K & S Joint Ventures v. OPC Mining Co. ( 2016 )

J-A31031-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
K & S JOINT VENTURES, IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
OPC MINING COMPANY AND DANIEL W.
STEES, INDIVIDUALLY AND AS
PRESIDENT OF OPC MINING COMPANY,
Appellants No. 313 MDA 2015
Appeal from the Order Entered February 9, 2015
in the Court of Common Pleas of York County
Civil Division at No.: 2011-SU-4459-40
BEFORE: PANELLA, J., LAZARUS, J., and PLATT, J.*
MEMORANDUM BY PLATT, J.: FILED JANUARY 08, 2016
Appellants, OPC Mining Co. and Daniel W. Stees, appeal from the trial
court’s order denying their petition to strike or open the confessed judgment
filed against them by Appellee, K & S Joint Ventures. We affirm on the basis
of the trial court’s opinion.
We take the following facts from our independent review of the record
and the trial court’s March 25, 2015 opinion. Appellant Stees is the
president of Appellant OPC. On September 18, 2000, Appellee and Appellant
OPC entered into a commercial lease agreement. The same day, Appellee
____________________________________________
*
Retired Senior Judge assigned to the Superior Court.
J-A31031-15
and Appellant Stees entered into a guaranty agreement. The guaranty
provides, in pertinent part, that Appellant Stees is liable to Appellee for “any
amounts unpaid . . . as a result of loss (reasonalbe [sic] wear and tear
excepted)[,] damages[,] or unlawful taking of any equipment [and] any
unpaid obligations of [OPC] as a result of alterations, improvements[,] or
additions to the premises . . . .” (Guaranty, 9/18/2000, at unnumbered
page 1 ¶ 1). On October 14, 2011, Appellee filed a complaint in confession
of judgment against Appellants on the bases that Appellant OPC failed to
maintain and repair equipment, failed to leave replaced equipment on the
premises after the termination of the lease, and removed a fixture from the
property. (See Complaint in Confession of Judgment, 10/14/11, at 2-3 ¶ 9).
The complaint confessed judgment in the amount of $95,694.20, which
included principal, interest, and attorney’s fees. (See id. at 4 ¶ 11).
On November 15, 2011, Appellants filed a petition to strike or open the
confessed judgment alleging that judgment was entered on a defective
basis. They specifically claimed that the guaranty does not contain Appellant
Stees’ signature, and that, even if it did, that the damages alleged in the
complaint exceed those actually sustained by Appellee. They further
asserted that the guaranty does not cover amounts that were paid by third
parties.
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J-A31031-15
On February 9, 2015, after argument, the submission of briefs, and
the completion of discovery, the court denied the petition to strike or open
the judgment. Appellants timely appealed.1
Appellants raise two questions for our review:
I. Did the trial court err in failing to strike the confessed
judgment for fatal defects or irregularities appearing on the
record?
II. Did the trial court err in failing to open the confessed
judgment where the petition was timely filed and set forth
allegations of a meritorious defense?
(Appellants’ Brief, at 4) (unnecessary capitalization omitted).
Appellants’ issues challenge the trial court’s denial of their petition to
open or strike the confession of judgment. Our standard review of this
matter is well-settled.
We review a trial court’s order denying a petition to strike
a confessed judgment to determine whether the record is
sufficient to sustain the judgment. A petition to strike a
judgment may be granted only if a fatal defect or irregularity
appears on the face of the record. Similarly, we review [an]
order denying [an] [a]ppellant’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.
____________________________________________
1
Appellants filed a timely statement of errors complained of on appeal on
March 2, 2015 pursuant to the court’s order. See Pa.R.A.P. 1925(b). The
court filed an opinion on March 25, 2015. See Pa.R.A.P. 1925(a).
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J-A31031-15
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.
Graystone Bank v. Grove Estates, L.P., 58 A.3d 1277, 1281-82 (Pa.
