Opinion ID: 667153
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Heading: Initial Summary

Text: 11 Fox Rothschild acted under a warrant to confess judgment in a printed form of lease for commercial office space between the Bermans and a corporation called Joseph J. Jordan, FAIA, P.C. That corporation was owned by one of the two stockholders of Jordan Mitchell, Inc. We assume Fox Rothschild acted on instructions from the Bermans. Before the judgment by confession was entered Jordan Mitchell, Inc. executed an amendment to the Lease (Amendment) after consulting counsel about a dispute on its right to hold over under the Lease signed by its predecessor, Joseph J. Jordan, FAIA, P.C. The Amendment extended the Lease's term and incorporated its terms by reference, but the only document that contained the text of the warrant on which judgment was confessed was the original form Lease signed by Jordan Mitchell's predecessor, Joseph J. Jordan, FAIA, P.C. Following execution of the Amendment, a new dispute arose. It concerned the Bermans' claim that additional rent was due under a rent escalator clause in a rider to the original form Lease. In the course of this second dispute, the Bermans asked Fox Rothschild to confess judgment for rent in arrears. 12 When Fox Rothschild confessed judgment against Jordan Mitchell, Inc., they took action that caused the Sheriff of Philadelphia to execute on the judgment by garnishing Jordan Mitchell, Inc.'s bank account. The sheriff, following routine Pennsylvania practice, acted without prior notice or hearing for Jordan Mitchell, Inc. or any of its agents, employees or stockholders. We again assume the Attorneys acted under instructions from the Bermans when they set the garnishment process in motion. 13 On these facts we conclude that entry of the confessed judgment did not involve state action with consequences significant enough to make the Bermans and Fox Rothschild state actors, but we think their use of the sheriff to enforce the judgment make them persons acting under color of law. We then conclude, as did the district court, that entry of the judgment, when coupled with seizure of the corporation's bank account, without prior notice or opportunity to be heard, does violate the Due Process Clause of the Fourteenth Amendment to the Constitution. 14 After the district court dismissed the Tenant's actions on the basis of qualified immunity, the Supreme Court decided in Wyatt that qualified immunity is not available to private persons who become state actors for purposes of section 1983. Whether private persons who act under color of law may raise a defense of good faith was left open. Accordingly, the district court's orders dismissing Jordan Mitchell, Inc.'s claims must be vacated. 15 Because it relied on qualified immunity to support dismissal, the district court did not speak clearly as to whether Jordan Mitchell, Inc. had waived its constitutional right to due process. The waiver issue is likely to recur on remand. After considering the decision of the Supreme Court in D.H. Overmyer Co., Inc. v. Frick Co., 405 U.S. 174, 92 S.Ct. 775, 31 L.Ed.2d 124 (1972) (debtor may waive the right to notice and hearing before a deprivation of property if the debtor freely and intelligently signs a document that authorizes judgment by confession), we believe that Jordan Mitchell, Inc.'s section 1983 claims against the Attorneys cannot be dismissed on a Rule 12(b)(6) motion because the complaint does not show on its face that the corporation waived its constitutional right to pre-deprivation hearing and notice. In the Bermans' case, again in consideration of Overmyer, we conclude that there remain genuinely disputed issues of material fact concerning waiver. We note that the district court on remand will have to consider whether the Bermans and their Attorneys can successfully assert a good faith defense and that issue is also likely to require the resolution of factual disputes. Finally, we note that the district court on remand may have to reconsider its orders dismissing the stockholders' claims for lack of standing.