HomeMy WebLinkAbout2008-7503
JANET W. HARTMAN, : IN THE COURT OF COMMON PLEAS OF
PLAINTIFF : CUMBERLAND COUNTY, PENNSYLVANIA
:
V. :
:
HERSHEY-PHILBIN :
ASSOCIATES, INC., :
DEFENDANT : NO. 08-7503 CIVIL
IN RE: DEFENDANT’S PETITION TO STRIKE OR OPEN JUDGMENT
BEFORE OLER, J. AND EBERT, J.
ORDER OF COURT
th
AND NOW
, this 15 day of October, 2010, upon consideration of the record and the
briefs filed by both parties;
IT IS HEREBY ORDERED AND DIRECTED
that:
GRANTED
(1) Plaintiff’s Motion to File an Amended Complaint is;
DENIED
(2) Defendant’s Motion to Strike Judgment by Confession is ;
DENIED
(3) Defendant’s Motion to Open Judgment by Confession is .
By the Court,
__________________________
M. L. Ebert, Jr., J.
Samuel L. Andes, Esq.
Attorney for the Plaintiff
R. Mark Thomas, Esq.
Attorney for the Defendant
JANET W. HARTMAN, : IN THE COURT OF COMMON PLEAS OF
PLAINTIFF : CUMBERLAND COUNTY, PENNSYLVANIA
:
V. :
:
HERSHEY-PHILBIN :
ASSOCIATES, INC., :
DEFENDANT : NO. 08-7503 CIVIL
IN RE: DEFENDANT’S PETITION TO STRIKE OR OPEN JUDGMENT
BEFORE OLER, J. AND EBERT, J.
OPINION AND ORDER OF COURT
Ebert, J., October 15, 2010 –
FINDINGS OF FACT
Janet W. Hartman (hereinafter Plaintiff) is an adult individual who resides in New
1
Cumberland, Cumberland County, Pennsylvania. Hershey-Philbin Associates, Inc. (hereinafter
Defendant) is a Pennsylvania corporation which maintains its principal offices at 2101 Orchard
2
Road in Camp Hill, Lower Allen Township, Cumberland County, Pennsylvania.
On October 24, 1994, Robert G. Hartman, Jr., the deceased husband of Plaintiff entered
into two separate agreements with Defendant. The first was an “Installment Agreement of Sale”
by which he sold an undivided one-third interest, as tenants in common, to Defendant in certain
3
real property located at 2101 Orchard Road in Camp Hill, Cumberland County, Pennsylvania.
The second was a “Tenants in Common Ownership Agreement” which outlined the rights,
4
responsibilities and obligations of the parties to manage the property. The total purchase price
1
Complaint for Confession of Judgment in Ejectment, Dec. 29, 2008, ¶ 1, (No. 08-7503) (hereinafter
Complaint).
2
Complaint at ¶ 2.
3
Ex. A, “Installment Agreement of Sale,” Complaint.
4
Ex. A, “Tenants in Common Ownership Agreement,” Motion to Strike and/or Open Judgment of
Ejectment by Confession, Feb. 6, 2009, ¶ 18, (No. 08-7503) (hereinafter Motion to Strike and/or Open
Judgment).
1
for Defendant’s one-third interest as tenant in common was $148,000.00, of which ten percent
was paid in cash at the time of settlement and the balance, together with interest at 7.5 percent,
5
was to be paid within five years. This never happened. In essence, when the two agreements
are read together, Defendant’s undivided one-third interest in the property entitled it to
essentially the exclusive use of the third floor of the building along with no less than 20 parking
6
spaces. Defendant has used this third floor for over 14 years, from the time of initial contract in
October of 1994.
