February 5, 1982
ALL AMERICAN HOMES, INC.
ALBERT J. VASKO, APPELLANT
No. 495 Philadelphia, 1980, Appeal from Order of the Court of Common Pleas, Civil Division, of Pike County, No. 68 Nov. Term, 1977.
Before Hester, Cavanaugh and Van Der Voort, JJ. Cavanaugh, J., files a Memorandum Dissenting Statement.
Presently before the court is appellant's appeal from the order of the lower court dated January 29, 1980, denying his petition to open a confessed judgment.
The relevant facts may briefly be summarized as follows: The parties entered into a building contract on March 5, 1977 for the construction of a home on appellant's property located in Pike County, Pennsylvania. The residence was allegedly completed and delivered to the appellant on October 14, 1977, at which time, following inspection (T.94a), appellant executed a Closing Statement and completed a "Punch List" wherein he scheduled eleven (11) items needing either repair or completion (the Closing Statement appears as Exhibit "A" and the Punch List appears as Exhibit "G" appended to appellant's petition to open).
On November 7, 1977, appellant executed a promissory note in favor of the appellee in the total amount of $8,361.60 (representing a $7,000 balance and interest at the rate of 9% in the sum of $1,361.60). Pursuant to the confession of judgment provisions contained therein, the note was recorded and indexed in the Pike County Prothonotary's Office on December 5, 1977.
On December 8, 1978, appellant filed a petition to open judgment alleging that (1) during the course of construction, appellee performed unauthorized "extra work" (exhibits "C", "D" and "E") for which the appellant was charged; (2) that in consideration of the execution of the promissory note on November 7, 1977, appellee's agent agreed to complete and/or correct within a reasonable time, the eleven (11) items which appellant listed on the Punch List, which appellee has failed to do; (3) that following the closing on October 14, 1977, appellant subsequently discovered additional construction defects; and (4) appellee committed certain violations of the Unfair Trade Practices and Consumer Protection Act. A rule issued; appellee filed its answer and new matter, to which appellant filed his reply. Following a hearing on October 15, 1979, the lower court issued its order dated January 29, 1980, denying appellant's petition to open confessed judgment. Hence, this appeal.
Our scope of review on appeal from either the opening or the denial of opening a judgment taken by confession has been clearly delineated over numerous years. We reiterate as we have done on numerous occasions, our scope of review on appeals from the lower court's grant or denial of a petition to open judgment is very narrow. A petition to open judgment is first an appeal to the equitable and discretionary powers of the lower court and as such, the exercise of the lower court's discretion in either opening or refusing to open a judgment taken by confession, will not be disturbed on appeal unless the lower court has committed a manifest abuse of discretion or an error of law. M. H. Davis Estate Oil v. Sure Way Oil, Pa. Super. , 403 A.2d 95 (1979); Fidelity Bank v. Act of America, Inc., Pa. Super. , 392 A.2d 784 (1978); Christie v. Open Pantry Marts, 237 Pa. Super. 243, 352 A.2d 165 (1975).
It is well settled that "(o)ne who petitions to open a confessed judgment must act promptly and aver a meritorious defense," Wenger v. Ziegler, 424 Pa. 268, 272, 226 A.2d 653 (1967). The court below concluded that the prompt filing requirement was excused. Since this issue was not preserved on appeal, we will not address ourselves thereto; thus the sole issue is whether appellant set forth a meritorious defense.
The standard to be applied by a court in determining whether a moving party has properly averred a meritorious defense so as to require that a confessed judgment be opened and the moving party let into a defense is succinctly set forth at Pa. R.C.P. 2959(e) effective December 1, 1973, which provides in relevant part:
"... If evidence is produced which in a jury trial would require the issues to be submitted to a jury the court shall open the judgment." (Emphasis added).
