaintiff referenced in paragraph 9 of his complaint a letter dated November 18, 2008, in
which he noticed Defendant that it was in default of the commercial property lease agreement.
This letter was referenced as being attached as Exhibit B to Plaintiff’s Complaint; however, it
was not attached. See Plaintiff’s Complaint, filed March 19, 2009. This letter was subsequently
attached as Exhibit B to Plaintiff’s Answer to Defendant’s Petition to Strike and Open Confessed
Judgment, filed May 5, 2009. Based on Pa. R.C.P. 1019(i) and Pa. R.C.P. 126 as well as case
law cited later in this opinion, this writing is deemed to be attached to Plaintiff’s Complaint as
Exhibit B.
25
Plaintiff’s Complaint, filed March 19, 2009; Confession of Judgment, filed March 19, 2009.
26
Rule 236 Notice of Entry of Order or Judgment, March 19, 2009.
27
Defendant’s Petition to Strike and Open Confessed Judgment, filed April 8, 2009.
4
28
Plaintiff to show cause why Defendant was not entitled to the relief requested. Plaintiff
filed his Answer to Defendant’s Petition To Strike and Open Confessed Judgment on
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May 5, 2009. Depositions of Kirk Naugle, Ray Cullen, and Terry Shetron were taken
30
on May 27, 2009. Argument was held on June 11, 2009 pursuant to the April 14, 2009
31
Order of Court.
DISCUSSION
Petition to strike - generally. A petition to strike a judgment and a petition to open
a judgment involve distinct remedies and are generally not interchangeable. Aquilino v.
Philadelphia Catholic Archdiocese, 2004 PA Super 339, ¶23, 884 A.2d 1269, 1280.
Pennsylvania Rule of Civil Procedure 126 states that
[t]he rules shall be liberally construed to secure the just, speedy and
inexpensive determination of every action or proceeding to which they are
applicable. The court at every stage of any such action or proceeding may
disregard any error or defect of procedure which does not affect the
substantial rights of the parties.
With regard to a petition to strike a judgment, a court may look only at the facts of
record at the time judgment was entered to decide if the record supports the judgment.
Aquilino v. Philadelphia Catholic Archdiocese, 2004 PA Super 339, ¶24, 884 A.2d 1269,
1280 (citation omitted).
Petition to strike judgment - lack of valid warrant of confession. The validity of a
confessed judgment rests upon a strict construction of the language of the warrant of
attorney, and any doubt as to the validity must be resolved against the party entering the
confessed judgment. Crum v. F.L. Shaffer Co., 693 A.2d 984, 986 (Pa.Super. 1997)
(citations omitted). “Because a warrant of attorney authorizing the confession of
judgment can be an oppressive weapon, entry of a valid judgment by confession can only
28
Order of Court, April 14, 2009.
29
Plaintiff’s Answer to Defendant’s Petition To Strike and Open Confessed Judgment, filed May
5, 2009.
30
Deposition of Kirk Naugle, May 27, 2009; Deposition of Ray Cullen, May 27, 2009;
Deposition of Terry Shetron, May 27, 2009.
31
Order of Court, April 14, 2009.
5
be accomplished if such entry is made in rigid adherence to the provisions of the warrant
of attorney, which must be fully complied with; otherwise, such judgment will be
stricken.” Id. In the instant action, Defendant argues that the commercial property lease
agreement lacks sufficient language to support as a valid confession of judgment. In
Federman v. Pozsonyi, 365 Pa.Super. 324, 327, 529 A.2d 530, 532 (1987), a lease
agreement contained the language:
When this lease shall be determined by condition broken, . . . it
shall be lawful for any attorney as attorney for Lessee to file an agreement
for entering in any competent Court an amicable action and judgment in
ejectment against Lessee and all persons claiming under Lessee for the
possession of the herein demised premises, for which this lease shall be
sufficient warrant, whereupon, if Lessor so desires, a writ of execution or
of Possession may issue forthwith, without any prior writ or proceedings
whatsoever . . . .
