Court Opinion

ID: 3152497
Source: CourtListenerOpinion
Date Created: 2015-11-05 19:11:05.727974+00
Date Added: 2024-06-11T09:48:17.604748
License: Public Domain

J-A15019-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

NORTH CITY DEVELOPMENT CO.                        IN THE SUPERIOR COURT OF
                                                        PENNSYLVANIA
                            Appellee

                       v.

GENERAL FOODS, LLC

                            Appellant                 No. 1440 EDA 2014

                   Appeal from the Order Entered April 30, 2014
              In the Court of Common Pleas of Philadelphia County
            Civil Division at No(s): September Term, 2013 No. 03382

BEFORE: BOWES, J., MUNDY, J., and FITZGERALD, J.*

MEMORANDUM BY MUNDY, J.:                         FILED NOVEMBER 05, 2015

        Appellant, General Foods, LLC, (General Foods) appeals from the

portion of the April 30, 2014 order denying its petition to open or strike a

confessed judgment entered in favor of Appellee, North City Development

Company (North City). After careful review, we affirm.

        The trial court summarized the relevant factual and procedural history

of this case as follows.

                    [North City] confessed judgment pursuant to a
              commercial lease with General Foods (hereinafter
              “Lease”). At the time the Lease was signed, General
              Foods and North City were both fully owned by the
              same person – Mr. Abraham Woidislawsky, a real
              estate investor who has been managing properties
              for over 30 years.

____________________________________________
*
    Former Justice specially assigned to the Superior Court.
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                 The Lease pertains to a property (hereinafter
          “the Property”) that is located in a shopping center
          owned by North City (hereinafter “Shopping
          Center”). Mr. Woidislawsky served as the property
          manager of the Shopping Center. The Lease, which
          was drafted by Mr. Woidislawsky’s attorney, is for a
          99-year term and, at the time that the Complaint
          was filed, set rent for the Property at $1,537.34 per
          month. As part of the Lease, General Foods was
          required    to    pay    estimated    common     area
          maintenance fees and a pro rata share of taxes and
          insurance each month (hereinafter collectively
          referred to as “CAM”), in addition to rent. This was
          supplemented by a CAM reconciliation total, which
          was calculated and billed to each shopping center
          tenant at the end of each year, and represented the
          difference between the estimated CAM monthly
          payments and the actual CAM costs.            Though
          General Foods is North City’s tenant, Mr.
          Woidislawsky had subleased the Property to a third
          party for about $6,500 per month, thereby allowing
          General Foods to reap a profit of roughly $5,000 per
          month. Undoubtedly, General Foods’ rent is so far
          below market value because Mr. Woidislawsky owned
          both entities at the time his attorney drafted this
          Lease.

                The Lease provides for several events of
          default, the most relevant of which for the instant
          case are described in Section 16(a) and 16(g) of the
          Lease. Under Section 16(a), a tenant has defaulted
          “to pay when due any installment of rent hereunder
          or any other sum herein required to be paid by
          Tenant, if such failure continues for 10 days after
          written notice thereof by Lessor is received by
          Tenant: is an event of default. Under Section 16(g)
          of the Lease, it is an event of default when there is
          “[r]epetition or continuation of any failure to timely
          pay any rent or other sums herein required to be
          paid by Tenant where such failure shall continue or
          be repeated for two (2) months in any period of
          twelve consecutive months.”         The Lease also
          contains a confession of judgment clause in Section
          17(b), which allows for judgment to be entered

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          pursuant to Pa.R.C.P. 2950, et seq. upon a default
          by the lessee.

                 In May of 2007, Kyun Duk Seo and Myung Kyu
          Seo purchased 89 shares of stock in North City.
          They bought the remaining stock in April of 2013,
          becoming the sole shareholders of North City.
          Though Paul Seo, the new owners’ son, began
          managing North City in 2010, Mr. Woidislawsky
          remained the Shopping Center’s property manager.
          As the property manager, Mr. Woidislawsky was in
          charge of collecting the CAM reconciliations from the
          tenants, including General Foods. However, in early
          2011, shortly after becoming North City’s manager,
          Paul Seo discovered that Mr. Woidislawsky had not
          collected CAM reconciliation from General Foods for
          the years 2007 through 2010. Mr. Seo testified in
          his deposition that he informed Mr. Woidislawsky as
          soon as he became aware of this fact. Mr. Seo
          repeatedly requested satisfaction of the charges and
          Mr. Woidislawsky consistently responded with
          promises of payment, but then would fail to follow
          through. Indeed, Mr. Woidislawsky admitted that he
          did not pay the charges until after the confessed
          judgment was entered. General Foods paid the CAM
          reconciliation for 2011, but then failed to pay it again
          for 2012. Mr. Woidislawsky maintains that he has
          paid all that he owed because he disagreed with the
          calculations of the CAM reconciliations and, thus, he
          was not required to pay them.

