Dime Bank v. Andrews

• Decision Date: 08 May 2015
• Docket Number: No. 1129 EDA 2014,1129 EDA 2014
• Citation: 115 A.3d 358,2015 PA Super 114
• Parties: The DIME BANK, Appellee v. Peter ANDREWS, Appellant.
• Court: Pennsylvania Superior Court

115 A.3d 358

2015 PA Super 114

The DIME BANK, Appellee

v.Peter ANDREWS, Appellant.

No. 1129 EDA 2014

Superior Court of Pennsylvania.

Argued Oct. 7, 2014.

Filed May 8, 2015.

Daniel P. Lyons, Stroudsburg, for appellant.

Jane T. Smedley, Kingston, for appellee.

BEFORE: GANTMAN, P.J., WECHT, J., and JENKINS, J.

Opinion

OPINION BY WECHT, J.:

Peter Andrews appeals the trial court's March 6, 2014 order denying his petition to strike a confessed judgment in favor of The Dime Bank (“Dime”) and allowing Dime to file a second amended complaint in confession of judgment. The question presented concerns infirmities in Dime's first and first amended complaints in confession of judgment, which infirmities Andrews contends the trial court should have deemed fatal to the judgment. We reverse and remand for further proceedings.

On or about August 19, 2011, in tandem with obtaining a loan from Dime in the amount of $915,942, Samfivedom, LLC, and Thoren, Inc. (“Borrowers”), executed a note (“Note”) in favor of Dime that was secured by a guarantee and surety agreement that Andrews executed in his capacity as one of three personal guarantors. On or about March 2, 2012, the parties to the Note entered into a note modification agreement that did not affect Andrews' guarantee.

The Guarantee and Suretyship Agreement (the “Guarantee”) at issue in this appeal contained a notice obligation on the part of Dime as follows: “The BANK hereby acknowledges and agrees that upon an event of default by the BORROWER under any of the LOAN DOCUMENTS, the BANK shall provide the GUARANTOR with written notice of said default at least ten (10) days prior to the commencement of any collection proceedings hereunder.” Guarantee and Suretyship Agreement at 2. It further contained the following provision regarding confession of judgment:

The GUARANTOR hereby irrevocably authorizes and empowers any attorney of record or the prothonotary or clerk of any court in the Commonwealth of Pennsylvania or elsewhere, to appear for the GUARANTOR at any time after the occurrence of an event of default under any of the LOAN DOCUMENTS in any such court in any action brought against the GUARANTOR by the BANK with respect to the GUARANTOR's obligations under the GUARANTEE or under the LOAN DOCUMENTS and therein to confess or enter judgment against the GUARANTOR for all sums payable by the GUARANTOR to the BANK under this GUARANTEE or under the LOAN DOCUMENTS, as evidenced by an affidavit signed by a duly authorized designee of the BANK setting forth such amount then due from the GUARANTOR to the BANK, plus reasonable attorney's fees and costs. In addition, the GUARANTOR hereby expressly authorizes any attorney of record on behalf of the BANK to commence execution immediately upon the entry upon [sic ] the confession of judgment ....

* * *

In support of the confession of judgment, it shall not be necessary to file the original debt instrument as a warrant of attorney. The GUARANTOR waives the right to any stay of execution and the benefit of any exemption laws now or hereafter in effect. No single exercise of the foregoing warrant empowered [sic ] to bring an action or to confess judgment shall be deemed to exhaust the power, but the power shall continue undiminished and may be exercised from time to time as often as the BANK shall elect until all amounts payable to the bank under the LOAN DOCUMENTS shall have been paid in full.

Id. at 4–5 (capitalization modified; emphasis removed).

After Borrowers defaulted under the Note, on October 19, 2012, Dime filed a complaint in confession of judgment. Therein, Dime alleged that “[a] default occurred under the [N]ote in that the Borrowers failed to pay the money due and owing the Bank pursuant to the Note, whereupon the Bank demanded the entire balance of the Note immediately due and payable.” Complaint in Confession of Judgment (“First Complaint”), 10/19/2012, at 2 ¶ 6. To this complaint, Dime affixed several affidavits of no import to the instant appeal as well as copies of the Note, note modification, and Guarantee.

On November 8, 2012, Andrews filed a petition to strike the confessed of judgment. On November 14, 2012, the trial court issued a rule to show cause why the petition should not be granted. On December 5, 2012, the parties entered into a stipulation. Therein, the parties agreed that Dime would be allowed to file an amended complaint in confession of judgment. As well, the parties agreed that Andrews would retain the prerogative to file a new petition to strike as though the amended complaint commenced a new action.¹ The parties also agreed in the stipulation that it rendered moot Andrews' earlier petition to strike.

