Driscoll, R. v. Arena, J. ( 2018 )

J-A25036-17
2018 PA Super 26ROBERT W. DRISCOLL, JR., : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
JOHN A. ARENA : No. 226 EDA 2017
Appeal from the Order Entered December 19, 2016
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): 03288, May Term, 2016
ROBERT W. DRISCOLL, JR., : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
JOHN A. ARENA : No. 228 EDA 2017
Appeal from the Order Entered December 30, 2016
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): 03293, May Term, 2016
ROBERT W. DRISCOLL JR. : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
THOMAS ARENA : No. 286 EDA 2017
Appeal from the Order Entered December 14, 2016
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): 03286 May Term 2016
BEFORE: OTT, STABILE, JJ., and STEVENS, P.J.E.*
OPINION BY STEVENS, P.J.E.: FILED FEBRUARY 12, 2018
____________________________________
* Former Justice specially assigned to the Superior Court.
J-A25036-17
In these consolidated Appeals, Appellant Robert W. Driscoll, Jr., appeals
from the Orders entered on December 14, 2016, December 19, 2016, and
December 30, 2016, in the Court of Common Pleas of Philadelphia County
granting the Petitions to Strike and/or Open Judgment by Confession filed by
Appellee John A. Arena and Appellee Thomas Arena (hereinafter collectively
“Appellees”).1 Upon our review we affirm.2
The instant appeal was preceded by a rather complicated and
convoluted procedural history involving a failed attempt to remove the
underlying civil actions to the Massachusetts federal court, although the facts
that give rise to the underlying petitions to strike or open the Confessed
Judgments may be simply stated. The Complaints in Confession of Judgment
arose out of three loan transactions between Appellant and Appellees all of
which related to commercial real estate ventures. On March 24, 2005,
Appellee Thomas Arena executed a Promissory Note which provided that in
the event of default, Appellant was empowered by him to confess judgment
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1 On January 30, 2017, the parties filed a Stipulation to Consolidate Appeals
pursuant to Pa.R.A.P. 513 in three separate matters originally docketed at 226
EDA 2017, 228 EDA 2017, and 286 EDA 2017. Therein, the parties stated the
matters “all concern the same underlying facts and the same question of law
on appeal, and are all controlled by the same court decision granting
appellees' motions to strike.”
2 In a Per Curiam Order entered on March 30, 2017, this Court quashed the
instant appeal as interlocutory; however, upon consideration of Appellant’s
Application for Reconsideration of that Order, this Court vacated that Order
and reinstated the appeal in a Per Curiam Order entered on April 28, 2017.
Therein, we further indicated we would take no further action at that time and
would refer the issues to the panel assigned to decide the merits of the appeal.
The matter was thereafter referred to this panel for consideration.
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in any court of record. Thomas Arena further agreed to pay Appellant the
principal sum of $183,861.00, together with interest on or before the earlier
of the sale of any properties in which he had an ownership stake on or
September 1, 2005. Also on that date, Appellee John A. Arena executed a
Promissory Note in favor of Appellant for the same amount and pursuant to
identical terms. Subsequently, on October 27, 2009, John A. Arena signed a
Promissory Note whereby he promised to pay Appellant $17,500.00, plus
interest on or before January 31, 2010.
On May 25, 2016, Appellant filed two Complaints in Confession of
Judgment against Appellees in the amount of $336, 986.00, and one in the
amount of $37,164.69 which included principal payment of the loans, interest,
and attorney’s fees of 5%. On that same date, judgment was entered against
Appellees in the amount of $336,966. 85, $336,966.85, and $37, 164.69. The
judgments were served upon Appellees on June 1, 2016.3 On June 29, 2016,
Appellant served Appellees with Execution Notices pursuant to Pa.R.C.P.
2958.1 notifying them of his intent to seek execution on the Confessed
Judgments.