On April 10, 2000, Lower Allen Township approved a plan for a new subdivision
submitted by Robert G. Hartman, Jr., and Plaintiff to combine the property at 2101 Orchard
7
Road with an adjacent tract of land. This subdivision plan was filed in the Cumberland County
Recorder of Deeds Office on April 28, 2000, in Planbook 80 on page 144. On July 7, 2000, an
“Extension Agreement” was executed by and between Robert G. Hartman, Jr., and Defendant to
8
extend the payment terms of the October 24, 1994, Agreement until December 31, 2004. This
“Extension Agreement” included a provision giving Robert G. Hartman, Jr., the right to
9
subdivide a tract of ground from the tract subject to the Agreement. Hershey-Philbin Associates
was fully aware that the original tract of land at 2101 Orchard Road was combined with an
adjacent tract of land into one property. Obviously at the time of the execution of the extension
agreement, Defendants did not object to this combination and in no way felt that it affected their
property rights.
5
Ex. A, “Installment Agreement of Sale,” Complaint.
6
Ex. A, “Tenants in Common Ownership Agreement,” Motion to Strike and/or Open Judgment.
7
Motion to Strike and/or Open Judgment ¶ 15(a).
8
Ex. C, Motion to Strike and/or Open Judgment ¶ 5.
9
Ex. C at 2(b), Motion to Strike and/or Open Judgment ¶ 5.
2
The new subdivision enabled Robert G. Hartman, Jr., to place a substantial storage
10
structure, now a source of contention, on the property in March of 2003. Defendant also points
to a conflict regarding the “Tenants in Common Ownership Agreement” involving the
11
installation of a new roof in May 2003 by Robert G. Hartman and the division of that expense.
By a deed dated September 19, 1996, Robert G. Hartman, Jr. transferred his two-thirds
12
interest in the property at 2101 Orchard Road to his wife, Plaintiff. Robert G. Hartman, Jr.,
13
died on November 9, 2003. Under the terms of his will, he left to Plaintiff his remaining assets,
which included the “Installment Agreement of Sale” and the remaining one-third interest in the
14
real estate. The assignment of the “Installment Agreement of Sale” was confirmed by an
15
“Executor’s Deed” dated July 6, 2009.
In March of 2008, Defendant obtained a commitment letter from Orrstown Bank in the
amount of $250,000.00, part of which was to be used by Defendant to pay off the “Installment
16
Agreement of Sale” in full. However, the financing commitment from Orrstown Bank was
subsequently withdrawn. Defendant claims it was withdrawn because they could not obtain a
17
deed in conformity with the “Installment Agreement of Sale.” In reality, an examination of the
record does not support this claim. The filed deposition of Paul P. Baynum, the Business
Development Officer at Orrstown Bank who was negotiating with the Defendant to secure the
$250,000.00 loan, establishes that the bank wanted a “Condominium Agreement” for the third
10
Motion to Strike and/or Open Judgment ¶ 26.
11
Motion to Strike and/or Open Judgment at ¶ 21-25.
12
Ex. C, “This Deed,” Motion to Strike and/or Open Judgment.
13
Ex. C, “Assignment of Installment Agreement of Sale,” Amended Complaint for Confession of
Judgment in Ejectment, Jan. 12, 2010, (No. 08-7503) (hereinafter Amended Complaint).
14
Amended Complaint at ¶ 4.
15
Ex. B, “Executor’s Deed,” & Ex. C “Assignment of Installment Agreement of Sale,” Amended
Complaint.
16
Motion to Strike and/or Open Judgment at ¶ 14.
17
Motion to Strike and/or Open Judgment at ¶ 15(c), 17.
3
floor of the building and when they did not get a condominium agreement in place they did not
18
feel that they would have a valid lien position to secure their loan.
Prior to 2008 Defendant had failed to make the installment payments in accordance with
19
the agreement. For example, the payments due for November and December, 2007, were not
20
made until March 30, 2008. The late payments continued until May of 2008, after which
21
Defendant has failed to make any payments on the “Installment Agreement of Sale.”
