Court Opinion

ID: 2765370
Source: CourtListenerOpinion
Date Created: 2014-12-30 17:07:12.471372+00
Date Added: 2024-06-11T11:27:23.701178
License: Public Domain

J.S45043/14 & J.S45044/14

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

PNC BANK, NATIONAL ASSOCIATION,   :               IN THE SUPERIOR COURT OF
SUCCESSOR IN INTEREST TO NATIONAL :                    PENNSYLVANIA
CITY BANK,                        :
                                  :
                v.                :
                                  :
DONALD J. WILLIS AND              :
PATRICIA A. WILLIS,               :
                                  :
                    Appellants    :               No. 235 EDA 2014

               Appeal from the Order Entered November 19, 2013
              In the Court of Common Pleas of Philadelphia County
                   Civil Division No(s).: 3251 June Term, 2013

PNC BANK, NATIONAL ASSOCIATION,   :               IN THE SUPERIOR COURT OF
SUCCESSOR IN INTEREST TO NATIONAL :                    PENNSYLVANIA
CITY BANK,                        :
                                  :
               v.                 :
                                  :
WHISPERING MEADOWS, LLC,          :
                                  :
                    Appellant     :               No. 282 EDA 2014

               Appeal from the Order Entered November 19, 2013
              In the Court of Common Pleas of Philadelphia County
                   Civil Division No(s).: 3250 June Term, 2013

BEFORE: BOWES, WECHT, and FITZGERALD,* JJ.

MEMORANDUM BY FITZGERALD, J.:                     FILED DECEMBER 30, 2014

        We dispose of these two appeals together, as they lie from identical

orders issued in the Philadelphia County Court of Common Pleas denying

*
    Former Justice specially assigned to the Superior Court.
J.S45043/14 & J.S45044/14

petitions to strike or open confessed judgments obtained by the same

Appellee, PNC Bank, National Association, Successor in Interest to National

City Bank. The appellants at No. 235 EDA 2014 are Donald J. and Patricia A.

Willis. The appellant at No. 282 EDA 2014 is Whispering Meadows, LLC, a

limited liability company of which the Willises are members. We will use the

appellation “Appellants” to refer to all three appellants. 1   Appellants have

filed identical briefs and argue the trial court erred in: (1) holding they did

not raise meritorious defenses to the confessed judgment; and (2) awarding

the attorneys’ fees to Appellee. We deny relief on the first issue but grant

relief on the second. Accordingly, we vacate and remand for the calculation

of attorneys’ fees.

      “On April 30, 2007, Donald and Patricia Willis, as the borrowers,

executed a promissory note with National City Bank, as the lender, in the

principal amount of $1,280,000[.]” Trial Ct. Op., 2/26/14, at 2. The Willises

defaulted on the note. Am. & Restated Forbearance Agreement, 7/1/12, at

1, Ex. C to Appellee’s Compl. in Confession of Judgment, 6/25/13.

         On July 1, 2012, [the Willises and Appellee] executed an
         “Amended and Restated Forbearance Agreement” that
         amended the payment terms of the promissory note and
         caused Whispering Meadows, LLC . . . to execute a

1
   Appellants were represented in the trial court proceedings and in the
instant appeal by the same law office. Furthermore, the appellate briefs,
trial court opinions, and filings in both cases are identical, and for ease of
disposition we refer to them in the singular.

                                     -2-
J.S45043/14 & J.S45044/14

         guaranty and suretyship agreement whereby it became a
         guarantor and surety for the Willis[es’] obligations.

Trial Ct. Op. at 2 (citations to record omitted). The documents attached to

the   forbearance   agreement    set    forth   the   outstanding   balance   as

$613,233.23.2 The new maturity date for the loan was one year later, June

30, 2013. Am. & Restated Forbearance Agreement, Exh. A at 1.