Super. 2012), affirmed, 81 A.3d 880 (Pa. 2013) (citation omitted).
After a thorough review of the record, the briefs of the parties, the
applicable law, and the well-reasoned opinion of the trial court, we conclude
that there is no merit to the issues Appellants have raised on appeal. The
trial court opinion properly disposes of the questions presented. (See Trial
Court Opinion, 3/25/15, at unnumbered pages 4-19) (finding: (1) petition
to strike properly denied where guaranty and warranty speak for
themselves, appear on their face to be signed by Appellant Stees, and all
items claimed in judgment amount authorized by warrant of attorney; (2)
petition to open properly denied where Appellants failed to produce evidence
to establish Appellant Stees did not sign the guaranty, that the property was
left with only normal wear and tear, that they did not remove equipment and
the canopy from the property, or that the judgment amount was excessive;
(3) the award of attorney’s fees in the amount of $4,310.55 is reasonable
where the principal balance was $86,210.99; and (4) pre-judgment interest
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J-A31031-15
in the amount of 6% is authorized legal rate in Pennsylvania). Accordingly,
we affirm on the basis of the trial court’s opinion.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/8/2016
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IN THE COURT OF COMMON PLEAS OF YORK COUNTY, PENNSYLVANIA
K&S JOINT VENTURES, : No. 2011-SU-4459-40
Plaintiff
vs.
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i Pa.R.A.P. 1925(a) MEMORANDUM OPlNJQtJ IN SUPPORT OF ORDER
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Defendants have ar ·3aled t'···:3 01.ie, . of the Court dated February 6, 2015
I
I
J and docketed February 9, 2015. Notice of the appeal was filed and received by
/[ this Court on February 18, 2015.
!1 Pursuant to Appellate Procedure, this Court ordered the Defendants to file
a Concise Statement of Matters Ccr .. lalned Of by its Order of February 25,
2015.
Defendants filed a Statement of 1\/1?-tters Complained Of on March 2, 2015.
After review of the record the Court is surprised to find that it's Opinion
Denying Defendants' Motion to Strike or Open Confessed Judgment was not
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docketed simultaneously with the Order that is currently on appeal. That Opinion
addresses the issues raised in this appeal and is provided below.
OPINION DENYING DEFENDANT'S PETITION TO STRIKE OR OPEN
CONFESSED JUDGMENT
Defendant OPC Mining Company and Daniel W. Stees, individually and as
President of OPC Mining Company, ("OPC" or "Stees") filed a Petition to Strike or
Open Confessed Judgment on November 15, 2011. Following the completion of
discovery in this matter, the Court heard oral argument on December 13, 2012.
Upon consideration of the pleadings filed· in this case, the factual record as _
established through discovery, and oral arguments, the Court has determined
11
r that the requirements for striking or opening judgment have not been met. The
Petition to Strike or Open Confessed Judgment is therefore DENIED.
•
Facts and Procedural History
On October 14, 2011, Plaintiff K&S Joint Ventures filed a Complaint in
Confession of Judgment against Defendant. Judgment was entered pursuant to
the Personal Guaranty Mr. Stees allegedly entered into with George Karandrikas
and Louis Skeparnias t/d/b/a K&S Joint Ventures. In that document, Mr. Stees
guaranteed the obligations incurred by OPC pursuant to the Commercial Lease
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Agreement with K&S Joint Ventures dated September 18, 2000.1 Paragraph 26
of the Lease Agreement and Paragraph 5 of the Guaranty contain warrants of
attorney authorizing the entry of confessed judgment upon default. There is no
dispute over the Lease Agreement, the issues in this case concern the Guaranty.
