Pittsburgh Properties v. Casteel, C.

Citation: Not availableDocket: 1597 WDA 2015

Court: Superior Court of Pennsylvania; December 8, 2016; Pennsylvania; State Appellate Court

Original Court Document: View Document

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Appellants Anthony J. Paravati, Cynthia A. Casteel, and CMG, LLC appeal a September 18, 2015 order from the Court of Common Pleas of Allegheny County, which denied their petition to open a confessed judgment against them. The case arises from a commercial lease agreement between Appellee Pittsburgh Properties, LTC, and Appellants, executed on December 19, 2011, which included personal guarantees from Casteel and Paravati. Following CMG's cessation of operations and vacating the premises in late 2013, Pittsburgh Properties filed a complaint for confessed judgment totaling $53,894.50 on July 11, 2014, after providing proper notice. Appellants filed a petition to open or strike the judgment on December 15, 2014. The trial court denied the petition to strike but allowed for further proceedings regarding opening the judgment, leading to the current appeal.

Appellants raise five points of error:
1. The trial court allegedly erred by determining that Appellants did not present a valid defense against unauthorized finance fees charged to CMG.
2. They contend the court erred regarding 'tenant improvements' costs, asserting these were the responsibility of Appellee and incurred after CMG vacated.
3. Appellants argue the confession of judgment clause in the Guarantees was invalid due to its lack of conspicuousness.
4. Paravati claims the court erred in finding no defense to the judgment since the Warrant of Attorney only authorized judgment against CMG, not against the individuals.
5. Finally, they assert the court erred in ruling there was no meritorious defense regarding unpaid rent, arguing Appellee breached the lease multiple times.

The trial court's order is affirmed.

The third and fourth arguments presented by the Appellants have been reordered to align with their brief. The review of the trial court's order is conducted under the standard of abuse of discretion, which occurs when the court misapplies the law or acts irrationally. A petition to open a confessed judgment is successful if the petitioner (1) acts promptly, (2) alleges a meritorious defense, and (3) presents enough evidence for a jury's consideration. The meritorious defense must be one that could lead to relief if proven at trial, and the court evaluates the evidence favorably towards the moving party, disregarding any contrary evidence. For the judgment to be opened, the evidence must be sufficient to warrant jury submission, akin to the standard for a directed verdict. 

In this case, Appellants Casteel and CMG filed their petitions over four months after receiving a notice of execution, exceeding the required 30-day period established by procedural rules, resulting in the affirmation of the trial court's order against them. The focus then shifts to Appellant Paravati, who argues that the Appellee confessed judgment for excessive finance charges not authorized by the Lease. Contract interpretation principles govern this analysis, and the appellate court reviews whether the trial court correctly interpreted the Lease's terms. The Lease permits a 1.5% finance charge on unpaid non-rent invoices and imposes daily charges for late payments and insufficient funds.

Paravati contends that the Appellee's confession of judgment included finance charges exceeding 8% on various outstanding balances, specifically highlighting a finance fee of $184.05 on a balance of $2,229.05 from December 10, 2012. Paravati argues that this represents an 8.2569% charge, which exceeds the Lease provisions. However, he has not provided evidence to clarify whether the amounts listed in Exhibit E comprise rent or non-rent invoices, nor whether the finance fees are from non-rent invoices or late charges. The Appellee asserts that the Lease explicitly permits finance fees, and that the Appellants did not object to these charges when they were assessed. 

The trial court rejected the Appellants' claim that there was no provision for finance fees, citing the Lease's authorization for such fees on unpaid non-rent invoices. The court concluded that there was no factual dispute regarding the obligation to pay these finance charges. On appeal, Paravati challenges the finance fee amounts, an issue not raised in the trial court, which the court holds cannot be introduced at this stage per Pa.R.A.P. 302(a). Although courts can modify confessed judgments for excessive amounts, Paravati has not met the burden of production to establish this point, making any modification unnecessary. The court would also require substantial evidence to warrant jury consideration, which Paravati has failed to provide, particularly regarding the origins of the balances in Exhibit E. Lastly, Paravati argues against the Appellee's authority to confess judgment for tenant improvements, claiming the Appellee was responsible for those costs under the Lease Amendment. This argument also lacks evidential support.

Appellants contest the confessed judgment on the grounds that it includes charges for alterations to the leased premises, which they argue are the responsibility of Appellee according to the Lease. However, Appellants failed to demonstrate that these charges pertain to the work Appellee was obligated to perform under the Lease. Despite having ample opportunity to depose Appellee's representatives, Appellants did not do so, resulting in a lack of evidence to support their claim regarding unauthorized charges. Furthermore, their brief inadequately identifies which specific charges were unauthorized and lacks proper citations, leading to a waiver of this argument.

Paravati asserts that the confession of judgment clause in the Guarantee is not sufficiently conspicuous, claiming this constitutes a valid defense. This argument is flawed for two reasons: it identifies a defect apparent on the record, which would necessitate a petition to strike the judgment rather than open it, and it lacks merit as a warrant of attorney to confess judgment must be clearly written and signed by the party bound. The lessee’s signature must relate directly to the warrant, and mere general references in the lease are insufficient for binding. Previous rulings confirm that a valid warrant of attorney requires explicit acknowledgment by the lessee, as demonstrated in related case law, which also emphasizes that it cannot be implied from general references. The Graystone Court validated a warrant of attorney that was prominently displayed, highlighting the importance of clear presentation in such documents.

Graystone Court distinguished the case at hand from prior cases where the warrant of attorney was improperly positioned away from the agreement’s signature. In previous rulings, relief was denied when the confession of judgment clause was presented in the same font size as the rest of the document. In this case, the warrant of attorney was clearly located as paragraph six within the Guaranty, printed in the same size type as the rest of the text, and not on a separate, unsigned page. Since the debtor did not claim fraud or present evidence of incapacity or misunderstanding of the contract, the debtor is bound by its terms. Failure to read a contract before signing is deemed 'supine negligence' and does not excuse enforcement of the contract.

Paravati’s initials were present on the page containing the confession of judgment clause, and he signed a warning paragraph indicating that signing the document meant waiving rights to notice and a court trial. The court concluded that the confession of judgment clause complied with legal standards, and Paravati's objections were dismissed.

Appellants contended that the trial court should have opened the judgment because the Lease and its amendments allowed judgment against CMG but not against Casteel or Paravati. However, since Paravati signed a Guarantee with a valid confession of judgment clause, judgment against him was warranted. Additionally, Appellants argued that alleged breaches of the Lease by the Appellee excused their default. The Lease specified that CMG was not entitled to damages for failures caused by repairs beyond the Lessor's control. The trial court found that issues with heating and electricity stemmed from renovations requested by CMG and that Appellants could not claim rent abatement under these circumstances. 

The trial court’s findings were supported by the record, and Appellants failed to provide sufficient evidence to question these conclusions. Consequently, all assertions of error by the Appellants were deemed meritless or not preserved for review, leading to the affirmation of the trial court’s order.