Centric Bank v. Sciore, M. ( 2021 )

J-A16032-21
2021 PA Super 178CENTRIC BANK : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
MICHAEL SCIORE AND MARIE ANGIE :
HERNANDEZ-SCIORE :
: No. 1376 MDA 2020
Appellants :
Appeal from the Order Entered September 30, 2020
In the Court of Common Pleas of Schuylkill County Civil Division at
No(s): J-1632-2020
CENTRIC BANK : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
EAGLE ROCK GREEN ENERGY, LLC :
:
Appellant : No. 1410 MDA 2020
Appeal from the Order Entered September 30, 2020
In the Court of Common Pleas of Schuylkill County Civil Division at
No(s): J-1633-2020
BEFORE: KUNSELMAN, J., McCAFFERY, J., and STEVENS, P.J.E.*
OPINION BY STEVENS, P.J.E.: FILED SEPTEMBER 03, 2021
Appellants, Michael Sciore and Mari Angie Hernandez-Sciore (“the
Sciores”), and Eagle Rock Green Energy, LLC (“Eagle Rock”), appeal from the
orders entered in the Court of Common Pleas of Schuylkill County denying
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* Former Justice specially assigned to the Superior Court.
J-A16032-21
their petitions to strike and/or open a confessed judgment in favor of Appellee
Centric Bank (“Appellee”).1 After a careful review, we affirm.
The relevant facts and procedural history have been set forth, in part,
by the trial court as follows:
[On or about May 26, 2020, Appellee filed a Complaint in
Confession of Judgment against the Sciores alleging that Appellee
made a $250,000.00 commercial loan to the Sciores, to which
Eagle Rock was a Guarantor, and that the Sciores defaulted on the
loan when they failed to make payments for March, April, and May
of 2020.] Appellee [also filed] a Complaint in Confession of
Judgment against [Eagle Rock2] on or about May 26, 2020, in
which Appellee alleged that [Eagle Rock] agreed to be a Guarantor
on its commercial loan to [the Sciores], and that [Eagle Rock]
signed a Commercial Guaranty Agreement dated December 19,
2014 (the “Guaranty”). [Appellee averred that Eagle Rock] was
in default of its obligations under the Guaranty for failing to cure
the [Sciores’] default.
Appellee attached the December 19, 2014, Promissory Note
(“the Note”) as an exhibit to the Complaints, which contained
authorization for the confession of judgment, as well as a
disclosure for confession of judgment, that was signed by the
[Sciores]. Appellee also attached the Guaranty as an exhibit to
the Complaints. Thereafter, judgment was entered against [Eagle
Rock and the Sciores] in the amount of $277,429.26, which
included attorneys’ fees that equated to 10% of the total
outstanding remaining balance of the loan principal plus accrued
interest. On or about June 2, 2020, [Eagle Rock and the Sciores
were] served with the Complaints. [They] filed Petitions to Strike
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1 The order entered against the Sciores is docketed at lower court number J-
1632-2020, and the order entered against Eagle Rock is docketed at lower
court number J-1633-2020.
2 Eagle Rock is a limited liability company (“LLC”), which was formed solely to
hold legal title to the Sciores’ vacation home in Schuylkill County,
Pennsylvania, and it does not operate or engage in any business. Mr. Sciore
is the sole member of Eagle Rock.
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Off or Open Judgments on or about June 30, 2020. Appellee filed
its Answers on or about July 17, 2020.
The parties engaged in three depositions.2 On or about
August 12, 2020, the parties deposed Mr. Sciore and Mrs. Sciore.
2 The parties agreed to use the same exhibits and depositions for both
[the case against Eagle Rock] and [the case against the Sciores.]
Donald Joseph Bonafede, a commercial loan officer for Appellee,
was deposed on or about August 13, 2020. During the
depositions, the parties agreed to jointly submit seventeen
exhibits. The exhibits were submitted to [the trial] court on
September 10, 2020, when the court scheduled oral argument on
[Eagle Rock’s and the Sciores’] Petitions to Strike or Open
Confessed Judgment. [The trial] court entered an Order on
September 30, 2020, that denied [Eagle Rock’s and the Sciores’]
Petitions and held that [they] failed to show any basis for [striking
or] opening the judgment. On or about October 26, 2020, [Eagle
Rock and the Sciores] filed [separate] Notices of Appeal. [3] An
Order was entered by [the trial] court on November 10, 2020,
directing [Eagle Rock and the Sciores] to concisely set forth the
matters complained of on appeal pursuant to Pa.R.[A].P. 1925.
On or about December 1, 2020, [they] filed a Statement of Errors
Complained of on Appeal Pursuant to Pa.R.A.P. 1925(b). [On
December 23, 2020, the trial court filed responsive Rule 1925(a)
opinions.4]
Trial Court Opinion, filed 12/23/20, at 1-3 (some footnotes omitted)
(footnotes added).
On appeal, Eagle Rock and the Sciores (collectively “Appellants”) have
filed a single brief in which they present the following issues in their
“Statement of Questions Involved” (verbatim):
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3 This Court subsequently consolidated the appeals.
4 We note the trial court’s Rule 1925(a) opinions for each lower court docket
number are nearly identical; however, where necessary, we have specified
precisely to which opinion we are referring.
