316 N.W.2d 371, 375 (Wis. 1982) (oral pronouncement by court that two defendants were entitled to judgment triggers res judicata as to both despite failure of clerk formally to enter judgment for second defendant).
Plaintiff cites no case in which a Pennsylvania court refused to accord res judicata effect to a confessed judgment where the debtor received notice from the court that such judgment had been "entered" because a prothonotary failed to complete the ministerial task of formally entering a distinct judgment document and the debtor permitted execution to proceed without ever claiming that there was no final judgment due to such failure. The court predicts that the Pennsylvania Supreme Court would hold on these facts that there is a judgment for res judicata purposes.
Plaintiff's RICO claim is premised on an alleged scheme by defendants fraudulently to induce persons to purchase services and sign notes by misrepresenting the nature and quality of the services provided.
Fraud in the inducement is a ground to open a confessed judgment. Nadolny v. Scoratow, 412 Pa. 488, 195 A.2d 87, 89 (Pa. 1963); Germantown Mfg. Co. v. Rawlinson, 341 Pa. Super. 42, 491 A.2d 138, 141 (Pa. Super. 1985); Van Arkel & Moss Properties, Inc. v. Kendor, Ltd., 276 Pa. Super. 547, 419 A.2d 593, 596 (Pa. Super. 1980). Insofar as plaintiff's RICO and other claims are premised on alleged fraud in the inducement of the service agreement and promissory note, they challenge the validity of the note and are barred. See Klecha, 712 F. Supp. at 47 (res judicata effect of confessed judgment bars claim based on fraud in the inducement); Kravinsky v. Wolk, 1988 U.S. Dist. LEXIS 9134, 1988 WL 84748, *1 (E.D. Pa. 1988) (res judicata effect of denial of petition to open confessed judgment bars RICO claim based on fraud), aff'd, 869 F.2d 589 (3d Cir. 1989). See also Kolb v. Scherer Bros. Fin. Servs. Co., 6 F.3d 542 (8th Cir. 1993) (RICO claim barred where plaintiff could have asserted it in mechanic's lien foreclosure action); Henry, 808 F.2d at 1235-36 (RICO claim barred by res judicata where plaintiff failed to raise underlying fraud allegations in prior foreclosure proceeding).
Plaintiff's remaining § 1983 claim is premised on the absence of a voluntary and intelligent consent by plaintiff to the warrant to confess judgment. Plaintiff could have raised the absence of a valid waiver in a petition to open. See Talacki, 657 A.2d at 1289. Further, she would have enjoyed a presumption that she did not voluntarily and intelligently consent if she could show that her annual income was in fact less than $ 10,000. Id.8 Because plaintiff could have asserted in a petition to open a claim that the averment her income exceeded $ 10,000 was incorrect and she had not intelligently consented to judgment by confession, plaintiff is now barred by res judicata from maintaining a § 1983 claim premised on such alleged falsity and lack of consent. Romah, 600 A.2d at 981.
Plaintiff's claim for rescissionary relief is predicated on a contention that the service agreement and note were procured by fraud and thus could have been asserted as a defense in a petition to open. The claim is barred by res judicata.
Defendants argue that to the extent plaintiff's UTPCPL claim "relates to contract formation and the confession of judgment procedure," it "attacks the validity of the confessed judgment" and is thus barred by res judicata. They are correct. Plaintiff correctly notes that defendants never explicitly pled res judicata as a defense to this claim in their answer to the amended complaint, but argues incorrectly that as a result they are precluded from doing so in their summary judgment motion.