      Appellants did not make any payments under the new agreement. On

June 25, 2013, Appellee, as a successor in interest to National City Bank

filed complaints in confession of judgment against both the Willises and

Whispering Meadows, LLC for the alleged failure to make payments Appellee

asserted it was owed $710,411.96, which included $63,715.94 in “attorneys’

fees of 10%.”3

            [The parties] agreed to extend the time to file petitions
         to strike off or open the judgment so that the parties could
         attempt to negotiate a settlement of their issues. Those
         discussions were unsuccessful, and [on September 26,
         2013, Appellants] separately filed nearly identical motions
         to “Open and Strike Confessed Judgment.”[4]

2
 This figure included: (1) a principal balance of $546,012.57; (2) interest
due of $61,950.33; and (3) a late fee of $5,270.33. The interest rate was
5%.
3
  The total damages of $710,411.96 also included: (1) $546,012.57 of
principal balance; (2) $91,146.89 of interest through the date of the filing of
the complaint; (3) $9,536.56 late charges. Appellee’s Compl. in Confession
of Judgment, 6/25/13, at ¶ 7.
4
  Pennsylvania Rule of Civil Procedure 2959 governs petitions strike or open
confessed judgment. Pa.R.C.P. 2959. “Pursuant to Pa.R.C.P. 2959(a)(3), a
petition to strike or open a confessed judgment must be filed within thirty
days of the date the judgment creditor filed written notice of its

                                       -3-
J.S45043/14 & J.S45044/14

Trial Ct. Op. at 2 (citations to record omitted).

      Appellants’ motions raised three defenses. First, they argued:

         [Appellee] has failed to properly calculate the amount
         outstanding on the Promissory Note and has failed to
         give    [Appellants]    proper   credit   for    payments[.]
         Specifically, [Appellants] made two payments of $2,500 on
         March 30, 2011 and April 12, 2011.[5 Appellee’s] failure to
         credit these payments affects the principal balance,
         interest, and late charges in an amount that cannot be
         determined at this time because [Appellee] has thus far
         been unwilling to provide an accounting on how those
         amounts were calculated. Thus, it is indisputable that the
         confessed judgment is in an amount in excess to which
         [Appellee] could be entitled as a matter of law.

Appellants’ Mot. to Open & Strike Confessed Judgment, 9/26/13, at ¶ 3

(emphasis added). Appellants’ second defense was that Appellee

         acted in bad faith with the intent and effect of frustrating
         [Appellee’s] ability to make payments on the Promissory
         Note. Specifically, [Appellee] lost two executed copies of
         the Forbearance Agreement; (2) . . . never provided
         [them] with a countersigned copy of the Forbearance
         Agreement; (3) . . .       never provided [them] with a
         payment schedule; (4) . . . never provided [them] with a
         monthly payment amount; and (5) . . . never provided
         [them] with a location or address to which payments could
         be directed. [Appellants] requested the foregoing items on
         numerous occasions, but [Appellee] failed to address these
         requests. . . . As a result of [Appellee’s] failure to provide
         the foregoing items, [Appellants] were effectively unable
         to make regular payments on the Promissory Note. The
         two payments [above] were made by [Appellant] Donald J.

execution.” ESB Bank v. McDade, 2 A.3d 1236, 1240 (Pa. Super. 2010)
(emphasis added). Here, Appellee did not seek to execute the confessed
judgments, and thus Rule 2959(a)(3) is not triggered. See id.
5
 As we discuss infra, the March and April 2011 payments predated the July
2012 execution of the amended forbearance agreement.

                                      -4-
J.S45043/14 & J.S45044/14

         Willis literally appearing at a local [branch of Appellee
         bank] and giving the checks to a local teller. It was clear
         to [Appellants] from these circumstances that their
         payments were not being properly credited, and the
         Complaint in Confession of Judgment . . . has confirmed
         that belief. Thus, as a result of [Appellee’s] bad faith, it
         was objectively unreasonable for [Appellants] to
         continue to make payments that they knew would
         not be properly credited to the Promissory Note.

Id. at ¶ 2 (emphases added).         Appellants’ final defense was that the

attorneys’ fees of $63,715.96 “act[ed] as an unlawful penalty rather than a

lawful liquidated damages provisions [sic]” and was “clearly unrelated to and

disproportionate to the work actually performed,” that of “filing . . . a three

page Complaint in Confession of Judgment.” Id. at ¶ 3.

