Court Opinion

ID: 2744241
Source: CourtListenerOpinion
Date Created: 2014-10-21 19:05:58.693641+00
Date Added: 2024-06-11T09:29:12.876271
License: Public Domain

J-A21027-14

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

DONALD OLSON AND 6 BITS, INC.                      IN THE SUPERIOR COURT OF
                                                         PENNSYLVANIA
                            Appellee

                       v.

JOHN F. SAYERS, IV AND K.S.A.
VENDING, INC.

                            Appellant                   No. 243 EDA 2014

              Appeal from the Order Entered December 18, 2013
             In the Court of Common Pleas of Montgomery County
                      Civil Division at No(s): 2013-03601

BEFORE: BOWES, J., OTT, J., and STRASSBURGER, J.*

MEMORANDUM BY OTT, J.:                               FILED OCTOBER 21, 2014

        John F. Sayers, IV (Sayers) and KSA Vending, Inc. (KSA) appeal from

the order entered on December 18, 2013, in the Court of Common Pleas of

Montgomery County, denying Sayers’ and KSA’s Petition to Open and/or

Strike Confessed Judgment.           Sayers and KSA claim the trial court erred

because: (1) they were never served with the complaint confessing the

judgment, (2) KSA filed for bankruptcy, (3) the amount at issue is incorrect,

and (4) Olson and 6 Bits, Inc. (Olson) agreed to forgive the debt. After a

thorough review of the submissions by the parties, certified record, and

relevant law, we affirm.

____________________________________________

*
    Retired Senior Judge assigned to the Superior Court.
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      We adopt the factual and procedural history as related by the trial

court in its Pa.R.A.P. 1925(a) Opinion.

      On June 14, 2010, Donald Olson, the president of 6 Bits
      Vending, Inc., [] entered into a purchase agreement
      (“Agreement”) with John Sayers, IV and KSA Vending, Inc. The
      Agreement provided 6 Bits to transfer the ownership of vending
      machines to [Sayers and KSA], for which [Sayers and KSA]
      agreed to pay $55,000 in thirty-six consecutive payments of
      $1,530.00 due on or before the tenth day of each month. If
      payments were not timely made, a late fee of $470.00 would be
      added to the amount due. The Agreement also contained a
      confession of judgment provision, which provided for the
      recovery of principal, interest, late fees and an [sic] attorney’s
      fees.

      Since May 10, 2011, [Sayers and KSA] have been delinquent on
      the installment payments. As a result, on February 6, 2013,
      [Olson] filed a confession of judgment against [Sayers and KSA]
      in the amount of $53,506.46.           Also on that day, the
      Prothonotary sent out Rule 236 Notice of Judgment to [Sayers
      and KSA].

      Thereafter, [Sayers and KSA] filed a Petition to Open and/or
      Strike Judgment Entered by Confession. This Court denied
      [Sayers’ and KSA’s] Petition, and [Sayers and KSA] now appeal
      from this Court’s determination.

Trial Court Opinion, 2/27/2014 at 1-2 (footnote omitted).

      We further note that the Confession of Judgment signed by Sayers

provided he would be jointly and severally liable with KSA for the debt to

Olson. See Complaint for Confession of Judgment, Exhibit “A” Confession of

Judgment. Documents submitted by Sayers and KSA indicate that Kimberly

M. Sayers, a/k/a KSA Vending, filed for Chapter 13 Bankruptcy protection on

February 21, 2012.       See Petition to Open and/or Strike, Exhibit E,

Bankruptcy Docket. Finally, KSA is a domestic corporation with a registered

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office in West Conshohocken, Pennsylvania.        Kimberly M. Sayers was the

President, Secretary and Treasurer of KSA.        See Response to Petition to

Open and/or Strike, Exhibit C Business Entity Filing History.

      Our standard of review regarding Appellant's petition to strike
      default judgment is well settled. Appellant's first issue questions
      the applicability of a Pennsylvania Rule of Civil Procedure to the
      instant case. As this presents us with a question of law, our
      standard of review is de novo and our scope of review is plenary.
      Skonieczny v. Cooper, 37 A.3d 1211, 1213 (Pa. Super. 2012)
      (citing Boatin v. Miller, 955 A.2d 424, 427 (Pa. Super. 2008)).

      “A petition to strike a judgment operates as a demurrer to the
      record, and must be granted whenever some fatal defect
      appears on the face of the record.” First Union Nat. Bank v.
      Portside Refridgerated Servs., Inc., 827 A.2d 1224, 1227
      (Pa. Super. 2003) (quoting PNC Bank v. Bolus, 440 Pa. Super.
      372, 655 A.2d 997, 999 (1995)). “When deciding if there are
      fatal defects on the face of the record for the purposes of a
      petition to strike a judgment, a court may only look at what was
      in the record when the judgment was entered.” Cintas Corp. v.
      Lee’s Cleaning Servs., Inc., 549 Pa. 84, 700 A.2d 915, 917
      (1997) (citing Linett v. Linett, 434 Pa. 441, 254 A.2d 7, 10
      (1969)). “Importantly, a petition to strike is not a chance to
      review the merits of the allegations of a complaint. Rather, a
      petition to strike is aimed at defects that affect the validity of the
      judgment and that entitle the petitioner, as a matter of law, to
      relief.” City of Philadelphia v. David J. Lane Advertising, 33
      A.3d 674, 677 (Pa. Cmwlth. 2011) (citing First Union Nat’l
      Bank, 827 A.2d at 1227). Importantly, “[a] petition to strike
      does not involve the discretion of the [trial] court.” Cintas
      Corp., 700 A.2d at 919 (citing Dubray v. Izaguirre, 454 Pa.
      Super. 504, 685 A.2d 1391, 1393 (1996)).