Throughout the months of June, July and August of 2016, the parties
litigated Appellees’ lawsuits filed in the United States District Court for the
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3 The two larger judgments were later assessed to be $335,569.57 on June
26, 2016. Appellees do not challenge the actual amount of the Confessed
Judgments.
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District of Massachusetts to remove all three matters to federal court in
Massachusetts. On September 23, 2016, Appellees filed Motions to Strike
and/or Open Confessed Judgment and Stay Execution on Confessed Judgment
in the Philadelphia Court of Common Pleas wherein they asserted the
judgments were void. Specifically, Appellees maintained the Notes were not
sealed documents; therefore, Appellant had failed to file his Complaints for
Confession of Judgment within the applicable statute of limitations. 4 On
November 18, 2016, Appellant filed his Responses to the Motions to Strike
wherein he asserted, inter alia, that the Motions had been untimely filed and
that Appellees had not asserted a compelling reason for their untimeliness
pursuant to Rule 2959(a)(3).
In December of 2016, the trial court entered three separate Orders
granting Appellees’ Petitions to Strike and striking the Complaints in
Confession of Judgment.5 In doing so, the trial court determined the
Promissory Notes were not instruments under seal and, therefore, Appellant
had brought the complaints after the applicable statute of limitations had
expired. Appellant filed timely notices of appeal from the three, consolidated
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4 Section 5525(a)(8) of the Judicial Code establishes a four-year limitation
period for “[a]n action upon a contract, obligation, or liability founded upon a
writing not specified in paragraph [(a)](7), under seal or otherwise, except an
action subject to another limitation specified in this subchapter.” 42 Pa.C.S.A.
§ 5525(a)(8).
5 Although we refer to the trial court in the singular, two trial court judges
issued opinions herein.
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Orders striking the Confessed Judgments on January 10, 2017. The trial court
did not order Pa.R.A.P.1925(b) statements, but it filed opinions on February
6, 2017, and May 25, 2017, wherein it addressed and denied the merits of
Appellant’s arguments.
In his brief, Appellant presents the following Statement of the Questions
Involved:
1. Whether a promissory note that includes a statement of
intent that such note is to be sealed is in fact a sealed instrument
if such promissory note states that it is a sealed instrument in the
body of the promissory note[?]
2. Whether the omission of the word SEAL or initials L.S. near
the signature block is a fatal defect on the face of a confessed
judgment that causes such confessed judgment to be void, and
not just voidable[?]
3. Whether the [t]rial [c]ourt can grant an untimely motion to
strike on the basis of a statute of limitations defense if such
defense was waivable and where the filing movant failed to
provide a compelling reason for the untimely filing[?]
Consolidated Brief of Appellant at 5.
It is well-settled that prior to reaching the merits of any appeal, this
Court initially must ascertain whether the order appealed from is properly
appealable. Commonwealth v. Borrero, 692 A.2d 158, 159 (Pa.Super.
1997). Since the question of appealability implicates this Court’s jurisdiction,
we may raise the issue sua sponte. Commonwealth v. Baio, 898 A.2d 1095,
1098 (Pa.Super. 2006).
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In general, this Court’s jurisdiction “extends only to review of final
orders.” Rae v. Pa. Funeral Dir’s Ass’n, 602 Pa. 65, 67, 977 A.2d 1121,
1124-25, (2009); Pa.R.A.P. 341 (“an appeal may be taken as of right from
any final order.”) A final order is defined as any order that disposes of all
claims and of all parties or is entered as a final order pursuant to Pennsylvania
Rule of Appellate Procedure 341(c). Pa.R.A.P. 341(b)(1),(3). An order
striking a judgment typically is not appealable, because “[s]uch an order
anticipates further litigation because the parties are placed back in the position
they were in prior to the entry of the judgment.” UPS v. Hohider, 954 A.2d
13, 16 (Pa.Super. 2008). However, an order striking judgment is appealable
when its effect is to end the existing litigation and require the filing of a new
action. Id.Under Hohider's rationale, we find the present Orders striking
Appellant’s Confessed Judgments are final and immediately appealable.