PROCEDURAL HISTORY
On December 29, 2008, after providing Defendant with the notice and opportunity to
cure its default that was required by the “Installment Agreement of Sale,” Plaintiff filed a
22
Complaint for Confession of Judgment in Ejectment. On February 6, 2009, Defendant filed the
instant Petition to Strike and/or Open Judgment of Ejectment by Confession. On July 31, 2009,
Plaintiff filed an Answer to Defendant’s Motion to Strike and/or open Judgment of Ejectment by
Confession. On January 12, 2010, Plaintiff filed a Motion to File Amended Complaint for
Confession of Judgment in Ejectment to add facts relating to the transfer to Plaintiff of the
remaining interest in the subject property owned by Robert G. Hartman, Jr., at the time of his
death, and the formal assignment to Plaintiff of the “Installment Agreement of Sale” from the
23
personal representatives of the Estate of Robert G. Hartman, Jr. On February 5, 2010,
Defendant opposed the Motion to Amend by filing an Answer to Plaintiff’s Motion to File
Amended Complaint with New Matter. On March 5, 2010, Plaintiff then filed a Reply to
Defendant’s New Matter. Argument was held on July 7, 2010.
18
Deposition of Paul Baynum, Dec. 17, 2009, p. 21.
19
Ex. B, “Notice of Default,” Complaint.
20
Ex. B, “Notice of Default,” Complaint.
21
Ex. B, “Notice of Default,” Complaint; Motion to Strike and/or Open Judgment at ¶ 18.
22
Ex. B, “Notice of Default,” Complaint.
23
Amended Complaint at ¶ 4.
4
DISCUSSION
I. Plaintiff’s Amended Complaint is Allowed
The Pennsylvania Rule of Civil Procedure, 2952, provides in relevant part that the
complaint shall contain “a statementof any assignment of the instrument.” Pa.R.C.P.
2952(a)(4). Plaintiff does not dispute that in her Complaint she mistakenly stated that she owned
the property in question and the “Installment Agreement of Sale” signed by Defendant.
Plaintiff’s husband had, however, only transferred a two-third interest to Plaintiff before his
death and had not assigned Plaintiff the “Installment Agreement of Sale.”
Defendant contends that because Plaintiff was not a party to the “Installment Agreement
of Sale” attached to the Complaint, she is not entitled to recover because only the real party in
interest has the right to enter judgment by confession. Fourtees Co. v. Sterling Equip. Corp., 363
A.2d 1229, 1232 (Pa. Super. 1976). However, when Plaintiff learned of the mistake in her
Complaint, she took effective measures to correct it before filing her Answer to Defendant’s
petition, and her Motion for Leave to Amend her Complaint.
Under the terms of his will, Plaintiff’s husband left the remaining one-third interest in the
real estate and the assignment of the “Installment Agreement of Sale” to Plaintiff. Plaintiff has
subsequently received a deed from the personal representatives of the Estate of her husband that
formally conveyed the remaining one-third interest in the property, and formally assigned to her
all interest in the “Installment Agreement of Sale.” These documents were attached to Plaintiff’s
Answer to Defendant’s petition and to her Motion for Leave to Amend her Complaint.
Therefore, this formal defect in Plaintiff’s Complaint can be corrected if she is granted leave to
amend her Complaint.
5
In West Penn S. & G. Co. v. Shippingport S. Co., 80 A.2d 84, 86 (Pa. 1951), the
Pennsylvania Supreme Court stated:
It has always been held that formal defects, mistakes and omissions in confessions
of judgment may be corrected by amendment where the cause of the action is not
changed, where the ends of justice require the allowance of such amendment, and
where the substantive rights of defendant or of any third persons will not be
prejudiced thereby.
Id. at 86. Plaintiff’s mistake in her original complaint is a formal defect in the judgment entered
against Defendant by confession and may be corrected by amendment. Here also, the cause of
action remains unchanged. It is still a claim for possession and ownership of the property
because Defendant seriously breached the contract. The ends of justice require the allowance of
the amendment because, without that amendment, Plaintiff cannot enforce her rights under the
“Installment Agreement of Sale.” Plaintiff’s amendment merely seeks to accurately reflect the
facts and in doing so does not prejudice the substantive rights of Defendant.