      On October 2, 2013, Appellee filed answers, asserting Appellants

“failed to present the requisite evidence of a meritorious defense necessary

to open a confessed judgment.” See Trial Ct. Op. at 4. Appellee attached a

transaction history for the account, which showed the March and April, 2011

payments were credited. Appellee further argued that Appellants offered no

factual support for their allegation that it “frustrated [their] ability to make

payments on the promissory note.” Id.

            [Appellee] further argued “the other allegations
         asserted by [Appellants] are immaterial, as none of them
         [affected Appellants’] ability to make payments to
         [Appellee] when due.” Finally, regarding the requested
         attorney’s fees of 10%, [Appellee] asserted that they are
         consistent with Pennsylvania law, and this court did not
         need to specifically access their reasonableness as they
         were specifically authorized by the warrant of attorney [in
         the parties’ forbearance agreement].

                                     -5-
J.S45043/14 & J.S45044/14

Id. at 4-5 (citations to record omitted).

      On November 14, 2013, the trial court held oral argument. Appellee

produced a transaction history of Appellants’ account. Appellants conceded

the two $2,500 payments were credited to their account. Appellee further

argued that “throughout 2011, the Willis[es] continued to make payments

on a monthly basis” and on December 13, 2011, “made a principal reduction

payment of $732,625.23.” Id. at 5 (quoting N.T., 11/14/13, at 7).

      On November 18, 2013, the trial court entered two orders, denying

each of Appellants’ motions to strike or open the confessed judgments. This

timely appeal followed.6

      In their first issue, Appellants argue the trial court abused its

discretion by failing to recognize their meritorious defense that Appellee

acted in bad faith. Their sole argument is:

         The trial court was presented with uncontested evidence
         that [Appellee]: (1)      two executed copies of the
         Forbearance Agreement [sic]; (2) provided [Appellants]
         with a countersigned copy of the Forbearance Agreement
         [sic]; (3) provided [Appellants] with a payment schedule
         [sic]; (4) never provided [Appellants] with a monthly
         payment amount; and, (5) provided [Appellants] with a
         location or address to which payments could be directed.

6
  Although the text of the orders state the date is November 18, 2013, the
orders bear “filed” time-stamps of November 19th. The trial docket also
indicated that notice of the orders was given on November 19th.
Accordingly, Appellants’ notices of appeal filed on December 19, 2013, were
timely. See Pa.R.A.P. 302(a); Pa.R.C.P. 236(a)(2). The trial court did not
order Appellants to file a Pa.R.A.P. 1925(b) statement; however the court
issued an opinion.

                                     -6-
J.S45043/14 & J.S45044/14

         [Appellants’ Reproduced Record at] 47a-48a and 140a-
         141a.    Appellants] requested the foregoing items on
         numerous occasions, but [Appellee] failed to address these
         requests. Id. Specifically, [Appellant] Donald J. Willis
         made numerous phone calls to Ms. Jean Mascia,
         [Appellee’s] agent who negotiated the transaction, to have
         these issues addressed, but none of his calls were
         returned. Id.

            The court below reasoned that [Appellants] should have
         continued to make payments—of an indeterminate amount
         and at an indeterminate location—on the blind faith that
         their payments were being properly credited.           This
         effectively alleviates [Appellee] of its duty of good faith
         and fair dealing by allowing [Appellee] to interfere with
         and fail to cooperate with [Appellants’] attempts to
         perform under the contract by making payments.

Appellants’ Brief at 8-9. We hold 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.[“]

                                  *    *    *

         [T]he 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. . . .

            In contrast, “if the truth of the 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 strike a confessed judgment and a petition to
         open a confessed judgment are distinct remedies; they are
         not interchangeable.     A petition to open a confessed
         judgment is an appeal to the equitable powers of the
         court. Factual disputes by definition cannot be raised
         or addressed in a petition to strike off a confession
         of judgment, because factual disputes force the court to

                                      -7-
J.S45043/14 & J.S45044/14

          rely on matters outside the relevant record to decide the
          merits of the petition.

