North Point I Condo Owners Assoc v. Burney, H.

J-S26033-19
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
NORTH POINT I CONDOMINIUM : IN THE SUPERIOR COURT OF
OWNERS ASSOCIATION C/O : PENNSYLVANIA
CHANCELLOR PROPERTIES, INC. :
:
Appellant :
:
:
v. :
: No. 2325 EDA 2018
:
HARRY BURNEY :
Appeal from the Order Entered July 17, 2018
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): No. 170205509
BEFORE: PANELLA, P.J., GANTMAN, P.J.E., and PELLEGRINI*, J.
MEMORANDUM BY PELLEGRINI, J.: FILED JUNE 27, 2019
North Point I Condominium Owners Association c/o Chancellor
Properties, Inc. (North Point) appeals from the order of the Court of Common
Pleas of Philadelphia County (trial court) striking the judgment by confession
entered against Harry Burney (Burney). After careful review, we reverse.
We take the factual background and procedural history of this case from
the trial court’s July 17, 2018 opinion and our review of the certified record.
North Point is a homeowners’ association that controls condominiums in
Philadelphia. As a condominium owner, Burney was subject to certain
assessments, fees and other charges by North Point for its provision of
benefits and services.
____________________________________
* Retired Senior Judge assigned to the Superior Court.
J-S26033-19
On April 18, 2015, Burney entered into an agreement with North Point
for payment of condominium fees for common expenses that had fallen into
arrears (Settlement Agreement). The Settlement Agreement contains a
confession of judgment clause to be enforced by North Point should Burney
be in breach.
On February 21, 2017, Burney breached the Settlement Agreement and
North Point filed a Complaint in Confession of Judgment against him. On
February 14, 2018, North Point filed a Writ of Execution. On July 7, 2018,
Burney filed a Motion for Stay of Execution that did not dispute the amounts
due or his breach.
On July 17, 2018, after a hearing on Burney’s Motion, the trial court
struck the confessed judgment based on Pennsylvania Rule of Civil Procedure
2950 dealing with confession of judgments. That Rule precludes judgment by
confession in any “action” involving a consumer credit transaction. 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 instrument executed by a natural person in connection
with a consumer credit transaction, authorizing such
confession.[1]
____________________________________________
1 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.”
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Pa.R.C.P. 2950 (emphasis added). A “consumer credit transaction” is defined
as credit transaction where credit is extended to a person for services that are
primarily for personal, family or household purposes:
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. (emphasis added).
In finding that condominium fees for common expenses were a
“consumer credit transaction” within the meaning of the Rule, the trial court
went on to state:
. . . [T]he Rules of Civil Procedure specifically instruct that
judgment by confession may not be entered against a natural
person in connection with a consumer credit transaction. Here,
[North Point] has filed on one hand an affidavit of non-consumer
transaction, yet, on the other, has admitted that the instant
judgment arises out of [] Burney’s “failure . . . to pay homeowner
dues and assessments.” (See Response in Opposition to Petition
to Stay Execution, at ¶ 1). This admission convinces the court
that judgment was entered by confession in connection with a
consumer credit transaction: this is particularly so considering
that the condominium unit involved in the instant matter is located
at the same address identified in the complaint as the residence
of [Burney]. The court reaches this conclusion because payment
of condominium fees is primarily personal in nature and related to
family and household purposes. In conclusion, the judgment
entered by confession is fatally flawed and thus void because the
judgment was filed upon an instrument which had been executed
by a natural person in connection with a consumer transaction.
Since the judgment is void, the court lacks jurisdiction over the
matter, and the judgment is stricken on the court’s own motion.
(Trial Court Opinion, 7/17/18, at 4) (footnotes omitted). North Point filed a
Motion for Reconsideration that the trial court denied and this timely appeal
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followed.2 The central issue in this appeal is whether condominium fees are
“consumer credit transactions.”
On appeal, among other issues, North Point contends that because
condominium fees assessed for common expenses are not “consumer credit
transactions,” the trial court erred in striking the judgment by confession.
Whether a common expense is a “consumer credit transaction” is determined
for what purpose the common expense was assessed as well as whether credit
was extended.
Section 3103 of the Uniform Condominium Act, 42 Pa.C.S. § 3103,
defines what are condominium fees for common expenses as follows:
“Common expenses.” Expenditures made or liabilities incurred
by or on behalf of the association, together with any allocations to
reserves, including general common expenses and limited
common expenses.
“Common expense liability.” The liability for common
expenses allocated to each unit pursuant to section 3208 (relating
to allocation of common element interests, votes and common
expense liabilities).
42 Pa.C.S. § 3103 (emphasis added). As can be seen, the expense is allocated
to each “unit.” Section 3101 defines unit and unit owner as follows:
“Unit.” A portion of the condominium designated for separate
ownership, the boundaries of which are described pursuant to
section 3205(4) (relating to contents of declaration; all
condominiums).
____________________________________________
2 We review a court’s order striking a judgment for an abuse of discretion or
error of law. See Knickerbocker Russell Co., Inc. v. Crawford, 936 A.2d
1145, 1147 (Pa. Super. 2007).
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“Unit owner.” A declarant who owns a unit, a person to whom
ownership of a unit has been conveyed, or a lessee of a unit in a
leasehold condominium whose lease expires simultaneously with
any lease the expiration or termination of which will remove the
unit from the condominium. “Unit owner” does not include a
person having an interest in a unit solely as security for an
obligation.
42 Pa.C.S. § 3101.
In turn, Section 3314(b) of the Uniform Condominium Act, 42 Pa.C.S. §
3314(b), provides, in pertinent part, that:
common expenses shall be assessed against all the units in
accordance with the common expense liability allocated to each
unit (section 3208) in the case of general common expenses and
in accordance with subsection (c) in the case of special allocations
of expenses. Any past due assessment or installment thereof shall
bear interest at the rate established by the association not
exceeding 15% per year.
42 Pa.C.S. § 3314(b).
Based on those definitions, common expenses do not fall within the
definition of consumer credit transactions for several reasons. First, common
expenses are not household expenses or personal expenses but akin to private
taxes that are assessed in rem against the unit regardless of whether the unit
owner lives there or not. Second, common expenses do not involve the
extension of credit by the condominium association to the unit owner. When
the common expense liability is allocated, the unit owner is required to make
payment when due, just like when real estate taxes are imposed. And just
like real estate taxes, when not paid when due, interest can be imposed.
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For the foregoing reasons, we conclude that the trial court erred in
striking off the Confession of Judgment on the basis that the condominium
fees were a credit transaction and, accordingly, we reverse the order of the
trial court.
Order reversed. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 6/27/19
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