Manufacturers and Traders Trust v. Jenner's Common ( 2014 )

J-A25022-14
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
MANUFACTURERS AND TRADERS TRUST IN THE SUPERIOR COURT OF
COMPANY PENNSYLVANIA
Appellee
v.
JENNER’S COMMONS, LLC, C. DAVID
MURTAGH & JUDITH W. MURTAGH
Appellants No. 622 EDA 2014
Appeal from the Order Entered on January 29, 2014
In the Court of Common Pleas of Chester County
Civil Division at No.: 13-02215-JD
BEFORE: DONOHUE, J., WECHT, J., and PLATT, J.*
MEMORANDUM BY WECHT, J.: FILED NOVEMBER 03, 2014
Jenner’s Commons, LLC, C. David Murtagh, and Judith W. Murtagh
(collectively, “Appellants”) appeal from the order of January 29, 2014, which
denied their petition to strike or open a judgment entered by confession.
We vacate the order.
Between May 10, 2006 and December 29, 2011, Appellants and
Manufacturers and Traders Trust Company (“M&T”) entered into a series of
loans. Ultimately, Appellants borrowed more than six million dollars from
M&T for the construction of a commercial office project called Jenner’s
Commons in West Grove, Chester County, Pennsylvania. On December 29,
____________________________________________
*
Retired Senior Judge assigned to the Superior Court.
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2011, the parties entered into a forbearance agreement to resolve
Appellants’ defaults under the various loan agreements. The forbearance
agreement provided, in pertinent part:
4. Acknowledgments. Obligors [Appellants] acknowledge
and agree that (i) the Financing is in default, (ii) they have no
defenses or counterclaims against Lender [M&T] with respect to
the Financing, (iii) as of December 19, 2011, they were indebted
to Lender pursuant to the Financing in the principal amount of
$6,037,858.53, plus accrued interest thereon together with any
expenses, costs and fees incurred by Lender and (iv) they have
knowingly and voluntarily entered into this agreement with the
opportunity to seek advice from a professional of their own
choosing.
5. Waivers. Obligors waive and release Lender from any
claims or defenses that any of them may have against Lender in
connection with the making and administration of the Financing,
including this agreement.
* * *
7. Covenants and Agreements. . . . (iii) on January 1,
2012 and on the first day of each consecutive month thereafter,
Obligors shall pay Lender accrued interest on the Financing plus
principal payments based on twenty-year amortization
schedules. Unless sooner paid, on December 31, 2012, Obligors
shall pay Lender the outstanding principal amount of the
Financing plus accrued interest thereon together with any
expenses, costs and fees.
8. Events of Default. Each of the following shall constitute
an event of default (“Event of Default”) under this Agreement:
(i) a breach of any term of this Agreement or (ii) a default or
event of default under the Consolidation Note, West Chester
Mortgage or any of the other Financing Documents, as amended
by this Agreement.
* * *
20. Governing Law and Jurisdiction. This Agreement has
been delivered to and accepted by the Lender and will be
deemed to be made in the State of Delaware. This agreement
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will be interpreted and all the rights and liabilities of the
parties determined in accordance with the laws of the
state of Delaware, excluding its conflict of laws rules.
Each of the Obligors hereby irrevocably consents to the exclusive
jurisdiction of any state or federal court in the county or judicial
district where the Lender’s office indicated above is located;
provided that nothing contained in this Agreement will prevent
the Lender from bringing any action, enforcing any award or
judgment or exercising any rights against any of the Obligors
individually, against any security or against any property of any
of the Obligors within any other county, state or other foreign or
domestic jurisdiction.
Forbearance Agreement, 12/29/2011, at 2-3, 6 (emphasis in original).
The trial court set forth the history of this case as follows:
[M&T] confessed judgment against [Appellants] on March 11,
2013. On April 12, 2013, [Appellants] filed a verified petition to
strike and/or open the judgment to which [M&T] filed a
response. On September 30, 2013, [Appellants] filed a praecipe
for determination which caused the petition to come before the
court for decision. By order dated January 2[9], 2014, the
petition was denied. Although it would appear that depositions
were taken, no transcripts of those depositions were filed of
record although copies of transcripts were attached to the
parties’ briefs.