On October 14, 2011, Defendant filed a Petition to Strike or Open
Confessed Judgment. It is alleged in the Petition that the Guaranty does not
contain.Mr. Stees' signature, and, even if it did, that the damages alleged exceed
the actual damages sustained by Plaintiff and/or that the Guaranty does not
cover amounts paid by third parties, and that the judgment was entered on faulty
bases further set forth in Defendant's Answer to the Complaint. Defendant's
Answer more fully addresses the argument that Mr. Stees did not sign the
Guaranty and the allegation that Plaintiff did not incur the expenses claimed
because the property was not damaged beyond normal wear and tear.
This Court determined that the Petition stated prima facie grounds for
relief and a rule to show cause was issued. Pa. R. Civ. P. No. 2959(b); Ohio Pure
Foods, Inc. v. Barbe, 548 Pa. 373, 376, 697 A.2d 252, 254 (1997). The Rule
ordered the completion of depositions by March 30, 2012 and provided that
argument would be held upon motion of any Party following the completion of
depositions. Plaintiff filed an Answer to the Petition and written discovery was
exchanged. George Karadrikas, Attorney Paul Lutz, and Gail Navaroli were each
1
There is an Addendum to the Lease Agreement dated July 31, 2010 that does not effect the
issues in this case. The Guaranty provides that the guarantor will guarantee the lease, even if it
is modified. (Guaranty ~2). If the Guaranty can be enforced against Mr. Stees, then Mr. Stees is
responsible for the lease terms and any amendment thereof.
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deposed on May 31, 2012. Plaintiff filed a Petition to Schedule Argument on
October 9, 2012. Oral argument was held on December 13, 2012.
Prior to the commencement of argument there was some confusion as to
whether the Court was hearing testimony or argument. The Court reiterated, as
was clear from Plaintiff's Petition to Schedule Argument and the Court's Order of
November 15, 2012 scheduling the argument, that argument, and not testimony,
was to be presented. Further,. the initial RTSC issued by the Court clearly
··- .,.
indicated that depositions were to occur and that argument alone wouid be held
upon the completion of discovery. Following argument, the Court entered an
Order Taking the Matter under Advisement that required Counsel to provide the
Court with a copy of the discovery conducted in this case and permitted the
Parties to file memorandum if they liked. The Court received copies of the
discovery on January 8, 2013 and Plaintiff filed a Memorandum of Law in
Opposition to Defendant's Petition on January 9, 2013.
Issues Presented
(1) Whether there is a fatal defect or irregularity on the face of the record
requiring the Court to strike the confession of judgment.
(2) Whether Defendant has alleged a meritorious defense requiring the
Court to open the confession of judgment.
Discussion
Pennsylvania law allows one contracting party to confess judgment
against the other pursuant to a warrant of attorney, strictly complied with, upon a
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breach of the terms of the agreement containing the warrant of attorney. A party
who enters into an agreement containing a warrant of attorney has granted the
other contracting party the authority, upon the occurrence of a specified event,
"to enter that which results ordinarily only after a trial of the issue between the
parties, i.e., a judgment." Scott Factors, Inc. v. Hartley, 425 Pa. 290, 293, 228
A.2d 887, 888 (1967). Cognizant of the risk of abuse inherent in such a grant of
. power to an attorney, the Supreme Court has noted that the courts must strictly
review these judgments when determining their validity. Scott Factors, 228 A.2d
at 888. The party against whom judgment is confessed can seek to have the
judgment opened and/or stricken pursuant to Pennsylvania Rule of Civil
Procedure No. 2959. All grounds for relief opening and/or striking judgment must
be filed in a single Petition and all defenses and objections not included in the
Petition are waived. Pa. R. Civ. P. No. 2959(a)(1) & (b). A Petition to Strike may
be granted only for a fatal defect or irregularity appearing on the record. Franklin
Interiors v. Wall of Fame Management Company, Inc., 510 Pa. 597, 601, 511
A.2d 761, 763 (1986); see also Parliament Industries, Inc. v. William H. Vaughan
& Co., Inc., 501 Pa. 1, 459 A.2d 720 (1983). A Petition to Open may be granted
only when the movant "acts promptly, alleges a meritorious defense and presents
sufficient evidence of that defense to require submission of the issues to the
jury." First Seneca Bank v. Laurel Mt. Development Corp., 506 Pa. 439, 443, 485
A.2d 1086, 1088 (1984).