                 In April of 2013, when the Seos assumed
          complete ownership of North City and after they
          found out that Mr. Woidislawsky was not collecting
          CAM reconciliation from General Foods, they hired a
          new company to manage the properties, thereby
          replacing Mr. Woidislawsky. Subsequently, General
          Foods did not pay its rent on time for May, June,
          July, or September of 2013 and North City sent
          letters via regular mail demanding payment of rent
          and other charges dated May 6, 2013, June 6, 2013,
          July 8, 2013 and August 6, 2013. In his deposition,
          Mr. Woidislawsky contended that he always paid rent
          on time, but North City didn’t pick up the checks on

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          time. [H]owever, he also stated that, though the
          Seos owned 89 percent of North City at the time, he
          believed that he could pay whenever he wanted,
          because he believed the properties still belonged to
          him and, in addition, because he managed the
          properties. On September [9], 2013, North City sent
          a letter requesting payment of the unpaid charges
          via UPS, which was received and signed for by Mr.
          Woidislawsky’s secretary, Ms. June Amey, on
          September 13, 2013.      North City instituted this
          action after General Foods did not respond to that
          letter in 10 days.

                  On September 27, 2013, North City filed its
          Complaint for Confession of Judgment for Money and
          Possession       of    Real     Property   (hereinafter
          “Complaint”). On October 25, 2013, General Foods
          filed its Petition to Open/Strike Judgment. …

                On November 13, 2013, North City filed its
          Praecipe to Attach a Verification to its Complaint in
          order to comply with Pa.R.C.P. 2952(a)(10) and
          Pa.R.C.P. 1024.     Five days later, it filed its
          [r]esponse [to General Foods’ petition]. …

                Subsequently, [the trial c]ourt entered an
          [o]rder granting leave to the parties to take
          discovery on disputed issues of fact. On March 31,
          the   parties    submitted    notes    of   testimony,
          documentation and supplemental memoranda as
          required by [the trial c]ourt’s January 14, 2014
          [o]rder and on April 10, 2014, [the trial c]ourt held a
          hearing on the Petition. Pursuant to leave granted
          by [the trial c]ourt, the parties submitted additional
          supplemental memoranda on April 14 and 15, 2014.

                 On April 30, 2014, after thorough consideration
          of the record, briefs and oral argument, [the trial
          c]ourt denied the Petition to Strike the confessed
          judgment for possession and money and denied the
          Petition to Open the confessed judgment for
          possession; however [the trial c]ourt granted the
          Petition to Open the confessed judgment for money
          so that the proper amount of the judgment could be

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              determined by a fact finder.[1] [The trial c]ourt also
              ruled that that amount of the judgment and the
              amount in controversy were not grossly excessive.
              On May 7, 2014, General Foods [filed a timely notice
              of appeal]. Pursuant to [the trial c]ourt’s May 8,
              2014 order, General Foods filed its Statement of
              Errors pursuant to Pa.R.A.P. 1925(b) on May 21,
              2014 …. On July 23, 2014, [the trial c]ourt entered
              an Order by Agreement, which stayed the execution
              upon the confessed judgment for possession.

Trial Court Opinion, 9/9/14, at 1-6 (internal citations and footnote omitted).

       On appeal, General Foods raises the following two issues for our

review.

              1.     Whether the [t]rial [c]ourt committed an error
                     of law and/or manifestly abused its discretion
                     by refusing to strike the judgments for
                     possession and for money in favor of [North
                     City] and against General Foods[?]

              2.     Whether the [t]rial [c]ourt committed an error
                     of law and/or manifestly abused its discretion
                     by refusing to open the judgment for
                     possession in favor of [North City] and against
                     General Foods[?]

General Foods’ Brief at 4.