Trial Court Opinion (“T.C.O.”), 3/20/2014, at 1-2. Appellants timely
appealed on February 12, 2014, and filed a concise statement of errors
complained of on appeal on March 4, 2014. See Pa.R.A.P. 1925(b). On
March 20, 2014, the trial court entered its opinion pursuant to Rule 1925(a).
Appellants raise four questions for our review:
1. Whether the lower [c]ourt committed an error of law when
it failed to strike the [c]onfessed [j]udgment based on the
exclusive venue/jurisdiction provision of the forbearance
agreement upon which the [c]onfessed [j]udgment was entered
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that required that the action be filed in Delaware, not
Pennsylvania.
2. Alternatively, whether the lower [c]ourt abused its
discretion when it failed to open the [c]onfessed [j]udgment
based on the exclusive venue/jurisdiction provision of the
forbearance agreement upon which the [c]onfessed [j]udgment
was entered. The terms of the provision were ambiguous, and
[Appellants’] assertion of improper venue under the terms of
that provision provided a meritorious defense to the [c]onfessed
[j]udgment (requiring that the [c]onfessed [j]udgment be
opened).
3. Whether the lower [c]ourt abused its discretion when it
failed to open the [c]onfessed [j]udgment due to the inclusion of
unidentified fees in the amount of the [c]onfessed [j]udgment,
which provided a meritorious defense to the [c]onfessed
[j]udgment.
4. Whether the lower [c]ourt abused its discretion when it
failed to open the [c]onfessed [j]udgment due to [M&T]’s and its
predecessors’ breach of the duty of good faith and fair dealing,
which provided a meritorious defense to the [c]onfessed
[j]udgment?
Appellants’ Brief at 2.
In their first issue, Appellants contend that the court erred in denying
their motion to strike the confessed judgment, where M&T “filed this action
in an improper venue, because the [f]orbearance [a]greement upon which it
confessed judgment contains an exclusive jurisdiction/venue provision[]
that requires that this action be filed in Delaware, not Pennsylvania.” Id. at
23 (emphasis in original). We agree that the trial court erred in refusing to
strike the confessed judgment.
“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
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judgment.” Graystone Bank v. Grove Estates, LP., 58 A.3d 1277, 1281
(Pa. Super. 2012).
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.
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.
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. [T]he record must be
sufficient to sustain the judgment. 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.
Midwest Fin. Acceptance Corp. v. Lopez, 78 A.3d 614, 622-23 (Pa.
Super. 2013) (citations omitted).
The defect alleged to appear from the face of the judgment or
which is a matter of record must be specified in the petition or
application for relief.
A judgment is void on its face if one or more of three
jurisdictional elements is found absent: jurisdiction of the
parties; subject matter jurisdiction; or the power or authority to
render the particular judgment.
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Flynn v. Casa Di Bertacchi Corp., 674 A.2d 1099, 1105 (Pa. Super.
1996). “[A] trial court’s failure to ensure proper venue [is] a fatal defect
apparent on the face of the record.” Bingaman v. Bingaman, 980 A.2d
155, 158 n.8 (Pa. Super. 2009).
A warrant to confess judgment must be explicit and will be
strictly construed, with any ambiguities resolved against the
party in whose favor the warrant is given. . . .
Whether a judge has correctly interpreted a writing and properly
determined the legal duties which arise therefrom is a question
of law for the appellate court. The legal effect or enforceability
of a contract provision presents a question of law accorded full
appellate review and is not limited to an abuse of discretion
standard. A cornerstone principle of contract interpretation
provides that where the words of the document are clear and
unambiguous, we must give effect to the language.
Midwest Fin. Acceptance Corp., 78 A.3d at 623-624 (citations omitted).