Confession of judgment actions are stand-alone actions, and different rules of
procedure govern confession of judgment actions than those which apply to
standard contract or tort actions.6 Herein, Appellant’s Complaints contained
only a count seeking Confession of Judgment; thus, when the trial court struck
Appellant’s Judgments, its Orders effectively ended the action. Having
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6For instance, the Rules prohibit the complaint from having either a notice to
defend or a notice to plead in a confession of judgment action, Pa.R.C.P.
2952(b), whereas civil complaints must contain a notice to plead.
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concluded that the Orders appealed from are final orders, we proceed to a
consideration of the merits of the issues Appellant has raised for our review.
In doing so, we employ a well-settled standard of review. A trial court may
grant a petition to strike a judgment:
only if a fatal defect or irregularity appears on the face of the
record. Similarly, we review [an] order denying [an] Appellant's
petition to open [a] confessed judgment for an abuse of discretion.
***
In considering the merits of a petition to strike, the court
will be limited to a review of only the record as filed by the party
in whose favor the warrant is given, i.e., the complaint and the
documents which contain confession of judgment clauses. Matters
dehors the record filed by the party in whose favor the warrant is
given will not be considered. If the record is self-sustaining, the
judgment will not be stricken. However, if the truth of the factual
averments contained in such record are disputed, then the remedy
is by a proceeding to open the judgment and not to strike. An
order of the court striking a judgment annuls the original
judgment and the parties are left as if no judgment had been
entered... When determining a petition to open a judgment,
matters dehors the record filed by the party in whose favor the
warrant is given, i.e., testimony, depositions, admissions, and
other evidence, may be considered by the court. Hazer v.
Zabala, 26 A.3d 1166, 1169 (Pa.Super. 2011) (citations omitted).
Osprey Portfolio, LLC v. Izett, 32 A.3d 793, 795–96 (Pa.Super. 2011),
aff'd, 620 Pa. 274, 67 A.3d 749 (2013).
Appellant’s first two issues require a determination as to whether
Appellees signed a contract under seal when they executed the Promissory
Notes, as this finding dictates whether the twenty-year statute of limitations
found set forth in 42 Pa.C.S.A. § 5529(b)(1) is applicable. Black’s Law
Dictionary defines “seal” generally as “[a] design embossed or stamped on
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paper to authenticate, confirm, or attest; an impression or sign that has legal
consequence when applied to an instrument.” Black’s Law Dictionary 1550
(10th ed. 2014). In Beneficial Consumer Discount v. Dailey, 644 A.2d 789(Pa.Super. 1994), this Court stated:
[i]t is well-established that, although a vestige of the past,
the contract under seal may still operate to lengthen the statute
of limitation. The Daileys argue forcefully-and we do not think
anyone would disagree-that an ordinary consumer transaction
hardly represents the solemnity that was once envisioned by a
party signing a contract under seal. Yet, this court has held, in
accord with many cases written by our Supreme Court, that when
a party signs a contract which contains a pre-printed word “SEAL,”
that party has presumptively signed a contract under seal. Klein
v. Reid, 422 A.2d 1143 (1980).
Id. at 790. A contract under seal operates to lengthen the statute of limitation
and an instrument containing the word “seal” or its equivalent is deemed a
sealed instrument if the maker adopts the seal through his or her signature.
See Swaney v. Georges Township Road District, 309 Pa. 385, 164 A. 336(1932); Collins v. Tracy Grill & Bar Corp., 19 A.2d 617 (Pa.Super. 1941).
Herein, each of the Promissory Notes contains a paragraph entitled
“Waiver” which includes the following language: “Borrower intends this to be
a sealed instrument and to be legally bound thereby.” Appellant maintains
this statement alone evinces the parties created a sealed instrument under
which they intended to be bound. Consolidated Brief of Appellant at 19-20.
We disagree.