It is true that res judicata is a defense which should be pleaded in the answer. See Fed. R. Civ. P. 8(c). It is not, however, a defense which is specifically waived if not so asserted. See, e.g., Fed. R. Civ. P. 12(h)(1). The failure to assert an affirmative defense in a responsive pleading does not per se result in a waiver, Kleinknecht v. Gettysburg College, 989 F.2d 1360, 1373 (3d Cir. 1993). Plaintiff has not and fairly cannot claim any prejudice from defendants' assertion of the defense by motion. Defendants pled res judicata in their answer as a defense to virtually all of plaintiff's other claims and their failure to reassert it in the portion of the answer addressing the UTPCPL claim appears to be a result of careless oversight. This defense to the UTPCPL claim is predicated on the same underlying facts and legal argument as is the res judicata defense asserted in the answer to the other claims. In such circumstances, defendants may assert res judicata by motion for summary judgment. See, e.g., Turiano v. Schnarrs, 904 F. Supp. 400, 405-06 (M.D. Pa. 1995) (allowing assertion of affirmative defense by way of amended answer or summary judgment motion); In re Air Crash Disaster, 879 F. Supp. 1196, 1200 (N.D. Ga. 1994) (allowing assertion of res judicata defense in amended motion for summary judgment); Carino v. Town of Deerfield, 750 F. Supp. 1156, 1162 (N.D.N.Y. 1990) (res judicata defense may be asserted by way of summary judgment motion). See also Wright, Miller, Federal Practice and Procedure: Civil 2d § 1277.
Defendants are also entitled to judgment on plaintiff's UTPCPL claim insofar as it is based upon alleged violations of regulations promulgated under the Federal Trade Commission Act. In pertinent part, 16 C.F.R. § 444.2 provides that taking an obligation that contains a cognovit or confession of judgment clause in connection with an extension of credit to a consumer in or affecting interstate commerce is an unfair trade practice. Defendants correctly argue that Federal Trade Commission Act regulations do not create private rights. See Naylor v. Case and McGrath, Inc., 585 F.2d 557, 561 (2d Cir. 1978); Holloway v. Bristol-Myers Corp., 158 U.S. App. D.C. 207, 485 F.2d 986, 988 (D.C. Cir. 1973); Valet Apartment Serv., Inc. v. Atlanta Journal and Constitution, 865 F. Supp. 828, 833 (N.D. Ga. 1994); Williams v. National School of Health Technology, Inc., 836 F. Supp. 273, 283 (E.D. Pa. 1993), aff'd, 37 F.3d 1491 (3d Cir. 1994). Pennsylvania courts, however, do look to decisions under the FTCA for aid in interpreting the UTPCPL. Commonwealth v. Monumental Properties, Inc., 459 Pa. 450, 329 A.2d 812, 817 (Pa. 1974); Pirozzi v. Penske Olds-Cadillac-GMC, Inc., 413 Pa. Super. 308, 605 A.2d 373, 376 (Pa. Super. 1992). Nevertheless, it is inconceivable that the Pennsylvania courts which have consistently upheld and enforced confessed judgments in connection with consumer transactions would at the same time hold by reference to § 444.2 that a creditor violates the UTPCPL by taking an obligation with a confession of judgment clause.
Defendants are entitled to judgment as a matter of law on plaintiff's UTPCPL claim insofar as it is premised on 16 C.F.R. § 442.2. The claim is otherwise barred by res judicata as are plaintiff's other pending claims except that asserted under the FDCPA.
Litigation of plaintiff's FDCPA claim for conduct after April 11, 1994 will proceed.
Accordingly, defendant's motion will be granted and plaintiff's cross-motion will be denied. An appropriate order will be entered.
AND NOW, this 3rd day of September 1997, upon consideration of defendants' Motion for Partial Summary Judgment (Doc. # 36) and plaintiff's cross-Motion for Summary Judgment as to Res Judicata Defense (Doc. # 37), consistent with the accompanying memorandum, IT IS HEREBY ORDERED that plaintiff's Motion is DENIED and defendants' Motion is GRANTED and accordingly except for her FDCPA claim, plaintiff's remaining claims in the above action are DISMISSED.
BY THE COURT:
JAY C. WALDMAN, J.