Midwest Fin. Acceptance Corp. v. Lopez, 78 A.3d 614, 622-23 (Pa.

Super. 2013) (citations omitted) (emphases added).

      In the instant matter, Appellants’ motion to strike the confessed

judgment did not aver any defects or irregularities appearing on the record.

Accordingly, we agree with the trial court that Appellants’ motions “were

only petitioning to open the confessed judgments.” See Trial Ct. Op. at 6.

Thus, we affirm the denial of the requests to strike the confessed judgment.

See id.    We thus consider whether the trial court erred in denying the

motion to open the confessed judgment.

      We note the relevant standard for a ruling on a petition to open a

confessed judgment: “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 court and will not be disturbed absent a manifest

abuse of discretion.”   PNC Bank v. Kerr, 802 A.2d 634, 638 (Pa. Super.

2002) (citation omitted).

      “[A] court acting in equity should open a confessed judgment only

when the petitioner ‘acts promptly, alleges a meritorious defense and

presents sufficient evidence of that defense to require submission of the

issues to the jury.’” Id. (citation omitted).

             Pa.R.Civ.P. 2959(e) sets forth the standard by which a
          court determines whether a moving party has properly
          averred a meritorious defense. “If evidence is produced

                                      -8-
J.S45043/14 & J.S45044/14

         which in a jury trial would require the issues to be
         submitted to the jury the court shall open the judgment.”
         Furthermore, the court must view the evidence presented
         in the light most favorable to the moving party, while
         rejecting contrary evidence of the nonmoving party. The
         petitioner need not produce evidence proving that if the
         judgment is opened, the petitioner will prevail. Moreover,
         we must accept as true the petitioner’s evidence and all
         reasonable and proper inferences flowing therefrom.

Liazis v. Kosta, Inc., 618 A.2d 450, 453 (Pa. Super. 1992) (citations

omitted and emphasis added).       “Fundamentally, every contract imposes

upon the parties a duty of good faith and fair dealing in the performance and

enforcement of the contract.” Id. at 454.

      In the case sub judice, the trial court opined that Appellants failed to

present sufficient evidence of a meritorious defense.    We agree, and note

Appellants did not produce any evidence, either by attachment to their

motion7 to open confessed judgment or by presentation at oral argument

before the trial court.

      With respect to Appellants’ claim that Appellee lost and failed to

provide executed copies of the forbearance agreement, we agree with the

trial court that these two facts, even if true, “had nothing to do with

[Appellants’] ability to make payments.” See Trial Ct. Op. at 7.

      With respect to Appellants’ defense that Appellee failed to provide a

7
  The only exhibits attached to Appellants’ motions to open confessed
judgment were: (1) emails between the parties concerning their agreement
to extend the time for Appellants to petition to open the judgment; (2)
copies of two checks payable to Appellee, of $2,500 each, and bearing
“deposited” stamps.

                                    -9-
J.S45043/14 & J.S45044/14

payment schedule, monthly payment amount, and payment address, we

note the following. Appellants’ motion to open confessed judgment averred

that Donald Willis called Ms. Mascia, Appellee’s representative, for the

payment schedule, monthly amount, and payment address, “none of his

calls were returned,” and consequently, [the Willises] “were effectively

unable to make regular payments on the Promissory Note.”                     Appellants’

Mot. to Open & Strike Confessed Judgment at ¶ 4 (emphasis added).

Appellants concluded, “Thus, as a result of [Appellee’s] bad faith, [including

its alleged failure to credit the March and April 2011 payments,] it was

objectively unreasonable . . . to continue to make payments that they knew

would not be properly credited to the Promissory Note.”                Id. (emphasis

added).

