Oehrle, a. v. Goldsmith, M. ( 2015 )

J-A16013-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
ALBERT C. OEHRLE, IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
MARCIA WOOLMAN GOLDSMITH AND
EDWIN M. GOLDSMITH, III,
Appellants No. 2241 EDA 2014
Appeal from the Order July 15, 2014
in the Court of Common Pleas of Montgomery County
Civil Division at No.: 12-31076
BEFORE: LAZARUS, J., OLSON, J., and PLATT, J.*
MEMORANDUM BY PLATT, J.: FILED JUNE 26, 2015
Appellants, Marcia Woolman Goldsmith and Edwin M. Goldsmith, III,
appeal from the order denying their petition to open and/or strike confession
of judgment. We affirm.
This case involves the parties’ attempt to resolve over a decade of
litigation between them filed in three different cases. We include only those
facts necessary for our review.
On April 19, 2006, Appellants and Appellee, Albert C. Oehrle, entered
into a settlement agreement on the record in an effort to resolve Appellee’s
lawsuit for attorney fees incurred by Appellant, Marcia Woolman Goldsmith,
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*
Retired Senior Judge assigned to the Superior Court.
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for his representation of her in a domestic relations matter.1 Pursuant to the
settlement, Appellants agreed to pay $25,000.00 to Appellee within thirty
months, and an additional $75,000.00 plus interest within sixty months.
This obligation was to be secured by a second mortgage against a property
owned by Appellants. Pertinent to our review, the settlement agreement
provided that: “If in fact there’s been an act of default, [Appellee] would be
entitled, and the documents would provide for him to receive, reasonable
attorney fees for collection matters dating from the date of default.” (N.T.
Settlement Agreement, 4/19/06, at 32; see also id. at 40). The parties
agreed that “[t]he note and the mortgage . . . will contain confession of
judgment clauses in the event of a default.” (Id. at 30; see id. at 37).
Additionally, Appellants expressly waived all defenses to a confessed
judgment:
MR. YOUNG [(Appellee’s counsel)]: In addition to that, the note
and the mortgage, you’re going to waive all defenses.
THE COURT: Is that so, Mr. Jokelson [(counsel for Mrs.
Goldsmith)]?
MR. JOKELSON: That’s correct.
THE COURT: Mr. Goldsmith?
MR. GOLDSMITH: That’s correct.
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1
Appellee is a licensed attorney.
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(Id. at 41). Appellants acknowledged that they understood the agreement’s
terms, and they agreed to abide by them. (See id. at 50-51).
Thereafter, Appellants’ counsel drafted the mortgage and note.
Consistent with the settlement agreement, the mortgage note included a
confession of judgment provision. It granted Appellee, in pertinent part,
power to confess judgment for “reasonabl[e] attorney[] fees,” (Mortgage
Note, 11/02/06, at 2 ¶ 4) (capitalization omitted), and provided that “the
amount of attorney[] fees . . . shall not exceed the actual attorney[] fees
incurred by [Appellee] in an arms[’] length representation by third party
counsel.” (Id.) (capitalization omitted).
Appellants made the first $25,000.00 payment pursuant to the
agreement, but defaulted thereafter by failing to make the payment due on
November 2, 2011. In February, 2012, Mrs. Goldsmith’s counsel mailed a
letter enclosing the draft of a petition to revoke, rescind, or modify the
settlement agreement to the trial judge’s chambers. Counsel did not file the
petition and, therefore, the document does not appear on the docket;
neither was there any argument or hearing listed.2
On December 6, 2012, Appellee filed a complaint in confession of
judgment seeking $75,000.00 in principal; $27,375.00 in interest; and
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2
Appellants attached the documents as an exhibit to their petition to open
and/or strike the confessed judgment. (See Petition to Open And/Or Strike,
12/21/12, Exhibit B, at 21-25).
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$5,118.75 in attorney fees. On December 21, 2012, Appellants filed a
petition to open and/or strike the confessed judgment. The court denied
Appellants’ petition on July 15, 2014 after argument. Appellants timely
appealed.3
Appellants raise two questions for this Court’s review:
1. Did the trial court err by failing to strike a judgment
entered by confession that contained two fatal flaws on its face?
2. Did the trial court err by failing to open a judgment
entered by confession that was promptly filed, contained a
meritorious defense and raised genuine issues of material fact?
(Appellants’ Brief, at 5).
As a preliminary matter, we observe that, under the unambiguous
terms of the settlement agreement, Appellants expressly agreed that
Appellee was empowered to confess judgment in the event of default, and
that they would “forever waive[] and release[] all errors in said proceedings
and any rights of appeal[.]” (Mortgage Note, 11/02/06, at 2 ¶ 4; see also
N.T. Settlement Agreement, 4/19/06, at 41 (waiving all defenses to
confession of judgment)). However, in the interests of judicial economy, we
will review Appellants’ issues instead of deeming them waived.
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3
Appellants filed a timely statement of matters complained of on appeal
pursuant to the court’s order on August 18, 2014. See Pa.R.A.P. 1925(b).
The court filed an opinion on December 5, 2014. See Pa.R.A.P. 1925(a).