Oswald v. WB Public Square Associates, LLC, 80 A.3d 790, 793-94 (Pa.

Super. 2013) (footnote omitted).

      “A petition to open judgment is an appeal to the equitable powers of

the court. As such, it is committed to the sound discretion of the hearing

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court and will not be disturbed absent a manifest abuse of discretion.”

Stahl Oil Co., Inc. v. Helsel, 860 A.2d 508, 513 (Pa. Super. 2004).

       Initially, we will address Sayers’ and KSA’s claims regarding the

petition to strike. The first claim is that judgment must be stricken because

the Complaint for entry of Confession of Judgment was not served on either

Sayers or KSA; therefore the trial court did not have jurisdiction over them.

This argument is unavailing.

       Signing a confession of judgment acts as a waiver of certain due

process rights, allowing a creditor to obtain a judgment by permission of the

debtor as long the confession was the product of a knowing and voluntary

consent. See Swarb v. Lennox, 314 F.Supp. 1091, 1095 (E.D.Pa. 1970).

It is only when the confession of judgment has been unknowingly and/or

involuntarily signed that the due process requirement of notice has been

violated. Id. Accordingly, a creditor initiates the confession of judgment by

filing the complaint1 with all attendant documentation, see Pa.R.C.P. 2952,

with the Prothonotary, who then provides notice of the entry of the

judgment to the debtor. The method of notice is provided by Pa.R.C.P. 236.

We note that in PNC Bank v. Kerr, 802 A.2d 634 (Pa. Super. 2002),

____________________________________________

1
  We note that a complaint for confession of judgment differs significantly
from other forms of complaint in that a complaint for confession of judgment
is specifically exempt from containing either a notice to defend or a notice to
plead. See Pa.R.C.P. 2952(b).

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although the issue of service was not in question, filing the complaint with

the Prothonotary and notice mailed by the trial court was the method used

therein. Instantly, the docket confirms that the complaint for confession of

judgment was filed with the Prothonotary, and that the Prothonotary then

mailed the requisite notice. Neither Sayers nor KSA has alleged the signing

of the confession of judgment was unknowing or involuntary. Accordingly,

notice of the judgment was properly given.2

       Because Sayers and KSA have not demonstrated the existence of a

fatal defect on the face of the record regarding service, they are not entitled

to strike the judgment.

       Next Sayers and KSA claim KSA is not responsible for the confession of

judgment because it was discharged from bankruptcy.         In support of this

claim, KSA has filed with the lower court, the docket from Federal

Bankruptcy Court, Petition #12-11488-ref. This docket lists the debtor as

Kimberly M. Sayers, a/k/a KSA Vending.

____________________________________________

2
  Sayers and KSA also claim that service of the notice of judgment and writ
of execution was defective. However, Sayers and KSA have not provided
any authority for the notion that defective service of the notice of writ of
execution operated to divest the court of jurisdiction. It is the notice of
execution that triggers the 30-day period in which to file a petition to open
and/or strike. Where a defendant is represented by counsel, the notice of
execution may be mailed to counsel pursuant to Pa.R.C.P. 2958.1(b)(2).
This is the manner of service chosen by Olson. Counsel entered his
appearance for Sayers and KSA on February 27, 2013 and notice of
execution was served via mail to counsel on March 7, 2013.

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       The docket reflects that bankruptcy protection was sought pursuant to

Chapter 13 of the Bankruptcy Code. Chapter 13 applies to “individuals with

regular income”, not corporations.             See 11 U.S.C. § 109(e).   See also,

Forestry Products, Inc. v. Hope, 34 B.R. 753 (M.D.Ga. 1983) (corporation

is not an individual eligible for relief under Chapter 13.)         Kimberly Sayers

may have been personally responsible for certain debts associated with KSA,

for which she sought protection under Chapter 13.            However, Kimberly M.

Sayers is not a defendant in this matter, and as far as the certified record is

concerned, bears no personal responsibility for any debts incurred by KSA.

Accordingly,    based     upon    the   record before     us, her   discharge   from

bankruptcy is immaterial to the confession of judgment filed against KSA.3

       Next, Sayers and KSA claim that the judgment should be stricken or

opened because the amount claimed is incorrect.

       A challenge to the accuracy of the amounts allegedly due under
       the instrument, or an error in computation, should be resolved in
       a petition to open unless it is evident from the face of the
       instrument that the amount is grossly excessive or not
       authorized by the warrant to confess judgment.

Germantown Sav. Bank v. Talacki, 657 A.2d 1285, 1291 (Pa. Super.

