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HomeMy WebLinkAbout2005-1827 Civil SOREL FORGE CO., : IN THE COURT OF COMMON PLEAS OF Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA HANOVER ASSOCIATES: Plaintiff’s Assignee : : CIVIL ACTION—LAW v. : : CALABRESE & SONS, : INC., : Defendant : No. 05-1827 CIVIL TERM IN RE: DEFENDANT’S PETITION TO STRIKE OR OPEN JUDGMENT BEFORE OLER, J. OPINION and ORDER OF COURT OLER, J., September 28, 2009. In this civil case involving a debt, Defendant has filed a petition requesting the court to strike or, alternatively, open a confessed judgment entered on a 1 promissory note in 2005 in favor of Plaintiff. The petition is opposed by 2 Plaintiff’s Assignee. The basis for Defendant’s petition to strike appears to be an alleged absence 3 of a valid confession for the amount owed to Plaintiff’s Assignee. The basis for Defendant’s petition to open is an alleged meritorious defense in the form of full 4 or partial repayment of the note subsequent to entry of the judgment. For the reasons stated in the accompanying opinion, Defendant’s petition to strike or open the judgment will be denied. STATEMENT OF FACTS By way of background, the following facts do not appear to be in dispute. On March 25, 2009, Defendant Calabrese & Sons, Inc. (Calabrese & Sons) 1 Defendant’s Petition for Relief, filed April 29, 2009. 2 Answer to Petition for Relief, filed May 27, 2009. 3 Defendant’s Petition for Relief, ¶15-16. 4 Defendant’s Petition for Relief, ¶19. executed a promissory note, payable on demand, in the principal amount of 5 $245,288.59 in favor of Plaintiff Sorel Forge Co. (Sorel Forge). The note identified Defendant as “a Pennsylvania corporation with a business address of P.O. Box 1667[,] 406 Brandy Lane[,] Mechanicsburg, PA 17055,” identified Plaintiff as “a Canadian corporation having its principal place of Business at 100 McCarthy St. Joseph deSorel, Quebec, Canada JR3M8,” indicated that payment 6 was to be made “upon demand,” and contained the following confession of judgment clause: CONFESSION OF JUDGMENT: The Maker hereby irrevocably authorizes and empowers any prothonotary, clerk or attorney of any court of record within the United States or elsewhere to appear for the Maker and, with or without declaration, to confess judgment at any time or times against each, any or all of the Maker(s) and in favor of the Holder hereof for the above sum plus interest thereon from the date hereof, and for so doing, this Note or a copy of this note, verified by affidavit shall be sufficient warrant. The Maker hereby releases all errors and expressly waives all rights to any stay of execution, sequestration of rents and exemption of any property from levy and sale of execution under any law or rule of court now in force or hereafter enacted. All of the foregoing promises are the joint and several promises of the Maker and shall bind the Maker, its successors and assigns. The Maker and all endorser[s] waive protest, demand and notice of nonpayment of this Note. The authority granted in this Note to confess judgment against Maker shall not be exhausted by any exercise of that authority, but shall continue from time to time and at all times until payment in full of all amounts due under this 7 Note. Pursuant to the authority of this clause, on April 7, 2005, Defendant’s 8 counsel filed the note with the prothonotary of Cumberland County, and the prothonotary entered judgment in favor of Plaintiff Sorel Forge and against 5 Promissory Note, filed April 7, 2005. 6 Promissory Note, filed April 7, 2005. 7 Promissory Note, filed April 7, 2005. 8 N.T. 9, Deposition of David Fisher, June 9, 2009. Defendant’s counsel ultimately withdrew his appearance in the action. Praecipe, filed September 5, 2006. However, it appears that the firm of Defendant’s counsel is still, or again, representing Defendant. 2 9 Defendant Calabrese & Sons in the amount of $245,288.59. On the same date, 10 notice of the judgment was mailed to Defendant. Plaintiff’s interest in the judgment was assigned to Plaintiff’s Assignee, 11 Hanover Associates, on April 11, 2005. The assignment was filed of record on 12 April 15, 2005. On March 31, 2009, Plaintiff’s Assignee filed notice of its intention to 13 execute upon the judgment. Defendant responded with the petition sub judice to 14 strike or, alternatively, open the judgment, on April 28, 2009. With respect to Defendant’s request that the judgment be stricken, Defendant’s petition asserts rather generally that “[t]o the best of Defendant’s knowledge and upon a review of the docket entries in this matter, no judgment has 15 ever been entered against Defendant based on the Promissory Note.” It adds that “[b]efore any execution on the Promissory Note may proceed, a confession of 16 judgment must be entered pursuant to Pa. R.C.P. 2950 et seq.” A review of Defendant’s brief on the issue indicates that Defendant maintains that evidence, testimonial and otherwise, would show that subsequent to the judgment the parties agreed to reduce the debt represented by the note to $100,000 plus any additional money “invested” by Plaintiff’s Assignee in Defendant, that Defendant paid the $100,000 to Plaintiff’s Assignee and received no additional funds from Plaintiff’s Assignee, that the original confession of judgment was thus no longer operative in terms of its amount, and that the record 9 Promissory Note, filed April 7, 2005; Docket, Sorel Forge Co. v. Calabrese & Sons, Inc., No. 05-1827 Civil Term. 10 Docket, Sorel Forge Co. v. Calabrese & Sons, Inc., No. 05-1827 Civil Term. 11 Assignment of Judgment, filed April 15, 2005. 