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I. Petition to Strike the Confession of Judgment
A valid warrant of attorney must be self-sustaining; it "must be in writing
and must be signed by the person to be bound." L.B. Foster, 409 Pa. 318,
322, 186 A.2d 18, 20 (1962). In addition, the Supreme Court has required that
the signature of the party to be bound must directly relate to the warrant of
attorney. Frantz Tractor Co. v. Wyoming Valley Nursery, 384 Pa. 213, 216, 120
A.2d 303, 305 (1956). Further, ."[i]f a confessed judgment includes an item not
authorized by warrant, the judgment is void in its entirety and must be
stricken ... However, if the judgment as entered is for items clearly within the
judgment note, but excessive in amount, the court will modify the judgment and
cause a proper judgment to be entered." Dollar Bank, Fed. Sav. Bank v.
Northwood Cheese Co., 431 Pa. Super 541, 551-552, 637 A.2d 309, 314 (1994).
In the present case, on the face of the Guaranty there is a warrant of
attorney permitting the confession of judgment upon default of the terms of the
Lease Agreement and providing that the judgment will reflect any amount of
damages to which the Lessor (Plaintiff) is entitled to under the Guaranty and the
Lease Agreement, including attorney's fees. (Guaranty ,I5). A signature that
appears to be Mr. Stees' is on the face of the Guaranty, at the end of the
contract, subsequent to the clause containing the warrant or attorney. The claim
that Mr. Stees did not sign the contract is a defense to this action and not a fatal
defect. The only defect or irregularity on the record that has been identified by
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Defendant is that the judgment amount includes damages that Plaintiff did not
incur and reflects amounts paid by third parties.
Defendant specifically argues that the expenses Plaintiff claims to have
incurred were in fact improvements and changes to the property that Plaintiff or a
third party chose to make, not expenses Plaintiff had to incur as a result of
abnormal damage done to the· property by Defendant. Further, Defendant
argues that all the documents purporting to establish the amounts claimed due in
fact reflect amounts paid by a third party, not Plaintiff, and that Defendant is not
responsible under the Guaranty for those amounts. Plaintiff claims that the
amount of damages awarded by the Confessed Judgment fall "squarely within"
the language of the Guaranty. The Court can only strike the confession of
judgment if it contains an item not authorized by the warrant of attorney. ..
Paragraph 1 of the Guaranty provides that the Guarantor "irrevocably
guarantees to Lessor ... the payment of any amounts unpaid by Tenant as a result
of any loss (reasonalbe [sic.] wear and tear excepted) damages or unlawful
taking of any equipment. .. [and] any unpaid obligations of Tenant as a result of
alterations, improvements or additions to the premises." In the Complaint in·
Confession of Judgment, Plaintiff identifies as the breach that Defendant failed to
maintain and repair equipment subject to the Lease Agreement, failed to leave
replaced equipment on the premises after termination of the lease, and removed
a fixture (a canopy) from the premises. Plaintiff also identifies the expenses it
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incurred to repair property damage and/or replace property damaged as a result
of Defendant's failure to return the property to its original condition. The
Guaranty permits Plaintiff to seek damages on these grounds. Therefore,
judgment was entered only for items permitted by the agreement and the
judgment cannot be stricken.
Defendant c1_rgues that he in fact left the property with only normal wear
and tear and that Plaintiff incurred no damages on that basis and that the
damages claimed were in fact incurred by a third party. First, whether the
property was in good condition and whether the expenses incurred were
necessary because the property was not left with only normal wear and tear are
not appropriate grounds for striking judgment.- The Court can modify the
judgment if it is excessive without striking the judgment. Also, that the property
was in good condition is a meritorious defense in this action and more properly
addressed with regard to the request that the Court open the judgment. Second,
the Defendant has failed to identify any provision of either the lease or guarantee
that would prevent Plaintiff from including expenses incurred by third parties for
the benefit of the property in the judgment amount. The Court has also been
unable to locate any such provision. The judgment cannot therefore be stricken
because it includes only items permitted by the note.