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1. Whether the trial court erred and abused its discretion in
denying Appellants’ petitions to strike and/or open the
confessed judgment for violating Pa.R.C.P. 2950, which
prohibits the use of a warrant of attorney to confess judgment
in a consumer credit transaction?
2. Whether the trial court abused its discretion in denying the
petitions to open the confessed judgment on the basis that the
warrant of attorney to confess judgment is a contract of
adhesion and is otherwise unconscionable under the
circumstances in which the loan was made to an
unsophisticated borrower, Mari Angie Hernandez-Sciore?
3. Whether the trial court abused its discretion in failing to strike,
open or reduce the amount of the judgment because the
attorneys’ fees of 10% of the principal balance of the loan
included in the confessed judgment is excessive and
unreasonable?
4. Whether the trial court abused its discretion in denying
Appellants’ petitions to open the confessed judgment when
there was a dispute concerning whether the loan was in default
and the accuracy of the amount due after Centric Bank applied
monies the bank advanced from another borrower’s line of
credit and held as collateral to the loan at issue?
5. Whether the trial court abused its discretion in denying
Appellants’ petitions to open the confessed judgment when the
totality of the circumstances gave rise to meritorious defenses?
Appellants’ Brief at 8-9.
In reviewing Appellants’ issues, we keep in mind the following well-
established legal precepts.
“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, 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,
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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.
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. [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. Resolution
Trust Corp., supra.
In contrast, “if the truth of the factual averments contained
in [the complaint in confession of judgment and attached exhibits]
are disputed, then the remedy is by proceeding to open the
judgment,” not to strike it. Id. at 106, 683 A.2d at 273.
A petition to strike a confessed judgment and a petition to
open a confessed judgment are distinct remedies; they are not
interchangeable. Hazer, supra. A petition to open a confessed
judgment is an appeal to the equitable powers of the court.
Factual disputes by definition cannot be raised or addressed in a
petition to strike off a confession of judgment, because factual
disputes force the court to rely on matters outside the relevant
record to decide the merits of the petition.
Neducsin v. Caplan, 121 A.3d 498, 504-05 (Pa.Super. 2015) (citations,
quotation, and quotation marks omitted). Thus, we review the order denying
a petition to open the confessed judgment for an abuse of discretion. PNC
Bank v. Kerr, 802 A.2d 634, 638 (Pa.Super. 2002).
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Further, “[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.”
Ferrick v. Bianchini, 69 A.3d 642, 647 (Pa.Super. 2013). “A meritorious
defense is one upon which relief could be afforded if proven at trial.” Id.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. An order of the court opening a
judgment does not impair the lien of the judgment or any
execution issued on it.
Id. (quotation omitted).
In their first issue, Appellants contend the trial court erred in denying
their petitions to strike and/or open the confessed judgment since Appellee
violated Pa.R.C.P. 2950, which prohibits the use of a confession of judgment
in a consumer transaction.5 Specifically, Appellants assert the trial court erred
in concluding the loan at issue was a commercial loan, as opposed to a
consumer loan.
Pa.R.C.P. 2950 precludes judgment by confession in any “action”
involving a consumer credit transaction. Specifically, Rule 2950 provides:
As in this chapter ‘action’ means a proceeding to enter a judgment
by confession for money pursuant to an instrument, other than an
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5Confessions of judgment for money are governed by Rules 2950 through
2967 of the Pennsylvania Rules of Civil Procedure.
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instrument executed by a natural person in connection with a
consumer credit transaction, authorizing such confession.[6]
Pa.R.C.P. 2950 (footnote added). A “consumer credit transaction” is defined
as “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.” Id.In finding that the loan was a not a consumer credit transaction within
the meaning of Pa.R.C.P. 2950, and thus, Appellants failed to demonstrate
their entitlement to have the confessed judgment stricken and/or open on this
basis, the trial court relevantly indicated the following:
Appellant[s] assert that the deposition testimony
established that the line of credit extended by Appellee to [the
Sciores] was used by [the Sciores], with Appellee’s knowledge, for
their personal purposes, including to repay another loan secured
by a mortgage on [the Sciores’] mountain home, and for their
personal expenses, mortgage, and car payments. Appellant[s]
allege that the loan was a consumer credit transaction, not a
commercial loan, and that Appellee violated Pa.R.C.P. 2950 by
using a warrant of attorney to confess judgment against the
[Appellants].
This Court finds that Appellant[s] [have] failed to
demonstrate that a fatal defect or irregularity appears on the face
of the record; therefore, Appellant[s] [are] not entitled to have
judgment stricken. The loan documents clearly establish that the
loan was to be used solely for business purposes, thus no violation
of Pa.R.C.P. 2950 occurred. [Further, there is no basis to open
____________________________________________
6 The Official Note to the Rule provides that the “[t]he [confession of
judgment] action is abolished insofar as it would apply to a confession of
judgment which is part of an instrument executed in connection with a
consumer credit transaction.” Pa.R.C.P. 2950, Note.
