Wilmington Sav. Fund Soc'y, Fsb v. Willington Equities LLC

Full title: WILMINGTON SAVINGS FUND SOCIETY, FSB, Plaintiff, v. WILLINGTON EQUITIES…

Court: Commonwealth Court of Pennsylvania

Date published: Jun 28, 2023

No. 03234 (Pa. Cmmw. Ct. Jun. 28, 2023)

Opinion

03234

06-28-2023

WILMINGTON SAVINGS FUND SOCIETY, FSB, Plaintiff, v. WILLINGTON EQUITIES LLC, Defendant.

PAULA A. PATRICK, J.

COMMERCE PROGRAM 770 EDA 2023

APPEAL OPINION

PAULA A. PATRICK, J.

Defendant-borrower Wellington Equities LLC ("Willington") appeals from this court's order entered on February 21, 2023,¹ in which the court denied Willington's Petition to Open or Strike the Judgment confessed against it by plaintiff-lender Wilmington Savings Fund Society, FSB ("WSFS").² In its Statement of Errors Complained of on Appeal, Willington argues that the

1 A copy of the February 21^st Order is attached hereto.

2 WSFS is the successor-in-interest by merger with the original lender, The Bryn Mawr Trust Company.

Judgment should have been opened or stricken because

[T]he underlying Note containing the original warrant of attorney to confess judgment was materially amended on September 17, 2021, per a contract styled as an "Amendment to the Note["], which did not expressly incorporate the warrant of attorney to confess judgment or contain its own warrant of attorney to confess judgment.³

3 Statement of Errors Complained of on Appeal filed April 13, 2023, pp. 1-2.

However, the Amendment to Note dated September 17, 2021, contains the following language clearly incorporating by reference the Confession of Judgment provisions of the original, underlying Note:⁴

4 Willington does not dispute that the original Note contains valid provisions permitting WSFS to confess judgment against it in the event of default.

14. Confession of Judgment. Borrower specifically acknowledges, agrees to and does hereby reaffirm the warrant of attorney to confess judgment against the Borrower contained in the Loan Documents.

THE BORROWER EXPRESSLY ACKNOWLEDGES THAT: (i) THE BORROWER HAS BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THIS TRANSACTION; AND (ii) IN THE EVENT LENDER EXERCISES THE WARRANT OF ATTORNEY GRANTED HEREIN, SUCH ACTION MAY BE ADVERSE TO BORROWER'S INTERESTS. BORROWER HEREBY EXPRESSLY WAIVES THE DUTIES THAT MAY BE IMPOSED UPON LENDER PURSUANT TO 20 PA.C.S. § 5601.3(b) IN EXERCISING ITS RIGHTS HEREUNDER.

15. Acknowledgment of Waiver of Rights. The Borrower hereby acknowledges and agrees that by agreeing that the Lender may confess judgment hereunder, Borrower waives any rights Borrower may have, including without limitation, the right to notice of any constitutional or other right Borrower may have to a prior judicial proceeding to determine Borrower's rights and liabilities hereunder, and the Borrower further acknowledges and agrees that the Lender, upon a default hereunder, may obtain a judgment against the Borrower without Borrower's prior knowledge or consent and without the Borrower's opportunity to raise any defense, setoff, counterclaim or other claim the Borrower may have, and the Borrower hereby expressly waives such rights as an explicit and material part of Borrower's consideration for the Loan as amended by this Amendment. No single exercise of the foregoing warrant and power to confess judgment is deemed to exhaust the power, whether or not any such exercise is held by any court to be invalid, voidable or void, but the power shall continue undiminished and may be exercised from time to time as often as the Lender elects until all indebtedness has been paid in full. The Lender may, in its sole discretion, exercise the authority contained herein against the Borrower at any time or times or at different times.⁵

5 Confession of Judgment filed August 30, 2022, Ex. C, p.4 (emphasis in original).

The Superior Court has condoned similar reaffirmations and republications of Confession of Judgment provisions in amendatory documents by holding that:

While the amendment herein does not restate the cognovit clause in its entirety, it does much more than generally incorporate the terms of the original [agreement between the parties.] . . . [Defendant] signed the amendment, which not only incorporated the terms of the original [agreement between the parties] generally, but specifically republished the terms of the confession of judgment and clearly stated the parties' intent that it continue in effect. . . . [Defendant's] specific acknowledgement that it would continue to be bound by the confession of judgment clauses contained in the original [agreement that was signed by defendant] was the clear manifestation of consent that is required to sustain the validity of a cognovit clause[.] . . . This is not a case where the warrant was foisted upon [defendant] by implication or by general and nonspecific reference.⁶

Likewise, in this case, Willington clearly agreed in the Amendment to the Note to be bound by the

6 Ferrickv. Bianchini, 69 A.3d 642, 652 (Pa. Super. 2013) (discussing an amendment to a lease.)

Confession of Judgment provisions of the Amendment and the original Note.

CONCLUSION

For all the foregoing reasons, as well as the reasons set forth in the footnote to the court's February 21^st Order, the court respectfully requests that said Order be affirmed on appeal.

ORDER

AND NOW, this 21^st day of February, 2023, upon consideration of defendant's Petition to Strike and/or Open Confessed Judgment, the responses thereto, and all other matters of record, it is hereby ORDERED and DECREED that said Petition is DENIED ¹ and the stay of execution is LIFTED.

1 While the initial attempt at service was made to an incorrect address, proper service was subsequently made. The Confession of Judgment provisions were sufficiently incorporated into the Amendment to the Note. Defendant offered no evidence that the calculation of capital and interest due is incorrect. The attorneys' fees equal to approximately .6% of the principal are not unreasonable, and the small late fee also appears to be well within the bounds set forth in the Note.