United States District Court, E.D. Pennsylvania
MEMORANDUM
Juan
R. Sánchez, C.J.
Plaintiff
Complete Business Solutions Group, Inc. filed a confession of
judgment against Defendants HMC, Inc. and Kara DiPietro. The
Philadelphia Court of Common Pleas entered judgment for
Complete Business and against HMC and DiPietro for $11, 985,
719.32. HMC and DiPietro removed the case to federal court
and moved to strike or open the judgment. Because the
confession of judgment has errors on its face, the Court will
grant HMC's motion to strike.
BACKGROUND
[1]
HMC is
a construction company owned by Kara DiPietro. Complete
Business is a company that buys future receivables from small
businesses.[2] Over the course of a year, Complete
Business spent approximately $10.8 million to buy
approximately $14.4 million of HMC's future receivables.
Complete Business made this purchase over a series of five
transactions, each of which was memorialized in a written
contract between Complete Business and HMC.
These
contracts had “warrants of attorney” which
allowed Complete Business to file for a confession of
judgment. The warrants of attorney provided:
Upon the occurrence of a violation of the representations and
warranties made heretofore by merchant, merchant irrevocably
authorize[s] and empower[s] any attorney or any clerk of any
court of record to appear for and confess judgment against
merchant for such sums as are due or may become due under
this merchant agreement.
Pl.'s Answer to Notice of Removal Ex. A 6. At the
beginning of each contract, it explains that the term
“merchant” refers to “HMC
incorporated.” Id. at 2. Kara DiPietro signed
each contract “for the seller/merchant.”
Id.
Attached
to these contracts was a “Disclosure for Confession of
Judgment.” The disclosure stated, “the merchant
acknowledges and agrees that the above documents contain
provisions under which oblige [Complete Business] may enter
judgment by confession against the merchant.”
Id. at 9. Kara DiPietro signed each disclosure. Next
to her signature on the disclosures were the words:
Seller/merchant By: Kara DiPietro
Id. DiPietro also signed a separate guaranty that
made her personally liable for any money HMC did not pay
under the contracts. Id. at 10. In this guaranty,
DiPietro was referred to as the “guarantor” and
HMC was referred to as “merchant.” Id.
The guaranty did not include a warrant of attorney.
According
to Complete Business, HMC owes it approximately 11 million
dollars in receivables under these contracts. On May 13,
2019, it filed a complaint and a confession of judgment in
the Philadelphia Court of Common Pleas. Along with its
complaint, Complete Business filed six agreements signed by
HMC. One of those six agreements was between HMC and Fast
Advance Funding (a separate corporation owned by the same
person as Complete Business). Complete Business conceded it
included the Fast Advance Funding agreement by mistake.
Pl.'s Answer at 21.
The
Court of Common Pleas entered a confession of judgment in
favor of Complete Business and against HMC and DiPietro. The
judgment was for $11, 985, 719.32, including $7, 501.04 in
interest and $570, 391.35 in attorneys' fees. HMC and
DiPietro removed this case to federal court and moved to
strike or open the confessed judgment.
DISCUSSION
A
confession of judgment is a Pennsylvania procedure that lets
a plaintiff obtain a judgment while skipping almost all the
steps in an ordinary litigation. Pa. R. Civ. P. 2950-2967.
The defendant, however, must agree to this procedure in
advance by signing a warrant of attorney. Pa. R. Civ. P.
2952(a)(8), 2962. After the court enters a confession of
judgment, the defendant's only remedy is to move to
strike or open the judgment. Pa. R. Civ. P. 2959.
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