Court Opinion

ID: 3169023
Source: CourtListenerOpinion
Date Created: 2016-01-12 21:07:26.730303+00
Date Added: 2024-06-11T12:01:17.430392
License: Public Domain

J.A30040/15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

PARKE BANK                                  :     IN THE SUPERIOR COURT OF
                                            :          PENNSYLVANIA
                    v.                      :
                                            :
RHOADS AVENUE                               :
NEWTOWN SQUARE, LP,                         :
                                            :
                          Appellant         :     No. 601 EDA 2015

                Appeal from the Order Entered February 9, 2015
               In the Court of Common Pleas of Delaware County
                       Civil Division No(s): 2013-007506

BEFORE: MUNDY, JENKINS, and FITZGERALD,* JJ.

MEMORANDUM BY FITZGERALD, J.:                      FILED JANUARY 12, 2016

        Defendant/Appellant, Rhoads Avenue Newtown Square, LP, appeals

from the order entered in the Delaware County Court of Common Pleas

granting the petition of plaintiff/Appellee, Parke Bank (“Bank”), to strike with

prejudice Appellant’s petition to open or strike Bank’s confessed judgment.

Appellant argues the court erred in finding George Spaeder had authority to

accept service of the confessed judgment and thus the time for challenging

the confessed judgment had tolled. We affirm.

        We glean the following facts from Bank’s complaint in confession of

judgment and the trial court opinion. George “Spaeder owned, controlled,

and managed” both Appellant and North Charlotte Road Pottstown, LP

*
    Former Justice specially assigned to the Superior Court.
J.A30040/15

(“North Charlotte”).    Trial Ct. 5/11/15, at 1.     On March 6, 2008, Bank

entered in a construction loan agreement (“Loan”) for $8 million with North

Charlotte as borrower. Appellee’s Compl. in Confession of J., 7/30/13, at ¶

3.   On October 5, 2011, Bank and North Charlotte executed a loan

modification and extension agreement (“Guaranty Agreement”), which

stated “[t]he original collateral for the Loan has depreciated in value, such

that, in order to permit the extension of the Loan . . . Bank is requiring

additional collateral,” including “[t]he guarantee[ ] of” Appellant.       Loan

Modification & Extension Agmt., 10/25/11, at ¶ 3.          Spaeder signed the

Guaranty Agreement as manager of North Charlotte.

      “North Charlotte defaulted on the Loan. On December 14, 2012, the

Bank confessed judgment against North Charlotte [for] $9,762,357.86.”

Trial Ct. Op. at 2 (citation omitted). North Charlotte filed a petition to strike

or open the confessed judgment, and in testifying in that matter, “Spaeder

conceded that the Loan . . . was in default.” Id.

      On July 30, 2013, Bank filed the underlying complaint in confession of

judgment against Appellant as guarantor of the Loan to North Charlotte, in

the amount of $10,430,209.25. On August 7, 2013, the Delaware County

sheriff’s office served notice of Bank’s confessed judgment on Spaeder. One

year and three months thereafter, on November 10, 2014, Appellant filed a

petition to open or strike the confessed judgment, which argued, inter alia:

(1) the petition was timely filed because Spaeder had no authority to receive

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service on behalf of Appellant; and (2) the Guaranty Agreement was void

and unenforceable because Bank obtained it through fraud.      Bank filed a

motion to strike Appellant’s petition, Appellant filed a response, and the

court heard oral argument on February 9, 2015.

     On the same day, the court entered the instant order granting Bank’s

motion to strike with prejudice Appellant’s petition to strike or open

confessed judgment. It reasoned:

        [F]or many years during the various civil actions filed,
        Spaeder repeatedly claimed that he is and always has
        been an owner, partner, member and manager of
        [Appellant], including at the time of service. [Spaeder
        signed the Guaranty Agreement on behalf of Appellant.]

