M&P Management, L.P. v. Michael D. Williams

The Superior Court determined that Pa.R.C.P. 2959(a)(3), as amended in 1996
(providing that a petition to strike off or open a confessed judgment must be made within
thirty days of receipt of written notice) was intended to eliminate the potential for striking off
or reopening judgments after the thirty-day time period announced in the rule, regardless of
whether the judgment was void, voidable or valid. A void judgment arises when the court
lacks subject matter jurisdiction, and a judgment from a court that lacks jurisdiction cannot
be made valid through the passage of time. Accordingly, we reverse. Because the lower
court did not make a determination as to the status of the confessed judgment in this case,
we remand for a determination of whether the judgment at issue is actually void and the
issuance of an appropriate order based upon that determination.

This question, regarding the intention and interpretation of Pa.R.C.P. 2959(a)(3),
arises from two separate promissory notes memorializing amounts owed to M & P
Management, L.P. ("M & P") by Michael D. Williams ("Williams") and subsequent
amendments to those promissory notes. Both original notes contained cognovit (or
confession of judgment) clauses;1 however, both notes were subsequently amended and the amendments did not contain express cognovit clauses, although they did each contain
incorporation language.2 On July 5, 2001, Appellee M & P, notified Williams that he was in default under both promissory notes. On September 28, 2001, M & P filed a Complaint in
Confession of Judgment for both notes and judgment was entered for $196,102.12 against
Williams. It is not disputed that Williams was properly served with a writ of execution and a
notice of sheriff's sale for the subject properties on February 25, 2003. This notice alerted
Williams to the requirements of Pa.R.C.P. 2959, specifically that a challenge to a
Confession of Judgment must be filed within thirty days of service of a notice of execution.
Pa.R.C.P. § 2959(a)(3).

Williams filed a petition to strike the confessed judgment two years later, on
February 24, 2005, claiming that the confessed judgment was void because the amended
notes did not contain confession of judgment clauses. According to Williams, Egyptian
Sands Real Estate, Inc. v. Polony et ux., 222 Pa. Super. 315, 294 A.2d 799 (1972) and
Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250 (3d Cir. 1994) stand for the
proposition that in order to still be valid, a cognovits clause must be expressly contained in
any amendment to a document containing the original cognovit clause.

M & P countered by stating that the thirty-day limitation period for striking a
confessed judgment, contained in Pa.R.C.P. 2959, makes Williams' petition to strike the
judgment untimely and thus the court should dismiss it without reaching the merits.

The trial court agreed with M & P, and dismissed the petition as untimely without
inquiring into whether the judgment was void, finding Pa.R.C.P. 2959 conclusive for void,
voidable, and valid judgments. The Superior Court affirmed, acknowledging that at common law void confessed judgments could be stricken at any time, but determining that
the amendment to Rule 2959(a)(3) intended to create a thirty-day time limit for petitions to
open or strike all confessed judgments, whether void, voidable, or valid.3

As the Superior Court recognized that, at least prior to the amendment to Rule
2959(a)(3), valid or voidable judgments of any kind could be struck or reopened within a
reasonable time. King Athletic Goods Co. v. Redevelopment Auth. of Philadelphia, 481 Pa.
504, 509, 393 A.2d 18, 20 (1978) ("The general rule is that if a judgment is sought to be
stricken off for an irregularity, not jurisdictional in nature, which merely renders the
judgment voidable, the application to strike off must be made within a reasonable time, or
the irregularity will be held waived.") (citing 7 Standard Pennsylvania Practice Ch. 30, § 196
(1961)). The reasonable time requirement for bringing an action to strike off or open a
confessed judgment was based upon the doctrine of laches. See Funds for Bus. Growth,
Inc. v. Maraldo, 443 Pa. 281, 287, 278 A.2d 922, 925 (1971) ("the doctrine of laches may
be applied to the opening of a judgment when the delay is unreasonably long and
unexplained"). However, historically void confessed judgments could be stricken off or
opened at any time as they were considered a legal nullity because the court lacked
subject matter jurisdiction over the matter. Romberger v. Romberger, 290 Pa. 454, 457,
139 A. 159, 160 (1927) (a void judgment is a "mere blur on the record, and which it is the duty of the court of its own motion to strike off, whenever its attention is called to it");
Clarion, M. & P. R. Co. v. Hamilton, 127 Pa. 1, 3 (Pa. 1889) ("a void judgment is no
judgment at all"). The policy reasons behind this disparate treatment are clear: it is in the
public interest for judgments to be final. However, sound public policy cannot create
jurisdiction. Accordingly, where the court lacked jurisdiction, as it does when it enters a
void confessed judgment, that court cannot enter a valid judgment, no matter how much
time has passed.