       In its first issue, General Foods avers that the trial court erred in not

striking the confessed judgment for possession or money.        General Foods’

Brief at 22-39.      We begin by noting our well-settled standard of review

pertaining to petitions to strike.

____________________________________________
1
 North City has not filed a cross-appeal from this portion of the trial court’s
April 30, 2014 order.

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               A petition to strike a judgment is a common[-
               ]law proceeding [that] operates as a demurrer
               to the record. A petition to strike a judgment
               may be granted only for a fatal defect or
               irregularity appearing on the face of the
               record….    An order of the court striking a
               judgment annuls the original judgment and the
               parties are left as if no judgment had been
               entered.

          In assessing whether there are fatal defects on the
          face of the record …, a court may only look at what
          was in the record when the judgment was entered.
          Moreover, if any defect disclosed by the record is one
          that can be remedied by an amendment of the
          record or other action, nunc pro tunc, the judgment
          should not be stricken off. We will reverse a trial
          court’s denial of a petition to strike a judgment only
          if there is a manifest abuse of discretion or an error
          of law.

          When a proceeding to confess judgment is instituted
          by complaint, the complaint and confession of
          judgment clause must be read together to determine
          whether there are defects on the face of the record.

               It is a firmly established rule of construction in
               the case of warrants of attorney to confess
               judgments that the authority thus given must
               be clear, explicit and strictly construed, that if
               doubt exists it must be resolved against the
               party in whose favor the warrant is given, and
               that all proceedings thereunder must be within
               the strict letter of the warrant. If the authority
               to enter judgment by confession on a warrant
               of attorney is not strictly followed, the
               judgment will be stricken.

          Notably, we have observed that the rule of strict
          construction may be constitutionally mandated in
          light of … due process attacks on cognovit clauses.

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                  It has always been held that formal defects,
                  mistakes and omissions in confessions of
                  judgment may be corrected by amendment
                  where the cause of the action is not changed,
                  where the ends of justice require the allowance
                  of   such    amendment,      and   where    the
                  substantive rights of defendant or of any third
                  persons will not be prejudiced thereby.

Dime Bank v. Andrews, 115 A.3d 358, 364-365 (Pa. Super. 2015)

(internal quotation marks and citations omitted; emphasis in original).

      In arguing that the trial court erred in not striking the confessed

judgments, General Foods makes four distinct assignments of error. First,

General Foods argues that North City did not aver or prove a demand for

rent in its complaint.   General Foods’ Brief at 25.   Second, General Foods

avers that North City’s attaching a notice of default was not a permissible

technical amendment. Id. at 28. Third, General Foods submits that North

City did not sufficiently aver notice of eviction in its complaint.   Id. at 35.

Fourth, General Foods maintains that the trial court incorrectly concluded

that North City’s complaint alleged a default by General Foods under a

section of the lease that did not require pre-confession notice.      Id. at 37.

We elect to address General Foods’ first two arguments together as they are

interrelated to each other.

      General Foods argues that North City did not aver or prove a demand

for rent, relying heavily on our Supreme Court’s decision in Elizabethtown

Lodge No. 596 Loyal Order of Moose v. Ellis, 137 A.2d 286 (Pa. 1958).

General Foods’ Brief at 23-27. General Foods also avers that the trial court

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erred in considering evidence de hors to the record, i.e., a demand letter

attached to North City’s response to General Foods’ petition.      Id. at 26.

Related to this argument, General Foods maintains that the trial court

improperly considered this demand letter as an amendment to the record.

Id. at 28.

      In Elizabethtown, our Supreme Court held that a petition to strike a

confessed judgment must be granted where the landlord “fail[s] to aver or

prove a demand for rent.”       Elizabethtown, supra at 289 (emphasis

added). Our Supreme Court noted that this is consistent with the common

law rule that “forfeitures are odious and must be strictly construed.” Id. at

290. Instantly, the trial court concluded that Elizabethtown only required

North City to aver or to prove in its complaint that a demand for rent was

made, not both. Trial Court Opinion, 9/9/14, at 8. We agree with the trial

court that this is the best reading of the case. Our Supreme Court’s use of

the conjunction “or” strongly indicates its intent that under Pennsylvania law

a landlord may elect to aver in the complaint’s text itself, or prove via

exhibits attached to the complaint or otherwise in the record, that a demand

for rent was made.    This is reinforced by our Supreme Court pointing out

that the landlord in Elizabethtown conceded that “no demand for payment

of the rent was made on the due date[.]” Id. at 289. Nor was the same

averred in the complaint.       The judgment of our Supreme Court in

Elizabethtown was that because the landlord did not demand payment of

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rent and there was no waiver of such a demand in the underlying lease, the

confessed judgment was required to be stricken. Id. at 291.