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“In examining the denial of a petition to strike or open a confessed
judgment, we review the order for an abuse of discretion or error of law.
Ferrick v. Bianchini, 69 A.3d 642, 647 (Pa. Super. 2013) (citation
omitted).
In Appellants’ first issue they challenge the court’s denial of their
petition to strike the confessed judgment on the basis that they have
established “more than one facial defect.” (See Appellants’ Brief, at 13)
(some capitalization omitted). Specifically, Appellants argue that the court
erred in allowing Appellee to collect counsel fees as part of the judgment,
and that judgment by confession was prohibited by law because this case
involved a consumer credit transaction. (See id. at 14-18). Appellants’
issue lacks merit.
A confessed judgment will be stricken only if a fatal defect
or irregularity appears 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. . . .
Ferrick, supra at 647 (citations and quotation marks omitted).
We first address Appellants’ claim that “[t]he judgment is flawed on its
face because it seeks counsel fees for [Appellee], but yet acknowledges
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within the judgment instrument that fees are only to be sought to
compensate a third party attorney.” (Appellants’ Brief, at 14) (emphasis
omitted). Specifically, Appellants argue that the confession of judgment was
flawed on its face because Appellee filed the complaint pro se, and that,
therefore, he sought reimbursement for personal fees rather than for those
incurred as a result of any third party counsel’s representation. (See
Appellants’ Brief, at 14-16). This argument does not merit relief.
We first observe that this is not a proper argument in support of a
petition to strike because the alleged flaw is not apparent from the face of
the record. See Ferrick, supra at 647. In other words, to determine if
Appellee incurred third party fees, the court necessarily needed to consider
facts outside the face of the complaint and the documents containing the
confession of judgment clauses. See id. Therefore, this argument fails.
Moreover, we conclude that the court properly denied the petition to
strike because there was not a fatal flaw on the face of the confession of
judgment.
Pennsylvania Rule of Civil Procedure 2952 provides, in pertinent part:
“The complaint [for confession of judgment] shall contain . . . an itemized
computation of the amount then due, [and] a demand for judgment as
authorized by the warrant[.]” Pa.R.C.P. 2952(a)(7), (8).
Here, the confession of judgment clause contained in the mortgage
note provided, in relevant part, that upon Appellants’ default, Appellee was
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empowered to confess judgment for “reasonabl[e] attorney[] fees . . . .
[that] shall not exceed the actual attorney fees incurred by [Appellee] in an
arms[’] length representation by third party counsel.” (Mortgage Note,
11/02/06, at 2 ¶ 4) (capitalization omitted). The complaint contained an
itemized list of the amounts due, including reasonable attorney fees
authorized by the note.4 (See Complaint, 12/06/12, at 2 ¶ 10).
Therefore, because the complaint sought reasonable counsel fees
authorized by the mortgage note, see Pa.R.C.P. 2952(a)(7), we conclude
that Appellants failed to prove that the confession of judgment was flawed
on its face. See Ferrick, supra at 647. Accordingly, the trial court
properly found that Appellants’ argument regarding attorney fees did not
justify striking the judgment by confession.
Appellants next argue that “[t]he judgment is also fatally flawed and
must be stricken because” it was a consumer credit transaction. (Appellants’
Brief, at 16; see id. at 17). We disagree.
It is well-settled that judgments by confession are an improper remedy
for the default of a consumer credit transaction. See, e.g. Willits v. Fryer,
734 A.2d 425, 427-28 (Pa. Super. 1999); see also Pa.R.C.P. 2952(a)(3)
(“The complaint [for confession of judgment] shall contain . . . an averment
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4
The complaint sought attorney fees at five percent of the principal and
interest, which amounted to $5,118.75. (See Complaint, 12/06/12, at 2 ¶
10).
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that judgment is not being entered by confession against a natural person in
connection with a consumer credit transaction[.]”). Pursuant to
Pennsylvania Rule of Civil Procedure 2950, a consumer credit transaction is
“a credit transaction in which the party to whom credit is offered or
extended is a natural person and the money, property or services which are
the subject of the transaction are primarily for personal, family or household
purposes.” Pa.R.C.P. 2950 (emphases added).
Here, Appellants argue that, “[o]n its face, the [c]omplaint in
[c]onfession of [j]udgment is invalid because it contains untrue statements
of fact and conclusions of law” where it avers that judgment is not being
entered in connection with a consumer credit transaction. (Appellants’ Brief,
at 16; see id. at 16-18). We disagree.
The parties entered into an agreement to settle litigation. (See
Settlement Agreement, 4/19/06, at 31-32; Mortgage Note, 11/02/06, at 1).
Appellee did not offer or extend Appellants any credit. (See Settlement
Agreement, 4/19/06, at 31-32; Mortgage Note, 11/02/06, at 1 ¶ 2); see
also Pa.R.C.P. 2950. Therefore, this argument also fails, and the trial court
properly denied Appellants’ petition to strike the judgment by confession.
See Ferrick, supra at 647. Appellants’ first issue does not merit relief.