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the judgment]. The record reflects that Appellee was told by
[Appellants] that the loan was to be used to advance [the Sciores’]
business interests. This is evidenced by the Disbursement Request
and Authorization that was signed by the [Sciores] as a part of
the Note, which states that the specific purpose of the loan is to
“[s]upport business and real estate investments.” See Exhibits
from the Deposition—Jointly Submitted by the Parties, Exhibit 11,
September 10, 2020. Further, the [Sciores] each executed a
Business Loan Agreement (“BLA”) related to the Note, which
stated on page 2, thereof, in a section entitled “Loan Proceeds,”
that the use of all loan proceeds were solely for [the Sciores’]
business operations unless specifically consented to the contrary
by Appellee in writing. See Exhibits from the Depositions—Jointly
Submitted by the Parties, Exhibit 15, September 10, 2020.
Additionally, the deposition testimony of Donald Bonafede, who
was a commercial loan officer for [Appellee] at the time the loan
was executed, indicates that the loan was a commercial loan, not
a consumer credit transaction, because it was extended by
[Appellee’s] commercial loan department. Mr. Bonafede testified
that he engaged only in commercial lending at [Appellee], as well
as that it is Appellee’s policy that its commercial loan department
does not issue consumer loans. According to Mr. Bonafede, if an
individual wants a consumer loan, they would be referred to one
of the bank’s branches instead of the commercial loan
department. Deposition testimony by Mr. Bonafede also indicated
that the proceeds of the loan had to be used for business purposes
unless expressly authorized by the lender. In the instant matter,
Appellant[s] [have] failed to produce evidence that Appellee
authorized the use of the loan proceeds for purposes other than
business.
[Nevertheless], Appellant[s] assert that discussion between
the parties occurred prior to the execution of the loan documents,
in which the [Sciores] notified Appellee that the proceeds would
be used for personal purposes. However, the Parole [sic] Evidence
Rule of Contract Law is clear that the final writing of a contract is
controlling, and that any discussions between the parties that
occurred before the final writing was executed, and which were
not included in the final writing, do not become part of the
contract. “[T]he purpose of the parole [sic] evidence rule is ‘to
preserve the integrity of the written agreements by refusing to
permit the contracting parties to attempt to alter the import of
their contract through the use of contemporaneous [or prior] oral
declarations.’” Rose v. Food Fair Stores, Inc., 262 A.2d 851,
853 (Pa. 1970). [In any event, regardless of discussions prior to
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the loan, Mr. Bonafede testified the proceeds of the instant loan
were used to pay off another commercial loan, which the Sciores
received from a different bank, Mid Penn Bank. See Bonafede
Deposition, 8/13/20, at 164.]
[The trial] court finds it did not err in denying Appellants’
Petition to Strike Judgment because Appellant[s] failed to show
that a fatal defect or irregularity appeared on the face of the
record. Additionally, [the trial] court did not err in denying
Appellants’ Petition to Open Judgment because, even though
Appellant[s] acted promptly in filing [their] petitions, Appellant[s]
failed to allege a meritorious defense or to produce sufficient
evidence that the loan was a consumer transaction, which would
require the submission of the case to a jury. Even in viewing the
evidence in the light most favorable to Appellant[s], and accepting
as true all evidence and proper inferences supporting the defense
alleged by Appellant[s], [the trial] court finds no valid defense.
Based on the record, the Guaranty, and the other loan documents,
it is clear that the loan was a commercial loan, not a consumer
credit transaction. Therefore, no violation of Pa.R.C.P. 2950
occurred.
Trial Court Opinion, filed 12/23/20, at 4-8 (citation omitted).
We find no error or abuse of discretion in the trial court’s analysis.
Initially, there is no fatal defect or irregularity appearing on the face of the
record so as to support striking the judgment under Pa.R.C.P. 2950. See
Neducsin, supra (setting forth standard for striking a confession of
judgment).
Further, the trial court did not abuse its discretion in finding that the
money, which was the subject of the transaction, was a commercial credit
transaction since the money was not primarily for personal, family, or
household purposes as set forth in Pa.R.C.P. 2950. Thus, we agree Appellants
failed to set forth sufficient evidence of a meritorious defense so as to open
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the confessed judgment. See Neducsin, supra (setting forth standard for
opening a confession of judgment). Accordingly, Appellants are not entitled
to relief with regard to their first issue.
In their next issue, Appellants contend the trial court abused its
discretion in denying the petitions to open since the warrant of attorney is a
contract of adhesion and unconscionable. Specifically, they assert Appellants
lacked a meaningful choice in accepting the provision, which unreasonably
favored Appellee.
Moreover, Appellants contend Mrs. Sciore, who was an unsophisticated
borrower, did not knowingly or voluntarily accept the warrant of attorney to
confess judgment. In this vein, Appellants assert that “[g]iven the vast
disparity that existed in the bargaining power between the parties and the
pressure placed on Mrs. [Sciore] to execute the Note containing the warrant
to get the Loan, whether Mrs. [Sciore] knowing[ly], voluntar[ily], or
intelligent[ly] waived her due process rights was certainly in doubt.”
Appellants’ Brief at 41.
Whether a contract is unconscionable is a matter of law. Snyder v.
