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Cedar Crest Professional Park VII LP v. Bosselli Italy LLC

United States District Court, E.D. Pennsylvania

October 21, 2019

CEDAR CREST PROFESSIONAL PARK VII LP, Plaintiff,
v.
BOSSELLI ITALY LLC, Defendant.

          MEMORANDUM OPINION

          EDWARD G. SMITH, J.

         The principal of the defendant company in this case was shocked to open his mailbox one day in March 2017 and discover the entry of a confessed judgment against the company in the amount of nearly $19 million, purportedly for breaching a 2014 commercial lease in Pennsylvania. He soon discovered that his longtime friend forged his name on the agreement. He contacted the plaintiff to resolve the matter, but the parties' discussions were unsuccessful, and this litigation moved forward. After a period of discovery and multiple substitutions of defense counsel, this court held a one-day non-jury trial to resolve the matter.

         The plaintiff asserts that the trial demonstrated that the defendant's principal signed the lease agreement, or, alternatively, that his representations to the plaintiff's principal and a real estate broker who participated in the lease negotiations created apparent authority for the defendant's principal's long-time friend to enter agreements binding on the company. The defendant responds that the trial revealed that its principal did not even know about the lease agreement until he received notice of the confessed judgment in 2017, and he did not authorize- or act in a way that suggested he authorized-his friend to act on his or his company's behalf. The court deems the defendant's principal's testimony that he did not know about the lease agreement to be credible, and further finds that his generalized, limited statements to the real estate broker and the plaintiff's principal about his relationship with his friend would not lead a reasonably prudent person to conclude that this friend had authority to act on his or the company's behalf. Moreover, as neither of the lease contingencies were fulfilled and the plaintiff did not waive the contingencies in writing, as the lease agreement required, the lease was never valid in any event. The court will therefore strike the confessed judgment and enter judgment in favor of the defendant.

         I. PROCEDURAL HISTORY

         The plaintiff, Cedar Crest Professional Park VII LP (“Cedar Crest”), filed a “Complaint for Confession of Judgment for Money” against the defendant, Bosselli Italy LLC (“Bosselli”), in the Court of Common Pleas of Lehigh County, on March 9, 2017.[1] Notice of Removal, Ex. A, Doc. No. 1-1. On the same date, the Prothonotary of Lehigh County entered a confessed judgment in the amount of $18, 981, 011.70. Notice of Removal, Ex. D, Notice of Filing Judgment.

         Bosselli removed the action to this court on diversity grounds on April 6, 2017. Notice of Removal at 1-2, Doc. No. 1. The next day, Bosselli filed a motion to vacate the confessed judgment. Doc. No. 2. Cedar Crest filed a response in opposition to the motion on April 24, 2017. Doc. No. 5. The court held a hearing on the motion the next day, April 25, 2017, Doc. No. 6, following which the court entered an order opening, but not striking, the confessed judgment. Doc. No. 7. The court also set a schedule for Bosselli to answer the complaint, the parties to complete discovery, and the parties to submit dispositive motions and any necessary pretrial filings. Id. Per the court's order, Bosselli filed an answer on May 8, 2017. Doc. No. 9.

         On May 9, 2017, the court entered an order staying all deadlines due to the parties' representation that they were actively engaged in settlement discussions, Doc. No. 11, but the court lifted the stay and imposed new deadlines on August 7, 2017, when the parties still had not settled. Doc. No. 14. On November 6, 2017, the court granted defense counsel's motion to withdraw after a hearing and gave Bosselli 45 days to retain new counsel. Doc. No. 21. New counsel entered a notice of appearance on behalf of Bosselli on December 18, 2017, Doc. No. 24, following which the court set new discovery and trial deadlines. Doc. No. 28. The court extended those deadlines again on July 10, 2018. Doc. No. 43.

         On September 27, 2018, Bosselli's second counsel filed a motion to withdraw, Doc. No. 44, which the court granted after a hearing on October 16, 2018. Doc. No. 48. The court again gave Bosselli 45 days to retain new counsel. Id. The court granted new counsel's pro hac vice motion on December 10, 2018, Doc. No. 54, following which the court entered another scheduling order, Doc. No. 56, which the court extended again on January 3, 2019, Doc. No. 57, and April 3, 2019. Doc. No. 59. Cedar Crest and Bosselli filed pretrial memoranda and proposed findings of fact and conclusions of law between April 16, 2019 and April 24, 2019. Doc. Nos. 64-67. The court then held a one-day non-jury trial on May 9, 2019. Doc. No. 73. Cedar Crest and Bosselli filed their amended proposed findings of fact and conclusions of law on July 8, 2019 and July 9, 2019, respectively. Doc. Nos. 77, 79. Neither party's filing included specific citations to the record, so the court entered an order on July 23, 2019, requiring them both to file revised submissions. Doc. No. 80. Cedar Crest filed its supplemented proposed findings of fact and conclusions of law on August 5, 2019. Doc. No. 81. Bosselli filed its supplemental trial brief and proposed findings of fact and conclusions of law on August 6, 2019. Doc. Nos. 82-83. The court heard oral argument from counsel for the parties on October 17, 2019. The matter is now ripe for resolution.