As stated previously, the Judicial Code provides that, generally, “[a]n
action upon a contract, obligation or liability founded upon a writing not
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specified in paragraph (7), under seal or otherwise, except an action subject
to another limitation specified in this subchapter” must be commenced within
four years. 42 Pa.C.S.A. § 5525(a)(8). However, the General Assembly has
made the decision to provide a twenty-year statute of limitations to
instruments under seal. 42 Pa.C.S.A. § 5529(b)(1) entitled “Twenty year
limitation” reads, in pertinent part:
(b) Instruments under seal.—
(1) Notwithstanding section 5525(7) (relating to four year
limitation), an action upon an instrument in writing under seal
must be commenced within 20 years.
Id.
In holding that the term “under seal or otherwise” as used in the four-
year statute of limitations applicable to written contract actions means “under
seal or not under seal” and that the four-year statute, rather than the six-year
general statute, applies to written contracts not under seal, this Court
reasoned as follows:
When faced with an issue of statutory construction, the goal of a
court should be to effectuate the intention of the legislature. 1
Pa.C.S. § 1921(a). “When the words of a statute are clear and
free from all ambiguity, the letter of it is not to be disregarded....”
1 Pa.C.S. § 1921(b). Here, the words of the statute are clear and
free of ambiguity. The statute of limitations for an action based on
“a contract, obligation or liability founded upon a writing ... under
seal or otherwise” is four years. The words and phrases used in a
statute are to be construed according to rules of grammar and in
accord with their common and approved usage. 1 Pa.C.S. §
1903(a). The term “otherwise,” when used as an adjective is
synonymous with “different” or “other.” MacMillan Contemporary
Dictionary 713 (1979). It seems clear, therefore, that the
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words “under seal or otherwise” can only mean “under seal
or not under seal.” It cannot mean under seal or in a
manner having the effect of a seal.
Packer Soc. Hill Travel Agency, Inc. v. Presbyterian Univ. of
Pennsylvania Med. Ctr., 635 A.2d 649, 651 (Pa.Super. 1993) (emphasis
added). We further stressed that “the history of our system of law in this
Commonwealth [ ] has always recognized a longer period of limitation for
contracts under seal.” Id. at 652.
In addition, “this [C]ourt has held, in accord with many cases written by
our Supreme Court, that when a party signs [an instrument] which contains a
pre-printed word ‘SEAL,’ that party has presumptively signed [an instrument]
under seal.” In re Estate of Snyder, 13 A.3d 509, 513 (Pa.Super. 2011)
(citations omitted), appeal denied, 611 Pa. 652, 25 A.3d 329 (2011). Therein,
in finding that the trial court properly had classified each of the pertinent
instruments before it as “an instrument in writing under seal” pursuant to 42
Pa.C.S.A. § 5529(b)(1), we first noted that all of the documents qualified as
“instruments” because each defined the rights, duties, entitlements, and
liabilities of the parties involved. Id. at 513 (citing Black's Law Dictionary 813
(Brian A. Garner ed., 8th ed. 2004) (stating that an instrument is “[a] written
legal document that defines rights, duties, entitlements, or liabilities, such as
a contract, will, promissory note,” or “in fact, any written or printed document
that may have to be interpreted by the Courts”)).
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We stressed the documents memorializing both a $6,000.00 mortgage
and a $20,000.00 mortgage, along with the documents memorializing the
several bond and warrant securities underlying each mortgage, “categorically
specif[ied] that each instrument was signed under seal.” We concluded that
“[b]ecause each document specifies that it is under seal, our law presumes
that the signatories of each document have, in fact, signed an instrument
under seal. See Beneficial Consumer Discount, [v. Dailey, 644 A.2d 789(Pa.Super. 1994)] [ ] at 790.” Therefore, we held the twenty-year statute of
limitations time period set forth in § 5529(b)(1) was the applicable limitations
period for the facts in that case. Id. Similarly, in Osprey, supra, our
Supreme Court noted the Promissory Note at issue “included a confession of
judgment clause and stated that it was ‘executed under seal’ with the
designation ‘(SEAL)’ as part of the signature line.” Id. at 274-75, 67 A.3d at
750.