The instant dispute comes to us because of questions arising from a 1996
amendment to the Pennsylvania Rules of Civil Procedure dealing with confessed
judgments, including Pa.R.C.P. 2959. The amended rule created an express time period
for opening or striking off confessed judgments with the timing requirement triggered upon
receipt of notice. In pertinent part, Rule 2959 was amended to read:

Striking Off or Opening Judgment; Pleadings; Procedure

(a)(1) Relief shall be made by petition.

. . .

(3) If written notice is served upon the petitioner pursuant to
Rule 2956.1(c)(2) or Rule 2973.1(c), the petition shall be filed
within thirty days after such service. Unless the defendant can
demonstrate compelling reasons for the delay, a petition not
timely filed shall be denied.

This rule is triggered by notice of the judgment; there is no express mention of whether this
rule was intended to change the common law rule and cover void, as well as voidable and
valid, confessed judgments.

The comments to the rule are likewise silent as to any intent to overturn the common
law rule:

Under new Rule 2959(a)(3), a defendant must file a petition
within thirty days of service of the notice to obtain relief from
the judgment or to prevent execution. After thirty days the
defendant is barred from relief unless there are "compelling
reasons for the delay."

Pa.R.C.P. 2959 cmt. (1996). This silence could be interpreted to mean that the new time
limitation is applicable to all confessed judgments, whether void, voidable, or valid.
However, there are good reasons to believe that it cannot apply to void judgments.

As previously discussed, a void judgment is one that the court does not have the
power to enter. It cannot become valid through the lapse of time. Comm. ex rel. Penland
v. Ashe, 341 Pa. 337, 341, 19 A.2d 464, 466 (1941) ("It is certainly true that a void
judgment may be regarded as no judgment at all; and every judgment is void, which
clearly appears on its own face to have been pronounced by a court having no jurisdiction
or authority in the subject matter."). While the instant case raises this question in a context
where there is serious question as to the status of the confessed judgment, i.e., whether it
is void, voidable or valid, a different example makes this clear. If a confessed judgment is
mistakenly entered against a person who never had any relationship with the judgment
holder, it would be absurd to believe that that judgment, with no basis in law or fact,
becomes valid merely because notice was given and thirty days elapsed. Although M&P
is correct in asserting that providing finality to judgments is a worthy goal, one that we
agree is achieved for valid and voidable judgments through the 1996 amendments to
Pa.R.C.P. 2959, we cannot provide finality to a judgment when a court lacked subject
matter jurisdiction over the underlying dispute. Void judgments are to be treated in the
same way that they were treated at common law, i.e., at any time that a void judgment is
brought to the attention of the court, it must be stricken. Romberger; Clarion, M. & P. R.
Co.; and Penland.

M & P repeatedly argues that the confessed judgments in this case are not void.
What M & P fails to appreciate is that that question is not before this Court. The trial court
assumed, without deciding, that the confessed judgments were void and still determined that Williams was not due any relief, because he had failed to raise the issue within thirty
days of receiving notice as required by rule 2959. Because we disagree with this
conclusion, and determine that if the confessed judgments are void, then they may be
challenged at any time, we remand this case for a determination of the status of the
confessed judgment underlying this dispute.

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http://www.courts.state.pa.us/OpPosting/Supreme/out/J-14-2007mo.pdf