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Plaintiff also states in the Complaint that the judgment amount reflects a
6% interest rate and attorney's fees in the amount of 5% of the principal balance.
The six percent interest rate is the legal rate of interest in Pennsylvania, 41 P.S.
§ 202, and no provision of the Lease Agreement or the Guaranty mandates any
different interest rate. The award of attorney's fees in the amount of 5% of the
judgment is permitted by the warrant of attorney.
In conclusion, the Petition to Strike is denied because there are no facial
defects or irregularities on the face of the record. Specifically, the Guaranty, and
warrant of attorney contained therein, speak for themselves and appear on their
face to be signed by Mr. Stees. In addition, the items claimed in the judgment
amount confessed are authorized by the warrant of attorney. Whether those
items accurately reflect the damages incurred is a meritorious defense raised by
Defendant in his request that the Court open the judgment. Also, whether the
judgment should be modified because the award is excessive or attorney's fees
unreasonable will be discussed at the close of this opinion.
II. Petition to Open the Confession of Judgment
Three requirements must be met in order for the Court to open judgment.
J-.
First, the Petitioner must act promptly. Plaintiff concedes that Defendant acted
promptly and the Court agrees. Second, the Petitioner must allege a meritorious
defense. Defendant identifies three allegedly meritorious defenses: (1) that Mr.
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Stees did not sign the Guaranty; (2) that, if the Guaranty does contain Mr. Stees'
signature, the Guaranty only covers actual damages sustained by Plaintiff, of
which there are none; and (3) that, if the Guaranty does contain Mr. Stees'
signature, the Guaranty does not permit the award of damages representing
amounts paid by third Parties.
The third requirement provides that the Petitioner must "'present evidence
of that defense. to require submission to a jury."' Germantown Mfg. Co. v.
Rawlinson, 341 Pa. Super. 42, 46, 491 A.2d 138, 140 (1985) (quoting Weitzman
v. Ulan, 304 Pa. Super. 204, 209, 450 A.2d 173, 176 (1982)); see also Pa. R.
Civ. Pro. No. 2959(e). Under Pennsylvania law, the standard of sufficiency for a
Petition to Open Judgment by Confession is the same as that required for a
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
judgment." Germantown Mfg., 341 Pa. Super at 46-47 (quoting Weitzman, 304
Pa. Super. at 209). In ruling on a Petition to Open Judgment the Court shall not
speculate as to whether the jury would be persuaded by Defendant's
presentation. 7 Goodrich Amram 2d § 2959(e):1. In light of the requirement that
the Court consider the evidence in the light most favorable to Defendant,
testimony elicited by Plaintiff in contradiction to the testimony elicited by
Defendant has not been considered by the Court in its determination.
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To begin, the allegation that Mr. Stees did not sign the Guaranty has only
been presented in the Petition to Open or Strike Confessed Judgment, in the
Answer and Counterclaim, both filed on November 15, 2011, and in the oral
argument presented by Defense Counsel. The Petition and Answer were not
verified by Mr. Stees (they contained an attorney verification). Mr. Stees was not
deposed in this matter nor was Mr. Stees served with written discovery to which
he provided verified answers. Therefore, the record contains no testimony or
verified statements made by Mr. Stees stating that he did not sign the Guaranty.
The Court has also reviewed the transcripts of the depositions conducted in this
matter. Looking at the deposition testimony in the light most favorable to the
Defendant, the Court has determined that there is not sufficient evidence that
.. ..-
Defendant did not sign the Guaranty to require submission of the question to a .
jury.
