BENEFICIAL MUTUAL SAVINGS BANK v. PHILIPPOPOULOS
MEMORANDUM. ( SIGNED BY HONORABLE EDUARDO C. ROBRENO ON 8/7/12. ) 8/9/12 ENTERED AND COPIES E-MAILED.(gn, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
BENEFICIAL MUTUAL SAVINGS BANK,
ANGELICA J. PHILIPPOPOULOS,
M E M O R A N D U M
EDUARDO C. ROBRENO, J.
AUGUST 7, 2012
Beneficial Mutual Savings Bank (“Plaintiff”) brought
this diversity action against Angelica J. Philippopoulos
(“Defendant”) for entry of judgment pursuant to a confession of
judgment Defendant executed in favor of Plaintiff. The Court
entered judgment in favor of Plaintiff based on the confession
of judgment. Defendant now moves to strike or open the judgment
and to stay certain discovery. For the reasons that follow, the
Court will deny both motions.
On September 18, 2008, Plaintiff extended a
construction loan (“the Loan”) to Wilson Development Associates,
L.L.C. (“WDA”), in the principal amount of $12,375,000, secured
by the guarantee of Defendant and a mortgage on certain real
property. Compl. ¶ 4; Construction Loan Agreement 1 (Sept. 18,
2008), Compl. Ex. A; Line of Credit Note 1, Compl. Ex. B. On
that same day, Defendant executed and delivered to Plaintiff two
documents to induce Plaintiff to make the Loan. First, Defendant
executed a personal guaranty (“the Guaranty”) under which she
became the unlimited and unconditional surety for all
obligations, indebtedness, and liabilities of WDA. Compl. ¶ 5;
Guaranty and Suretyship Agreement ¶¶ 1-3 (Sept. 18, 2008),
Compl. Ex. C. Second, Defendant executed a warrant of attorney
to confess judgment (“the Warrant”), under which Defendant
authorized confession of judgment in favor of Plaintiff and
against Defendant in the event of breach or default of the Loan,
the mortgage securing the loan, or the Guaranty (collectively,
“Loan Documents”).1 Compl. ¶ 6; Warrant of Attorney to Confess
Judgment 1 (Sept. 18, 2008), Compl. Ex. D.
The Warrant provides in part:
Borrower and Guarantor [Defendant] do hereby authorize
you [Clerk or any attorney of any court of law in
Pennsylvania] to appear for Borrower or Guarantor one
or more times in any court of competent jurisdiction,
in case of breach of the conditions or obligations
contained in the Loan Documents or upon the occurrence
of an event of default, and to confess judgment for
the principal debt, interest and costs due under the
Loan Documents against the Borrower or Guarantor for
which this instrument (or a copy hereof verified by
affidavit of Lender or anyone authorized to make such
affidavit on behalf of Lender) shall be a sufficient
WDA is in default on the Loan. Compl. ¶ 7. The amount
of $10,716,995.16 is due immediately to Plaintiff, and interest
continues to accrue at a per diem rate of $1,026.19. Compl. ¶¶
On April 4, 2011, Plaintiff filed a Complaint in
Confession of Judgment against Defendant that demands judgment
against Defendant. Compl. ¶ 15. On May 4, 2011, the Court
entered judgment in favor of Plaintiff and against Defendant in
the amount of $10,716,995.16, with continuing interest at a per
diem rate of $1,026.19. Judgment 1, ECF No. 7.
On June 14, 2011, Thomas D. Bielli, Esquire, noticed
his appearance on behalf of Defendant. Notice 1, ECF No. 9.
On March 1, 2012, Plaintiff’s counsel issued a
subpoena duces tecum against Defendant. Mot. to Stay Ex. A, ECF
No. 12. The subpoena commands Defendant’s appearance at a
deposition at a location in Stamford, Connecticut, and demands
production of certain financial documents. Id.
On March 20, 2012, Defendant moved to strike or open
the confessed judgment, Mot. to Strike or Open Confessed J. 1,
ECF No. 11, and moved to stay her deposition, Mot. to Stay 1.
Defendant moves to strike or open the judgment and to
stay certain discovery. The Court will deny both motions.
Motion to Strike or Open Confessed Judgment
In certain circumstances, a party may move for relief
from a final judgment. Fed. R. Civ. P. 60(b). Although the
Federal Rules of Civil Procedure do not expressly provide a
mechanism for striking or opening a confessed judgment, Rule
60(b) procedurally governs an attack on a judgment entered by
confession in federal court. Resolution Trust Corp. v. Forest
Grove, 33 F.3d 284, 288 (3d Cir. 1994). Therefore, a party
seeking relief from a confessed judgment must do so by filing a
motion to strike or open the judgment. Ohio Cas. Ins. Co. v. LRS
Constr., Inc., No. 07-331, 2008 WL 4533677, at *2 (W.D. Pa. Oct.
