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[U] DNB First, N.A. v. Fretz

Superior Court of Pennsylvania

January 13, 2014

DNB FIRST, N.A., Appellee
v.
WILLIAM B. FRETZ, JR., Appellant DNB FIRST, N.A., Appellee
v.
WILLIAM B. FRETZ, JR., Appellant

NON-PRECEDENTIAL DECISION

Appeal from the Order January 22, 2013 in the Court of Common Pleas of Chester County Civil Division at No.: 2011-06531.

BEFORE: GANTMAN, J., SHOGAN, J., and PLATT, J.[*]

MEMORANDUM

PLATT, J.

In these consolidated cases, Appellant, William B. Fretz, Jr., appeals from the trial court's orders denying his petition to strike or open the judgment entered by confession, and the related order denying his motion for sanctions. We affirm.

Appellant and his business associate, John Irvine, are each 49.95% limited partners in KI Real Estate Associates, LP (KI).[1] On October 23, 2006, Appellee, DNB First, N.A., extended two loans to KI: specifically, an acquisition and improvements loan in the amount of $1, 797, 000.00, and a construction loan in the amount of $1, 595, 000.00 (collectively, the 2006 Loans). The purpose of the loans was to finance construction of six luxury townhomes in a community located in Willistown Township, with a target sales price of approximately $750, 000.00 for each home. KI executed promissory notes in favor of Appellee for each loan. Appellant and Irvine executed a guaranty unlimited in amount in connection with both notes. The guaranty contains a warrant of attorney, which reads as follows:

The undersigned hereby irrevocably authorize the Prothonotary or any attorney of any court of record to appear and confess judgment hereon against the undersigned, or any of them, for the amount for which the undersigned may be or become liable to [Appellee] under this Guaranty, with or without default . . . . The undersigned waive the right to any stay of execution and the benefit of all exemption laws now or hereafter deemed to exhaust the power to confess judgment granted herein, whether or not any such exercise shall be held by any [c]ourt to be invalid, void, or voidable, but the power shall continue undiminished and may be exercised from time to time as often as [Appellee] shall elect, until all sums payable or that may become payable by the undersigned have been paid in full.

(Guaranty, 10/23/06, at unnumbered page 2) (emphasis added; original emphasis omitted).

On June 19, 2008, KI and Appellee entered into an amended promissory note modifying the original 2006 Loans, providing $700, 000.00 in additional financing to complete construction of the townhomes (2008 Loan). Appellant signed the note on behalf of KI as "[m]anaging [m]ember of KI Real Estate Associates, LLC, its general partner, and in his personal capacity as Guarantor of the [2006] Loans." (Amended and Restated Promissory Note Modification, 6/19/08, at unnumbered page 6).[2] The 2008 Loan includes the following provisions extending the terms of the original guaranty:

Recitals.

F. As part of the [2008] Loan, the terms of the [2006] Loans are being modified as per the terms below.

12. Effect of Guaranty. [Appellant] and Irvine, each a Guarantor under the [2006] Loans, hereby join in the terms of this Modification and acknowledge that the terms of the Guaranty Agreement signed by them on October 23, 2006 shall be deemed amended to cover the terms of the [2006] Loans as amended hereby.

(Id. at unnumbered pages 1, 2, 5).

On October 21, 2009, Appellant, Irvine, KI, and Appellee entered a second loan modification agreement, extending up to $275, 000.00 of additional financing to Appellant and Irvine to fund the development project (2009 Loan). The loan modification agreement (2009 Agreement) provides, in pertinent part, as follows:

BACKGROUND

E. As part of the 2009 Loan, the terms of the [2006] Loans and the 2008 Loan are being modified ...

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