Dominic's Inc. v. Tony's Famous Tomato Pie Bar & Rest., Inc.

214 A.3d 259

DOMINIC'S INC., Appellee

v.TONY'S FAMOUS TOMATO PIE BAR & RESTAURANT, INC., Appellant

No. 50 EDA 2019

Superior Court of Pennsylvania.

Submitted June 26, 2019

Filed July 02, 2019

Ronald L. Daugherty, Philadelphia, for appellant.

Douglas Maloney, Langhorne, for appellee.

BEFORE: BENDER, P.J.E., GANTMAN, P.J.E., and COLINS,^* J.

OPINION BY GANTMAN, P.J.E.:

Appellant, Tony's Famous Tomato Pie Bar & Restaurant, Inc., appeals from the order entered in the Philadelphia County Court of Common Pleas, which denied Appellant's petition to strike and/or open the confessed judgment entered in favor of Appellee, Dominic's Inc. We affirm in part and reverse in part.

The trial court sets forth the relevant facts and procedural history of this appeal as follows.

BACKGROUND

On February [29], 2016, [A]ppellant...executed a promissory note ( ["Note"] ), in favor of [A]ppellee.... The Note arose out of an "AGREEMENT OF SALE," whereby [Appellee] sold to [Appellant] a tavern, its building, and equipment. The Note contained a warrant-of-attorney empowering [Appellee] to confess judgment upon the occurrence of a default committed by [Appellant]. On October 11, 2018, [Appellee] confessed judgment against [Appellant] on the grounds that [Appellant] had failed to make two monthly payments as required under the Note. On November 6, 2018, [Appellant] filed its petition to strike or open the judgment. On November 30, 2018, this court entered an Order denying the petition to strike or open the judgment. The court included in its Order an expansive footnote explaining the grounds for its decision. On December 27, 2018, [Appellant] appealed to the Pennsylvania Superior Court and subsequently filed, on January 15, 2019, a [Rule] 1925(b) statement of errors complained of on appeal.

(Trial Court Opinion, filed January 31, 2019, at 2). In support of the relevant facts, we add that the parties' Agreement of Sale included the following:

29. Entire Agreement. This Agreement, including exhibits, contains all of the agreements and understandings between the parties hereto; this Agreement supersedes and replaces any and all prior or contemporaneous agreements, understandings, warranties or representations of the parties or their counsel or anyone on the their behalf, of every nature and kind and whenever or wherever made, written or oral; and this Agreement may not be altered or amended except by a writing executed by all of the parties hereto.

(Agreement of Sale, dated 12/31/15, at 14; R.R. at 103a). Further, the Note states:

Events of Default. Each of the following shall constitute an Event of Default if not cured by Borrower within ten (10) days after notice from Lender unless a longer notice cure period is specified herein:

(a) There shall occur any default by Borrower in the payment of any principal of or interest under this Note or any other amounts due hereunder or any other loan document when due; or * * *

Remedies of Lender . Upon the determination by Lender that there has been the occurrence of an Event of Default, and following the expiration of any applicable grace or cure period, the Lender may if it so elects, without any notice or demand to Borrower whatsoever (which notice or demand is expressly waived, except to the extent otherwise specifically provided herein ), exercise any or all (or none) of the following rights and remedies (all of which rights and remedies shall be cumulative) as the Lender, in its sole discretion, may deem necessary or appropriate:

(a) Declare immediately due and owing all outstanding Loan sums due to Lender hereunder or under any of the loan documents.

