Complete Business Solutions Group, Inc. v. HMC Inc.

          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. ...