On December 19, 2012, Dime filed an amended complaint in confession of judgment (“First Amended Complaint”) that was materially identical to Dime's First Complaint. On January 2, 2013, Andrews filed a petition to strike the First Amended Complaint. Therein, Andrews identified the following alleged deficiencies in Dime's pleading:

7. Pursuant to Pennsylvania Rule[ ] of Civil Procedure [2952](b)(6) a complaint [in confession of judgment] shall contain the following: “[I]f [the] judgment may be entered only after default or the occurrence of [a] condition precedent, an averment of the default or [of the] occurrence of the condition precedent.”

[Quoting the Guarantee]: “(b) the BANK hereby acknowledges and agrees that upon an event of default by the BORROWER under any of the LOAN DOCUMENTS, the BANK shall provide the GUARANTOR with written notice of said default at least ten (10) days prior to the commencement of any collection proceedings hereunder.”

8. The requirement of giving notice ten (10) days before commencing an action to collect on [a] debt is a condition precedent and [Dime] has failed to aver [in] its [First Amended] Complaint with [sic ] condition precedent required by Pennsylvania Rule[ ] of Civil Procedure 2952(b)(6).

Petition to Strike First Amended Complaint at 2 (unnumbered).

On January 3, 2013, the trial court issued a rule to show cause why Andrews' petition should not be granted. On January 22, 2013, Dime filed its answer to Andrews' petition to strike. In relevant part, Dime responded to Andrews' averments as follows:

7. Denied. The averments set forth in paragraph 7 are conclusions of law to which no response is necessary. To the extent a response is necessary, the Guarant[ee] is a writing [that] speaks for itself.

8. Denied. The averments set forth in paragraph 8 are conclusions of law to which no response is necessary. To the extent a response is necessary, on or about September 22, 2012, [Dime] demanded payment in full from the borrower and the guarantors. Additionally, in paragraph 6 of [Dime's] [First A]mended [C]omplaint ..., a default occurred and [Dime] averred as follows: “A default occurred under the Note in that [Borrowers] failed to pay the money due and owing [Dime] pursuant to the Note, whereupon [Dime] demanded the entire balance of the Note due and payable.”

Dime's Answer to Andrews' Petition to Strike Confession of Judgment Based on Amended Complaint in Confession of Judgment at 1–2 (unnumbered). Andrews and Dime filed briefs in support of their petitions on November 15 and November 27, 2013, respectively.²

On March 6, 2014, the trial court entered an opinion and order denying Andrews' petition. Therein, it explained as follows:

[T]he [First] Amended Complaint attaches the Guarantee ... entered into between [Dime] and [Andrews], accordingly it is part of the record. The [First] Amended Complaint alleges a default, however, it fails to aver that written notice of the default was provided to [Andrews] at least 10 days prior to the commencement of any collection proceedings as set forth in III(b) of the [Guarantee]. Since the warrant of attorney must be strictly construed, and the record indicates that written notice of the default is to be provided to [Andrews] at least 10 days prior to the commencement of any collection proceedings [sic ]; we find this to be a fatal defect or irregularity appearing on the face of the record.

In its brief, [Dime] argues that Atlantic National Trust, LLC v. Stivala Investments, Inc., 922 A.2d 919 (Pa.Super.2007), allows it to remedy the defect by amendment of record. In Stivala, after confessed judgment was entered and opened by the [c]ourt, the creditor filed a second complaint in confession of judgment. Thereafter, Stivala filed a ... petition to strike or open the confessed judgment. Stivala argued that judgment was impermissibly confessed twice on the same warrant of attorney and that the second complaint in confession of judgment contain[ed] a fatal defect or irregularity since it [did] not contain the information required by Pa.R.C.P. 2952(a)(5).¹ In denying the petition to strike the confessed judgment, the Stivala [c]ourt held that if “the defect is one that can be remedied by an amendment of the record or other action,” then a motion to strike may not be granted. Id. at 923. However, the [c]ourt must determine if an error is technical or prejudicial. Id.

FN1. Pa.R.C.P. 2952(a)(5) requires the complaint to contain either a statement that judgment has not been entered on the instrument in any jurisdiction or if it has been entered an identification of the proceedings.

Instantly, [Dime] was required to aver and provide [Andrews] with written notice of default at least 10 days prior to the commencement of any collection proceeding. [Dime] contends that the cause of action has not changed and that the sending of a 10[-]day notice of default can easily be added to the [a]ffidavit of [Dime]. [Andrews] simply argues that the [First] Amended Complaint does not aver that 10[-]day notice of default was given to him and, therefore, [Dime] failed to comply with the condition precedent contained in the [Guarantee]. Although we agree with [Andrews] that [Dime] failed to aver that written notice of default was provided 10 days prior to the commencement of any collection

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