           By his own actions in related civil actions, Spaeder was
        the proper entity for the Bank to serve notice of the entry
        of the confessed judgment. In [a] related matter filed in
        the Delaware County Court of Common Pleas, [Earle v.
        Spaeder], No. 12-6409, Spaeder filed a Response . . . on
        July 27, 2012.      Throughout this pleading[ ], Spaeder
        averred that “[he] is a partner in the Entities and also in
        the Manager of the limited partnership Entities.” Spaeder
        defined the “Entities” to include [Appellant].

            In another related civil action filed in the Delaware
        County Court of Common Pleas, Parke Bank v. Main
        Street Peckville, LP, No. 12-10303, Spaeder filed a
        Petition to Intervene on March 13, 2013. [This petition]
        alleged that he was the sole member of [Appellant’s] co-
        general partner[ ] and therefore, cannot be excluded from
        the litigation. In addition, Spaeder alleged that Earle had
        no authority to act independently of the co-general
        partners of the limited partnerships, of which Spaeder was
        the sole member, including [Appellant].

          In April 2013, Spaeder filed a Civil Action in the
        Delaware County Court of Common Pleas, [ ] Spaeder v.
        Rosedon Holding Co., L.P., Bruce Earle, and Margaret

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         Earle, No. 12-6399, wherein he alleged that he held a
         50% interest of [Appellant]. In the complaint, Spaeder
         allege[d] he was the day-to-day manager of the entities
         and was responsible for their management, including
         [Appellant].    Based upon his own averments in these
         various civil actions, it is clear that Spaeder is and was an
         owner, partner, and manager of [Appellant,] and
         therefore, the Bank properly and logically served Spaeder,
         on behalf of [Appellant], as to the confessed judgment.

Trial Ct. Op. at 5-6 (citations omitted).

      The trial court also rejected Appellant’s argument that an “Operating

Agreement” and a court “Order issued by Judge Green in Earle v. Spaeder,

. . . No. 12-4609”—both dated August 16, 2012—“prevented him from

having authority to accept service of the notice of the entry of the confessed

judgment in this matter.” Id. at 6. The court stated:

         In the Operating Agreement, the parties agreed to allow a
         neutral, John McGary, to provide oversight regarding the
         business operations of the Spaeder-Earle entities because
         there were mutual allegations of misappropriation of the
         entities’ funds.

            Spaeder argues that the following language in the
         Operating Agreement and the appointment of the neutral
         removed him as [Appellant’s] owner[:] “Rosedon, subject
         to the supervision of the Neutral, will serve as the sole
         interface between the Entities and any third parties.” This
         argument fails for several reasons. When Spaeder signed
         the Operating Agreement, he still “disputed who has the
         right to ownership and control of the Entities” and reserved
         his position that he was an owner of [Appellant]. When he
         signed the Operating Agreement, Spaeder never gave up
         his ownership rights of [Appellant] and his right to pursue
         money he believed that Earle owed him. Judge Green’s
         August 12, 201[2 order] never divested Spaeder as an
         owner of [Appellant].

            Upon review, the Operating Agreement’s purpose was

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         to appoint a Neutral to oversee and ensure that no further
         monies from [Appellant] were being misappropriated.
         Furthermore, the Bank was not a party to the Operating
         Agreement or to the Earle v. Spaeder Action[,] and
         therefore, was not bound by the Operating Agreement’s
         terms. . . .

             [Furthermore, o]ne month after the entry of the
         confessed judgment, Spaeder won his Civil Action in . . .
         [Spaeder] v. Rosedon Holding Co., L.P., Bruce Earle
         and Margaret Earle, No. 12-6399, where he obtained full
         ownership of [Appellant]. Yet, Spaeder and [Appellant]
         allowed time to pass without filing anything regarding the
         entry of the Confessed Judgment [in the instant case].

Id. at 6-8 (citations omitted).

      The court concluded Appellant’s “waiting 430 days to address the entry

of the Confessed Judgment was not acceptable and that the reason for the

delay, the alleged improper service[,] did not have merit.” Id. at 8. The

court also found “Bank properly obtained a confessed judgment[ ] and

therefore, was prejudiced by the extreme delay by [Appellant] by having to

wait such a long time to execute that judgment.” Id.

