In and Out Enterprises v. AKF Reporters

• Court: Superior Court of Pennsylvania
• Decided: March 29, 2022
• Docket: 1276 WDA 2021
• Status: Unpublished

Opinion

J-A08007-22

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

IN AND OUT ENTERPRISES, LLC : IN THE SUPERIOR COURT OF : PENNSYLVANIA Appellant : : : v. : : : AKF REPORTERS, INC. : No. 1276 WDA 2021

Appeal from the Order Entered October 5, 2021 In the Court of Common Pleas of Allegheny County Civil Division at No(s): GD-21-009297

BEFORE: BENDER, P.J.E., LAZARUS, J., and McCAFFERY, J.

MEMORANDUM BY BENDER, P.J.E.: FILED: MARCH 29, 2022

In and Out Enterprises, LLC (“Landlord”) appeals from the order entered

on October 5, 2021, by the Court of Common Pleas of Allegheny County, which

granted the petition of AKF Reporters, Inc. (“Tenant”) to strike the confessed

judgment entered against Tenant and in favor of Landlord. After careful

review, we are constrained to quash the appeal.

We glean the following facts and procedural history from the record. On

December 10, 2015, Tenant entered into a written lease (“Lease”) with Blvd.

Allies Peter, LLC and Allies Shane, LLC (“Original Landlord”) for commercial

space consisting of the first and third floors of 436 Boulevard of the Allies (the

“Premises”). On May 13, 2021, Landlord purchased the Premises from

Original Landlord and assumed all terms and obligations under the Lease. The

Lease contains a confession of judgment provision, an acceleration of rent

provision, and a heightened interest rate provision. J-A08007-22

On August 6, 2021, Landlord confessed judgment against Tenant in the

amount of “$811,571.74 plus Article 2(C) rent and costs[,]” which included

accelerated rent and interest at the heightened rate of 18% per annum. On

September 1, 2021, Tenant timely filed a petition to strike and/or open the

judgment entered by confession (“Petition to Strike”), in which it alleged the

following three fatal defects on the face of the confessed judgment:

a. Landlord was not a party to the Lease Agreement and no Assignment of Lease Agreement had been attached to its Complaint in Confession [of Judgment];

b. Pursuant to the Lease Agreement, only Rent, which term is specifically defined within the Lease Agreement, was subject to the assessment of interest at the rate of eighteen (18%) percent per annum; however, the Complaint in Confession [of Judgment] assessed interest at the rate of eighteen (18%) percent on Real Estate Taxes, Use and Occupancy Taxes, Operating Expenses, and Parking Space Rent, each of which is specifically defined as constituting Additional Rent as opposed to Rent and therefore not subject to the heightened interest rate;

c. The Complaint in Confession [of Judgment] included a claim for accelerated Additional Rent, which was not authorized under the clear language of the Lease Agreement.

Tenant’s Brief at 4. Tenant maintained that each of these fatal defects

warranted a striking of the confessed judgment, pursuant to Pa.R.C.P. 2959.

In the event the trial court did not find a fatal defect on the face of the

confessed judgment, Tenant requested that the court alternatively open the

confessed judgment to permit the submission of evidence relative to the

Tenant’s asserted defenses.

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After conducting an evidentiary hearing on the matter, the trial court

entered an order dated October 5, 2021, granting Tenant’s Petition to Strike.1

Landlord filed a motion for reconsideration, which was denied by order of court

dated October 15, 2021. On October 20, 2021, Landlord filed a timely notice

of appeal, followed by a timely, court-ordered Rule 1925(b) concise statement

of errors complained of on appeal. Herein, Landlord presents the following

questions for our review:

A. Did the trial court commit an error of law in striking [Landlord’s] complaint in confession of judgment for money under Pa.R.C.P. 2959?

B. Did the trial court commit an error of law in striking [Landlord’s] complaint in confession of judgment for money under Pa.R.C.P. 2959 instead of modifying the judgment nunc pro tunc?

Landlord’s Brief at 4 (unnecessary capitalization omitted).

This matter is scheduled for oral argument on April 5, 2022. However,

we deem it appropriate to address the propriety of the appeal at this juncture.

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1 The court explained its decision in its Rule 1925(a) opinion: On the face of the judgment in this case, it appears that [Landlord] applied interest under the [L]ease (18%) to amounts not subject to that rate and that [Landlord] accelerated amounts not subject to acceleration. Part of the problem with the confession of judgment in this case is that there is substantial doubt about what “rent” means under the almost unintelligible definitions and terms of the [L]ease. This court is required by law to resolve any doubt as to the validity of this judgment against [Landlord]. Scott Factors[, Inc. v. Hartley,] 228 A.2d [887,] 888 [(Pa. 1967)]. The court did so by striking the judgment.

Trial Court Opinion, 11/2/21 (single page).

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See Joseph Palermo Development Corp. v. Bowers, 564 A.2d 996, 997

(Pa. Super. 1989) (“[I]t is well settled that this [C]ourt may sua sponte raise

a question as to its own jurisdiction.”) (citations omitted). On November 19,

2021, we issued a rule directing Landlord to show cause as to why this appeal

should not be quashed, as an order striking or opening a judgment is generally

not immediately appealable. See Per Curiam Order, 11/19/21 (citing

Pa.R.A.P. 311(a)(1), Note; Hagel v. United Lawn Mower Sales & Service,

Inc., 653 A.2d 17, 20 (Pa. Super. 1995); Joseph Palermo Development

Corp., 564 A.2d at 997). Landlord filed a timely response in the form of a

letter dated November 23, 2021, in which it asserted that the October 5, 2021

order striking its complaint in confession of judgment for money “is a final

order pursuant to Pa.R.C.P. 341[,] as it disposes of all claims and of all

parties.” Response to Rule to Show Cause, 11/23/21, at 1 (unpaginated).