Furthermore, the Pennsylvania Supreme Court has also decided that amendment is
permissible to substitute the real party at interest in the litigation for a party incorrectly named as
the plaintiff in the original complaint. In Miller v. Michael Morris, Inc., 63 A.2d 44 (Pa. 1949),
the Supreme Court upheld the trial court’s refusal to strike or open a judgment in ejectment
entered by confession. There the defendant had contended that the judgment was invalid
because the original plaintiff was not the real party at interest. The judgment had been confessed
on a lease which had been assigned from one lessor to another. When the lessee defaulted, the
judgment was entered in the name of an earlier lessor who had assigned the lease to another
lessor. The defendant seized upon the defect and asked the trial court to strike the judgment on
that basis. The trial court permitted the amendment to the complaint, to substitute the lessor
holding the lease at the time of the entry of judgment, and the defendant appealed. The
6
Pennsylvania Supreme Court, upholding the trial court’s decision, determined that the judgment
should have been entered in the name of the real party in interest, but then continued to state:
This rule is mandatory and the lower courts have properly enforced this rule in
many instances. Under the circumstances of this case, however, the Court below
properly permitted the ‘amendment to the pleadings to conform with the
provisions of this rule.’ We will treat it as if it was amended and as if the
judgment was so entered.
Miller., 63 A.2d at 47. Having so ruled, the Supreme Court upheld the trial court’s decision and
the judgment in ejectment stood.
As this case makes clear, substitution of the real party in interest for a plaintiff mistakenly
identified as the claimant is a defect which may be corrected by amendment. Therefore, this
Court permits the amendment of Plaintiff’s Complaint which corrects the formal defect present
in that original Complaint.
II. Defendant’s Petition to Strike and/or Open the Judgment is Denied
“A petition to strike off the judgment reaches defects apparent on the face of the record,
while a petition to open the judgment offers to show that the defendant can prove a defense to all
or part of the plaintiff's claim.” Manor Bldg. Corp. v. Manor Complex Assoc., Ltd., 645 A.2d
843, 845 (Pa. Super. 1994)(internal citations omitted). As the following discussion will reveal,
both of Defendant’s petitions are denied because Plaintiff’s Amended Complaint remedies the
apparent defect of the record and Defendant has failed to show that it can prove a defense to
Plaintiff’s claim. “The decision of the trial court on a petition to strike or open judgment will not
be disturbed unless there is an error of law or a manifest abuse of discretion.” RAIT Ptnr., LP v.
E Pointe Prop. I, Ltd., 957 A.2d 1275, 1277 (Pa. Super. 2008).
7
a. The Petition to Strike the Judgment is Denied
“A petition to strike a judgment raises a question of law and relief thereon will only be
granted if a fatal defect appears on the face of the record.” RAIT Ptnr., 957 A.2d at 1277.
Defendant contends that the record is fatally defective because the Complaint does not establish
that Plaintiff is the real party of interest. Therefore, Defendant seeks to strike entirely the
judgment entered against it by confession. However, Plaintiff has subsequently received a deed
from the personal representatives of the Estate of her husband that formally conveyed the
remaining one-third interest in the property in question, and formally assigned to her all interest
in the “Installment Agreement of Sale.” This Court has permitted the correction of this formal
defect by Plaintiff through the filing of her Amended Complaint. So there no longer exists the
question of whether Plaintiff is the lawful owner of the property or the “Installment Agreement
of Sale” on which judgment was entered. With Plaintiff’s Amended Complaint permitted, the
defect of which Defendant complains is cured. Therefore, Defendant’s petition to strike
Plaintiff’s judgment entered against Defendant by confession is denied.
b. The Petition to Open the Judgment is Denied
Defendant contends that the judgment should be opened because they have averred a
meritorious defense. The defense advanced by Defendant is a breach of contract claim in which
Defendant alleges that Plaintiff failed to abide by the agreed upon terms of the “Installment
Agreement of Sale” when he combined 2101 Orchard Road with the adjacent property.
Defendant alleges that due to this combination, Plaintiff was not legally able to tender
performance as provided by the “Installment Agreement of Sale.”
“[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
8
evidence to require submission of the case to a jury.” RAIT Ptnr., 957 A.2d at 1277. Here,
Defendant acted promptly in filing its motion to strike or open judgment pursuant to Pa. R.C.P.
2956.1(c)(2), which requires a petition to open or strike a confessed judgment be filed within
thirty days after service of a notice. However, this court is not convinced that Defendant has
raised a meritorious defense or can produce sufficient evidence to require the case to be
submitted to a jury.
