Appellant, North Point I Condominium Association, entered into a settlement agreement with Defendant/Appellee Harry Burney dated April 18, 2015 (the “Contract"). The Contract contains a confession of judgment clause.
After Defendant breached the Contract, Plaintiff filed a confession of judgment on February 21, 2017. Plaintiff filed the writ of execution on February 14, 2018.
On July 7, 2018, more than sixteen months after the judgment, Defendant filed a Motion to Stay Execution. Defendant Burney does not dispute the amounts due or his repeated breaches of the various settlement agreements, including the Contract.
On July 17, 2018, the Trial Court issued an Order and Opinion stating, inter alia, that the Confession of Judgment was stricken, finding that, “because the judgment arises out of defendant's failure to pay homeowner dues and assessments, … the judgment was entered by confession in connection with a consumer credit transaction." (Op. at 3). Plaintiff filed a Motion for Reconsideration on July 24, 2018, which was denied July 31, 2018. Plaintiff appealed to this Honorable Court on August 14, 2018.
CAI filed an amicus brief in this case for a few reasons: (1) homeowners associations (HOAs) in any of the states that allow confessions of judgment could be affected by the PA Superior Court's ruling in this case, even if it is just persuasive and not binding authority; (2) a ruling against appellant in this case would chill the possibility of settlement by all associations that wish to settle regarding past-due debt of homeowners; and (3) HOAs already struggle to collect from delinquent unit owners, the law in most states subordinates debt for assessments to that of first mortgage holders, so foreclosure is rarely a practical option, and any further hindrance for such collection (which a ruling against appellant could be) would make collection that much more difficult. See Goldmintz, Daniel. Lien Priorities: The Defects of Limiting the “Super Priority" For Common Interest Communities, Cardozo Law Review, Vol. 33, No.1, at 268, Fall 2011.
CAI advances the arguments suggested in the reasons stated above and urges the Court that public policy dictates that parties settle matters out of court whenever efficiency, fairness, and economy dictate. To affirm the Trial Court's striking of appellant's confessed judgment would mean that HOAs would not settle out of court anymore but would insist on obtaining judgments against debtors even if the parties wished to enter into a formal settlement agreement. Debtors would have judgments on their records, showing up on their credit reports, and rue the day they decided to buy into an HOA in the first place.
Status: Superior Court Reversal Memorandom
Brief Author: Henry F. Reichner, Esq.
CAI Amicus Review Panel: Mr. Robert Diamond, Esq., Chair of Amicus Committee, Mr. Edmund Allcock, Esq. (MA), Ms. Karyn Kennedy Branco, Esq. (NJ), Mr. Gary Kessler, Esq. (CA), and Mr. Steve Sugarman, Esq. (PA)