      Appellant filed a timely notice of appeal and complied with the trial

court’s order to file a Pa.R.A.P. 1925(b) statement of errors complained of

on appeal.

      For ease in reviewing Appellant’s arguments on appeal, we first

summarize the following averments made elsewhere in its brief.

            Beginning in 2003, . . . Spaeder began a partnership
         with a man named Bruce Earle to buy, sell, and renovate
         real estate. . . . Spaeder and Earle began working with . .
         . Bank in early 2007, eventually borrowing tens of millions
         of dollars from . . . Bank through various entities they

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         controlled. . . .

Appellant’s Brief at 3-4.       Appellant’s “First Amended and Restated

Partnership Agreement,” dated December 22, 2011, provided that it had one

general partner and two limited partners. The general partner was Rhoads

Avenue Newtown Square GP, LLC,1 whose sole member was Earle and the

president was Spaeder.        “By late 2011, however, the Spaeder-Earle

relationship had begun to deteriorate and their long-standing business

partnership had begun to collapse.” Id. at 4.

         This culminated in a number of lawsuits, including Earle v.
         Spaeder, C.C.P., Delaware County, No. 12-6409, relating
         to Earle’s and Spaeder’s various rights and obligations vis-
         à-vis [Appellant] and the numerous other entities they
         owned and operated[.]        In the course of Earle v.
         Spaeder, the [court] entered Orders and a concomitant
         Operating Agreement that put Earle’s entity, Rosedon
         Holding Company (“Rosedon”), in exclusive charge of
         [Appellant].

Id. at 5.   “Thus, as of September 11, 2012 (at the very latest), Spaeder

lacked the power to serve as an ‘interface or point-of-contact between’

[Appellant] ‘and all third parties.’ Rosedon, owned and controlled solely by .

. . Earle, was alone permitted to act in that capacity.” Id. at 6.

      Appellant raises two issues for our review, which we address together.

First, it reiterates that at the time of service of Bank’s complaint in August of

2013, Spaeder could not accept service pursuant to Pennsylvania Rule of

1
 We note the name of this entity is similar to Appellant’s name, Rhoads
Avenue Newtown Square, LP.

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Civil Procedure 423, as he was not one of Appellant’s partners, members,

officers, or registered agents. In support, Appellant contends the following.

Although Spaeder “managed [its] activities” “[p]rior to [his] discord” with

Earle, “Earle thereafter kicked him out, leading to the lawsuits and Operating

Agreement[.]” Appellant’s Brief at 19. In August of 2012, Earle had sworn

that “Spaeder no longer had authority to act on behalf of [Appellant], that

Earle had ‘removed . . . Spaeder from any and all positions’ at [Appellant],

and that Earle, ‘through . . . counsel, advised [Bank]’ of this fact.”    Id.

“After September 2012, . . . Spaeder was, by order of court, entirely

powerless to be ‘in charge of any [of its] regular place of business or

activity[.’]”    Id.   Instead, “only Earle could operate the company” and,

“through Rosedon (his company), could act as an ‘interface or point-of-

contact between’ [Appellant] and ‘third parties.’”       Id.    By “eventual

settlement[,] Spaeder and his wife became majority owners of [Appellant] in

September 2013.” Id.

      Appellant’s second argument on appeal is that the court erred in

relying “heavily on averments in court filings below by Spaeder’s attorneys

[in other cases] that Spaeder was ‘an owner, partner, and manager of’”

Appellant.      These arguments, Appellant maintains, were merely “rhetoric”

and “did not alter the state of fact [that Spaeder was not] a partner,

member, officer, registered agent, or authorized agent for service of

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[Appellant] at that time.”2 Id. at 21, 22. Appellant avers the court further

erred by ignoring “Bank’s own statements in [other] court filings.”      Id. at

22.    Specifically, it states, in May 2013, “less than three months before

[Bank] served Spaeder in this action—in one of the very cases referenced by

the trial court,” Bank stated: (1) Spaeder “ha[s] absolutely no right to

participate in the management of [Appellant], [and] shall have no control

over [its] business or assets and shall have no right or authority to act for or

obligate” Appellant; and (2) “Earle through entities he owns and controls has

exclusive authority to manage” Appellant. Id. at 21-22. We find no relief is

due.