3, 2008); see also Pa. R. Civ. P. 2959(a)(1). Given that
confessions of judgment are a creature of state law, state law
governs the substantive aspects of the motion. See Ohio Cas.,
2008 WL 4533677, at *2.
Defendant raises two arguments in support of her
Motion to Strike or Open the Confessed Judgment: (1) that
Plaintiff did not properly serve Defendant with the Complaint;
and (2) that a certain post-judgment agreement is not
enforceable for lack of consideration. Both arguments lack
Service of Complaint
First, Defendant argues Plaintiff did not properly
serve the Complaint pursuant to Federal Rule of Civil Procedure
4(e). Plaintiff filed an Affidavit of Service attesting that, on
May 3, 2011, a process server personally served copies of the
Complaint in Confession of Judgment and Notice under
Pennsylvania Rule of Civil Procedure 2958.1 on Defendant.2 Aff.
of Service 1, May 6, 2011, ECF No. 8. An exhibit attached to the
Affidavit of Service describes the person who received the
Complaint and Notice as a sixty-five-year-old, five-feet-andfour-inches-tall female. Id. Ex. A. Defendant attaches an
affidavit to her motion swearing that “[she] was never
A judgment creditor may execute on a confessed
judgment by filing a praecipe for a writ of execution. Pa. R.
Civ. P. 2956.1(c), 2957. However, a judgment debtor must be
served with written notice at least thirty days before the
filing of the praecipe for a writ of execution. Id. 2958.1(a).
The record does not reflect, nor do the parties
assert, that Plaintiff executed on the confessed judgment. Nor
does the record reflect that Plaintiff sought to execute on the
judgment by filing a praecipe for a writ of execution. At most,
Defendant asserts that Plaintiff represented to Defendant that
“[Plaintiff] intended to move forward to exercise its rights and
remedies.” Mot. to Strike or Open Confessed J. 2. Defendant
never refers to any attempt to execute on the confessed judgment
against Defendant and fails to even refer to Rule 2958.1.
personally served the Summons in this matter.”3 Mot. to Strike or
Open Confessed J. Ex. G. And her attorney represents that
Defendant stands five-feet-and-nine-inches tall and is
approximately forty-years old. Id. at 4.
Defendant’s argument is unavailing. Defendant waived
her right to challenge entry of confessed judgment based on lack
of service. That is, Defendant consented to entry of confessed
judgment without notice or an opportunity to object.4 Waiver 2.
And Defendant does not now claim that her waiver is invalid or
Indeed, the docket in this case does not reflect that
the Clerk issued a “summons,” nor does Pennsylvania law require
issuance of summons before entry of a confessed judgment.
Specifically, Defendant made the following waiver:
The undersigned waives and releases Lender and
said attorneys from all errors and defects whatsoever
of a procedural nature in entering any such action or
judgment, or in causing any such writ or process to be
issued, or in any proceeding thereon or concerning the
. . . .
THE UNDERSIGNED HEREBY
MAY BE ENTERED AGAINST
OPPORTUNITY TO OBJECT, AND
WITH AN ATTORNEY REGARDING
PROVISIONS OF THIS WARRANT.
ACKNOWLEDGE THAT JUDGMENT
THEM WITHOUT NOTICE OR
THAT THEY HAVE CONSULTED
THE LEGAL EFFECT OF THE
Defendant did not move to strike or open the confessed
judgment on grounds that the Warrant, much less any of the Loan
Documents, is invalid or unenforceable, that the judgment was
Indeed, requiring formal service of the Complaint
would be inconsistent with the essential purpose of the Warrant.
That is, Defendant, in the Warrant, authorized any attorney of
any court of law in Pennsylvania to appear on her behalf in the
event of a default and to confess judgment for the debt due
against her. Defendant has not pointed to any authority
suggesting that failure to serve the judgment debtor with the
Complaint and notice, before entry of the confessed judgment,
under the Federal Rules of Civil Procedure is a valid ground to
strike or open a confessed judgment, regardless of whether the
debtor waives all procedural defects relating to, and notice of,
the confessed judgment.6
confessed outside of the authority granted in the Warrant, or
that the Loan is not in default.
In fact, at least one court has recognized just the
The agreement to confess judgment obviates the
necessity for a formal commencement of action, service
of process, pleading, a trial of the issues and
judicial determination thereof. An authorization to
confess judgment is in fact a waiver of the provisions
of the aforesaid Rules governing the steps taken
through the rendition of judgment as to the amount of
the debt which is due. Such a waiver is in no way
incompatible with the Rules which, to the extent they
have not been waived, continue in effect as to the
Clerk’s ministerial duty of recordation or entry of
the confessed judgment, and as to any post judgment
proceedings such as stay of enforcement, execution,
relief from judgment, appeal, etc.
Nat'l Leasing Corp. v. Williams, 80 F.R.D. 416, 418-19 (W.D. Pa.