To the contrary, in the matter sub judice, there is no passage as part of
the signature lines on the Promissory Notes or elsewhere to the effect that the
parties have caused the agreement to be duly executed and sealed. Indeed,
there is no language anywhere thereon to indicate the Notes had been “signed
under” or “given under seal,” nor does the pre-printed word “SEAL” or other
such mark appear anywhere near either of the Appellee’s signature.
Moreover, Appellant has cited to no caselaw, nor has our research
uncovered any, to support a position that the single reference buried in the
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“Waiver” paragraph of the Promissory Notes that Appellees intend the
documents to be sealed instruments is sufficient to presumptively create a
sealed instrument. See Trial Court Opinion, filed 12/14/16, at 11.7 An
“intention” that something is to be a sealed instrument does not mean that it,
in fact, is one, for “what statute of limitations will apply to instruments under
seal if a seal is, for all purposes, not only surplusage but also meaningless?”
Toll v. Pioneer Sample Book Co., 373 Pa. 127, 132, 94 A.2d 764, 766
(1953); see also Packer Soc. Hill Travel Agency, supra. Accordingly, we
do not disturb the trial court’s holding that the Promissory Notes are not sealed
instruments and, therefore, the twenty-year statute of limitations under
Section 5529(b)(1) for instruments in writing under seal under Section 5529
is inapplicable.
In his third issue, Appellant posits that because Appellees failed to
demonstrate that there were compelling reasons for their delay in filing their
Petitions to Strike and/or Open Confessed Judgments in accordance with
Pa.R.C.P. 2959, their petitions should be denied. Appellant further maintains
that the Confessed Judgments were not void on their face but, rather, were
merely voidable because there was not fatal defect in them. Consolidated
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7 In its Opinion of January 26, 2017, filed Pursuant to Pa.R.A.P. 1925(a)
following appeal, the trial court incorporated its December 14, 2016, Opinion
and indicated that for the reasons set forth therein, its Orders entered on
December 14, 2016, should be affirmed; however, the two, referenced Orders
were docketed on December 14, 2016, and December 19, 2016.
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Brief for Appellant at 39. With regard to this issue, in its Opinion filed on
December 14, 2016, in support of its decision to strike confessed judgment,
the trial court stated:
The court is well aware that [Appellees] filed [their] petition
to strike or open beyond the thirty-day period required under
Pa.R.C.P. 2958.1(a). However, [Appellees’] error cannot be used
to defeat [their] petition: “historically void confessed judgments
could be stricken off or opened at any time as they were
considered a legal nullity because the court lacked subject matter
jurisdiction over the matter…[A] void judgment is a mere blur on
the record, and which it is the duty of the court of its own motion
to strike off, whenever its attention is called to it.” M & P Mgmt.,
L.P. v. Williams, 937 A.2d 398 (Pa. 2007). In this case, the
judgment is void because it contains a fatal flaw, even though
[Appellees] failed to timely petition this court.
Trial Court Opinion, filed 12/14/16, at 12 n. 7.8 In considering this issue, we
are mindful of the following:
“A petition to strike a judgment is a common law proceeding which
operates as a demurrer to the record. A petition to strike a
judgment may be granted only for a fatal defect or irregularity
appearing on the face of the record.” Resolution Trust Corp. v.
Copley Qu–Wayne Associates, 546 Pa. 98, 106, 683 A.2d 269,
273 (1996).
In considering the merits of a petition to strike, the court
will be limited to a review of only the record as filed by
the party in whose favor the warrant is given, i.e., the
complaint and the documents which contain confession
of judgment clauses. Matters dehors the record filed by
the party in whose favor the warrant is given will not be
considered. If the record is self-sustaining, the judgment
will not be stricken.... An order of the court striking a
judgment annuls the original judgment and the parties
are left as if no judgment had been entered.