       This Court has stated: “A petition to strike a judgment is a common

law proceeding which 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.” Neducsin v. Caplan, 121 A.3d 498,

504 (Pa. Super. 2015) (citation omitted). A “petition to strike a confessed

judgment must focus on any defects or irregularities appearing on the face

of the record, as filed by the party in whose favor the warrant was given,

which affect the validity of the judgment and entitle the petitioner to relief

as a matter of law.” Id. (citation omitted). “In contrast, ‘if the truth of the

2
  The sole legal authority cited in Appellant’s brief is Rule 423 and the
statement, “[A]ttorneys’ arguments [a]re not evidence, but argument.” See
Appellant’s Brief at 18, 21 (citing Commonwealth v. Carson, 913 A.2d
220, 269 (Pa. 2006)).

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factual averments contained in [the complaint in confession of judgment and

attached exhibits] are disputed, then the remedy is by proceeding to open

the judgment,’ not to strike it. . . . A petition to open a confessed judgment

is an appeal to the equitable powers of the court.” Id. (citations omitted).

“[W]e review the order denying Appellant’s petition to open the confessed

judgment for an abuse of discretion.” Id. at 506 (citation omitted).

      Pennsylvania Rule of Civil Procedure 2959(a)(3) sets forth the time

period for filing a petition to strike or open confessed judgment:

         If written notice [of execution upon a confessed judgment]
         is served upon the petitioner pursuant to Rule
         2956.1(c)(2) or Rule 2973.1(c), the petition shall be filed
         within thirty days after such service. Unless the defendant
         can demonstrate compelling reasons for the delay, a
         petition not timely filed shall be denied.

Pa.R.C.P. 2959(a)(3).   The comment to the rule states, “After thirty days,

the defendant is barred from relief unless there are ‘compelling reasons for

the delay.’” Pa.R.C.P. 2959, cmt.

      As stated above, Appellant challenges Bank’s service under Rule 423.

That rule states:

         Rule 423.         Partnerships      and    Unincorporated
         Associations

            Service of original process upon a partnership and all
         partners named in the action or upon an unincorporated
         association shall be made upon any of the following
         persons provided the person served is not a plaintiff in the
         action:

               (1) any partner, officer or registered agent of the
            partnership or association, or

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              (2) an agent authorized by the partnership or
           association in writing to receive service of process for it,
           or

              (3) the manager, clerk or other person for the time
           being in charge of any regular place of business or
           activity of the partnership or association.

Pa.R.C.P. 423(1)-(3).

     As stated above, Appellant cites an “Operating Agreement” executed in

the related matter, Earle v. Spaeder, as divesting Spaeder of any

ownership, membership, and officer position in Appellant.      We review that

document, which was attached as the fourteenth exhibit to Appellant’s

petition to open or strike the confessed judgment.

     The first paragraph of the Operating Agreement stated the parties in

that matter, including Spaeder and Earle, “have mutually agreed that John

McGary of Marcum LLP (the ‘Neutral’) shall serve as the ‘Neutral’” required

by the court’s August 3, 2012 stipulated order. Operating Agmt., 9/10/12,

at 1, Earle v. Spaeder, No. 12-6409, Delaware Co. C.C.P. The agreement

then stated:

           Whereas, pursuant to the Stipulated Order, the Neutral
        shall oversee the day to day business operations of
        Rosedon Holding Company, LP (“Rosedon”) and the
        entities listed in Exhibit “A,” [which included Appellant]
        until further order of the Court;

           Whereas, the business operations subject to the
        oversight of the Neutral shall not include the acquisition,
        sale, transfer, or other disposition of any assets of the
        Entities, and such transactions shall be subject to the
        review of the Court during the pendency of the Stipulated

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        Order[;]

                                *     *      *

           Whereas, pursuant to an Order entered by the Court on
        August 16, 2012, Rosedon, subject to the oversight of the
        Neutral, shall serve as the sole interface or point-of-
        contact between the Entities and all third parties, including
        without limitation, creditors, financing entities and
        investors.