Nor is Defendant’s waiver, as applied here,
inconsistent with due process. A judgment debtor may waive his
right to notice and an opportunity to be heard before judgment
is confessed against him, consistent with due process, so long
as he knowingly and voluntarily waives his rights. Choi v. Kim,
50 F.3d 244, 249 & n.10 (3d Cir. 1995). Here, Defendant does not
argue the Warrant was coerced or that her consent was not
knowing and voluntary. Nor does Defendant argue she lacked
notice and an opportunity to be heard before execution of the
judgment.7 Therefore, Defendant’s waiver was proper and did not
offend her constitutional right to due process. See id.
Second, Defendant argues that a certain Letter
Agreement is unenforceable against Plaintiff for lack of
consideration.8 Plaintiff, Defendant, and WDA entered into a
In fact, Defendant’s counsel entered his appearance
after entry of the confessed judgment and Defendant has even
taken measures, albeit unsuccessfully, to settle the defaulted
debt. See infra note 9.
Furthermore, Plaintiff made other efforts, apart from
personal service, to serve Defendant. On April 5, 2011,
Plaintiff served a copy of the Complaint and Rule 2958.1 notice
by Certified Mail, Return Receipt, and by First Class Mail. Aff.
of Service 1, Mar. 27, 2012, ECF No. 17. The Certified Mail
package was returned as “unclaimed.” Id. The First Class Mail
package was not returned. Id.
Defendant attached a Letter Agreement between
Plaintiff, Defendant, and WDA, dated February 2, 2012. Mot. to
Letter Agreement where, inter alia, Defendant agreed that
Plaintiff properly served the Rule 2958.1 notice, which is
required prior to execution on the confessed judgment.9 The
alleged relevancy of the Letter Agreement to these claims is
unclear, but, in any event, Defendant’s reliance on any terms of
the Letter Agreement is meritless.
First, Defendant’s stipulation to Rule 2958.1 notice
for purposes of execution on the confessed judgment in the
Letter Agreement is irrelevant to Defendant’s argument that
Plaintiff failed properly to serve Defendant before entry of
judgment by confession. Second, as Defendant herself argues, the
Strike or Open Confessed J. Ex. F. The letter provides that
Plaintiff obtained confessed judgments against WDA and
Defendant. Id. at 1. Plaintiff obtained a judgment against WDA
in the U.S. District Court for the Eastern District of
Pennsylvania (Civil Action No. 11-2347), which was then
transferred to the U.S. District Court for the District of New
Jersey (Civil Action No. 11-168). Id. at 1-2. Plaintiff executed
on the WDA judgment through a U.S. Marshal’s sale of the real
property mortgaged to secure the Loan. Id. at 2. The Letter
Agreement does not indicate Plaintiff has yet attempted to
execute on the confessed judgment against Defendant.
In the Letter Agreement, WDA and Defendant agreed,
inter alia, to pay Plaintiff a reduced settlement amount of
$6,275,000, and Plaintiff agreed to continue the U.S. Marshal’s
sale of the mortgaged property. Mot. to Strike or Open Confessed
J. Ex. F, at 2. Furthermore, WDA and Defendant affirmed that all
Rule 2958.1 notices were timely and properly issued and served.
Defendant represents that the reduced payment was not
made pursuant to the Letter Agreement because WDA declared
bankruptcy, and Plaintiff, therefore, informed Defendant and WDA
that it would exercise its rights under the confessed judgments.
Mot. to Strike or Open Confessed J. 2.
Letter Agreement is unenforceable for lack of consideration.
Defendant does not argue that the Guarantee, the Warrant, or any
other Loan Documents for that matter, lacked consideration,
which would, of course, be a relevant argument on a Rule 60(b)
motion. See Resolution Trust, 33 F.3d at 292 (noting that
failure of consideration for surety agreement is “meritorious
defense for which a confessed judgment can be opened”). And
Defendant fails to explain how the allegedly unenforceable
agreement the parties formed after the entry of confessed
judgment has any bearing on the validity of the judgment
confessed in this action. In fact, it is difficult to imagine a
proper purpose for advancing such an argument but to harass or
unreasonably and vexatiously multiply the proceedings. See Fed.
R. Civ. P. 11(b)(1); 28 U.S.C. § 1927 (2006).
Therefore, the Court will deny Defendant’s Motion to
Strike or Open Confessed Judgment.
Motion to Stay Discovery
Plaintiff served a subpoena duces tecum on Defendant
that commands her appearance at a location in Stamford,
Connecticut, and demands the production of certain financial
documents. Defendant argues that the Court should stay her
deposition because “such production of documents and deposition
would become irrelevant should this Court rule to strike the
confessed judgment.” Mot. to Stay 2. Because the Court will not
strike or open the confessed judgment, the Court will deny the
Motion to Stay.
For the foregoing reasons, the Court will deny the
Motion to Strike or Open Confessed Judgment and deny the Motion
to Stay. An appropriate order will follow.
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