United States District Court, E.D. Pennsylvania
G. SMITH, J.
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.
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.
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. 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.
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.
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.
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.
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
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,
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. Id. at
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.
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,
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).
Cedar Crest never provided a written waiver of any Lease
provision. Tr. at 98.
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. Id. at 56, 58-59, 66, 121,
Cedar Crest did not contact D'Eletto about the check
bouncing. Id. at 60, 80.
one from Bosselli ever moved into or otherwise used the
leased space ...