Rogers, 499 A.2d 1369, 1372 (Pa.Super. 1985). This Court has explained
that unconscionability is a defensive contractual remedy that relieves a party
from an unfair contract or an unfair portion of a contract. Germantown Mfg.
Co. v. Rawlinson, 491 A.2d 138, 145-48 (Pa.Super. 1985). Further, in
general, unconscionability has been recognized to include an absence of a
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meaningful choice on the part of one of the parties together with contract
terms that are unreasonably favorable to the other party. See id.“Unconscionability...[does] nothing more than reaffirm the most basic tenet
of the law of contracts—that parties must be free to choose the terms to which
they will be bound.” Id. at 145-46.
In the context of a confession of judgment clause, emphasis is placed
on the sophistication of the parties in determining whether a provision is
unconscionable. Id. A party’s signature to a contract is designed to evidence
his or her intention to be bound by the contract’s terms. Petrie v. Haddock,
119 A.2d 45 (Pa.Super. 1956).
However, agreements authorizing a confession of judgment require a
clearer manifestation of consent than do some other types of contract
provisions. Scott v. 1523 Walnut Corp., 447 A.2d 951 (Pa.Super. 1982).
The language contained in the agreement must be specific enough to
demonstrate that the signing party has consented to the entry of the judgment
by confession. See Solebury Nat. Bank of New Hope v. Cairns, 380 A.2d
1273 (Pa.Super. 1977) (en banc). The burden of establishing the
unconscionable nature of a contract or contract provision clearly rests upon
the party challenging the contract or term. Denlinger, Inc. v. Dendler, 608
A.2d 1061 (Pa.Super. 1992).
In the case sub judice, the trial court relevantly indicated the following:
Direct and unambiguous language of a Confession of
Judgment provision contained in a contract is strong evidence that
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the signatories waived their notice and hearing rights knowingly,
voluntarily, and intelligently. Further, an agreement which
contains multiple direct references to the confession of judgment
and waiver of due process rights, in bolded, capitalized letters, is
evidence of a valid warrant of attorney.
[The trial court] finds that the Guaranty, the Mortgage and
Security Agreement, and the other loan documents, are written
documents that speak for themselves. Therefore, [Appellants] are
bound by the loan documents that they executed.
The loan documents and the facts indicate that [Appellee]
and [Appellants] agreed that the Sciores’ vacation home in
Schuylkill County, PA, would serve as a collateral for the loan. The
deposition testimony of Mr. Bonafede indicates that Mr. Sciore
sought out the loan with Appellee. Mr. Bonafede testified that, in
his initial conversation with Mr. Sciore, Mr. Sciore requested a line
of credit under his and his wife’s name, and that he offered the
Property as collateral for the loan. Mr. Bonafede also testified
that, during that conversation, Mr. Sciore was notified that
Appellee required financial information about the Property to have
an appraisal performed. According to Mr. Bonafede, Appellee
discovered that legal title to the Property was held by [Eagle Rock]
only after Mr. Sciore submitted the requested financial
information. Mr. Bonafede testified that the Guaranty from [Eagle
Rock] was then required by Appellee because [Eagle Rock], and
not the [Sciores], held legal title to the Property that Mr. Sciore
was offering as collateral.
The record and facts also indicate that the Guaranty, which
was signed by Mr. Sciore on behalf of [Eagle Rock], expressly
states that the Guaranty was given in exchange for “good and
valuable consideration.” Additionally, the Mortgage and Security
Agreement, which was signed by Appellants, indicates that the
mortgage was entered into for “valuable consideration.” As
already explained above, [Eagle Rock] is an LLC that was formed
solely to hold legal title to the [Sciores’] Property, and it does not
operate or engage in any business. The sole member of [Eagle
Rock] is Mr. Sciore. Mr. Sciore is a sophisticated businessman,
who has a history of more than twenty (20) years working
professionally in the commercial and residential loan industries.
Mr. Sciore testified in his deposition that he knows the difference
between consumer and commercial transactions, that he knows
what a confession of judgment is and what its effects are, as well
as that he has signed many loan documents in the past with
different banks. The record also reflects that Mr. Sciore actively
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sought out the loan from Appellee[, and he had the opportunity to
negotiate the terms of the loan with Appellee.] Additionally, the
Limited Liability Company Resolution Collateral Guarantee
expressly states Eagle Rock held a Resolution meeting on
December 19, 2014, and that a resolution was adopted that
authorized [Mr.] Sciore “[t]o guarantee or act as surety for loans
or other financial accommodations to Borrower from Lender on
such guarantee or surety terms as may be agreed upon between
the member of the Company and Lender and in such sum or sums
of money as in his or her judgment should be guaranteed or
assured, without limit (the “Guaranty”).” The Resolution also
authorized Mr. Sciore “[t]o mortgage…or otherwise encumber and
deliver to Lender any property now or hereafter belonging to the
Company in which the Company now or hereafter may have an
interest, including without limitation to all of the Company’s real
property…as security for the Guaranty, and as security for the
payment of any loans, any promissory notes, or any other or
further indebtedness of [Mr.] Sciore and [Mrs.] Sciore to Lender
at any time owning, however the same may be evidenced.”