In its response, Landlord further explained that it believes Continental

Bank v. Tuteur, 450 A.2d 32 (Pa. Super. 1982), in which this Court held that

a warrant of attorney may not be used twice for the same debt, precludes it

from filing an amended complaint in confession of judgment.2 Response to

Rule to Show Cause at 1 (unpaginated). Moreover, Landlord cites multiple

cases, which it perceives to reflect “conflicting legal precedent.” See Id.

2 We observe that Landlord mistakenly cited to Continental Bank as a Pennsylvania Supreme Court case, rather than a Superior Court decision. The correct citation is reflected above. Moreover, we note that in reaching its decision, the Continental Bank Court relied heavily on Scott Factors, Inc. v. Hartley, 228 A.2d 887 (Pa. 1967).

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(citing TCPF Ltd. Partnership v. Skatell, 976 A.2d 571 (Pa. Super. 2009)

(following Continental Bank and not allowing an amended complaint in

confession of judgment)). See also id. (citing SDO Fund II D32, LLC v.

Donahue, 234 A.3d 738 (Pa. Super. 2020); Dominic’s Inc. v. Tony’s

Famous Bar, 214 A.3d 259 (Pa. Super. 2019); Dime Bank v. Andrews, 115

A.3d 358 (Pa. Super. 2015); Atlantic Nat. v. Stivala Investments, 922

A.2d 919 (Pa. Super. 2007) (permitting an amended complaint in confession

of judgment)). Landlord states that it would certainly amend its complaint if

it believed it could, but that based on the foregoing case law, Landlord is

unsure how to proceed. Id. By order dated December 12, 2021, this Court

discharged the rule to show cause and deferred the issue to the merits panel.

We will now address the appealability of the October 5, 2021 order.

First, we reject Landlord’s claim that the order striking its confessed

judgment is a final and appealable order. “An order of the court striking a

judgment annuls the original judgment and the parties are left as if no

judgment had been entered.” Ferrick v. Bianchini, 69 A.3d 642, 647 (Pa.

Super. 2013). Hence, such an order clearly does not dissolve all claims and

all parties.

Second, contrary to Landlord’s interpretation of relevant case law, we

do not believe the cases cited in its response to the rule to show cause create

an inconsistency in legal precedent. In Continental Bank, this Court did

indeed acknowledge the general rule in Pennsylvania that a warrant of

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attorney cannot be used more than once. See Continental Bank, 450 A.2d

at 35. As we explained:

In Pennsylvania, we have long recognized and permitted the entry of a judgment by confession upon the authority of a warrant of attorney contained in an agreement between the parties….

The warrant constitutes a grant of authority by one contracting party to the other, upon the happening of a certain event, i.e., a breach of the terms of the agreement wherein the warrant is contained, to enter that which results ordinarily only after a trial of the issue between the parties, i.e., a judgment. Such judgment when entered carries with it the same legal consequences as any judgment of a court…. [T]he given authority…, once exercised, ceases to exist.

Under our case law, it is clear beyond question that, once a judgment has been entered under a warrant of attorney, the authority to use the warrant vanishes and the warrant cannot again be exercised. Upon the entry of a judgment by confession under a warrant of attorney, the warrant is exhausted….

Id. (quoting Scott Factors, Inc., 228 A.2d at 888-89). However, we

recognized in Dime Bank that “under certain circumstances, and to certain

extents, parties to a note may waive this rule, allowing for multiple exercises

of a warrant of authority to confess judgment.” Dime Bank, 115 A.3d at 369

(citations omitted).

In SDO Fund II D32, an individual filed a petition to strike and/or open

the confessed judgment entered in favor of the lender, on the premise that

the warrant of attorney was “exhausted” by a previous use of the warrant to

confess judgment against him. SDO Fund II D32, 234 A.3d at 740.

Acknowledging our decision in Dime Bank, we upheld the trial court’s denial

of the petition, “[b]ecause the warrant of attorney contained explicit language

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permitting the lender to confess judgment against [the petitioner] multiple

times without exhausting the warrant[.]” Id.

Similarly, in the instant matter, the confession of judgment clause

contained in the Lease expressly provides, in relevant part, that “such

authority shall not be exhausted by one exercise thereof, but judgment may

be confessed as aforesaid from time to time as often as any of said rental

and/or other sums shall fall due or be in arrears, and such powers may be

exercised as well after the termination or expiration of the term of this lease.”

Complaint in Confession of Judgment, 8/6/21, at Exhibit A (Lease at 15, Article

17(N) (unpaginated) (emphasis added)). Thus, it appears that the authority

granted by the warrant of attorney has not been exhausted, and Landlord

would not thereby be precluded from filing an amended complaint for

confession of judgment against Tenant.

Additionally, we conclude that no appeal as of right may be taken from

the trial court’s order striking the confessed judgment. In accordance with

Rule of Appellate Procedure 311, “only an order refusing to open, vacate, or

strike off a judgment is immediately appealable.” Hagel, 653 A.2d at 20

(citing Joseph Palermo Development Corp, supra; Pa.R.A.P. 311(a)(1)).

See also Pa.R.A.P. 311, Note (“The 1989 amendment to subparagraph (a)(1)

eliminated interlocutory appeals of right from orders opening, vacating, or

striking off a judgment while retaining the right of appeal from an order

refusing to take any such action.”).

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Accordingly, we quash the appeal from the trial court’s October 5, 2021

order striking Landlord’s confessed judgment.3

Appeal quashed. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 3/29/2022

3Nothing herein shall impede Landlord’s right to file an amended complaint in confession of judgment.

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