* * *

CONFESSION OF JUDGMENT: BORROWER HEREBY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR IN ANY OTHER JURISDICTION THAT PERMITS THE ENTRY OF JUDGMENT BY CONFESSION, TO APPEAR FOR BORROWER AT ANY TIME AFTER THE OCCURRENCE OF ANY EVENT OF DEFAULT UNDER THIS NOTE OR AT ANY TIME AFTER THE MATURITY DATE HEREUNDER IN ANY ACTION BROUGHT AGAINST BORROWER HEREUNDER BY LENDER, WITH OR WITHOUT COMPLAINT OR DECLARATION FILED, WITHOUT STAY OF EXECUTION, AS OF ANY TERM OR TIME, AND THEREIN TO CONFESS OR ENTER JUDGMENT AGAINST BORROWER FOR ALL, OR ANY PART OF, THE UNPAID PRINCIPAL BALANCE HEREUNDER AND ACCRUED INTEREST THEREON, TOGETHER WITH ALL COSTS AND OTHER EXPENSES INCURRED IN CONNECTION THEREWITH AND AN ATTORNEYS' COLLECTION COMMISSION OF FIVE (5%) PERCENT OF THE AGGREGATE AMOUNT OF THE FOREGOING SUMS, BUT IN NO EVENT LESS THAN FIVE THOUSAND ($5,000) DOLLARS; AND FOR SUCH PURPOSE THE ORIGINAL OR ANY PHOTOCOPY OF THIS NOTE AND AN AFFIDAVIT OF LENDER OR LENDER'S COUNSEL AVERRING TO THE EVENT OF DEFAULT SHALL BE A GOOD AND SUFFICIENT WARRANT OF ATTORNEY. SUCH AUTHORIZATION SHALL NOT BE EXHAUSTED BY ONE EXERCISE THEREOF, BUT JUDGMENT MAY BE CONFESSED AS AFORESAID FROM TIME TO TIME. BORROWER HEREBY WAIVES ALL ERRORS AND RIGHTS OF APPEAL, AS WELL AS RIGHTS TO STAY OF EXECUTION AND EXEMPTION OF PROPERTY, IN ANY ACTION TO ENFORCE ITS LIABILITY HEREON.

BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT BORROWER'S REASONABLE EXPECTATION WITH RESPECT TO THE AUTHORIZATION GRANTED PURSUANT TO ANY WARRANT OF ATTORNEY OR POWER OF ATTORNEY HEREUNDER, IS THAT LENDER OR ITS ATTORNEY MAY CONFESS JUDGMENT AS SET FORTH HEREIN, SEEK TO FORECLOSE ON COLLATERAL AND TAKE ALL OTHER ACTIONS WITH RESPECT TO THE EXERCISE OF LENDER'S RIGHTS HEREUNDER. BORROWER HEREBY WAIVES

ALL OTHER DUTIES OF LENDER THAT MAY ARISE UNDER 20 PA. C.S.A. § 5601.3(b). BORROWER HEREBY REMISES, RELEASES, AND FOREVER DISCHARGES, AND WAIVES ALL CLAIMS, CAUSES OF ACTION AND ANY OTHER RIGHTS AGAINST, TD BANK, N.A. AND ITS PREDECESSORS, LEGAL REPRESENTATIVES, PAST AND PRESENT PARENT COMPANIES, SUBSIDIARIES, AGENTS, EMPLOYEES, SERVANTS, INSURERS, ATTORNEYS, OFFICERS, DIRECTORS, STOCKHOLDERS, AFFILIATES, AFFILIATE COUNTERPARTIES, SUCCESSORS IN INTEREST, AND ASSIGNS OF AND FROM ANY AND ALL CLAIMS, DEMANDS, DAMAGES, FEES, AND COSTS, SUMS OF MONEY, RIGHTS, CAUSES OF ACTIONS, OBLIGATIONS AND LIABILITIES OF ANY KIND OR NATURE WHATSOEVER INCLUDING ATTORNEYS' FEES, ARISING UNDER OR RELATING TO ANY DUTIES OF AN AGENT UNDER 20 PA.C.S.A. § 5601.3 OR OTHERWISE.

THE AUTHORITY GRANTED HEREIN TO CONFESS JUDGMENT SHALL NOT BE EXHAUSTED BY ANY EXERCISE THEREOF, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL THE AMOUNTS DUE HEREUNDER. BORROWER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED BY COUNSEL IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THIS INSTRUMENT (OR HAS MADE THE UNILATERAL DECISION NOT TO CONSULT WITH COUNSEL IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THIS INSTRUMENT) AND THAT IT KNOWINGLY WAIVES ITS RIGHT TO BE HEARD PRIOR TO THE ENTRY OF SUCH JUDGMENT AND UNDERSTANDS THAT, UPON SUCH ENTRY, SUCH JUDGMENT SHALL BECOME A LIEN ON ALL REAL PROPERTY OF BORROWER IN THE COUNTY WHERE SUCH JUDGMENT IS ENTERED.