Based on the record, it is apparent that Mr. Sciore, acting
on behalf of [Eagle Rock], sought to enter into the Guaranty and
its terms willingly, intelligently, and knowingly; [neither Eagle
Rock nor Mr. Sciore] were coerced or placed under any duress in
executing the Guaranty; and [Eagle Rock] indicated in the
Guaranty and the Mortgage Security Agreement that it received
“valuable consideration” when it signed said documents. [The trial
court] finds that [Eagle Rock] failed to show it lacked a
“meaningful choice” when it entered into the Guaranty with
Appellee, and that [Eagle Rock] failed to show that the Guaranty
and warrant of attorney were unreasonably favorable to Appellee.
Therefore, [the trial court] holds that the Guaranty and warrant
of attorney were not unconscionable.
As to Appellants’ argument that the loan was
unconscionable because the Guaranty containing the warrant of
attorney to confess judgment was obviously required by Appellee
to secure the lien of a quick judgment against the Sciores,…[the
trial court] finds the argument to be without merit….[As indicated
supra,] Mr. Sciore, the sole member of [Eagle Rock], sought out
the loan with Appellee, and he offered the Property as collateral.
Appellee was not aware that [Eagle Rock] held legal title to the
Property until Mr. Sciore submitted financial information that was
required for the appraisal of the Property. Appellee then required
[Eagle Rock] to become a Guarantor of the loan because the LLC,
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not Mr. Sciore, held legal title to the property that Mr. Sciore was
offering as collateral….The facts also indicate that [Eagle Rock],
through Mr. Sciore, signed the Guaranty in order to entice
Appellee to make the loan. Mr. Sciore, who acted on behalf of
[Eagle Rock], was aware and understood the provisions contained
in the Guaranty, and therefore, [Eagle Rock] understood the
provisions of the Guaranty, including the warrant of attorney for
confession of judgment[.]
Trial Court Opinion, filed at J-1633-2020, 12/23/20, at 10-13 (citations to
record omitted).
Moreover, as it specifically pertains to Mrs. Sciore, the trial court
relevantly indicated:
As to Appellants’ allegation that the warrant of attorney is a
contract of adhesion and is unconscionable because Mrs. Sciore
was an “unsophisticated borrower,” [the trial court] finds
Appellants’ argument to be without merit. In Pennsylvania, willful
ignorance is no defense. “[A]bsent fraud, failure to read a
[contractual document] is an unavailing excuse or defense and
cannot justify an avoidance, modification or nullification of the
contract or any provision thereof.” McDonald v. Whitewater
Challengers, Inc., 116 A.3d 99, 120 (Pa.Super. 2015). The
record reflects that although Mrs. Sciore testified in her deposition
that she was not a businesswoman; that there was no business
for which she could have use the loan proceeds; and that she
signed the loan documents at the request of her husband, there
is also evidence that she speaks, reads, and understands English,
and that she testified on several occasions throughout her
deposition that she neither read nor made an effort to understand
the loan documents because she trusted her husband.
Appellants’ argument that Mrs. Sciore had no knowledge or
understanding of the confession of judgment is without merit
because the record is clear that she made no effort to gain an
understanding of the confession of judgment by either asking
Appellee or Mr. Sciore, who is a sophisticated businessman that
has both a residential and commercial background in selling and
brokering loans, to explain the terms of the loan to her. The
record and facts indicate that, although Mrs. Sciore made no
attempt to read the loan documents, she still chose to sign the
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confession of judgment, sign and initial each and every paragraph
of the two separate disclosures of judgment attached to the Note,
and initialed and/or signed that she understood that the Note
contained a confession of judgment provision that would permit
Appellee to enter judgment against her in court after a default on
the Note without notice. Additionally, by signing the loan
documents, Mrs. Sciore also indicated that she knowingly,
intelligently, and voluntarily waived her rights, including any right
to advance notice of the entry of judgment against her. Therefore,
[the trial court] finds that Mrs. Sciore’s willful failure to read
and/or understand the loan documents cannot be used by
Appellants as a defense to justify avoidance, modification, or
nullification of the loan.
Trial Court Opinion, filed at J-1632-2020, 12/23/20, at 10-11 (citations to
record omitted).
We find the trial court did not abuse its discretion. Appellants failed to
present sufficient evidence that they lacked a meaningful choice with regard
to its contractual obligations or that the obligations were unreasonably
favorable to Appellee. See Snyder, supra.Moreover, as it specifically pertains to Mrs. Sciore, the trial court found
the record demonstrated that, while she was not a sophisticated
businesswoman, the loan documents clearly set forth her obligations. The fact
Mrs. Sciore chose to make no effort to understand, or even read, the
documents does not render the confession of judgment provisions
unconscionable. “The failure to read a confession of judgment clause will not
justify avoidance of it. This is particularly true where the confession of
judgment clause is clear and conspicuous and part of a commercial
transaction.” Dollar Bank, Fed. Sav. Bank v. Northwood Cheese Co.,
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Inc., 637 A.2d 309, 313 (Pa.Super. 1994) (citations omitted). The confession
of judgment clauses in the instant case, standing out in bold print, possessed
all of these attributes. Thus, the trial court did not err in denying Appellants’
petitions to open on this basis.
