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ELMER H. DRUM v. WILLIAM J. LETA (02/10/86)

submitted: February 10, 1986.

ELMER H. DRUM, APPELLEE,
v.
WILLIAM J. LETA, APPELLANT



Appeal From Judgment Entered September 9, 1985 Court of Common Pleas, Civil Division, Lycoming County No. 84-01014

COUNSEL

Ann S. Pepperman, Williamsport, for appellant.

W. David Marcello, Williamsport, for appellee.

Cavanaugh, Watkins and Lipez, JJ.

Author: Cavanaugh

[ 354 Pa. Super. Page 449]

This is an appeal from an order of the Court of Common Pleas of Lycoming County granting appellant's petition to strike a confessed judgment entered against him, but denying appellant's request for attorney's fees. Appellant raises one issue on appeal. He contends that the lower court erred in ruling that he was not entitled to collect reasonable attorney's fees. We agree, finding that an award of reasonable attorney's fees is mandatory in this instance, where appellant has prevailed in causing a judgment by confession

[ 354 Pa. Super. Page 450]

    against him to be stricken, under 41 P.S. ยง 407(b). Accordingly, we reverse the portion of the order denying appellant attorney's fees, and remand the matter to the lower court for a determination of reasonable fees to be awarded.

This action arose from appellant's default on a loan agreement made between appellant as debtor and Powy's Park Inn, Inc. as creditor. Two instruments were executed on February 15, 1983 pursuant to the loan, a security agreement and a bond. The security agreement granted appellee an interest in certain inventory and equipment of appellant. The loan was also evidenced by the $396,000.00 bond, which contained a confession of judgment clause, and secured by a mortgage on certain property of the appellant. Powy's Park assigned all of its interest in the security agreement and bond to appellee, Elmer Drum.

Appellant stopped making scheduled loan payments in October of 1983. In late November, 1983, appellee instituted mortgage foreclosure proceedings on the mortgage securing the loan. He obtained a judgment against appellant, and bought the property at a sheriff's sale. Appellee also brought a cause of action in replevin, while the mortgage foreclosure proceedings were pending, to obtain possession of the inventory and equipment in which he had a perfected security interest. Although an order for writ of seizure was issued by the lower court, no further action was taken because appellee failed to post the requisite bond. However, appellant did agree to a voluntary repossession of the collateral by appellee.

Meanwhile, appellee confessed judgment against appellant pursuant to the clause in the bond. He filed a judgment by confession with the prothonotary of Lycoming County on May 18, 1984, in the replevin action. Appellee then sought to enforce the judgment entered by confession by a writ of execution, and attempted to levy upon appellant's residence. At that point, appellant filed a petition to strike or open the confessed judgment. Appellant asserted that the judgment by confession was entered improperly, as a result of appellee's failure to comply with Pa.R.C.P. 2951, governing procedures to be followed in confessing judgment.*fn1

[ 354 Pa. Super. Page 451]

For example, the original instrument upon which judgment was confessed was not filed, as required by Pa.R.C.P. 2951(c); no certificate of residence was filed, as required in Rule 2951(a); and no notice was given to appellant of the judgment by confession, until he was served ...


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