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8The trial court reached the same conclusion in its May 25, 2017, Opinion in
support of its Order entered on December 30, 2016, granting Appellee John
A. Arena’s Motion to Strike Confessed Judgment.
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Hazer v. Zabala, 26 A.3d 1166, 1169 (Pa.Super. 2011) (quoting
Resolution Trust Corp., supra). In other words, the petition to
strike a confessed judgment must focus on any defects or
irregularities appearing on the face of the record, as filed by the
party in whose favor the warrant was given, which affect the
validity of the judgment and entitle the petitioner to relief as a
matter of law. ESB Bank v. McDade, 2 A.3d 1236, 1239
(Pa.Super. 2010). “[T]he record must be sufficient to sustain the
judgment.” Id. The original record that is subject to review in a
motion to strike a confessed judgment consists of the complaint
in confession of judgment and the attached exhibits. Resolution
Trust Corp., supra at 108, 683 A.2d at 274.
Neducsin v. Caplan, 121 A.3d 498, 504 (Pa.Super. 2015), appeal denied,
635 Pa. 726, 131 A.3d 492 (2016).
In M & P Management, L.P. v. Williams, 594 Pa. 489, 937 A.2d 398(2007) the Pennsylvania Supreme Court reversed this Court’s prior
determination that Pa.R.C.P. 2959(a)(3)9 had been intended to eliminate the
potential for striking off or reopening a confessed judgment after the thirty-
day time period announced in the rule regardless of whether the judgment
was void, voidable or valid. In doing so, the Court determined that even
though the petition to strike the confessed judgment at issue therein had not
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9 Rule 2959. entitled “Striking Off or Opening Judgment; Pleadings;
Procedure,” states, in relevant part:
(3) If written notice is served upon the petitioner pursuant to Rule
2956.1(c)(2) or Rule 2973.1(c), the petition shall be filed within
thirty days after such service. Unless the defendant can
demonstrate that there were compelling reasons for the delay, a
petition not timely filed shall be denied.
Pa.R.C.P. 2959(3).
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been filed until two years after judgment was entered, “[a] void judgment
arises when the court lacks subject matter jurisdiction, and a judgment from
a court that lacks jurisdiction cannot be made valid through the passage of
time.” Id. at 490-91, 937 A.2d at 398. The Court further reasoned that
“where the court lacked jurisdiction, as it does when it enters a void confessed
judgment, the court cannot enter a valid judgment, no matter how much time
has passed.” Id. at 494, 937 A.2d at 401. Consequently, because the lower
court had not made a determination as to the status of the confessed
judgment, the Supreme Court remanded for a determination as to whether
the judgment at issue actually was void and for the issuance of an appropriate
order following its determination. Id.As stated previously, a four-year statute of limitations period generally
applies to an action under contract, while the statute of limitations governing
an unsealed negotiable instrument is six years. See 42 Pa.C.S.A. § 5525; 13
Pa.C.S.A. § 3118(a). Finding it unnecessary to discuss which statute governed
the Promissory Notes herein, the trial court found that Appellant confessed
judgment beyond the longer, six-year time period as invoked by Appellees.
See Trial Court Opinion, filed 12/14/16, at 4 n. 9, 11; see also, Trial Court
Opinion, filed 5/25/17, 3. The Promissory Notes dated March 24, 2005, were
due on September 1, 2005. The third Note was due on January 31, 2010.
Assuming, arguendo, the Notes are governed by a six-year statute of
limitations under the Uniform Commercial Code, 13 Pa.C.S.A. § 3104,
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Appellant filed his Complaints in Confession of Judgment on May 25, 2016,
almost eleven years after the six-year statute of limitations had run on the
initial notes and four months after it had expired on the third Note.
Given that the Complaints in Confession of Judgment were filed after
both the four-year and six-year statute of limitations had expired, the
Judgments in Confession were void, and the trial court properly entered the
Orders striking the same. M.& P. Mgmt., supra.
Orders affirmed.
Judge Ott joins the Opinion.
Judge Stabile files a Dissenting Opinion.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/12/18
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