Pittsburgh Properties v. Casteel, C.

J-A20024-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
PITTSBURGH PROPERTIES, LTC IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
CYNTHIA A. CASTEEL, ANTHONY J.
PARAVATI AND CMG, LLC D/B/A
CASTEEL MANAGEMENT GROUP
Appellant No. 1597 WDA 2015
Appeal from the Order Entered September 18, 2015
In the Court of Common Pleas of Allegheny County
Civil Division at No: GD-14-012850
BEFORE: BOWES, STABILE, and MUSMANNO, JJ.
MEMORANDUM BY STABILE, J.: FILED DECEMBER 9, 2016
Appellants, Anthony J. Paravati, Cynthia Casteel, and CMG, LLC D/B/A
Casteel Management Group, appeal from the September 18, 2015 order
denying his petition to open a confessed judgment against him. We affirm.
Appellant CMG and Appellee, Pittsburgh Properties, LTC, entered a
commercial lease agreement on December 19, 2011 (the “Lease”) and a
lease amendment and renewal agreement dated March 28, 2012 (the “Lease
Amendment and Renewal”)1 whereby Appellants leased office space from
Appellee. Appellant Casteel was the owner and operator of Appellant CMG, a
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1
The Lease Amendment and Renewal provided that Appellant CMG would
lease an expanded space to be renovated by Appellee.
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creative talent management company. N.T. Casteel Deposition, 3/27/15, at
8. On December 19, 2011, Appellants Casteel and Paravati, Casteel’s
boyfriend, executed unconditional personal guarantees (the “Guarantees”) of
CMG’s obligations under the lease. The Lease, the Lease Amendment and
Renewal, and the Guarantees contain warrants of attorney authorizing entry
of judgment against Appellants in the event a default.
Unable to generate sufficient revenue, CMG ceased operations and
vacated the leased premises in October or November of 2013. N.T. Casteel
Deposition, 3/27/15, at 15. On July 11, 2014, Appellee filed a complaint in
confession of judgment for $53,894.50 against Appellants. Appellee served
notice of judgment and execution, per Pa.R.C.P. No. 2958.1, on Appellants
Casteel and CMG, LLC on August 4, 2014. Appellee served a Rule 2958.1
notice on Appellant Paravati on November 19, 2014. Appellants filed a
petition to open or strike the judgment, pursuant to Pa.R.C.P. No. 2959 on
December 15, 2014. On January 2, 2015, the trial court denied the petition
to strike the judgment but issued a rule to show cause why the judgment
should not be opened. Appellee answered the petition to open on January
22, 2015. Appellants Paravati and Casteel gave deposition testimony and
both parties filed briefs. On September 18, 2015, the trial court entered the
order on appeal. This timely appeal followed.
Appellants raise five assertions of error:
I. Whether the court erred in determining that
Appellants did not raise a meritorious defense to the amount of
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finance fees included as part of the confessed judgment when
unauthorized finance fees were charges imposed upon CMG and
such finance fees were assessed at higher [sic] rate than what
was authorized under the [Lease and Lease Amendment and
Renewal].
II. Whether the court erred in determining that
Appellants did not raise a meritorious defense to the amount
included as part of the confessed judgment for ‘tenant
improvements’ when such improvements were the responsibility
of Appellee under the [Lease and Lease Amendment and
Renewal] and were assessed after CMG had vacated the leased
premises.
III. Whether the court erred in determining that the
confession of judgment clause contained in the Unconditional
and Continuing Guarantee (hereinafter “the Guarantee”) was
valid when it is not conspicuous, is buried within the body of the
document, and not clearly labeled or identified as authorizing
judgment by confession.
IV. Whether the court erred in determining that the
individual Appellant, Paravati, did not raise a meritorious defense
to the confession of judgment when the Warrant of Attorney set
forth in the [Lease and Lease Amendment and Renewal] only
authorized the entry of a confessed judgment against the
Lessee, CMG, LLC, and not the individual Appellants.
V. Whether the court erred in determining that
Appellants did not raise a meritorious defense to the amount of
unpaid rent included as a part of the confessed judgment when
the Appellee committed multiple breaches of the Lease?
Appellant’s Brief at 4-5.2
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2
We have reordered the third and fourth arguments to correspond to the
order in which Appellants present them in the argument section of their
brief.
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We review the trial court’s order for abuse of discretion. Neducsin v.
Caplan, 121 A.3d 498, 506 (Pa. Super. 2015), appeal denied, 1131 A.3d
492 (Pa. 2016).
Judicial discretion requires action in conformity with law on
facts and circumstances before the trial court after hearing and
consideration. Consequently, the court abuses its discretion if, in
resolving the issue for decision, it misapplies the law or exercises
its discretion in a manner lacking reason.
