Opinion ID: 667153
Heading Depth: 2
Heading Rank: 1

Heading: Confession of Judgment Proceeding14

Text: 60 In order to prevail on a claim under section 1983, a plaintiff must establish (1) the violation of a federally protected constitutional or statutory right, (2) by state action or action under color of law. 42 U.S.C.A. Sec. 1983; see Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 156, 98 S.Ct. 1729, 1733, 56 L.Ed.2d 185 (1978). 61 The district court rejected [the] argument that judgment by confession is unconstitutional without a prior hearing and determination as to the validity of the cognovit provision. Fox Rothschild II, 792 F.Supp. at 396 (citing Berman I, 758 F.Supp. at 278). Under the express terms of the Pennsylvania rules governing actions for confession of judgment, a creditor must present an instrument which contains a written waiver of rights signed by the debtor, along with a sworn affirmation by the creditor that the facts set forth in the complaint are true. Id. at 396 n. 6 (citing Pa.R.Civ.P. 2952, 1024, 76). The district court initially held these safeguards adequately protect a defendant's right to due process in the action for confession of judgment. Berman I, 758 F.Supp. at 278. Building on this conclusion, it decided the state procedure for confession of judgment is facially constitutional. Later, it explained that Jordan Mitchell, Inc. had not stated a cognizable section 1983 claim because (1) neither the Bermans nor Fox Rothschild were state actors, see Fox Rothschild II, 792 F.Supp. at 395; Berman I, 758 F.Supp. at 278, and (2) the Tenant had alleged no facts from which one could reasonably infer that it had not knowingly and voluntarily waived its due process rights by signing the Lease containing the cognovit clause. See Fox Rothschild II, 792 F.Supp. at 397. 62 Jordan Mitchell, Inc. argues the acts of the Bermans and Fox Rothschild in confessing judgment are reasonably attributable to the state, and thus involve state action, subjecting them to liability under section 1983. 63 The Supreme Court addressed the question of whether and when a private party who invokes a state procedure acts under color of law for purposes of section 1983 in Lugar v. Edmondson Oil Co., 457 U.S. 922, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982). In Lugar, it first referred to judicial recognition of the fact that 'most rights secured by the Constitution are protected only against infringement by governments.'  Lugar, 457 U.S. at 936, 102 S.Ct. at 2753 (quoting Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 156, 98 S.Ct. 1729, 1733, 56 L.Ed.2d 185 (1978)). It then articulated a two-part inquiry, each part of which must be satisfied before an act of a private party that causes a constitutional deprivation is fairly attributable to the State, id. 457 U.S. at 937, 102 S.Ct. at 2753, and so makes a private actor subject to liability under section 1983: 64 First, the deprivation must be caused by the exercise of some right or privilege created by the State or by a rule of conduct imposed by the State or by a person for whom the State is responsible.... Second, the party charged with the deprivation must be a person who may fairly be said to be a state actor. This may be because he is a state official, because he has acted together with or has obtained significant aid from state officials, or because his conduct is otherwise chargeable to the State. Without a limit such as this, private parties could face constitutional litigation whenever they seek to rely on some state rule governing their interactions with the community surrounding them. Id. at 937, 102 S.Ct. at 2753-54. 15 65 In the cases before us, the acts of the Bermans and Fox Rothschild in causing entry of the confessed judgment meet the first part of the Lugar test. The power to confess judgment depends on a state statute and the procedure for doing so depends on state procedural rules of general application. For sufficient state action to be present the complaint in the Fox Rothschild case must allege state action involving sufficient force of law to meet the second part of the Lugar test. If it does, the Attorneys can be treated as state actors in the case against them. Against the Bermans, liability depends on whether the record on summary judgment shows they were state actors who effectively and knowingly invoked the force of law in order to collect the rent they claimed without observing the due process requirements of pre-deprivation notice and hearing. 66 In Lugar, the Supreme Court referred to Flagg Brothers to illustrate the second part of section 1983's two-part state action test. In Flagg Brothers, a debtor challenged the constitutionality of a New York commercial law statute. The debtor contended this statute violated the Due Process and Equal Protection Clauses of the Fourteenth Amendment. The Lugar Court explained it had not focused on the terms of the particular statute in Flagg Brothers but rather on the defendant's status, to determine [a]ction by a private party pursuant to [ ] statute, without something more, was not sufficient to justify a characterization of that party as a 'state actor.'  Lugar, 457 U.S. at 938-39, 102 S.Ct. at 2754. The Supreme Court in Flagg Brothers stated the something more would vary with the circumstances of the case and indicated the Court had applied different tests in different circumstances. 16 Id. at 939, 102 S.Ct. at 2754; see, e.g., Flagg Bros., 436 U.S. at 157, 98 S.Ct. at 1734 (joint action test); Jackson v. Metropolitan Edison Co., 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.2d 477 (1974) (nexus test); Adickes v. S.H. Kress & Co., 398 U.S. 144, 170, 90 S.Ct. 1598, 1615, 26 L.Ed.2d 142 (1970) (state compulsion test); Marsh v. Alabama, 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265 (1946) (public function test). Regardless of its label, [o]nly by sifting facts and weighing circumstances can the nonobvious involvement of the State in private conduct be attributed its true significance. Lugar, 457 U.S. at 939, 102 S.Ct. at 2755 (quoting Burton v. Wilmington Parking Auth., 365 U.S. 715, 722, 81 S.Ct. 856, 860, 6 L.Ed.2d 45 (1961)). Analyzing these Supreme Court cases, the district court finally concluded that entry of the judgment did not so intimately involve the Attorneys or the Bermans in a significant state deprivation of the constitutional right to due process that it could treat either of them as state actors. 67 Before private persons can be considered state actors for purposes of section 1983, the state must significantly contribute to the constitutional deprivation, e.g., authorizing its own officers to invoke the force of law in aid of the private persons' request. Under the circumstances of the present cases, we believe the district court correctly held Jordan Mitchell, Inc. had failed to allege against Fox Rothschild, or show against the Bermans, sufficient state involvement in the entry of the judgment by confession to bring them within the category of private persons acting under color of law. We agree specifically with the district court that [a] state procedure permitting private parties to file a complaint and confess judgment essentially involves acquiescence by the state, not compulsion. In such circumstances, private conduct is not attributable to the state. Fox Rothschild II, 792 F.Supp. at 395 (citations omitted). 68 The district court also concluded that the confession of judgment itself did not so intimately involve the Bermans and their Attorneys in state action that they could be treated as acting under color of law, one of section 1983's prerequisites for liability. Id. at 395-96. It decided the confession of judgment did not, at the point of entry, officially invoke the force of law to collect or secure the rents the Bermans claim. It was on this basis that the district court finally concluded confession of judgment against Jordan Mitchell was not itself unconstitutional. Berman I, 758 F.Supp. at 278; see also Fox Rothschild II, 792 F.Supp. at 395 (An improper use or abuse by a private party of an otherwise valid state procedure is not cognizable under Sec. 1983.) (citations omitted). We agree with the district court's ultimate conclusion that entry of the judgment is not a state action involving the force of law to an extent sufficient to hold that private persons become state actors and therefore can be liable under section 1983. The district court correctly concluded Jordan Mitchell, Inc. had failed to make out a violation of section 1983 insofar as they relied on entry of the judgment. 17