Attorney Paul Lutz represented K&S in this transaction and prepared both
the Lease Agreement and the Guaranty. (Lutz Depa. at 8, line 25 & 9, lines 6-
18). Attorney Lutz testified that he did not believe that he was present when the
documents were executed, nor was he aware. whether the documents were
executed at the same time. (Lutz Depa. at 10, lines 8-18). In addition, Attorney
Lutz testified that he did not have a signed copy of the Guaranty in his files and
that he received, he believes, a copy of the executed Guaranty from Plaintiff.
(Lutz Depa. at 12, lines 17-20 & 13, lines 1-7). Gail Navaroli, Attorney Lutz's
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legal assistant, was also deposed. Ms. Navaroli testified that a year or two ago
she was asked to find the original signed Guaranty and that she was unable at
that time to find either the original or a signed copy. (Navaroli Depo. at 14, lines
24-25 & 15, lines 1-3). Ms. Navaroli could not recall who asked her originally to
find the Guaranty but she believes Mr. Skeparnias, one of the signatories to the
Lease Agreement and Guaranty on behalf of K&S, and Attorney Lutz each asked
her for it at one time or another. Ms. Navaroli also testified that Mr. Skeparnias
dropped off a copy of the signed Guaranty at Law Offices, although Ms. Navaroli
did not ask him why he was dropping the contract off and she assumed it was
because Law Offices did not have a copy. (Navaroli Depo. at 15, lines-15-25 &
16, lines 1-14). Mr. Karandrikas testified that he believed Attorney Lutz was
present at the signing of the lease and guarantee, that he probably received a
copy of the executed documents after the fact, that he did not know if anyone
else received copies of the executed documents, and that he does not recall
seeing an original Guaranty executed by Mr. Stees. (Karandrikas Depo. at 17,
line 25 & 18).
Written discovery also reiterated the fact that Plaintiff does not possess
the original Guaranty. Defendant argued that Plaintiff did not plead that the
original document had been lost, misplaced, stolen or destroyed, and, therefore,
Plaintiff did not establish the necessary grounds for allowing a copy of the
contract to be admitted into evidence. Defendant is specifically upset that the
original document was not produced because he wished to conduct a
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handwriting examination of the document. It does not matter that the original
does not exist; if. the original is lost then the copy is sufficient. First, the best
evidence rule (Pa. R. Evid. No. 1002) concerns the admissibility of documents; it ·
is not a defense that if proven at trial would entitle a party to judgment in their
favor. Second, Defendant never served supplemental interrogatories asking
who, if anyone, might possess the original document. Third, Defendant did not
seek recourse in the judiciary in order to find the missing original Guaranty.
Fourth, there is no evidence that the Plaintiff has lost or destroyed the document
in bad faith. Fifth, there is no evidence that Plaintiff ever had the original
Guaranty. Finally, and most importantly, even if the failure to produce the
original Guaranty was a meritorious defense, or a fatal defect on the record,
Defendant did not raise the argument in the Petition to Open or Strike and the
argument is therefore waived.
It is clear that there no evidence has been produced that would warrant
referring the question of whether Mr. Stees signed the Guaranty to a jury. The
original document has been misplaced, but a copy of a Guaranty containing a
signature above the signature line reserved for Mr. Stees has been produced. In
addition, the Lease Agreement, which Mr. Stees does not dispute signing,
requires Mr. Stees to sign a personal guarantee. Further, the Guaranty was in
fact signed and witnessed and Defendant produced no evidence to the contrary.
None of the witnesses that testified were present at the signing of the Guaranty.
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The witnesses to the execution of the Guaranty were not deposed. Further, that
Attorney . Lutz's Law Offices could not locate the original or a copy of the
executed Guaranty is not sufficient evidence to establish that an executed
Guaranty never existed because, in fact, a copy of the Guaranty containing the
signatures of all the Parties involved plus witnesses has been produced. Finally,
no argument or evidence has been presented that the signature on the Guaranty
was not Mr. Stees'. It has only been argued that Mr. Stees did not sign the
Guarantee, not that the Guarantee contains a forged signature. Therefore,
judgment will not be opened.
