J-A16037-17
J-A16038-17

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P 65.37

PNC BANK, NATIONAL ASSOCIATION,          :    IN THE SUPERIOR COURT OF
                                         :          PENNSYLVANIA
              Appellee                   :
                                         :
     v.                                  :
                                         :
GUIDO D’ELIA,                            :
                                         :
              Appellant                  :   No. 1475 WDA 2016

             Appeal from the Order Entered September 27, 2016
              in the Court of Common Pleas of Allegheny County
                     Civil Division at No(s): GD 15-020177

PNC BANK, NATIONAL ASSOCIATION,          :    IN THE SUPERIOR COURT OF
                                         :          PENNSYLVANIA
              Appellee                   :
                                         :
     v.                                  :
                                         :
JOSEPH WITTKOFSKI,                       :
                                         :
              Appellant                  :   No. 1477 WDA 2016

             Appeal from the Order Entered September 27, 2016
              in the Court of Common Pleas of Allegheny County
                     Civil Division at No(s): GD 15-020182

BEFORE:      STABILE, J., FORD ELLIOTT, P.J.E., and STRASSBURGER,* J.

MEMORANDUM BY STRASSBURGER, J.:              FILED SEPTEMBER 12, 2017

     In these identical appeals, Guido D’Elia and Joseph Wittkofski

(collectively Appellants) appeal from the September 27, 2016 order denying

their petitions to open judgments by confession and for stay of execution.

We affirm.




*Retired Senior Judge assigned to the Superior Court.
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       Appellants are former officers, directors, and shareholders of D’Elia

Wittkofski, Inc. d/b/a Mind Over Media. Mind Over Media was a corporate

borrower of PNC Bank, National Association (PNC).          In November 2005

Appellants executed commercial guaranties in favor of PNC, agreeing to pay

all obligations owed by Mind Over Media should the company default on its

loan payments.      Pertinent to this appeal, both commercial guaranties

contained the following language: “Guarantor also waives any and all rights

or defenses arising by reason of: … (D) any right to claim discharge of the

[i]ndebtedness on the basis of unjustified impairment of any collateral for

the [i]ndebtedness;…”       Wittkofski’s Commercial Guaranty Agreement,

11/18/2005, at 2; D’Elia’s Commercial Guaranty Agreement, 11/18/2005, at

2.

       On November 12, 2015, Mind Over Media filed a Chapter 11

Bankruptcy petition.    Several days later, PNC confessed judgment against

Appellants after they and Mind Over Media defaulted on the loan payments

due.

       Individually, Appellants “then filed a [p]etition to [o]pen the pertinent

confessed judgment, raising the defenses of impairment of collateral,

excessive counsel fees, and excessive interest rate.[1] After argument, the

1
  “On appeal, [Appellants] assert only the issue of impairment of collateral.
Counsel fees and interest rate are not issues on appeal.” Trial Court Opinion,
1/5/2017, at 2.



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[trial court] concluded that no meritorious defense had been alleged and

denied the [p]etitions to [o]pen.” Trial Court Opinion, 1/5/2017, at 1-2.

     Appellants timely filed notices of appeal, and Appellants and the trial

court complied with Pa.R.A.P. 1925. Appellants present three questions to

this Court, which we have reordered for ease of disposition.

     1. Did the [trial] court err in holding that Appellant[s] waived
        the impairment of collateral defense?

     2. Did PNC impair the collateral in violation of its duties under
        the Uniform Commercial Code?

     3. Did PNC’s impairment of the collateral also constitute a
        breach of its duties of good faith and fair dealing?

Wittkofski’s Brief (1477 WDA 2016) at 4 (trial court answers omitted). See

also D’Elia’s Brief (1475 WDA 2016) at 4 (same).         We begin with our

standard of review.

     When the denial of a petition to open a confessed judgment is
     appealed, we will not disturb the lower court’s denial unless it is
     shown that the court committed an error of law or a manifest
     abuse of discretion. Traditionally, a confessed judgment will be
     opened in only a limited number of circumstances, and only
     when the person seeking to open acts promptly, alleges a
     meritorious defense and presents sufficient evidence of that
     defense to require submission of the issues to the jury. In
     making such a determination, the court employs the same
     standard as that of the directed verdict—viewing all the evidence
     in the light most favorable to the petitioner and accepting as
     true all evidence and proper inferences therefrom supporting the
     defense while rejecting adverse allegations of the party obtaining
     the judgment.




