The opinion of the court was delivered by: DuBOIS, J.
These three related cases center upon defendants' obligations under a loan agreement in which plaintiff Webster Capital Finance, Inc. ("Webster Capital" or "plaintiff") financed the purchase of an aircraft by defendant C.B. Aviation, LLC ("C.B. Aviation"). Alleging that defendants defaulted on their loan repayment and guaranty obligations, plaintiff filed Complaints in Confession of Judgment for Money against all three defendants, relying on the warrant-of-attorney provisions in its agreements with defendants. On October 5, 2010, the Clerk of Court entered judgment against all three defendants in the amount of $4,259,299.72 plus interest.
Presently before the Court are defendants' Motions to Open Confessed Judgment and Motions for Stay. In their motions, defendants argue that: the judgments should be opened; execution of the confessed judgments should be stayed pending resolution of C.B. Aviation's litigation against a third party, Hawker Beechcraft Corporation ("HBC"), the manufacturer of the aircraft; and the attorney's fees in the warrant-of-attorney clauses are unreasonable and should be modified. For the reasons set forth below, defendants' motions are denied. The judgments will not be opened and execution of those judgments will not be stayed pending resolution of C.B. Aviation's litigation with HBC. The Court concludes, however, that the 20% attorney's fee included in the judgments is unreasonable and that the judgments should be modified so as to provide only a reasonable attorney's fee, and to accurately reflect the amount of defendants' remaining indebtedness to plaintiff. The Court will conduct a hearing limited to receipt of evidence and argument on those issues, and will thereafter modify the judgments. Execution on the judgments is stayed until the Court issues an order modifying the judgments.
On February 20, 2008, plaintiff and C.B. Aviation entered into a contract-the Aviation Master Loan and Security Agreement No. 57416 ("Agreement")-in which plaintiff, as lender, agreed to finance C.B. Aviation's purchase of a 2002 Raytheon Aircraft Company Model 390 airplane ("the aircraft") from HBC, the manufacturer of the aircraft. (Compl., Exs. A, C; C.B. Aviation's Mot. to Open Confessed J., at 3.) Under the Agreement, C.B. Aviation granted to plaintiff a security interest in the aircraft; all proceeds (cash or non-cash), insurance proceeds, and any other rights arising from the disposition of the aircraft; and any concurrent payment or security deposit given by C.B. Aviation to plaintiff. (Id. ¶ 3.) Plaintiff filed a UCC Financing Statement on February 26, 2008, perfecting its security interest in the collateral. (Compl. ¶ 8; id., Ex. H.)
On February 20, 2008, defendants Chetty Builders, Inc. ("Chetty Builders") and Carl E. Chetty ("Chetty") (collectively, "the Guarantors") each executed a Continuing Guaranty ("Guaranty") in which they "unconditionally and absolutely guarantee[d] to [plaintiff] the prompt payment of all indebtedness . . . due to plaintiff" in connection with the Agreement between plaintiff and C.B. Aviation. (Compl. Against Chetty Builders, Ex. J; Compl. Against Chetty, Ex. J.) The Guarantors ratified and confirmed the existence of the Guaranties on September 24, 2009. (Compl., Ex. I.)
C.B. Aviation began making monthly payments pursuant to the Agreement in April 2008. (C.B. Aviation's Mot. to Open Confessed J., at 4; id., Ex. A.) In early 2009, Chetty placed the aircraft with a charter company and used the proceeds from chartering the aircraft to fulfill its monthly debt obligations under the Agreement. (Id. at 4.) In late August 2009, the charter company arranged for the aircraft to undergo routine maintenance through Hawker Beechcraft Services in Indianapolis, Indiana. (Id.) During an inspection, Hawker Beechcraft Services discovered latent cuts in the composite structure of the aircraft. (Id.) Based on HBC's alleged admission that these cuts were manufacturing defects, Chetty, on behalf of C.B. Aviation, rescinded the aircraft purchase agreement between C.B. Aviation and HBC, revoked acceptance of the aircraft, and filed suit against HBC in this Court. (Id. at 3-4.) The aircraft remains at HBC's facility in Indianapolis, Indiana. (Pl.'s Emergency Mot. for Permission to Take Possession of Secured Collateral, at 3.)