       A careful review of this argument reveals Appellants’ argument was

that   because    two    payments   were    not    properly    credited   under      the

promissory       note    and   Appellants   were      unable   to   obtain     payment

information, it was unreasonable for them make payments under the

subsequently executed forbearance agreement.               Appellants provided no

evidence, nor even an assertion, that despite the lack of a payment

schedule,   monthly      payment    amount,     and    payment      address    for   the

promissory note, and the fact that they ultimately defaulted under the

promissory note,        they subsequently      attempted to      obtain the      above

information after they executed the forbearance agreement.                     The trial

                                      - 10 -
J.S45043/14 & J.S45044/14

court noted:

        Given the undisputed fact that [Appellants] successfully
        made payments to [Appellee] on the account in the past
        (and even when they asserted the payments were not
        being credited), we agreed it was absurd for [Appellants]
        to now claim [Appellee’s] conduct somehow prevented
        them from doing so after the forbearance agreement was
        executed . . . . No doubt that is why [Appellants] carefully
        alleged only the hollow accusation that they were
        “effectively” unable to make regular payments on the
        promissory note, not that they were actually precluded
        from doing so.[ ]

Trial Ct. Op. at 7 (emphasis added).

     Furthermore, the trial court reasoned:

        [T]here is a level of disingenuousness in [Appellants’]
        claiming bad faith on [Appellee’s] part for allegedly not
        providing . . . a monthly payment amount after they
        entered into the forbearance agreement when thereafter
        [Appellants] had an equal obligation [sic] to make
        payment, but failed to make any payment on the account.
        In addition to explicitly stating payments were due “on the
        last day of each consecutive calendar month” until the
        June 30, 2013 maturity date (which is essentially a
        payment schedule, something [Appellants] also averred
        they were never provided with in bad faith), Exhibit A to
        the forbearance agreement includes the interest rate and
        payment terms for the loan going forward. This court is
        hard pressed to believe that if [Appellants] really were not
        being told [the monthly payment amount], they could not
        have attempted to calculate the expected payment (that
        appears to be approximately $6,900 a month) or at least
        make some kind of payment on the account, which in all
        certainty would have been properly credited to the account
        like all the other payments they made. Of course, there
        is no evidence [Appellants] attempted to make a
        payment of any kind after the forbearance
        agreement was entered into, but were refused. . . .

Id. at 7-8 n.1 (emphases added).

                                   - 11 -
J.S45043/14 & J.S45044/14

     On appeal, Appellants ignore the above analyses. They likewise ignore

the trial court’s observation that at oral argument: (1) they conceded that

the March and April 2011 payments were credited to their account; and (2)

Appellee averred the Willises continued to make monthly payments

“throughout    2011”    and   “made       a      principal   reduction   payment   of

$732,625.23” on December 13, 2011. See Trial Ct. Op. at 5; N.T. at 4, 6-7.

At oral argument, Appellee contended such payments indicated Appellants’

knowledge of where to make payments, as well as the fact that they had,

prior to executing the forbearance agreement, previously made payments.

N.T. at 7.    In response, Appellants: (1) reiterated the five instances of

alleged bad faith on the part of Appellee; and (2) then reasoned that the

transaction history corroborated their claims: the lack of “a concession of

monthly payment[s]” and the different amounts paid “tend to show

[Appellants] didn’t even know what [they were] supposed to be paying

because of the bank’s actions.” Id. at 9-10.

     In light of all the foregoing, including their argument before the trial

court, Appellants have not persuaded this Court that the trial court abused

its discretion in finding they did not allege meritorious defenses. See PNC

Bank, 802 A.2d at 638. Accordingly, we deny relief on their first issue.

     Appellants’ second claim on appeal is that the court abused its

discretion in rejecting their defense as to the attorneys’ fees.           As stated

above,   Appellee’s    complaint   in   confessed       judgment    demanded   10%

                                        - 12 -
J.S45043/14 & J.S45044/14

attorneys’ fees in the amount of $63,715.94.            Appellants present two

arguments, which we address seriatim.              First, they assert that the

“attorneys’ fee awards . . . had no relationship to the work actually

performed by [Appellee’s] attorney, and therefore, violated the express

terms of the Forbearance Agreement, which specifically provides that ‘the

amount of attorneys’ fees that [Appellee] may recover . . . shall not exceed

the actual attorneys’ fees incurred.’” Appellants’ Brief at 9-10. They assert

that the trial court improperly overlooked this provision of the forbearance

agreement. Appellants further aver, without any citation to the record, that

Appellee “admitted that those fees bore no relationship whatsoever to the

work actually performed by [its] counsel.” See id. at 10. They reason that

the attorneys’ fees thus “acted as an unlawful penalty rather than a lawful

liquidated damages provision.” Id. We find no relief is due.