Defendant's final two meritorious defenses again concern allegations that
the amount confessed in the judgment was inappropriate because it reflected
damages not incurred by Plaintiff, but in fact expenses paid by third parties. The
Court has determined that the items claimed in the confession of judgment were
permitted by the warrant of attorney because they arise from damage Plaintiff
claims was done to the property beyond normal wear and tear and because there
is no contractual provision preventing the inclusion of third party expenses.
Defendant raises as a meritorious defense that the property was left with only
normal wear and tear and that the judgment amount confessed is therefore not
permitted by the Guaranty.
II
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There is nothing in the record beyond the claim in the Petition and
Answer, both of which have not been verified by Mr. Stees, that the property was
left with only normal wear and tear. It is alleged in the Petition that George
Karanicolas [sic.], one the partners of K&S, will testify that the property only had
normal wear and tear immediately prior to Defendant vacating the premises. Mr.
Karadrikas in fact did not provide such testimony and instead testified that in
September or October of 2010 he went to the property for a beer and that he
could not recall the condition of the property. In addition, Mr. Karandrikas
testified that he had not and did not conducting any sort of inspection. Mr.
Skeparnias, the other partner of K&S and the father of the current tenants, was
not deposed. In addition, Plaintiff has produced photographic evidence in
response to Defendant's written discovery requests evidencing the alleged
damage to the property. Defendant has provided no documentary evidence to
contradict those photos. Defendant has not presented sufficient evidence that
the property was left in an acceptable condition and this issue need not be
submitted to a jury.
The Court may modify an excessive judgment award. In this case,
Defendant has made no argument nor presented any evidence that the judgment
amount is excessive. The principal balance that formed the basis of the
judgment award in this case totaled $86,210.99. The lease, which was in effect
for ten years, originally provided for rent in the amount of $276,000 for a term of
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three years. It is evident therefore, that Defendant must have spent over
$900,000 in rent for the property over the course of the approximately ten years.
It is not unreasonable that Defendant and his business, a restaurant, caused
about $86,000 of damage to the property over that period of time, and Plaintiff
has produced photographic documents reflecting the claimed damage. Further,
the judgment amount includes the equipment and fixtures Plaintiff alleges the
Defendant removed from the property and failed to replace. Defendant has
provided no evidence to contradict that allegation.
In addition, no argument has been made by Defendant that attorney's fees
awarded in this case, 5% of the principal for a total of $4,310.55, are excessive.
We will note that the Superior Court in Dollar Bank refused to strike an award of
attorney's fees in the amount of 15% of the principal in a confessed judgment
because the award was "specifically authorized by the warrant of attorney."
Dollar Bank, 431 Pa. Super at 552. While a court may modify a confessed
judgment where the attorney's fees awarded are excessive, the Superior Court
refused to do so as Appellant did not "make any argument as to why the fees are
claimed to be excessive" or cite any evidence on the record supporting the claim
that the fees were excessive. Id.; see also RAIT Partnership v. E. Pointe
Properties, 2008 PA Super 225, 957 A.2d 1275 (2008). Accordingly, the Court
finds no evidence that the judgment amount is excessive and modification of the
award on that basis is therefore inappropriate. The only consideration left to the
Court is whether the attorney's fees awarded are reasonable.