12 Assignment of Judgment, filed April 15, 2005. 13 Notice under Pa.R.C.P. No. 2958.1 of Judgment and Execution Thereon, filed March 31, 2009. 14 Defendant’s Petition for Relief, filed April 28, 2009. 15 Defendant’s Petition for Relief, ¶7. 16 Defendant’s Petition for Relief, ¶16. 3 accordingly contained no effective confession of judgment for purposes of 17 execution on behalf of Plaintiff’s Assignee. Given the absence in the record of a new confession of judgment in the reduced amount, Defendant maintains that the 18 judgment relied upon by Plaintiff’s Assignee must be stricken. With respect to Defendant’s request that the judgment be opened, Defendant’s petition asserts that “Defendant has paid the amount of the 19 Promissory Note in full.” In this regard, it alleges that a “Judgment Release filed on September 5, 2006, acknowledges a partial satisfaction of the Promissory 20 Note,” that “Defendant and Hanover Associates also negotiated the amount of 21 the Promissory Note to be for $100,000,” and that “[t]hereafter . . . Defendant 22 satisfied the balance of the [p]romissory [n]ote.” In response to Defendant’s petition to strike or open the judgment, the court issued a rule to show cause pursuant to Pennsylvania Rule of Civil Procedure 2959(b), providing for the filing of an answer to the petition and the establishment 23 of an evidentiary record by way of depositions. Plaintiff’s Assignee filed an 24 answer denying that payments made by Defendant to Plaintiff’s Assignee 25 subsequent to the judgment were intended to be applied to the judgment debt and denying that the parties had agreed to reduce the principal amount of the debt 26 represented by the assigned note. 17 Defendant’s Brief in Support of Defendant’s Petition for Relief, submitted August 14, 2009. 18 Defendant’s Brief in Support of Defendant’s Petition for Relief, submitted August 14, 2009. 19 Defendant’s Petition for Relief, ¶19 (emphasis in original). 20 Defendant’s Petition for Relief, ¶20. 21 Defendant’s Petition for Relief, ¶21. 22 Defendant’s Petition for Relief, ¶23. 23 Order of Court, May 6, 2009. 24 Answer to Petition for Relief, filed May 27, 2009. 25 Answer to Petition for Relief, ¶19. 26 Answer to Petition for Relief, ¶21. 4 Depositions were taken of (a) David Fisher, a general and limited partner of Plaintiff’s Assignee, Hanover Associates, and a certified public accountant who at 27 one time performed professional services for Defendant Calabrese & Sons, (b) 28 Joseph A. Calabrese, president and owner of Defendant Calabrese & Sons, (c) 29 Joseph A. Calabrese, II, an employee of Defendant Calabrese & Sons, and (d) 30 Richard Riggleman, a former employee of Defendant Calabrese & Sons. In summarizing the evidence in support of Defendant’s request to open the judgment, Defendant’s brief states the following: As evidence of at least a partial satisfaction of the Sorel Note, Calabrese has submitted [a certain] Judgment Release which was filed on September 5, 2006, which clearly states that it partially satisfies the judgment entered at this caption. In addition, written ledgers submitted by David Fisher, President of Hanover, confirms that only $100,000.00 was paid for the Sorel Note; therefore, the amount of the principal was reduced to $100,000.00. Furthermore, according to the testimony of Joe Calabrese, the entire amount of the Sorel Note was paid in full. Oral argument was held on Defendant’s petition to open or strike the judgment on August 20, 2009. DISCUSSION General. A petition to strike a confessed judgment and a petition to open a confessed judgment request distinct remedies and are generally not interchangeable. Weinberg v. Morgan, 186 Pa. Super. 322, 325, 142 A.2d 310, 312 (1958). Petition to strike judgment. With regard to a petition to strike a judgment, the court may look only at the facts of record at the time judgment was entered to decide if the record supports the judgment. Id. A petition to strike will not be granted unless a fatal defect in the judgment appears on the face of the record. Germantown Sav. Bank v. Talacki, 441 Pa. Super. 513, 519, 657 A.2d 1285, 1288 27 N.T. 4-5, Deposition of David Fisher, June 9, 2009. 28 N.T. 3-4, Deposition of Joseph A. Calabrese, June 9, 2009. 29 N.T. 4, Deposition of Joseph A. Calabrese, June 9, 2009. 30 N.T. 3-4, Deposition of Richard Riggleman, June 9, 2009. 