Here, Appellants contend that the trial court erred in interpreting the
“Governing Law and Jurisdiction” clause in the forbearance agreement to
permit M&T to file the confessed judgment in Pennsylvania instead of
Delaware. Thus, they argue that this is a defect on the face of the
proceedings in light of the “exclusive venue/forum provision.” Appellants’
Brief at 23 (emphasis in original). The clause at issue provides, in pertinent
part:
This agreement will be interpreted and the rights and
liabilities of the parties determined in accordance with the
laws of the State of Delaware, excluding its conflict of
laws rules. Each of the Obligors hereby irrevocably consents to
the exclusive jurisdiction of any state or federal court in the
county or judicial district where the Lender’s office indicated
above is located; provided that nothing contained in this
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Agreement will prevent the Lender from bringing any action,
enforcing any award or judgment or exercising any rights
against any of the Obligors individually, against any security or
against any property of any of the Obligors within any other
county, state or other foreign or domestic jurisdiction.
Forbearance Agreement, 12/29/2011, at 6 ¶ 20 (emphasis in original).
The trial court found that this provision “does not bind [M&T] from
bringing an action in a jurisdiction other than the State of Delaware.” T.C.O.
at 3. However, upon examination, the provision explicitly states that
“[e]ach of the Obligors hereby irrevocably consents to the exclusive
jurisdiction of any state or federal court in the county or judicial district
where the Lender’s office indicated above is located[.]” Forbearance
Agreement, at 6 ¶ 20 (emphasis added). M&T has maintained that it is
located in Delaware throughout the proceedings, particularly in the record
established in the forbearance agreement and complaint in confession of
judgment. See id. at 1 (“This Forbearance Agreement . . . is made [by]
Manufacturers and Traders Trust Company, successor in interest to
Wilmington Trust FSB (‘Lender’), having an address at 1100 North Market
Street, Wilmington, Delaware 19890[.]”); see also Verified Complaint in
Confession of Judgment for Money, 3/11/2013, at 2 ¶ 1 (“Lender is a New
York corporation with an address at 1100 North Market Street, Wilmington,
Delaware 19890.”). Nowhere in the record does M&T contend that it has an
office in Pennsylvania. Therefore, the plain language of the provision at
issue indicates that, by M&T’s choice, only the courts where M&T’s offices
are located have “exclusive jurisdiction” over this action.
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The next clause in the provision qualifies the above-mentioned
jurisdictional selection with the language: “provided that nothing contained
in this Agreement will prevent the Lender from bringing any action,
enforcing any award or judgment or exercising any rights against any of the
Obligors individually, against any security or against any property of any of
the Obligors within any other county, state or other foreign or domestic
jurisdiction.” Forbearance Agreement, 12/29/2011, at 6 ¶ 20. Appellants
argue as follows:
[This provision] clearly only applies to attempts to collect after
obtaining a judgment, allowing M&T to pursue actions in other
jurisdictions “against any security or against any property of any
of the Obligors within any other county, state or other foreign or
domestic jurisdiction.” Here, the “within any other county, state
or other foreign or domestic jurisdiction” language follows and is
clearly modifying the term “security . . . or property of any of
the Obligors.”
Appellants’ Brief at 29 (emphasis in original). We agree.
M&T and the trial court’s favored interpretation, that M&T can bring
suit in any jurisdiction, undermines the entire provision, as it would
contradict the “exclusive” language of the previous sentence. To interpret
the “within any other county . . .” language as referring back to “nothing
contained in this Agreement will prevent the Lender from bringing any
action” would render the first clause, exclusively submitting to the
jurisdiction in which M&T’s office is located, meaningless. Cf. Midwest Fin.
Acceptance Corp., 78 A.3d at 631 (determining that clause “select[ing] a
forum of any court in any location” was not a forum selection clause
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circumventing procedural venue rules “as this would amount to selecting no
forum at all”).