The Pennsylvania Superior Court held that, “[d]espite the fact the words ‘Confession of
Judgment’ do not specifically appear in the lease, it is clear that [the paragraph] of the
lease, above, authorizes an amicable action in ejectment to be instituted by confession of
judgment.” Id. at 330, 529 A.2d at 533.
The language in paragraph 12 of the instant lease agreement is not significantly
different from the language approved in Federman. The record in the instant action
indicates (1) that a valid warrant of attorney was executed between the parties, (2) a
complaint and confession of judgment were properly filed in accordance with the
executed warrant of attorney, and (3) a confession of judgment was properly entered
against Defendant and in favor of Plaintiff. For these reasons the confessed judgment
will not be stricken for lack of a valid warrant of attorney.
Petition to strike judgment - failure to attach necessary writing. Pennsylvania
Rule of Civil Procedure 1019(i) requires that
[w]hen any claim or defense is based upon a writing, the pleader shall
attach a copy of the writing, or the material part thereof, but if the writing
or copy is not accessible to the pleader, it is sufficient so to state, together
with the reason, and to set forth the substance in writing.
The failure to attach a writing which establishes Plaintiff’s right to a judgment is an
impediment to the claims set forth in the complaint. Atlantic Credit and Finance, Inc. v.
6
Giuliana, 2003 PA Super 259, ¶13, 829 A.2d 340, 345. “Ordinarily a complaint should
be stricken for failure to attach an essential document.” Adamo v. Cini, 656 A.2d 576,
579 (Pa. Commw. 1995). However, where the court and the Defendant both possess the
document in question, an objection based on Rule 1019(i) will be overruled. Integrated
Project Services v. HMS Interiors, Inc., 2001 WL 1807887, 7 n.12 (Philadelphia County
2001) (citing McClellan v. Health Maintenance Organization of Pennsylvania, 413 Pa.
Super. 128, 145 n.10, 604 A.2d 1053, 1061 n.10 (1992)); see also Pa. R.C.P. 126. In
Integrated Project Services v. HMS Interiors, Inc., 2001 WL 1807887, 7 n.12
(Philadelphia County 2001), the court held that because plaintiff attached the necessary
writing to its response to objections, the complaint need not be stricken for violating Rule
1019(i).
In the instant action, Plaintiff referenced a document in his complaint which
notified Defendant of its alleged default. This writing was not attached to the complaint,
despite being referenced as Exhibit B of the Plaintiff’s Complaint. The writing was
subsequently included in Plaintiff’s Answer to Petition To Strike and Open Confessed
Judgment, as Exhibit B. Based on the foregoing, Plaintiff’s complaint will not be
stricken for an alleged violation of Rule 1019(i).
Petition to strike judgment - failure to elect remedies. The primary substantive
application of the doctrine of election of remedies has been to prevent double recovery
for a single injury, and thus, an election should be required among inconsistent remedies
prior to the entry of a final judgment. Schwartz v. Rockey, 593 Pa. 536, 548, 932 A.2d
885, 892 (2007) (citations omitted). Two remedies are inconsistent if the assertion of one
involves the negation or repudiation of the other, as where one of them admits a state of
facts and the other denies the same facts. Nuside Metal Products, Inc. v. Eazor Exp., Inc.,
189 Pa. Super. 593, 597, 152 A.2d 275, 278 (1959). In order for the selection of one
remedy to bar the pursuit of another, or to compel an election, it must appear that the
remedies are inconsistent, and not merely cumulative. Id. (citations omitted). Generally,
a party may have multiple remedies so long as they are consistent. Id.
7
Having said this, the record, for the purpose of a petition to strike, indicates that
Plaintiff is seeking only a single remedy at this docket ― ejectment. Therefore, the
motion to strike for failure to elect remedies must be denied.
Petition to open judgment. A petition to open a judgment is an appeal to the
court’s equitable powers and its disposition is within the sound discretion of the court.