1995) (citations omitted).          The amount of the judgment entered was
____________________________________________

3
  As a practical matter, we understand that KSA may have no assets and/or
may no longer exist. That fact does little to help Sayers, as the confession
of judgment he signed renders him jointly and severally liable for the debt at
issue. Therefore, even if KSA is incapable of making any payment to Olson,
Sayers would still be responsible for the entire debt.

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$53,506.46. This sum was derived from adding $49,012.00 unpaid balance,

$1,946.54 interest, and $2,546.23 attorney’s fee.4 See Entry of Appearance

and Confession of Judgment, 2/6/2013. Sayers and KSA claim the judgment

amount is in error by the amount of $12,240.00. Sayers and KSA argue that

the $49,012.00 in principal owed5 should actually be $36,772.00.       That

number is based upon the undisputed fact that Sayers and KSA made a total

of $18,228.00 in payments against the original $55,000.00 owed.

       Although neither the trial court nor Olson itemized the $49,012.00

claimed as principal owed, it is nonetheless apparent that the sum properly

credited Sayers and KSA with the entire $18,228.00 paid. However, Sayers’

and KSA’s argument neglects to account for the late fees that are explicitly

included as collectable in the confession of judgment.6 Pursuant to Sayers’

and KSA’s own evidence, they made 10 timely payments out of the 36

____________________________________________

4
  These numbers actually add up to $53,504.77, not $53,506.46.          This
appears to be simply a $1.69 error in addition.
5
  While the Entry of Appearance and Confession of Judgment lists this
amount as “Principal or Penal Sum”, the Complaint for Confession of
Judgment refers to the sum as the “Unpaid Balance of Instrument”. See
Complaint for Confession of Judgment, 2/6/2013, at ¶ 10(a).
6
   The Confession of Judgment lists the amount collectable as including
“interest and late fee costs, release of errors, and attorney’s commission.”
See Confession of Judgment, 6/14/2010, ¶ 3. Attorney’s commission and
interest are separately accounted for in the Complaint for Confession of
Judgment, leaving late fees, which are determined by terms of the contract.

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payments required.        Therefore, there were 26 late payments, 7 on which

$470.00 was also owed, equaling $12,220.00. Given that Sayers and KSA

complain of a $12,240.00 error and the late fees amount to $12,220.00, we

reject Sayers’ and KSA’s claim, and further find the $20.00 difference is de

minimus. Accordingly, we conclude the actual calculation does not represent

a fatal defect in the amount owed or an abuse of discretion, and therefore,

Sayers and KSA are not entitled to relief on this issue.

       The final argument is that Olson agreed to forgive the debt.        This

argument is unavailing by Sayers’ own evidence. The deposition of John F.

Sayers, IV, taken June 14, 2013, and submitted as evidence in this matter,

contains the following relevant exchanges.

       Q [Counsel for Olson]: And he expressly said that you no longer
       have to make payments pursuant to the agreement [after losing
       the YMCA account]?

       A: He did not say it that way, but he understood the fact that we
       weren’t going to be able to make the payments. That’s why he
       decided to utilize my employee.

Sayers’ Deposition, 6/14/2013, at 33.

       Q [Counsel for Sayers/KSA]: You mentioned before that Don
       Olson spent more time than you did working to get the contract
       renewed for the Y; is that correct?

       A: Correct.

____________________________________________

7
 Here, “late” incudes payments made in less than the full amount owed and
payments not made at all.

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     Q: And that was after the Purchase Agreement was signed; is
     that correct?

     A: Correct.

     Q: Why was he spending the bulk of the time doing that if he –
     his company, 6 Bits, theoretically wasn’t involved?

     A: Well, one, he did say as pursuant to that contract that he
     would still act as an outside salesman, but he knew that the way
     this contract was that if we lost the Y.M.C.A., he loses out on his
     contract with us as our verbal agreement. That’s why it would
     behoove him to make sure we kept that contract.

     Q: I don’t have anything else.

                                      ….

     Q [Counsel for Olson]: Did he make it – did he agree that the
     only reason he put in the effort was because he knew that his
     contract would be null and void if he did not continue?

     A: Yes.

     Q: Did he say that – he said that to you?

     A: He didn’t say it to me that way. He did say that he would end
     up losing interest.

     Q: I’m sorry? Could you explain that?

     A: He felt that it we lost the Y.M.C.A., he said that he knew he
     wasn’t going to get paid.

Id. at 37-39.

     We agree with the trial court that these exchanges do not represent an

intent to modify the contract by forgiving the debt.       Sayers’ testimony

reveals only that Olson was aware of the fact that if Sayers and KSA lost

their contract with the Y.M.C.A., then Sayers and KSA would not have

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sufficient income to make the required payments to 6 Bits.    Therefore, to

help protect his contract with Sayers and KSA, Olson attempted to help

Sayers and KSA regain the Y.M.C.A. contract. Sayers’ testimony cannot be

reasonably interpreted as Olson saying if you cannot pay me, you do not

have to fulfill the contract. Because there is no evidence that Olson agreed

to forgive the debt, this argument is without merit.

      Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 10/21/2014

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