A. Alternative Payment Arrangements
Because of the claimed manufacturing defect, C.B. Aviation could no longer charter the aircraft. As a result, C.B. Aviation entered into a series of alleged alternative payment arrangements with plaintiff.
1. Amendment to the Agreement
On September 24, 2009, C.B. Aviation entered into an Amendment and Restatement of Loan/Lease Agreement ("the Amendment") with plaintiff, which restructured the payment schedule under the original Agreement. (Compl., Ex. I.) The Amendment was also signed by the Guarantors, who "ratified and confirmed the existence of their respective guaranties" and agreed that the Amendment modified each Guaranty to reflect the terms of the Amendment.
(Id.) Under the restructured schedule, C.B. Aviation agreed to repay a principal balance of $3,497,438.26 in forty-seven consecutive monthly payments. (Id.) Specifically, the Amendment provided that "commencing on August 1, 2009," C.B. Aviation would make: (1) two payments of "interest only" in the amount of $16,872.03; (2) followed by one payment of "interest only" in the amount of $16,327.77; (3) followed by forty-three consecutive monthly payments of principal and interest each in the amount of $30,708.87; (4) followed by one payment of principal and interest in the amount of $2,837,926.11. (Id.) Although the Amendment states that it was "executed and effective as of July 1, 2009," (id.), the parties in fact did not sign the Amendment until September 24, 2009. (Compl., Ex. I; Pl.'s Obj. to C.B. Aviation's Mot. to Open Confessed J., at 7-8.)
In addition to the September 24, 2009 Amendment, C.B. Aviation alleges that plaintiff "forced C.B. Aviation to sell a helicopter that [plaintiff] previously financed, so that [plaintiff] could apply the proceeds to the loan for the [aircraft]." (C.B. Aviation's Mot. to Open Confessed J., at 5.) Plaintiff's March 2010 internal emails, which were forwarded on to Carl Chetty, reveal that plaintiff received $523,150 from the sale of C.B. Aviation's helicopter-$454,505.33 of which it retained as a security deposit on another loan, and $68,644.67 of which it held for "FUTURE application to" C.B. Aviation's payments on the aircraft loan. (Id., Ex. B.)
3. Alleged Agreement Regarding the Apartment Building Sales Proceeds C.B. Aviation alleges that "[d]uring the summer of 2010, Chetty also decided to sell a portion of his interest in an apartment building he owned in Chester County, Pennsylvania," and that plaintiff agreed that the "proceeds of this sale could be used toward future payments on the outstanding balance on the Loan Agreement." (C.B. Aviation's Mot. to Open Confessed J., at 6.) Plaintiff does not dispute that the parties discussed the possibility that plaintiff might accept proceeds from the sale of the apartment building. (Pl.'s Obj. to C.B. Aviation's Mot. to Open Confessed J., at 13.) Plaintiff asserts, however, that it never reached an agreement with any of the defendants to modify the terms of the loan, and "there were never any discussions that consisted solely of forbearing all performance for the possible proceeds from a single parcel of real estate." (Id. at 13 n.7.)
Regardless of whether plaintiff agreed to accept proceeds from the anticipated apartment building sale, C.B. Aviation admits that "[a]t the end of the summer, . . . issues arose with regard to the sale of the building, and Chetty immediately advised Webster Capital that the funds for such payment would not be available as soon as he originally anticipated." (C.B. Aviation's Mot. to Open Confessed J., at 6.)
B. C.B. Aviation's Alleged Default
C.B. Aviation stopped making monthly loan payments to plaintiff after March 4, 2010. (Id., Ex. A.) The Agreement defines as an "event of default" the "failure to pay any installment(s) due [under the Agreement] . . . on the due date therefor." (Compl., Ex. A.) By letter dated September 1, 2010, plaintiff notified the defendants that C.B. Aviation was in default under the Agreement and that plaintiff was accelerating the indebtedness and demanding payment "of such accelerated balance, together with any and all applicable sales tax and late fees[,] . . . on or before September 13, 2010. (Id., Ex. K.)
C. Dispute Over Payments Made by C.B. Aviation on the Aircraft Loan
Attached to defendants' motions is a check register which defendants claim reflects monthly payments made by C.B. Aviation to plaintiff for the aircraft loan. According to the check register, the following amounts were paid to plaintiff from August 2009 through March 2010:
August 6, 2009: $36,214.51