     In Dollar Bank v. Northwood Cheese Co., 637 A.2d 309 (Pa. Super.

1994), the trial court refused to open a confessed judgment to determine

the reasonableness of counsel fees. Id. at 314. On appeal, the borrower

“assert[ed] that counsel fees awarded in accordance with the fifteen percent

attorney’s   commission   specified    in   the   warrant   of   attorney   [were]

excessive.” Id. This Court set forth relevant Pennsylvania authority:

        If a confessed judgment includes an item not authorized
        by the warrant, the judgment is void in its entirety and
        must be stricken. However, if the judgment as entered is
        for items clearly within the judgment note, but excessive
        in amount, the court will modify the judgment and cause a
        proper judgment to be entered. If the judgment was

                                      - 13 -
J.S45043/14 & J.S45044/14

         entered for an amount which was grossly excessive, the
         judgment must be stricken in its entirety.

Id. (citations omitted). We then reasoned:

         Here, it is clear that attorney’s fees in the amount of
         fifteen percent were specifically authorized by the warrant
         of attorney. [The borrowers] claim that the amount of
         attorneys’ fees is excessive, but they provide no citation to
         any evidence of record to this effect, and similarly do not
         make any argument as to why the fees are claimed to be
         excessive. We note that a voluminous record accompanies
         the instant case. In light of the fact that the warrant of
         attorney permits the fee to which [the borrowers] object,
         and in the absence of any specific argument concerning
         the alleged excessiveness of the fee, we find this argument
         meritless.

Id.

      Rait P’ship, L.P. v. E Pointe Props. I, 957 A.2d 1275 (Pa. Super.

2008), relied on Dollar Bank.      Id. at 1279.    In that case, the borrowers

argued “that the trial court erred in refusing to strike off or open that part of

the   judgment that included ‘an attorney’s collection          commission’    of

$450,000.” Id. This Court disagreed:

         [T]his Court has previously approved the inclusion of
         similar collection commission provisions in contracts. See:
         Dollar Bank[,637 A.2d at 314] (attorney’s fee provision of
         fifteen percent enforceable where it was “specifically
         authorized by the warrant of attorney”). Here, there is no
         dispute that the Forbearance Agreement specifically
         provided for [the lender] to include as part of the
         confessed judgment “an attorney’s collection commission
         of fifteen percent (15%) of the aggregate amount of the
         foregoing sums.” . . .

Id. Furthermore, in a footnote, this Court stated:

                                     - 14 -
J.S45043/14 & J.S45044/14

         We are not persuaded by [the borrower’s] argument that
         the decision of this Court in PNC Bank v. Bolus, [655
         A.2d 997 (Pa.Super. 1995)], compels a different result. In
         that case, this Court approved a trial court's finding that
         the inclusion of an attorney's commission of $70,647.77 on
         a confessed judgment was "unreasonable." However, the
         provision at issue in that case specifically called for the
         imposition of a "reasonable" fee, thus justifying the trial
         court's inquiry into the reasonableness of the fee. Here,
         however, there is no similar provision, merely the
         automatic imposition of a "commission" of fifteen percent
         taxable as a cost attributable to [the borrower’s] default.
         ...

Id. at 1279 n.3.

      In the instant case, the forbearance agreement included the following

clause pertaining to attorneys’ fees:

            The Borrower hereby reaffirms and empowers any
         attorney of any court of record, after he occurrence of any
         Event of Default hereunder, to appear for the Borrower
         and, without complaint filed, confess judgment . . . against
         the Borrower in favor of the Bank . . . for the entire
         principal balance of the Note, all accrued interest and all
         other amounts due hereunder, together with costs of suit
         and an attorney’s commission of the greater of 10%
         of such principal and interest or $1,000 added as
         reasonable attorneys’ fee, and for doing so, the Note or
         a copy verified by affidavit shall be a sufficient
         warrant. . . . Notwithstanding the attorney’s commission
         provided for in this paragraph (which is included in the
         warrant for purposes of establishing a sum certain), the
         amount of attorneys’ fees that the Bank may recover
         from the Borrower shall not exceed the actual
         attorneys’ fees incurred by the Bank.