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In general, each party is responsible for their own attorney's fees unless
the award of fees is authorized by statute, agreement, or other exception. It is
within the "sound discretion" of the trial court to determine the reasonableness of
a fee. In Re Estate of LaRocca, 431 Pa. 542, 547 (1968). Where an agreement
between parties permits the award of attorney's fees but is silent as to whether
those fees must be reasonable, the Supreme Court has determined that the trial
court may consider the reasonableness of the claimed fees and reduce the fees,
if appropriate, and has held that a trial court has the authority to consider the
reasonableness of fees. McMullen v. Kutz, 603 Pa. 602, 615 (2009). The
Supreme Court has established that the following factors are to be considered in
a court's determination of the reasonableness of attorney's fees:
"[1] the amount of work performed; [2] the character of services
rendered; [3] the difficulty of the problems involved; [4] the
importance of litigation; [5] the amount of money or value of the
property in question; [6] the degree of responsibility incurred; [7]
whether the fund involved was 'created' by the attorney; [8] the
professional skill and standing of the attorney in his profession; [9]
the results [the attorney] was able to obtain; [1 OJ the ability of the
client to pay a reasonable fee for the services rendered; and very
importantly [11] the amount of money or the value of the property in
question." LaRocca, 431 Pa. 546.
LaRocca, 431 Pa. at 546. The Superior Court has required that all the
factors be considered by the trial court when determining the
reasonableness of fees. McMullen, 925 A.2d 832, 836 (Super.Ct. 2007);
Estate of Murray v. Love, 602 A.2d 366, 370 (Sup.Ct. 1992).
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The amount of work involved in confessing judgment is, in general,
somewhat minimal. Essentially, all that required is the filing of the Confession of
Judgment and Complaint in Confession of Judgment with the Prothonotary. In
this case, Counsel determined that a breach pursuant to the Lease and Guaranty
had occurred, determined the expenses incurred by Plaintiff as a result of the
breach, identified the provisions of the contracts permitting the confession of
judgment against Mr. Stees personally, and Counsel listed in the Complaint each
breach and each expense incurred as a result of the breach. The services
rendered in this case were routine, but very thorough. There has been no
litigation in this case because judgment was confessed. Nevertheless, this
matter is clearly important to Defendant as he is seeking to either strike the
judgment, and make Plaintiff try again, or open the judgment and litigate the
matter. The amount of money at issue in this case also reflects the importance
of this matter.
The amount of money in question is a total judgment of $95,694.20,
reflecting the principal balance, interest, and the attorney's fees. The attorney's
fees awarded are the result of calculating 5% of the principal balance, without
interest. The principal balance at issue in this case is $86,210.99. As to the
degree of responsibility incurred, judgment was confessed because of
Defendant's breach. There are allegations that the damages were actually
incurred by the new tenant and that Plaintiff was not responsible for the expense.
However, Defendant has produced no evidence to support this allegation.
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Further, Defendant has produced no evidence that he did not remove fixtures or
equipment from the premises in violation of the Lease and Guaranty.
No fund has been created by any attorney in this case. Attorney Douglas
A. France, Counsel for Plaintiff, is highly skilled professionally in good standing
with the legal community. Attorney France did properly file a Complaint in
Confession of Judgment and judgment for his client was awarded. The Court
does not know whether Plaintiff is able to pay the reasonable attorney's fees, but
the Court has no reason to believe that Plaintiff could not pay the fees as Plaintiff
owns at least one property capable of producing rental income.
The Supreme Court advises that the most important factor is the amount
of money in question. As stated above, the amount of money in question is at
least the principal balance of $86,210.99. This is a substantial sum of money.
Counsel filed a thorough and correct Complaint in Confession of Judgment
without defect or irregularity and successfully secured for Plaintiff the large
judgment. After reviewing all the relevant factors, especially the amount of
money in question, the Court finds in this case that the award of attorney's fees
in the amount of $4,310.55 is reasonable.
Conclusion
In conclusion, the Court will DENY the Defendant's Petition to Strike or
Open Confessed Judgment filed on November 15, 2011. An Order consistent
with this Opinion will be entered.
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The Prothonotary shall forward copies of this Memorandum Opinion to
counsel of record.
n . Linebaugh, President Judge
19th Judicial District of Pennsylvania
=3 / ~-s I,_,{_
Date: __
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