      In the case sub judice, it is undisputed that North City did not

specifically aver in its complaint that it made a demand for rent, nor did it

attach a demand letter to the same.      However, this does not support the

conclusion that a demand for payment was never made, as was the case in

Elizabethtown.

      Appellant is correct that when considering a petition to strike a

judgment, the trial court is confined to “only the record as filed by the party

in whose favor the warrant is given, i.e., the complaint and the documents

which contain confession of judgment clauses [and m]atters dehors the

record filed by the party in whose favor the warrant is given will not be

considered.” Resolution Trust Corp. v. Copley Qu-Wayne Assocs., 683
A.2d 269, 273 (Pa. 1996) (emphasis in original). However, as noted above,

Pennsylvania law prohibits the striking of a confessed judgment if an

“omission” can be corrected by the trial court allowing an amendment of the

record.   Dime Bank, supra; see also Atl. Nat’l Trust, LLC v. Stivala

Invs., 922 A.2d 919, 923 (Pa. Super. 2007) (stating, “a motion to strike

may not be granted ‘[i]f the defect is one that can be remedied by an

amendment of the record or other action[]’”) (citation omitted), appeal

denied, 936 A.2d 39 (Pa. 2007).      Here, North City’s failure to attach its

demand letter as an exhibit to its original complaint was undoubtedly an

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“omission.” However, the trial court properly considered the September 9,

2013 letter attached as an exhibit to North City’s response to General Foods’

petition to effectively amend the record and cure the omission. See A. B. &

F. Contracting Corp. v. Matthews Coal Co., 166 A.2d 317, 320 (Pa.

Super. 1960) (stating, “the failure to attach a copy of the notice [of the

default] was merely a formal defect[]”).         This further distinguishes the

instant   case   from   the   situation   our   Supreme   Court   confronted   in

Elizabethtown, most notably that a demand was made, and said demand

letter was supplied.

      General Foods also argues the omission of the September 9, 2013

demand letter at the time of the filing of the complaint, caused it prejudice

because it was deprived of raising three meritorious defenses. Specifically,

General Foods claims it was prevented from raising the issues that it

contacted North City’s property manager within the 10-day period, that it

disputed the sums in North City’s September 9, 2013 letter, and that it did

pay all rent that was due and thus substantially performed under the terms

of the lease. General Foods’ Brief at 34.

      We fail to see how North City’s initial omission of the September 9,

2013 demand letter “cause[d] General Foods to focus primarily on its strike

allegations in its Petition to Strike or Open.” Id. There was no practical or

legal obstacle to General Foods raising as many defenses and arguments as

it wanted. General Foods was always free to present to the trial court any

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and every reason as to why the confessed judgments should be open or

stricken. As we explain infra, this is required by Pennsylvania Rule of Civil

Procedure 2959.        See generally Pa.R.C.P. 2959(a)(1).    Based on these

considerations, we conclude the trial court did not abuse its discretion or

legally err when it denied General Foods’ petition to strike the confessed

judgments for possession and money.2 See Dime Bank, supra.

       In its second issue on appeal, General Foods avers that the trial court

erred when it failed to grant its petition to open the confessed judgment for

possession. General Foods’ Brief at 40-52. We begin by noting our standard

of review.    “A petition to open a confessed judgment is an appeal to the

equitable powers of the court.”          Midwestern Fin. Acceptance Corp. v.

Lopez, 78 A.3d 614, 623 (Pa. Super. 2013) (citation omitted). “We review

a court's order denying a petition to open a confessed judgment for an

abuse of discretion.”       Huntington Nat’l Bank v. K-Cor, Inc., 107 A.3d
783, 785 (Pa. Super. 2014) (citation omitted), appeal denied, 117 A.3d
1281 (Pa. 2015). “A petition to open a judgment should be granted when a

party acts promptly, alleges a meritorious defense to the judgment and

____________________________________________
2
  In its last two arguments, General Foods avers first that the trial court
incorrectly concluded that North City sufficiently averred notice in its
complaint and second that the defaults complained of did not require notice
at all. General Foods’ Brief at 35, 37. However, because we have resolved
General Foods’ first two arguments in North City’s favor, we need not
address General Foods’ remaining two arguments since they are contingent
on this Court’s disagreeing with the trial court’s reading of Elizabethtown.