In their next issue, Appellants contend the trial court erred in failing to
strike, open, or modify the confession of judgment since the amount of the
judgment was unreasonable and grossly excessive. Specifically, Appellants
contend the inclusion of Appellee’s attorneys’ fees, which were set by the Note
and Guaranty at ten percent of the unpaid principal balance of the loan plus
accrued interest, rendered the confessed judgment unreasonable and grossly
excessive.
Appellants admit the loan documents provided for the ten percent
attorneys’ fees; however, they contend the “amount of the attorneys’ fees
included in [the] confessed judgment are grossly excessive [since] they are
not commensurate with the amount of work and time that [Appellee’s]
attorney spent to prepare a complaint and to confess judgment.” Appellants’
Brief at 43 (citation omitted).
This Court has held:
If a confessed judgment includes an item not authorized by the
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. If the
judgment was entered for an amount which was grossly
excessive, the judgment must be stricken in its entirety.
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Dollar Bank, Fed. Sav. Bank, 637 A.2d at 314 (citations omitted).
This Court has upheld attorneys’ fees in the amount of fifteen percent
when such were specifically authorized by the warrant of attorney in a
confession of judgment action. See id.In the case sub judice, in rejecting Appellants’ contention, the trial court
relevantly indicated the following:
Based on the record and the facts, it is clear that the 10%
attorneys’ fees were authorized by the loan documents. This is
evidenced by the Confession of Judgment provision in the
Guaranty, which states that:
[The] [g]uarantor hereby irrevocably authorizes and
empowers any attorney or the Prothonotary or Clerk
of any court in the Commonwealth of Pennsylvania, or
elsewhere, to appear at any time for borrowers after
the amounts hereunder become due and without
complaint filed, confess or enter judgment against
borrower for the entire principal balance of this note
and all accrued interest, late charges and any and all
amounts expended or advanced by lender relating to
any collateral securing this note, together with costs
of suit, and an attorneys’ commission of ten percent
(10%) of the unpaid principal balance and accrued
interest for collection, but in any event not less than
five hundred dollars ($500)….
See Exhibits from the Depositions—Jointly Submitted by the
Parties, Exhibit 16, September 10, 2020 (emphasis omitted).
In Appellee’s May 26, 2020, Complaints in Confession of
Judgment, Appellee itemized the amount that was due as a result
of the [Sciores’] default, which [Eagle Rock] failed to cure.
Appellee indicated that the total amount due was $277,429.26,
which included the principal balance due of $249,497.88, the
accrued interest as of May 11, 2020, in the amount of $2,614.53,
the late fees due in the amount of $105.61, and the attorneys’
fees in the amount of $25,211.24, which was calculated as being
10% of the loan principal plus accrued interest.
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[The trial court] finds that the requested attorneys’ fees in
this matter are neither unreasonable nor excessive because the
fees sought by Appellee equate to 10% of the total principal loan
balance plus accrued interest, and the Guaranty, which
[Appellants] signed and [are] bound by, authorized 10%
attorneys’ fees in the event of a default. Further, Appellee has
stated that it is only seeking to collect the 10% of attorneys’ fees
against either [Eagle Rock] or the [Sciores]. Appellee explained
that if [Eagle Rock] satisfies the total judgment, then it will not
attempt to collect the same attorneys’ fees from the [Sciores], or
in the alternative, if [the Sciores] satisfy the total judgment,
Appellee will not seek the requested attorneys’ fees from [Eagle
Rock].
[The trial court] holds that the attorneys’ fees sought by
Appellee in the amount of $25,211.24 are neither unreasonable
nor excessive because the 10% fees were authorized by the loan
documents; the Pennsylvania appellate courts have determined a
15% commission to not be excessive; and litigation is ongoing.
Thus, [the trial court] finds no basis to strike,…open, [or modify]
the judgment.
Trial Court Opinion, filed 12/23/20, at 15-16 (footnote omitted).
We find no error or abuse of discretion in this regard. Here, the warrant
of attorney specifically authorized attorneys’ fees in the amount of ten
percent. See id. Further, as to Appellants’ claim the attorneys’ fees are
excessive since they are not commensurate with the amount of time spent by
Appellee’s attorney in this case, we simply note that Appellee’s attorneys filed
complaints for confession of judgment, answers, and multiple responses to
Appellants’ petitions. See id. at 16 n.7. Further, Appellee’s attorneys
participated in three lengthy depositions, as well as oral argument before the
trial court, and they have filed an appellate brief on behalf of Appellee. See
id. Thus, we agree with the trial court that Appellants are not entitled to have
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the confession of judgment stricken, opened, or modified based on the amount
of the attorneys’ fees included in the judgment on this basis. See Dollar
Bank, Fed. Sav. Bank, supra.