Am. & Restated Forbearance Agreement at ¶ 10 (emphases added).

      The trial court found Appellants’ claim failed as a matter of law. Citing

Rait P’ship, L.P., the trial court noted the Superior Court “has previously

                                    - 15 -
J.S45043/14 & J.S45044/14

approved of the inclusion of similar collection commission provisions in

contracts.”    Trial Ct. Op. at 8.     The trial court also held that it “need not

assess the reasonableness of such a commission where the” contract

explicitly provides for the commission and does not specifically call for a

“reasonable’ fee.” Id. The court reasoned: “Here, the requested attorney’s

commission of 10% appeared in four separate places in the contracts

between the parties and did not call on the court to inquire into the

reasonableness of the commission.” Id.

      We agree with the court’s reasoning.            The forbearance agreement

provided for “an attorney’s commission of the greater of 10% of such

principal and interest or $1,000 added as a reasonable attorney’s fee.” Am.

& Restated Forbearance Agreement at ¶ 10 (emphasis added). Although the

term “reasonable” appears, it modifies the $1,000 alternative. However, the

agreement provided for either 10% of principal and interest or $1,000,

whichever was greater. In this case, the 10% figure was greater and thus

controlled.      That   clause   did   not   invoke   a   court   inquiry   into   the

reasonableness of attorney’s fees.

      Appellants’ second argument is that that the forbearance agreement

limited an award of attorney’s fees to “actual attorneys’ fees” incurred by

Appellee.     We agree with this interpretation of the contract.        See Am. &

Restated Forbearance Agreement at ¶ 10.               The trial court included the

following footnote in its opinion:

                                         - 16 -
J.S45043/14 & J.S45044/14

        While the [forbearance agreement] provisions . . . allowed
        [Appellee] to establish a sum certain and confess
        judgment in the amount of $63,715.94 for attorney’s fees,
        the court would note the guarantee and forbearance
        agreements will only allow [Appellee] to . . . recover . . .
        the actual attorney’s fees it incurs, which may end up
        being less than $63,000 in the absence of further
        litigation.

Trial Ct. Op. at 8 n.2 (citing Am. & Restated Forbearance Agreement at ¶

10) (emphasis added).

     On appeal, Appellants respond:

        The problem with [the trial court’s] analysis is that the
        confessed judgments act as final [judgments. Appellee]
        can collect $63,715.94 in attorney’s fees with impunity
        [sic], and if [Appellants] attempt to argue [Appellee]
        actually expended less, then surely [Appellee] will fall back
        on the doctrine of res judicata. In other words, the only
        way for the trial court have given [sic] “actual attorney’s
        fees” provision any hope of being enforced was to open the
        confessed judgment and require [Appellee] to establish its
        actual attorney’s fees. Having failed to do so was an
        abuse of discretion which should be overturned.

Appellants’ Brief at 11-12. We determine this argument has merit.

     The trial court’s footnote indicates that the final sum of Appellee’s

attorney’s fees was not yet calculated or determined, and could be less than

the amount demanded in its complaint.        Trial Ct. Op. at 8 n.2.    None of

Appellee’s filings, including its complaint, includes documentation showing

incurrence of $63,715.94 of attorneys’ fees.       Our review of the record

likewise reveals no explanation for the court’s reference to a $63,000 figure.

As Appellants point out, the confessed judgments will act as final judgments

against them.    Because the trial court has indicated the final sum of

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J.S45043/14 & J.S45044/14

attorney’s fees requested may not be calculated, and may be less than what

was demanded, we agree with Appellants that the confessed judgments

should be opened to determine this discrete issue. Accordingly, we vacate

the court’s orders denying Appellants’ motions to open the confessed

judgments and remand for the court to determine only the appropriate

award of attorneys’ fees.

     Orders vacated. Case remanded for proceedings consistent with this

memorandum. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 12/30/2014

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