          Whereas, the Earles and Spaeder dispute who has
        the right to ownership and control of the Entities.

           Now, therefore, pursuant to the Stipulated Order, the
        Earles, the Entities, [Spaeder and defendants], and the
        Neutral enter into this Operating Agreement . . . to set
        forth the services to be provided by the Neutral . . . .

Id. at 1-2 (emphasis added).

     The Operating Agreement further stated the following.       The Neutral

“shall oversee the collection, receipt, deposit, management, disbursement,

and accounting” of the Entities’ day to day cash accounting. Id. at 4. “Each

week . . . the Parties shall meet and prepare a schedule of Expected Cash

Events (‘ECE’) for the week, including both cash disbursements and cash

receipts” and “shall agree to the EeE [sic] for the current week and update

the prior EeE [sic] for the actual cash events that were agreed to and

transacted[.]” Id. “During the week, the Neutral will monitor cash receipts

and control the issuance of checks and/or wire transfers for bona fide

expenses of the Entities that were approved at the prior Cash Meeting.” Id.

at 5. “The Parties, subject to the supervision of the Neutral, may authorize

disbursements of cash for development activities only if the development

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activities will protect or secure imminent net positive cash flow.” Id. at 7.

Spaeder was one of the signatories on this agreement.

      On appeal, as it did before the trial court, Appellant emphasizes the

paragraph which stated “the Neutral[ ] shall serve as the sole interface or

point-of-contact between the Entities and all third parties, including without

limitation, creditors[.]” See id. at 1. However, Appellant does not address

the trial court’s reasoning that the purpose of the Operating Agreement was

merely “to appoint a Neutral to oversee and ensure that no further monies

from [Appellant] were being misappropriated.”       See Trial Ct. Op. at 7.

Appellant further ignores the Agreement’s: (1) requirement that the parties,

including Spaeder, prepare weekly schedules of the “day to day cash

management, control and accounting” of the Entities; (2) preclusion of the

Neutral from issuing checks and wire transfers that were not “approved at

the prior Cash Meeting;” and (3) provision that the parties, subject to the

Neutral’s supervision, may authorize cash disbursements “for development

activities.”   See Operating Agmt. at 4-5.     Furthermore, in arguing the

Operating Agreement effected removal of Spaeder from any official position

in Appellant, Appellant wholly overlooks the parties’ acknowledgment that

“the Earles and Spaeder [currently] dispute who has the right to ownership

and control of the Entities.” See id. at 1.

      In light of the foregoing, we disagree with Appellant’s argument that at

the time service of Bank’s confessed judgment was made, Spaeder was not

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a member, officer, or manager of Appellant under Rule 423. We thus do not

disturb the trial court’s finding that service on Spaeder was proper.     See

Neducsin, 121 A.3d at 506.

      We now consider whether Appellant “demonstrate[d] compelling

reasons for the delay” in filing its petition to strike or open confessed

judgment. See Pa.R.C.P. 2959(a)(3) & cmt; M & P Mgmt., L.P., 937 A.2d

at 401.   In its appellate brief, Appellant avers that “after September 30,

2013, Spaeder could again act on behalf of” Appellant. Appellant’s Brief at

7.   Appellant, however, does not dispute or address the trial court’s

observation that after Spaeder won the civil action against Earle and

“obtained full ownership of” Appellant, he and Appellant failed to respond to

Bank’s confessed judgment for thirteen months. See Trial Ct. Op. at 8. We

thus find Appellant does not present any compelling reason to overcome the

trial court’s finding that its petition to open or strike was untimely.    We

affirm the order of the court granting Bank’s petition to strike with prejudice

Appellant’s petition to open or strike Bank’s confessed judgment.

      Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 1/12/2016

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