In their next issue, Appellants contend the trial court abused its
discretion in failing to open the confession of judgment since Appellants
disputed the default. Specifically, Appellants contend they had no obligation
to pay the Note until Appellee made a demand for payment. However,
Appellee never made any demand for payment.7
Moreover, Appellants contend the trial court should have opened the
confession of judgment since Appellants disputed the calculations of the
amount due under the Note. Specifically, Appellants contend Appellee
advanced a $40,000.00 line of credit to M.S. Acquisitions & Holdings, LLC,
which is an entity in which Mr. Sciore is a member, and this advanced line of
____________________________________________
7 We note that Appellee avers the loan documents reveal that Appellants
expressly waived their right to pre-judgment notice of default. See Appellee’s
Brief at 35-36. Appellants, on the other hand, argue the loan documents
were, at the very least, ambiguous as to whether notice was required prior to
the entry of a confession of judgment based on a default. See Appellants’
Brief at 45. Appellants specifically aver “[t]he trial court failed to address the
ambiguities of the loan documents and, instead, held that no notice and no
demand was required because the Sciores and Eagle Rock waived the rights
to receive advanced notice of the entry of the confessed judgment.” Id. at
48 (citation to record omitted).
We conclude it is unnecessary to determine whether Appellants were
entitled to pre-judgment notice of the default. As discussed infra, the trial
court concluded, inter alia, that Appellants received notice of the default prior
to Appellee’s filing of the complaints for confession of judgment, and we find
no abuse of discretion in this regard.
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credit was used to pay the past due amounts on the loan. Appellants contend
that, in determining the amount due under the Note, Appellee failed to account
for the application of the $40.000.00 line of credit.
When a complaint for confession of judgment is filed…the
plaintiff need only aver a default and allege the amounts due.
Unless it is evident from the face of the instrument that the
judgment is grossly excessive, or includes recovery for items not
authorized by the instrument, a challenge to the accuracy of such
amounts should be resolved by a petition to open the judgment.
Davis v. Woxall Hotel, Inc., 577 A.2d 636, 638 (Pa.Super. 1990) (citations
omitted).
In rejecting Appellants’ claim, the trial court aptly indicated the
following:
Appellants allege that [the trial court] erred in denying
[their] Petitions to Open the Confessed Judgment because the
Note was payable on demand, but no demand for payment in full
was made by Appellee. We find this argument to be without merit.
The record reflects that Mr. Sciore testified in his deposition
that he had received statements regarding the loan and its
balance throughout 2019. Mr. Sciore averred that he stopped
receiving these loan statements from Appellee beginning in 2020.
However, Mr. Sciore also testified that, since the origination of the
loan, he authorized for the loan statements to be mailed to 535
Route 38 East, Suite 100, Cherry Hill, New Jersey, which is the
address associated with Mega-Philadelphia, LLC (“Mega-
Philadelphia”). [Mr. Sciore is the Chief Executive Officer of M.S.
Acquisitions & Holdings, LLC, which holds ownership of Mega-
Philadelphia.] Mr. Sciore further testified that, in 2020, Mega-
Philadelphia closed its office at the above address. Additionally,
Mr. Sciore testified that he never notified Appellee of the closure
of the Mega-Philadelphia office, that he never notified Appellee to
have the loan statements sent to the P.O. Box where mail for
Mega-Philadelphia was being forwarded, and that he never
requested that Appellee forward any replacement loan statement
to him that he did not receive. In his own deposition, Mr.
Bonafede testified that Appellee continued to send loan
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statements to the address that Mr. Sciore requested, which was
535 Route 38 East, Suite 100, Cherry Hill, New Jersey. Appellee
also submitted Exhibit 12 at the Oral Argument [before the trial
court] on September 10, 2020, which consisted of copies of the
loan statements from the end of 2019 until August 2020, which
Appellee indicated were sent to the address for Mega-Philadelphia,
and which notified [Appellants] of the payment due, past payment
due, late fees, and the principal balance of the loan.
The record also reflects that, on March 2, 2020, Appellee’s
counsel sent Walter Weir, Jr., Esq., an attorney representing
Appellant[s], a letter[8] that indicated that a portion of the
undistributed funds from a loan (“Loan 1”) by Appellee to M.S.
Acquisitions & Holdings, LLC (“M.S. Acquisitions”), which was
guaranteed by [Mr.] Sciore, was being used to pay off past due
amounts on the [instant] loan, as well as several other loans that
Appellee had entered into with Mr. Sciore and/or companies [with
which] he was associated[.] The letter further indicated that
“…there were discussions and an agreement by Mr. Sciore and [an
officer of Appellee] to apply a portion of the ‘Undistributed Funds’
from Loan 1 to certain past due amounts on…” several loans
including the loan at issue, and that “Mr. Sciore was aware that
[the] five payments were required [] so that [Appellee] would not
declare a written event of default and take judgments against
each of the responsible parties for…” the loan. The letter further
indicated that $2,616.46 was applied to the [instant] loan from
the undistributed funds of Loan 1. Additionally, the letter advised
Appellants…and their counsel that the loan was again becoming
past due, and that a payment would need to be made on the loan
to prevent another event of default. Appellee explained that, upon
default, all amounts on the loan would become immediately due
and Appellee had the right to exercise the rights and remedies
agreed to in the loan documents, which included Appellee’s right
to file judgments against all of the obligors and guarantors of the
loan.