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, 450 A.2d 173, 176 (1982). Furthermore, “the petitioner need not produce
evidence proving that if the judgment is opened, the petitioner will prevail.” Liazis v. Kosta,
Inc., 618 A.2d 450, 453 (1992), app. denied, 637 A.2d 290 (1993).
The terms of the “Installment Agreement of Sale,” required Defendant to make timely
payments. Defendant claims that due to the combination of the two property tracts, Plaintiff was
not legally able to tender performance as provided by the “Installment Agreement of Sale.”
When viewing all the evidence in the light most favorable to Defendant, this court finds that the
combination of the properties did not affect Plaintiff’s ability to perform under the terms of the
contract, and provide Defendant with a “one-third interest in the premises known and numbered
as 2101 Orchard Road, Camp Hill, Pennsylvania.” Under the installment agreement of sale
signed on October 24, 1994, Defendant bought a one-third interest of the entire premises. This
interest is broader than its Paragraph #5 Possession and Occupancy Clause, which guaranteed
that Defendant was “entitled to possession of the third floor of the premises and an unspecified
9
one-third, but not less than 20, of the parking spaces in the parking areas adjacent to the
24
premises.” Defendant used this third floor for over 14 years. Defendant would still own its
one-third interest in the premises had it abided by the terms of the contract for timely payment.
The failure of Defendant to qualify for a sizable loan is not a defense against the failure
to abide by the previously agreed upon terms for timely payment. Even under the extension
agreement on July 7, 2000, the entire agreement to transfer the one-third interest in the premises
was to have been completed by December 31, 2004. The Defendants did not even apply for the
loan it is seeking to use as a defense until 2008. Furthermore, even though the terms of both the
Installment Agreement of Sale and the Extension Agreement contemplated the creation of a
condominium structure, there is nothing in this record that indicates Defendant ever sought same.
The bank wanted a condominium agreement and the Defendants could not produce one. The
Defendants simply cannot produce sufficient evidence that the bank turned down the loan
commitment because the Plaintiff was unable to transfer the one-third interest in the premises.
Accordingly, this is not a meritorious defense.
Defendants also raise some issues regarding the roof on the premises in question.
Defendants admit that in paragraph 22 of their Motion to Strike and/or Open Judgment of
Ejectment by Confession, that a new roof was installed on the building in 2005. There are no
allegations that the Defendant ever raised issues regarding the cost of this roof or any damages
they suffered as a result of an inadequate roof during the 3 year period from the time the new
roof was installed until Plaintiff’s Complaint for Confession of Judgment in December of 2008.
Such a complaint at this time does not provide a meritorious defense to the fact that the
Defendants did not make timely payments on the original Installment Agreement of Sale and the
Extension Agreement all of which should have been concluded by December 31, 2004. It is
24
Complaint for Confession of Judgment in Ejectment, filed Dec. 29, 2008, Ex. A, Para. 5.
10
clear from the record that if the Defendants had received the loan they requested from Orrstown
Bank, they would have fully paid the balance remaining on the outstanding purchase agreement
without any complaint regarding the roof.
Again, a Petition to Open a Confessed Judgment is an appeal to a Court’s equitable
powers. It is clear that the Defendant does not have any meritorious defenses. As such, the
principles of equity do not dictate opening this judgment. Therefore, the Defendant’s Petition to
Open the Judgment is denied.
Accordingly the following order is entered:
ORDER OF COURT
th
AND NOW
, this 15 day of October, 2010, upon consideration of the record and the
briefs filed by both parties;
IT IS HEREBY ORDERED AND DIRECTED
that:
GRANTED
(1) Plaintiff’s Motion to File an Amended Complaint is;
DENIED
(2) Defendant’s Motion to Strike Judgment by Confession is ;
DENIED
(3) Defendant’s Motion to Open Judgment by Confession is .
By the Court,
__________________________
M. L. Ebert, Jr., J.
Samuel L. Andes, Esq.
Attorney for the Plaintiff
R. Mark Thomas, Esq.
Attorney for the Defendant
11