Id. A petition to open a confessed judgment will succeed where the
petitioner (1) acts promptly; (2) alleges a meritorious defense; and (3)
produces sufficient evidence to require submission of the matter to a jury.
Id. “A petition to open a confessed judgment is an appeal to the equitable
powers of the court.” Id. at 504.
A meritorious defense is one upon which relief could be
afforded if proven at trial. Pa.R.Civ.P. 2959(e) sets forth the
standard by which a court determines whether a moving party
has properly averred a meritorious defense. If evidence is
produced which in a jury trial would require the issues to be
submitted to the jury the court shall open the judgment.
Furthermore, the court must view the evidence presented in the
light most favorable to the moving party, while rejecting
contrary evidence of the non-moving party. The petitioner need
not produce evidence proving that if the judgment is opened, the
petitioner will prevail. Moreover, we must accept as true the
petitioner’s evidence and all reasonable and proper inferences
flowing therefrom.
In other words, a judgment of confession will be opened if
a petitioner seeking relief therefrom produces evidence which in
a jury trial would require issues to be submitted to a jury. The
standard of sufficiency here is similar to the standard for a
directed verdict, in that we must view the facts most favorably
to the moving party, we must accept as true all the evidence and
proper inferences in support of the defense raised, and we must
reject all adverse allegations.
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Id. at 506-07 (internal citations and quotation marks omitted).
As noted above, Appellants Casteel and CMG filed their petitions to
open more than four months after Appellee served them with notice of
execution under rule 2958.1., and five months after Appellee filed and
served the complaint. The trial court found that Appellants Casteel and CMG
failed to act promptly, and Appellants have not challenged that finding. In
addition, the procedural rules required Appellants to file any petition to open
or strike within 30 days of the Rule 2958.1 notice of execution. Pa.R.C.P.
Nos. 2956.1(c)(2) and 2959(a)(3). Appellants Casteel and CMG failed to
meet that deadline. We therefore affirm the trial court’s order as to
Appellants Casteel and CMG and confine our analysis to Appellant Paravati’s
petition to open.
Appellant Paravati’s first substantive argument is that Appellee
confessed judgment for greater finance charges than are authorized in the
Lease. General principles of contract construction govern our analysis of the
Lease:
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.
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Midwest Fin. Acceptance Corp. v. Lopez, 78 A.3d 614, 624 (Pa. Super.
2013) (internal citations and quotation marks omitted).
The Lease authorized 1.5% finance charges on “all unpaid non-rent
invoices.” Lease, at ¶ 5. The Lease also authorizes Appellee to charge
Appellant $25.00 per day for late payment of rent and $25.00 per day in the
event of insufficient funds to cover the automatically billed amount of rent.
Lease, at ¶ 4. Paravati asserts that Appellee’s confession of judgment
included finance charges of more than 8% on various outstanding balances.
Paravati references Exhibit E to Appellee’s complaint in confession of
judgment, which is a chart containing five columns: “Date,” “Charge Code,”
“Charge Description,” “Amount,” and “Balance Due.” Complaint in
Confession of Judgment, at Exhibit E. An item dated December 10, 2012,
with the charge code “LAT”, a charge description of “finance fee,” an amount
of $184.05, and a balance of $2,229.05. Complaint in Confession of
Judgment, Exhibit E. Appellant asserts, without citation to any other
evidence, that the $2,229.05 balance includes past due rent. Paravati
asserts that a finance charge of $184.05 against a balance of $2,229.05
represents a finance charge of 8.2569%—significantly more than the amount
provided for in the Lease. Other items in Exhibit E follow a similar pattern.
Appellant produced no evidence about whether balances due in Exhibit E are
comprised of rent invoices or non-rent invoices. Appellant also produced no
evidence to establish whether the finance fees are comprised of finance
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charges on non-rent invoices, as per paragraph five of the Lease, or late
charges, as per paragraph four of the Lease.
Appellee responds that the Lease, in paragraphs four and five, clearly
allows finance fees, and that Appellants never objected to the finance fees at
the time they were charged. Appellee also asserts that Paravati’s argument
on appeal is different from the argument he offered to the trial court. In the
petition to open and in the briefs to the trial court, Appellants argued that
Appellee was not entitled to assess finance charges. The trial court, citing
paragraphs four and five of the lease, rejected that argument:
With respect to finance charges, [Appellants] allege there
is no provision in the Lease requiring CMG to pay finance
fees and, thus, the finance fees included in the Confessed
Judgment are unauthorized. However, sections 4 and 5 of
the Lease clearly authorize [Appellee] to charge late fees and
monthly finance charges for unpaid non-rent invoices. By
executing and guaranteeing the Lease, [Appellants] agreed to
these charges. Based on the clear, unambiguous language of
the Lease, there is no question of fact as to whether CMG was
required to pay finance fees under the Lease and [Appellants]
have failed to raise a meritorious defense in this regard.