***
The record is clear that Appellee mailed loan statements to
Mr. Sciore each month, but Mr. Sciore may not have received said
statements because he failed to provide Appellee with an updated
address and/or to request replacement statements. Appellants
cannot rely on the assertion that [they were] without knowledge
____________________________________________
8 Appellants do not dispute that they received the March 2, 2020, letter.
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of the amounts due on the loan for the months prior to March
2020 as a defense because [they] willfully failed to provide
Appellee with an updated address….Additionally, and in any event,
the March 2, 2020, Letter advised [Eagle Rock] and the [Sciores]
that the loan was again becoming past due, and that a payment
would need to be made on the loan to prevent another event of
default from occurring. However, [the Sciores] still failed to make
payments on the loan for the months of March, April, and May of
2020, and [Eagle Rock] failed to cure the [Sciores’] default. On
or about May 22, 2020, [the Sciores] did make a payment of
$850.00, which Appellee received on June 1, 2020. [However,]
at the time of payment, the $850.00 did not bring the loan
current.
Additionally, [the trial court] finds no merit in Appellants’
arguments that the confessed judgment should have been opened
because there were disputes concerning whether (a) the loan was
in default and (b) whether the calculations of the amount due
under the Note were accurate after Appellee applied monies in
advanced from another line of credit and held as collateral to the
loan. The record indicates that after receiving the March 2, 2020,
Letter, [the Sciores] and/or [Eagle Rock] failed to make payments
on the loan, which resulted in Appellee filing its Complaint[s] in
Confession of Judgment. Appellant[s] argue that [they] believe
the loan was current because there were discussions between Mr.
Sciore and Appellee with regard to the application of $40,000.00,
which Appellee held as collateral to another loan, to payoff
amounts due on several of Mr. Sciore’s loans. However,
deposition testimony from Mr. Bonafede reflected that Mr. Sciore
never agreed to allow Appellee [to] apply the $40,000.00 to past
due loans. Mr. Bonafede also testified that said discussions
related to applying the money to several SBA loans, not to the
loan at issue.
[The trial court] finds that there was no dispute as to
whether a default occurred because the record is clear that [Eagle
Rock] and the [Sciores] were made aware in March of 2020 that
the loan was becoming past due, but [the Sciores] still failed to
make payments and bring the loan current throughout the months
of March, April, and May of 2020. Additionally, [Eagle Rock] failed
to cure this default by the [Sciores]. Appellee admits that [the
Sciores] made a payment of $850 on or about May 22, 2020,
which Appellee received on June 1, 2020; however, the payment
failed to make the loan current. Further, Appellants cannot rely
on the assertion that [they] believed Appellee applied the
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$40,000.00 that Appellee held in collateral to another loan
because the facts indicate Mr. Sciore never agreed to the
application of said money, and the discussions about applying the
$40,000.00 concerned the SBA loans only, not the loan at issue.
Appellant[s] failed to offer sufficient evidence to show that the
discussion concerning the application of the $40,000.00 involved
the loan at issue. Appellant[s] also failed to offer sufficient
evidence that demonstrated that Appellee’s calculations of the
amount due under the Note were inaccurate and resulted in a
judgment that included excessive principal and interest.
Trial Court Opinion, filed 12/23/20, at 17-21 (footnotes and citations to record
omitted) (footnote added).
We conclude the trial court’s reasoning is sound, and the court did not
abuse its discretion. See PNC Bank, supra (setting forth standard of review
for petition to open a confessed judgment). Appellants failed to produce
sufficient evidence that the loan was not in default or that they did not receive
notice of the default.9 Moreover, Appellants failed to produce sufficient
evidence that the judgment included excessive principal and interest.
____________________________________________
9 A review of the equities in this case strengthens our conclusion that the trial
court did not err in denying Appellants’ petition to open. See Atlantic Nat.
Trust, LLC v. Stivala Investments, Inc., 922 A.2d 919, 924-25 (Pa.Super.
2007). As the trial court determined, Appellants were regularly receiving
statements pertaining to the loan until the beginning of 2020, at which time
Appellants closed the business office where they were receiving the
statements. Appellants then failed to update their mailing address and/or
request replacement statements. In any event, Appellants received the March
2, 2020, letter advising of the status of the loan. Accordingly, “we find no
abuse of discretion, as the equities in this matter militate against the judgment
debtor[s].” See id.- 23 -
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Accordingly, the trial court properly denied Appellants’ petition to open the
confession of judgment on this basis. See Ferrick, supra.In their final issue, Appellants contend the trial court abused its
discretion in denying Appellants’ petitions to open the confessed judgment
since the totality of the circumstances gave rise to meritorious defenses.
Specifically, Appellants contend the trial court failed to consider Appellee’s bad
faith, which included failing to give Appellants notice that they were in default
of the loan prior to confessing judgment and failing to apply $40,000.00 worth
of proceeds from Loan 1 to the instant loan.
We conclude Appellants are attempting to relitigate arguments, which
we rejected supra. In any event, as the trial court determined, Appellants
have failed to set forth evidence that Appellee acted in bad faith. See Trial
Court Opinion, filed 12/23/20, at 24 (holding Appellee did not “unilaterally”
apply funds to make a payment on the loan, rather, the parties agreed that
Appellee would apply a portion of Loan 1 to several outstanding loans,
including the instant loan); 24-45 (holding that Appellee gave Appellants
notice of the default).
For all of the foregoing reasons, we affirm.
Affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 09/03/2021
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