Judgment by Confession • Petition to Open

Citizens Bank v. Simmons, PICS Case No. 14-0499 (Pa. Super. April 3, 2014) Lazarus, J. (6 pages).

Court did not err in denying petition to open confession of judgment where plaintiff failed to present evidence of a defense sufficient to submit to a jury. Affirmed.

Simmons, in the business of acquiring residential rental properties, executed two promissory notes with bank. The rental properties were collateral for the loans, and in addition to maintaining the properties, Simmons was required to keep all tax and insurance obligations current. Both notes contained confession of judgment and warrant of attorney clauses, which required occurrence of default before bank could confess judgment.

Bank confessed judgment against Simmons and court entered judgment to that effect.

Simmons petitioned to open, alleging that he was not in default under either note, but that bank had “intentionally manipulated” his payments to make it appear so. Specifically, Simmons alleged that he submitted monthly payment on the two notes by handing them to a teller at bank, who told him this manner of payment was acceptable. About 10 days later, Simmons received a letter from bank, stating that the method of payment was in error and that Simmons had to wait for loan receipts. Simmons returned to bank, waited for receipts and his checks were accepted. Simmons also alleged that as of the date he filed the petition, there were no outstanding payments owed on either note, and that bank’s failure to notify him of the “unacceptable” method of payment within a timely fashion caused the grace period to elapse, thereby forcing him into a “maliciously manufactured default situation.” Trial court denied the petition.

On appeal, Simmons argued that trial court erred in denying his petition to open as he developed sufficient evidence to allow the disputed issue of whether he was in default of the notes to go to the jury. The Superior Court affirmed.

A judgment by confession will be opened if petitioner acts promptly, alleges a meritorious defense and presents sufficient evidence in support of the defense to require submission of the issues to a jury.

Simmons admitted that he had made untimely payments in the past. Bank sent Simmons notice that both loans were in default once in 2010, three times in 2011 and twice more in 2012. Simmons acknowledged receiving these documents.

Simmons, a sophisticated debtor who managed 72 apartments and who took out a commercial loan, was on notice of default as early as April of 2010. The fact that bank confessed judgment in September 2012 after Simmons’ checks were returned for failure to wait for a receipt at a local branch does not evidence a “manufactured” default. By his own admission, Simmons was in default on various occasions over the past few years. A petition to open judgment requires presentation of “sufficient clear, direct, precise and believable evidence of a defense sufficient to require submission of the defense to a jury.” Iron Worker’s Savings & Loan Ass’n v. IWS, Inc., 622 A.2d 367, 370 (Pa. Super. 1993). The confusion surrounding the tender of Simmons’ two partial payments does not reach this level. Moreover, Simmons had received notice of default from bank’s counsel in both April and July, 2012, when bank accelerated the debt and demanded payment in full. Accordingly, Simmons could have avoided confessed judgment only if he had tendered payment in full.