Trial Court Opinion, 1/6/16, at 5-6 (emphasis added). On Appeal, Paravati
now challenges the amount of finance fees, an argument Appellants never
raised in the trial court. 3 Paravati’s argument fails for this reason alone, as
he cannot raise an issue for the first time on appeal. Pa.R.A.P. 302(a).
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3
We are cognizant that courts can modify a confessed judgment where the
plaintiff confesses judgment for an allowable item, but an excessive amount.
Housing Mortg. Corp. v. Tower Dev. and Inv. Corp., 167 A.2d 146, 147
(Footnote Continued Next Page)
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Were we to address the merits, Paravati still would not obtain relief.
As explained above, Paravati must produce evidence sufficient to create a
jury question. Given the record before us, proper interpretation of Exhibit E
is a matter of mere speculation rather than reasonable inference. Paravati
has produced no evidence to establish that some or all of the balances due
in Exhibit E arose from non-rent invoices. If portions of the balances due
pertain to rent invoices, it is possible that portions of the finance charges
include the $25 per day late fees authorized by paragraph four of the Lease.
Even if Paravati had preserved this issue for appeal, we could not conclude
that he has produced sufficient evidence to require submission of this issue
to a jury.
Next, Paravati argues that Appellee was not authorized to confess
judgment for tenant improvements because Appellee was responsible for the
cost of improvements under the Lease Amendment and Renewal and
because Appellant CMG vacated the premises before Appellee incurred the
costs. This argument suffers from the same fatal flaw as the previous one:
Appellants produced no evidence to support it. The trial court observed:
[Appellants] challenge the confessed judgment because it
includes charges for certain […] alterations to the leased
premises. [Appellants] alleged the Lease requires [Appellee]
(and not [Appellants]) to make these improvements and
alterations to the leased premises. While [Appellee] did agree to
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(Footnote Continued)
(Pa. 1961). As Paravati has failed to carry his burden of production, we
need not decide whether modification is appropriate in this case.
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perform certain work when the Lease [Amendment and Renewal]
was executed, [Appellants] have failed to show that the charges
in the confessed judgment relate to the work [Appellee] agreed
to perform in the Lease. Once again, [Appellants] had sufficient
time to depose representatives of [Appellee] on this issue, but
failed to do so. As such, [Appellants] have failed to present
evidence or support for their claim that the charges for
alterations are unauthorized.
Trial Court Opinion, 1/6/16, at 5.
In addition to Appellants’ failure to produce evidence that Appellee
assessed unauthorized charges for alterations to the leased premises,
Appellants’ brief fails to explain which charge or charges in the confession of
judgment were unauthorized. Appellants’ argument on this point spans just
over one page and fails to provide any supporting citations to the record.
Appellants’ Brief at 17-18. This failure results in waiver. Pa.R.A.P. 2119(c);
J.J. DeLuca Co., Inc. v. Toll Naval Assoc., 56 A.3d 402, 411 (Pa. Super.
2012).
Next, Paravati argues that the confession of judgment clause
contained in the Guarantee was not sufficiently conspicuous. He argues that
the lack of conspicuity creates a meritorious defense. This argument fails for
at least two reasons. First, it asserts a defect apparent from the face of the
record. If correct, this argument would be a basis for striking, rather than
opening, the confessed judgment. “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.” Naducsin, 121 A.3d at
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504. “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. (quotation marks and citations omitted; brackets in original).
The conspicuity, or lack thereof, of the confession of judgment clause
does not depend upon the truth of the factual averments in the complaint.
Rather, it is apparent from the complaint and attached exhibits. Paravati
cannot obtain relief on this issue because Appellants failed to challenge the
trial court’s order denying their petition to strike.
Second, the argument lacks merit. We have held that “[a] warrant of
attorney to confess judgment must be self-sustaining and to be self-
sustaining the warrant must be in writing and signed by the person to be
bound by it.” Naducsin, 121 A.3d at 505 (quoting Midwest Fin.
Acceptance Corp. v. Lopez, 78 A.3d 614, 622-23 (Pa. Super. 2013)).
“The requisite signature must bear a direct relation to the warrant of
attorney and may not be implied.” Id. “There should be no doubt that the
lessee signed the warrant and that he was conscious of the fact that he was
conferring a warrant upon the lessor to confess judgment in the event of
breach.” Ferrick v. Bianchini, 69 A.3d 642, 651 (Pa. Super. 2013).
A general reference in the body of an executed lease to
terms and conditions to be found is insufficient to bind the lessee
to a warrant of attorney not contained in the body of the
lease unless the lessee signs the warrant where it does appear.