         II. FINDINGS OF FACT

1. At some time in 2012, David Schumacher (“Schumacher”) suggested that Vincenzo D'Eletto (“D'Eletto”), Bosselli's sole principal and shareholder, lease property in Pennsylvania from David Rothrock (“Rothrock”), Cedar Crest's principal, but D'Eletto declined because he did not have the necessary funding. Tr. of Nonjury Trial, Day 1 (“Tr.”) at 157, Doc. No. 75; see also Id. at 152; Articles of Organization for Bosselli Italy, LLC; Def.'s Ex. 22, Aff. of Vincent D'Eletto at ¶ 2.
2. Despite D'Eletto representing that he was disinterested in leasing Cedar Crest's property, Schumacher continued to negotiate a lease with Rothrock and a real estate broker, Michael Pascal (“Pascal”), without D'Eletto's knowledge. See Tr. at 21, 23, 24, 37, 42, 44, 88, 105-06, 157, 158; see also Am. Suppl. Proposed Findings of Fact and Conclusions of Law on Behalf of Pl. Cedar Crest Professional Park VII LP (“Pl.'s Proposed Findings and Conclusions”) at p. 1, ¶ 4, Doc. No. 81 (“David Rothrock, managing member of Cedar Crest Professional Park VII LP[, ] had numerous discussions with Michael Pascal and David Schumacher regarding a potential lease by Bosselli Italy of commercial space at Cedar Crest Professional Park.”).[2]
3. Schumacher delivered a purportedly executed 2014 lease between Cedar Crest and Bosselli (the “Lease” or the “2014 Lease”), which included D'Eletto's forged signature. Tr. at 55, 58, 161.[3]
4. Rothrock and D'Eletto never spoke or met during the negotiation of the 2014 Lease. Id. at 50.
5. D'Eletto did not sign the 2014 Lease.[4] Id. at 161.
6. The 2014 Lease involved the same building as the 2012 lease. Id. at 51.
7. The 2014 Lease included the following provision:
LEASE CONTINGENCIES: The validity of this Lease is contingent upon the following: (i) Tenant providing Landlord with an Irrevocable Standby Letter of Credit, with terms acceptable to Landlord, drawn on a financial institution acceptable to Landlord, in the amount of the total Annual Minimum Rent for the entire initial term of this Lease; or (ii) a bonded lease from a reputable bank or financial institution acceptable to Landlord in Landlord's sole discretion.

         Agreement of Lease By and Between Cedar Crest Professional Park VII LP, a Pennsylvania Limited Partnership (“Landlord”) and Bosselli Italy LLC, a New York Limited Liability Company, (“Tenant”) for Premises Located at: Building 1249, Suite 300, 200 and 100A South Cedar Crest Boulevard, Allentown, Lehigh County, PA (“Agreement of Lease”) at § 1(L), Doc. No. 1-1 at ECF p. 11.

8. Neither of these contingencies ever occurred. Tr. at 75, 78.

         9. The Lease further stated:

No failure by Landlord to insist upon the strict performance of any agreement, term, covenant or condition hereof or to exercise any right or remedy upon a breach thereof, and no acceptance of full or partial Annual Minimum Rent, Additional Rent, or other charges or payment during the continuance of any such breach, shall constitute or be implied as a waiver of any such breach or of any such agreement, term, covenant or condition. No. agreement, term, covenant or condition hereof to be performed or complied with by Tenant, and no breach thereof, shall be waived, altered or modified except by written instrument executed by Landlord. No. waiver of any breach shall affect or alter this Lease, but each and every agreement, term, covenant and condition hereof shall continue in full force and effect with respect to any other then existing or subsequent breach thereof.

Agreement of Lease at § 24(G).

         10. Cedar Crest never provided a written waiver of any Lease provision. Tr. at 98.

         11. In or around October 2014, Schumacher provided Cedar Crest with a security deposit check that he claimed would be drawn on D'Eletto's attorney's escrow account, but the check bounced.[5] Id. at 56, 58-59, 66, 121, 122-23.

         12. Cedar Crest did not contact D'Eletto about the check bouncing. Id. at 60, 80.

         13. No one from Bosselli ever moved into or otherwise used the leased space ...


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