In their second claim, Appellants challenge the trial court’s denial of
their petition to open the confession of judgment. (See Appellants’ Brief, at
18-27). This issue lacks merit.
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. . . A judgment by confession will be opened if the
petitioner acts promptly, alleges a meritorious defense, and
presents sufficient evidence in support of the defense to require
the submission of the issues to a jury. In adjudicating the
petition to . . . open the confessed judgment, the trial court is
charged with determining whether the petitioner presented
sufficient evidence of a meritorious defense to require
submission of that issue to a jury. A meritorious defense is one
upon which relief could be afforded if proven at trial.
* * *
. . . 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. . . .
Ferrick, supra at 647 (citations omitted).5
In regard to the second requirement, that the petitioners state a
meritorious defense, see id., Appellants argue that “[t]he petition to open
stated a meritorious defense[] [where] they offered clear evidence of a prior
pending petition . . . .” (Appellants’ Brief, at 20; see id. at 21). This
argument does not merit relief.
As aptly stated by the trial court:
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5
Appellee does not argue that Appellants’ petition was untimely. (See
Appellee’s Brief, at 25-29). Additionally, our review of the record confirms
that Appellants’ petition was filed in a timely manner where the judgment
was entered on December 6, 2012, and Appellants filed the petition on
December 21, 2012. (See Docket, Case No. 2012-31076, at 1); see also
Pa.R.C.P. 2959(a)(3) (requiring that a petition to strike or open a judgment
“shall be filed within thirty days after” notice of the judgment is served).
Therefore, Appellants meet the first prong of the test for a petition to open.
See Ferrick, supra at 647.
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. . . Appellants argue that the confessed judgment should
be opened due to the meritorious defense of a prior pending
action. Specifically, Appellants allude to the fact that . . . [on]
November 15, 2011, . . . [they] discovered information which
prompted them to contact counsel and draft a petition to revoke,
rescind or modify settlement agreement. Roughly three (3)
months later, Appellants forwarded a letter to the Honorable
Kent H. Albright, as the judge who had previously presided over
the settlement agreement and retained jurisdiction of the same.
In this letter, Appellants requested a conference to schedule a
hearing on the petition. Appellants attached this letter dated
February 3, 2012, . . . to their petition to open as evidentiary
support of their request to open. However, notably, the docket
reflects that [] Appellants did not file this petition . . . at that
time. According to [them], Judge Albright never scheduled the
requested hearing.
On April 24, 2012, the Honorable Richard J. Hodgson
[allegedly] scheduled a conference on [] Appellants’ petition . . .
under docket number 1994-04928. However, unfortunately,
Judge Hodgson passed away before the [alleged] conference.
Appellants did not attach a copy of the scheduling notice or the
docket to their petition to open as supporting evidence of the
prior pending action. Further, as [of] April 24, 2013, []
Appellants’ petition . . . remained unfiled with the Montgomery
County Prothonotary. Finally, the court’s review of the
Montgomery County docket number 1994-04928, shows that
docket to be “Closed,” suggesting nothing else is pending under
that case number.
On December 6, 2012, confessed judgment was entered
against [] Appellants . . . .
On December 21, 2012, post-confession of judgment,
[] Appellants finally filed their petition to revoke, rescind or
modify settlement agreement, in conjunction with their presently
contested petition to open confessed judgment.
. . . Appellants herein failed to present clear, direct,
precise and believable evidence that there was an outstanding
pending action which provided a meritorious defense to their
confessed judgment. First, evidence of the prior pending action
was certainly not clear, direct or precise. Indeed, the record
demonstrates that while [] Appellants drafted a petition to
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revoke, rescind or modify settlement agreement, they failed to
file and actively pursue same until after judgment by confession
was entered. The timing of the correspondence and docket
entries, as well as the fact that the petition was not filed until
after judgment, suggests abandonment of the issue rather than
judicial oversight as suggested by Appellants. . . .
(Trial Court Opinion, 12/05/14, at 7-9) (record citations and some
capitalization and emphasis omitted).
After our independent review of the record, we agree with the trial
court that, because there was no prior pending action at the time the
confessed judgment was entered, Appellants failed to meet their burden to
prove their alleged meritorious defense.6 See Ferrick, supra at 647.
Therefore, we conclude that the trial court properly denied Appellants’
petition to open. See id. Accordingly, Appellants’ second issue lacks merit.7
Order affirmed.
Judge Lazarus joins the Memorandum.
Judge Olson concurs in the result.
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6
Appellants’ reliance on PNC Bank v. Bluestream Technology, Inc., 14
A.3d 831 (Pa. Super. 2010), is not legally persuasive because the case is
factually distinguishable. Importantly, in that case, Bluestream Technology
had an actual action pending against PNC Bank and they attached a copy of
the filed, verified complaint to their petition to open. See PNC Bank, supra
at 834. Here, there was no filed, pending action justifying the opening of
the judgment by confession.
7
Because the trial court properly found that Appellants failed to provide
sufficient evidence of a meritorious defense, they necessarily have failed to
establish that the alleged defense created an issue of fact for the jury. See
Ferrick, supra at 647.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 6/26/2015
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