PRIOR TO SIGNING THIS INSTRUMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS INSTRUMENT. BORROWER AGREES TO THE TERMS OF THIS INSTRUMENT AND ACKNOWLEDGES RECEIPT OF A TRUE AND COMPLETE COPY OF THIS INSTRUMENT.

(Note, 2/29/16, at 3, 5-7; R.R. at 19a, 21a-23a) (some emphasis added). Appellant's signature appears directly under this paragraph.

On appeal, Appellant raises three issues:

DID THE [TRIAL] COURT ERR IN DENYING APPELLANT'S REQUEST FOR ENTRY OF A RULE TO SHOW CAUSE REQUESTING DISCOVERY WHERE APPELLANT PROPERLY FILED A PETITION TO STRIKE AND/OR OPEN JUDGMENT AND PRESENTED A PRIMA FACIE DEFENSE TO THE CAUSE OF ACTION?

DID THE [TRIAL] COURT ERR IN DENYING APPELLANT'S PETITION TO STRIKE AND/OR OPEN JUDGMENT WHERE THE PETITION DEMONSTRATED MERITORIOUS DEFENSES OF BREACH OF CONTRACT BY APPELLEE IN PROVIDING FALSE FINANCIAL INFORMATION AND FAILING TO DISCLOSE STRUCTURAL PROBLEMS WITH THE PROPERTY, MISREPRESENTING THE VALUE OF EQUIPMENT GIVEN FOR THE

NOTE, AND FAILURE TO GIVE REQUIRED NOTICE UNDER THE TERMS OF THE NOTE, WHICH FORM THE BASIS OF THE CONFESSED JUDGMENT, THAT SHOULD BE PRESENTED TO A JURY?

DID THE [TRIAL] COURT ERR IN DENYING APPELLANT'S PETITION TO STRIKE AND/OR OPEN JUDGMENT WHERE THE RECORD DEMONSTRATED ERRORS IN THE RECORD CONSISTING OF A FAILURE TO GIVE REQUIRED NOTICE BEFORE DECLARING THE DEFAULT THAT LED TO THE CONFESSED JUDGMENT, AVERRING A DEFAULT OF $6,459.22 BUT CONFESSING JUDGMENT FOR A FIGURE 33 TIMES HIGHER ($212,381.83), WHICH IS EXCESSIVE AND WITHOUT AVERRING ANY ACCELERATION OF THE NOTE, AND FOR SEEKING AN UNREASONABLE ATTORNEY FEE GIVEN THE AMOUNT OF WORK INVOLVED IN THE CONFESSION OF JUDGMENT?

(Appellant's Brief at 4).

In its first issue, Appellant claims the trial court should have used Appellant's proposed rule to show cause, attached to its petition to strike and/or open the confessed judgment, because in its proposed rule, Appellant sought discovery and a stay of execution on the confessed judgment. Appellant insists it was entitled to discovery on disputed facts, which was necessary to provide a proper record for the trial court to decide the matter. Appellant submits the purpose behind the rule to show cause was thwarted, because the court did not allow discovery.

In its second issue, Appellant argues Appellee committed various defaults under the Agreement of Sale. Specifically, Appellant contends Appellee misrepresented the financial information of the business, misconstrued the worth of the equipment purchased, and overvalued the building, which was structurally unsound. Appellant claims these "defaults" constituted meritorious defenses to the confession of judgment. Appellant submits Appellee's general denials to allegations in the petition to strike and/or open constituted admissions of fact, which provided a defense to Appellee's judgment on the Note. Appellant concludes this Court should reverse and remand at least to allow for discovery to create a proper record in order to open the confession of judgment and conduct a trial on the matter. We disagree.

"[W]e review the order...