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presents evidence of that defense sufficient to reach a jury.”     Atl. Nat’l

Trust, LLC., supra.

                 [It is axiomatic that] a court should open a
           confessed judgment if the petitioner promptly
           presents evidence on a petition to open which in a
           jury trial would require that the issues be submitted
           to the jury. A petitioner must offer clear, direct,
           precise and believable evidence of a meritorious
           defense, sufficient to raise a jury question.      In
           determining whether sufficient evidence has been
           presented, [courts should] employ the same
           standard as in a directed verdict: [the trial court
           must] view all the evidence in the light most
           favorable to the petitioner and accept as true all
           evidence and proper inferences therefrom supporting
           the defense while … reject[ing] adverse allegations
           of the party obtaining the judgment.

Stahl Oil Co., Inc. v. Helsel, 860 A.2d 508, 512 (Pa. Super. 2004)

(internal citations omitted), appeal denied, 885 A.2d 43 (Pa. 2005).

     Instantly, General Foods raises two arguments in support of its

position that the confessed judgment for possession should have been

opened. First, General Foods avers that the trial court applied an incorrect

standard as it failed to view the evidence in the light most favorable to it,

regarding its compliance within the demand letter’s 10-day period. General

Foods’ Brief at 42. Second, General Foods argues that the trial court failed

to apply the proper standard to determine whether it substantially

performed under the terms of the lease. Id. at 43. However, we must first

consider North City’s argument that General Foods waived these arguments

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by not presenting them in its petition to open the judgment in the trial court.

See generally North City’s Brief at 32-34, 39-40.

      Petitions to open or strike a confessed judgment are governed by Rule

2959, which provides in relevant part, as follows.

            Rule 2959. Striking Off or Opening Judgment;
            Pleadings; Procedure

            (a)(1) Relief from a judgment by confession shall be
            sought by petition. Except as provided in
            subparagraph (2), all grounds for relief whether
            to strike off the judgment or to open it must be
            asserted in a single petition. The petition may be
            filed in the county in which the judgment was
            originally entered, in any county to which the
            judgment has been transferred or in any other
            county in which the sheriff has received a writ of
            execution directed to the sheriff to enforce the
            judgment.

                                      …

            (c) A party waives all defenses and objections
            which are not included in the petition or
            answer.

                                      …

Pa.R.C.P. 2959 (emphases added); see also Pa.R.A.P. 302(a) (stating,

“issues not raised in the lower court are waived and cannot be raised for the

first time on appeal[]”).

      We have reviewed General Foods’ petition.       Therein, it raised three

issues regarding its position that the confessed judgment for possession

should be opened.     First, General Foods asserted that North City had not

produced any evidence that notice of nonpayment had been provided.

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General Foods’ Petition, 10/25/13, at ¶¶ 67-69.          Second, General Foods

averred that the amount of the judgment was excessive and not supported

by evidence.      Id. at ¶¶ 76-78.       Third, General Foods submitted that the

signature on the lease did not relate to the warrant of attorney provision

contained in the lease and said warrant was not bolded, underlined, or

otherwise set apart from the rest of the lease’s text.         Id. at ¶¶ 82-86.

Nowhere in its petition to open did General Foods assert that it complied

with the 10-day notice or substantially performed under the terms of the

lease.3   Regarding its alleged compliance with the 10-day notice, General

Foods did not make this argument until it filed its reply to North City’s

answer. See generally General Foods Reply, 11/21/13, at 4-5. As a result,

we agree with North City that General Foods’ arguments regarding its

petition to open the confessed judgment for possession are waived on

appeal.

       Based on the foregoing, we conclude all of General Foods’ issues are

either waived or devoid of merit. Accordingly, the trial court’s April 30, 2014

order is affirmed.

       Order affirmed.

____________________________________________
3
  General Foods acknowledges that it did not raise these issues in its petition
to open. General Foods’ Brief at 34.

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Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 11/5/2015

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