5 (1995). Matters outside the record may not be considered and, if the record is self- sustaining, the judgment will not be stricken. Id. In 2005, one method by which a judgment could be entered by the prothonotary pursuant to a confession of judgment clause was provided for in Pennsylvania Rule of Civil Procedure 2951(a): (a)(1) Upon filing of the documents required by subparagraph (2), the prothonotary shall enter judgment by confession on a note . . . confessing judgment or authorizing confession by an attorney at law or other person against the person who executed it in favor of the original holder or, unless expressly forbidden in the instrument, in favor of the assignee or other transferee without the agency of an attorney and without the filing of a complaint, for the amount which may appear to be due from the instrument. The judgment may include interest computable from the instrument. (2) The documents to be filed in support of the entry of judgment are (i) the instrument (ii) an affidavit that the judgment is not being entered by confession against a natural person in connection with a consumer credit transaction, and (iii) a certificate of residence of the plaintiff and of the defendant. The method outlined in this provision is, or was in 2005, appropriate where the amount due at the time of the judgment is ascertainable from the face of the 31 instrument, as in the case of a demand note. See generally, P. Mining Co. v. Carter, 113 Pa. Super. 231, 232, 173 A.2d 726 (1934). In the present case, at the time the judgment was entered against Defendant in 2005 the amount due was ascertainable from the face of the note and an entry of judgment pursuant to former Pennsylvania Rule of Civil Procedure 2951(a) was permissible. Although affidavits did not accompany the filing of the note, (a) the residences of the Plaintiff and Defendant were stated in the note and the fact that the judgment was not being entered against a natural person in connection with a consumer credit transaction was self-evident from the note, (b) Defendant waived “all errors” in connection with the confession of judgment, and (c) judgment was 31 Krevolin & Co. v. Tharp, 178 Pa. Super. 236, 238, 115 A.2d 856, 857 (1955). 6 entered at the instance of Defendant’s own attorney. Under these circumstances, the court is unable to conclude that the judgment relied upon by Plaintiff’s assignee was fatally defective on the face of the record at the time of its entry, nor has the court found authority for the proposition that events subsequent to the entry of a valid judgment can retroactively create such a defect for purposes of a motion to strike. Petition to open judgment. A petition to open a confessed judgment is an appeal to the court’s equitable powers and is a matter of judicial discretion. 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). The petitioning party bears the burden of producing sufficient evidence to substantiate its alleged defenses. Weitzman v. Ulan, 304 Pa. Super. 204, 209, 450 A.2d 173, 176 (1982) (citations omitted). The standard of sufficiency a court must employ is that applicable to a directed verdict, viewing all the evidence in the light most favorable to the petitioner. Id. A petition to open judgment is the proper method of seeking relief from a judgment where the irregularity 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. On the other hand, the fact that a defendant has a setoff as to the plaintiff’s claim is not a ground for opening the judgment. See Harrison v. Galilee Baptist Church, 427 Pa. 247, 252, 234 A.2d 314, 316 (1967). As a general rule, a petition to reassess damages is the proper vehicle for securing relief from the amount of a judgment based upon subsequent events. See generally, Spitzer v. Buten et. al, 306 Pa. 556, 160 A.2d 444 (1932) (citations omitted). 7 In the present case, it appears to the court that any defense being asserted to the judgment in question goes not to the propriety of the judgment, but to the amount of damages, if any, which remain due on the judgment as a result of events occurring after its entry. As with any judgment where it is alleged that full or partial satisfaction of it has occurred after its entry, the remedy of a debtor in Defendant’s position lies not with an opening of the judgment and retrial on plaintiff’s claim, but with a petition to reassess damages based upon full or partial payment following the entry of the judgment, or upon some other change in the amount due arising out of a post-judgment event. Accordingly, the following order will be entered: ORDER OF COURT th AND NOW, this 28 day of September, 2009, upon consideration of Defendant’s Petition for Relief in the nature of a petition to strike or open a judgment, and for the reasons stated in the accompanying opinion, the petition is denied, without prejudice to Defendant’s right to file a petition to reassess damages. BY THE COURT, s/ J. Wesley Oler, Jr. J. Wesley Oler, Jr., J. Marlin R. McCaleb, Esq. 219 East Main Street P.O. Box 230 Mechanicsburg, PA 17055 Attorney for Plaintiff Seth T. Mosebey, Esq. 10 East High Street Carlisle, PA 17013 Attorney for Defendants 8 9 SOREL FORGE CO., : IN THE COURT OF COMMON PLEAS OF Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA HANOVER ASSOCIATES: Plaintiff’s Assignee : : CIVIL ACTION—LAW v. : : CALABRESE & SONS, : INC., : Defendant : No. 05-1827 CIVIL TERM IN RE: DEFENDANT’S PETITION TO STRIKE OR OPEN JUDGMENT BEFORE OLER, J. ORDER OF COURT th AND NOW, this 28 day of September, 2009, upon consideration of Defendant’s Petition for Relief in the nature of a petition to strike or open a judgment, and for the reasons stated in the accompanying opinion, the petition is denied, without prejudice to Defendant’s right to file a petition to reassess damages. BY THE COURT, _________________ J. Wesley Oler, Jr., J. Marlin R. McCaleb, Esq. 219 East Main Street P.O. Box 230 Mechanicsburg, PA 17055 Attorney for Plaintiff Seth T. Mosebey, Esq. 10 East High Street Carlisle, PA 17013 Attorney for Defendants