Aquilino v. Philadelphia Catholic Archdiocese, 2004 PA Super 339, ¶33, 884 A.2d 1269,
1283. The burden of proof on a petition to open is on the petitioner. Continental Bank v.
Schaler, 362 Pa. Super. 610, 616, 525 A.2d 388, 391 (1987). This burden includes a
responsibility to provide sufficient evidence to show at least a plausible defense. See
Weitzman v. Ulan, 304 Pa. Super. 204, 209, 450 A.2d 173, 176 (1982). In viewing such
evidence, a court is to view it in the light most favorable to the petitioner. Id.
A petition to open a judgment is the proper method of seeking relief from a
judgment where the putative impropriety of the judgment is dependent on matters outside
the record. Acquilino v. Philadelphia Catholic Archdiocese, 2004 PA Super 339, ¶33,
884 A.2d 1269, 1283. “[A] petition to open rests within the discretion of the trial court,
and may be granted if the petitioner (1) acts promptly, (2) alleges a meritorious defense,
and (3) can produce sufficient evidence to require submission of the case to a jury.”
RAIT Partnership, LP v. E. Pointe Properties I, Ltd., 2008 PA Super 225, ¶4, 957 A.2d
1275, 1277 (citations omitted).
Defendant alleges, in the instant action, that it stopped payment on the lease only
after it filed suit against Mr. Shetron, at Docket No. 06-3096, for breach of contract,
fraud, misrepresentation, fraud in the inducement, unjust enrichment, promissory
estoppel, breach of fiduciary duty, and breach of a non-compete agreement. Defendant
maintains that it stopped payment on the lease only after Plaintiff breached his
obligations under the lease. Defendant believes, and this court agrees, that this would
constitute a meritorious defense and requiring submission of this matter to a jury.
For the foregoing reasons, the following order will be entered:
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ORDER OF COURT
rd
AND NOW, this 23 day of June, 2009, upon consideration of Defendant’s
Petition To Strike and Open Confessed Judgment, and following argument held on June
11, 2009, and for the reasons stated in the accompanying opinion, Defendant’s Petition
To Strike is denied and Defendant’s Petition To Open is granted.
BY THE COURT,
s/ J. Wesley Oler, Jr.
J. Wesley Oler, Jr., J.
Glenn R. Davis, Esq.
Andrea E. Dean, Esq.
LATSHA, DAVIS, YOHE & MCKENNA, P.C.
1700 Bent Creek Boulevard
Suite 140
Mechanicsburg, PA 17050
Attorneys for Plaintiff
Dean F. Piermattei, Esq.
Stephanie E. DiVittore, Esq.
RHOADS & SINON, L.L.P.
th
One South Market Square, 12 Floor
P.O. Box 1146
Harrisburg, PA 17108
Attorneys for Defendant
9
10
TERRY J. SHETRON : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
:
v. :
: CIVIL ACTION - LAW
SHETRON WELDING AND :
FABRICATION, INC., :
Defendant : NO. 09-1716 CIVIL TERM
IN RE: DEFENDANT’S PETITON TO STRIKE
OR OPEN CONFESSED JUDGMENT
BEFORE OLER, J.
ORDER OF COURT
rd
AND NOW, this 23 day of June, 2009, upon consideration of Defendant’s
Petition To Strike and Open Confessed Judgment, and following argument held on June
11, 2009, and for the reasons stated in the accompanying opinion, Defendant’s Petition
To Strike is denied and Defendant’s Petition To Open is granted.
BY THE COURT,
__________________
J. Wesley Oler, Jr., J.
Glenn R. Davis, Esq.
Andrea E. Dean, Esq.
LATSHA, DAVIS, YOHE & MCKENNA, P.C.
1700 Bent Creek Boulevard
Suite 140
Mechanicsburg, PA 17050
Attorneys for Plaintiff
12
Dean F. Piermattei, Esq.
Stephanie E. DiVittore, Esq.
RHOADS & SINON, L.L.P.
th
One South Market Square, 12 Floor
P.O. Box 1146
Harrisburg, PA 17108
Attorneys for Defendant