Thus, the “Governing Law and Jurisdiction” clause permits M&T to
enforce an award against Appellants in any jurisdiction once the confessed
judgment has been obtained in a valid forum. We agree with Appellants that
the forbearance agreement contains a forum selection clause requiring the
confessed judgment to be brought in a state in which M&T’s offices are
located, which has not been shown to be Pennsylvania. Therefore, the
forbearance agreement is ambiguous in this regard. See Flynn, 674 A.2d at
1105; see also Midwest Fin. Acceptance Corp., 78 A.3d at 624 (“A
warrant to confess judgment must be explicit and will be strictly construed,
with any ambiguities resolved against the party in whose favor the warrant
is given.”).
Furthermore, in the affidavits authorizing confession of judgment
attached as exhibits to the forbearance agreement, each Appellant averred
as follows:
2. As set forth in that forbearance agreement, dated
December 29, 2011 (the “Agreement”), I hereby authorize
Manufacturers and Traders Trust Company (“Bank”) and its
successors and assigns to confess judgment against me in the
Superior Court of the State of Delaware in and for New Castle
County for up to $6,037,858.53 plus accrued interest thereof,
costs and expenses.
* * *
4. The contacts with the State of Delaware in the transaction
to which the Agreement relate are (i) the Agreement was
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accepted by the Bank in the State of Delaware and (ii) the
Agreement is governed by the laws of the State of Delaware.
Affidavit Authorizing Confession of Judgment against C. David Murtagh,
12/29/2011, at 2. Thus, M&T executed a forum selection clause choosing
the jurisdiction in which its offices were located, and obtained Appellants’
consent to confess judgment in the Superior Court of the State of Delaware.
M&T fails to identify anything in the record which would suggest that it has
an office located in Pennsylvania. Graystone, 58 A.3d at 1281.
“A forum selection clause in a contractual provision limits the place or
court in which an action may be brought.” Midwest Fin. Acceptance
Corp., 78 A.3d at 628 (discussing forum selection and venue rules in
confessed judgments). “[A] plaintiff’s choice of forum is to be given great
weight, and the burden is on the party challenging the choice to show it was
improper . . . . However, a plaintiff’s choice of venue is not absolute or
unassailable.” Zappala v. James Lewis Group, 982 A.2d 512, 518 (Pa.
Super. 2009).
While private parties cannot change by contract the rules of
jurisdiction or venue, a court should decline to proceed with the
cause when the parties have freely agreed that litigation shall be
conducted in another forum and where such agreement is not
unreasonable at the time of litigation. An agreement is
unreasonable if its enforcement would . . . seriously impair [the]
plaintiff’s ability to pursue its cause of action. A clause is not
unreasonable if it makes enforcing the agreement merely
inconvenient or expensive.
Morgan Trailer Mfg. Co. v. Hydraroll, Ltd., 759 A.2d 926, 930 (Pa.
Super. 2000); see also Autochoice Unlimited, Inc. v. Avangard Auto
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Fin., Inc., 9 A.3d 1207, 1209 (Pa. Super. 2010) (enforcing forum selection
clause where Florida was designated “sole venue to resolve disputes”).
M&T does not contend that enforcement of the forum selection clause
would be unreasonable; therefore, the trial court should have declined to
proceed where the parties freely agreed that the litigation should be
conducted in a state in which M&T’s office was located. See Morgan
Trailer Mfg. Co., 759 A.2d at 930. Thus, the court erred when it did not
give effect to M&T’s venue selection and resolve this issue in favor of
Appellants. Midwest Fin. Acceptance Corp., 78 A.3d at 624. M&T’s filing
the confessed judgment in Pennsylvania without any evidence that it was a
state in which M&T’s office was located is a fatal defect apparent on the face
of the record that compromises the validity of the judgment and entitles
Appellants to relief as a matter of law. See Flynn, 674 A.2d at 1105.
Accordingly, we vacate the order denying Appellants’ motion to strike and
remand to the trial court for entry of an order consistent with this
memorandum.1
Order vacated. Jurisdiction relinquished.
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1
In light of our disposition, Appellants’ remaining issues challenging the
denial of the motion to open are moot. See Flynn, 674 A.2d at 1105 n.4
(“[T]he petition to strike and the petition to open judgment are two different
forms of relief with separate remedies.”).
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/3/2014
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