In short, a warrant of attorney to confess judgment is not to be
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foisted upon anyone by implication or by general and nonspecific
reference.
Graystone Bank v. Grove Estates, LP., 58 A.3d 1277, 1282–83 (Pa.
Super. 2012) (quoting Frantz Tractor Co. v. Wyoming Valley Nursery,
120 A.3d 303, 305 (Pa. 1956) (emphasis added in Graystone)), aff'd sub
nom., 81 A.3d 880 (Pa. 2013). The Graystone Court found the warrant of
attorney valid because it appeared “conspicuously in all caps” at the bottom
of a page and the signature line appeared at the top of the next page. Id.
The Graystone Court therefore distinguished the facts before it from cases
in which the warrant of attorney was “located either altogether outside the
body of the agreement, too remote from the signature, or on pages
subsequent to the signature.” Id.
In other cases, we have denied relief to the defendant where the
confession of judgment clause was printed in the same font size as the
remainder of the document. Germantown Sav. Bank v. Talacki, 657 A.2d
1285, 1289 (Pa. Super. 1995).
The warrant of attorney in this case appeared as a
separately numbered paragraph within the body of the
Guaranty; it was paragraph six out of 18, on page three of nine
pages. It was printed in the same size type as the rest of the
text. It was not a finely printed clause on the unsigned reverse
side of the document. It is clear that a party’s signature to a
contract is designed to evidence his or her intention to be bound
thereby. Where, as here, the debtor has not alleged fraud, and
has produced no evidence to show a lack of capacity to
understand the document signed, or that he or she had asked
for an explanation of the contract language, the debtor must be
held to the contract’s terms.
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Id. at 1289-90 (citations omitted). “It is well established that, in the
absence of fraud, the failure to read a contract before signing it is an
unavailing excuse or defense and cannot justify an avoidance, modification
or nullification of the contract; it is considered ‘supine negligence.’” Id. at
1289 (quotation marks omitted).
Instantly, we observe that Paravati’s initials appear on the page of the
Guarantee containing the confession of judgment clause. Complaint in
Confession of Judgment, at Exhibit C. At the very top of the next page,
Paravati signed his name under a paragraph that is printed in larger font
than the rest of the document, bolded, and italicized. Id. That paragraph
provides: “WARNING – BY SIGNING THIS PAPER YOU GIVE UP YOUR
RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME
A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR
PRIOR KNOWLEDGE [….].” Id. We conclude that the confession of
judgment clause in the Paravati Guarantee clearly complies with the
requirements set forth in the foregoing case law.4 Paravati’s argument lacks
merit.
Next, Appellants’ brief asserts that the trial court should have opened
the judgment because the Lease and Lease Amendment and Renewal
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4
We believe Appellants’ reliance on the definition of conspicuity set forth in
the Uniform Commercial Code at 13 Pa.C.S.A. § 1201(b)(10) is misplaced,
as the UCC governs contracts for the sale of goods.
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authorize entry of judgment against CMG but not Casteel or Paravati. As we
have just explained, Paravati signed a Guarantee with a valid confession of
judgment clause. Appellee was entitled to confess judgment against
Paravati based on the Guarantee.
Finally, Appellants’ brief argues that the trial court should have opened
the judgment because Appellee’s alleged breaches of the Lease excused
Appellants’ default. Appellants argue that Appellee failed to make needed
repairs to the ceiling, and of the heating and electrical systems of the leased
premises. Paragraph 18 of the Lease provides that CMG was not “entitled to
any reduction of rent or to damages by reason of Lessor’s failure to furnish
[electricity and heat] when such failure is caused by […] repairs […] or by
any other cause beyond the reasonable control of Lessor.” Lease, at ¶ 18
(emphasis added). Likewise, Appellee was obligated to provide heat,
electricity, and other utilities only so long as Appellants were not in default
under the Lease.
The trial court found as follows:
In her deposition, Casteel testified that issues related to
heat and electric were the result of renovations and repairs to
expand the leased premises at the request of CMG. Under the
terms of the Lease, CMG is not entitled to an abatement of rent
because the heat and electric issues were the result of such
renovations and repairs. Moreover, Casteel has not explained
how the heat and/or electrical failures were the Landlord’s fault
or responsibility so as to justify an abatement of rent.
[Appellants] had sufficient time to depose representatives of
[Appellee] on this issue, but failed to do so.
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Trial Court Opinion, 1/6/16, at 4-5. The record supports the trial court’s
findings. N.T. Casteel Deposition, 3/27/15, at 11-14. Thus, we agree with
the trial court’s conclusion that Appellants failed to produce sufficient
evidence to create a jury question on this issue.
In summary, we have reviewed all of Appellants’ assertions of error
and found them lacking in merit or not preserved for appellate review. We
therefore affirm the trial court’s order.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 12/9/2016
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