Moreover, in testing the sufficiency of the evidence, the facts as alleged must be viewed by the court in the exercise of its discretion in the light most favorable to the moving party (the appellant herein) and further, the lower court must accept as true all evidence and reasonable and proper inferences flowing therefrom. (Emphasis added). Greenwood v. Kadoich, 239 Pa. Super. 372, 357 A.2d 604 (1976); M. H. Davis Estate Oil v. Sure Way Oil, supra. As Judge Van der Voort of our court in M. H. Davis Estate Oil v. Sure Way Oil, supra, declared:
"... the test in evaluating the petitioners' evidence is not whether the evidence will probably win a verdict from the jury, but only whether there is sufficient evidence to allow the disputed issue to go to the jury."
The sole issue, therefore, is whether the lower court abused its discretion or committed an error of law when it found that appellant failed to aver a meritorious defense.
The law of this Commonwealth in this area is governed by the polestar case of Pollard & Brant Inc. v. Stein, 81 Pa. Super. 374, 376-77 (1923), which held:
"It seems to be well settled that it is poor practice to open a judgment to establish a defense which has originated since the rendition of it. 'To a judgment there can be no set-off of a debt not in judgment. One judgment may be set-off against another, through the equitable powers of the court, but to a judgment ripe for execution, there can be but one answer to-wit: Payment pure and simple': Thorp v. Wegfarth [Wegefarth] 56 Pa. 82; Rishel v. Crouse, 162 Pa. 3, [29 A. 123]. This broad statement, however, must be qualified in this respect that when the subject-matter of defense is attached to the judgment or to the consideration on which it rests, the court under its equitable powers will entertain such a petition and if the facts warrant will open the judgment: Beaty v. Bordwell, 91 Pa. 438; Stroud's App., 109 Pa. 326." (Emphasis added).
Thus, there is no doubt that the lower court ruled properly as to appellant's allegations 1, 3 and 4 dealing with unauthorized extras, after-discovered construction defects and violations of the Unfair Trade Practices and Consumer Protection Act.
We believe that allegations 1, 3 and 4 neither attack the validity nor the amount of the instant judgment; rather, they advance separate and distinct defenses or causes of action which fall far outside the Pollard & Brant (supra) exception to the general rule. We therefore agree with the lower court's conclusion that appellant's remedy as to these allegations is the commencement of an independent action in assumpsit and/or trespass. "Then, if a judgment is obtained thereunder, it may, of course, be set-off against the within judgment." For an analogous situation and conclusion, see Fidelity Bank v. Act of America, Inc., 258 Pa. Super. 261, 392 A.2d 784 (1978).
Allegation #2, however, is more troublesome. Does not this allegation (to-wit: Appellee's failure to consideration for the execution of the promissory note constitute the averment of a meritorious defense in that they (the eleven Punch List items*fn1 constitute the subject matter of defense to the judgment and are the consideration on which it (the execution of the promissory note) rests? Frankly, we feel that it does, and if our inquiry would stop there, we would reverse and open the confessed judgment on that basis. However, our inquiry must go one step further.
We must review the entire record in light of Pa.R.C.P. 2959(e) for the purpose of determining only whether appellant has produced sufficient evidenced to allow the disputed issue to go to the jury.
We have done so and conclude that in the total absence of any testimony as to the alleged monetary damages suffered by appellant as a result of appellee's alleged failure to complete or correct the eleven (11) Punch List items, appellant has failed to produce sufficient (or any) evidence to allow the disputed issue to go to the jury. Hence, we affirm.
CAVANAUGH, J., files a Memorandum Dissenting Statement.
I agree with the majority that the lower court properly denied appellant's petition to open the confessed judgment based upon allegations 1, 3 and 4. However, I do not find that result to be appropriate as to allegation 2.
The majority concedes, and I agree, that appellee's failure of consideration for execution of the promissory note, i.e., failure to complete and/or correct eleven items listed on appellant's punch list, constitutes a meritorious defense which would ordinarily require the opening of a judgment. Notwithstanding the presentation of a meritorious defense, the majority nonetheless refuses to open the confessed judgment because appellant failed to present testimony regarding any monetary damages suffered as a result of appellee's alleged dereliction.
I find nothing in our decisional law, nor has any case been cited by the majority, which requires an appellant who raises a meritorious defense in a petition to open judgment to demonstrate actual monetary damages. I would open the confessed judgment because appellant produced sufficient evidence, absent proof of damages, to allow the issue to go to the jury.