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Iron Worker's Sav. & Loan Ass'n v. IWS, Inc., 622 A.2d 367, 370 (Pa.

Super. 1993) (citations and quotation marks omitted).

      In its 1925(b) opinion, the trial court offered the following explanation

for its decision to deny Appellants’ petitions.

      1. Guarantors waived the defense of impairment of
      collateral.

      Pennsylvania law very clearly permits a lender to include a
      waiver of the defense of impairment of collateral in a loan
      document. See 13 Pa.C.S. § 3605(i); [Appellants] rely on
      §3605(e) for their assertion of the defense.

      13 Pa.C.S. § 3605(e) states:

            Impairment of collateral; discharge of indorser or
            accommodation party.—If the obligation of a party to
            pay an instrument is secured by an interest in
            collateral and a person entitled to enforce the
            instrument impairs the value of the interest in
            collateral, the obligation of an indorser or
            accommodation party having a right of recourse
            against the obligor is discharged to the extent of the
            impairment. The value of an interest in collateral is
            impaired to the extent the value of the interest is
            reduced to an amount less than the amount of the
            right of recourse of the party asserting discharge or
            the reduction in value of the interest causes an
            increase in the amount by which the amount of the
            right of recourse exceeds the value of the interest.
            The burden of proving impairment is on the party
            asserting discharge.

      13 Pa.C.S. § 3605(i) states:

           Other limitations on discharge.--A party is not discharged
      under this section if:




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            (1) the party asserting discharge consents to the
            event or conduct that is the basis of the discharge;
            or

            (2) the instrument or a separate agreement of the
            party provides for waiver of discharge under this
            section either specifically or by general language
            indicating that parties waive defenses based on
            suretyship or impairment of collateral.

      [The trial court] correctly concluded that the defense was indeed
      waivable and that [Appellants] had waived it.

      2. Even if there had been no waiver, [Appellants] own
      [p]etitions and evidence show that [Appellants] had the
      power to prevent the conduct of the person they put in
      charge of the company and did nothing to remove him.

      [Appellants] contend that PNC failed to heed their warnings or
      requests regarding the wrongful conduct of Mr. Foster regarding
      the management of the business and the handling of its
      finances. However, even if true, this is not sufficient for a jury
      to conclude that it was PNC who impaired the collateral. Rather,
      [Appellants] have shown at most that Mr. Foster impaired the
      collateral and that [Appellants] failed to exercise their power to
      control him or dismiss him.

      3. Since the defense of impairment of collateral was
      waived, any such impairment cannot constitute the
      breach of a duty of good faith and fair dealing.

      [Appellants] may have intended to assert that there was also a
      breach of the duty of good faith and fair dealing, not that the
      alleged impairment itself constituted such a breach. Either way,
      since Pennsylvania law permits the defense to be waived PNC
      committed no breach by asserting that waiver.

Trial Court Opinion, 1/5/2017, at 2-4.

      Appellants disagree with the trial court’s conclusions.      They first

maintain that PNC impaired the collateral by failing to heed their notices and


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warnings that Mind Over Media, under the leadership of then president and

manager of sales, Cecil Foster (Mr. Foster), was dissipating its assets.

Wittkofski’s Brief at 11; D’Elia’s Brief at 11.   This is significant because,

despite the trial court’s finding to the contrary, Appellants contend that they

did not waive the impairment of collateral defense.        Specifically, D’Elia

testified at his deposition that “he did not even know what the term

‘impairment of collateral’ meant, and that no one from PNC pointed out the

waiver language or explained its meaning when he signed the guaranty.”

Id. at 15. Wittkofski relies on this testimony as evidence that, he too, did

not waive this defense. Id. Furthermore, Appellants aver that the issue of

waiver is “generally a question of fact,” and thus this issue should have been

submitted to a jury.   Id.   Lastly, Appellants argue that “PNC’s intentional

failure to collect its debt from Mind Over Media, when it knew that the

company had sufficient assets to satisfy the obligation, clearly constituted a

breach of its duty of good faith and fair dealing, and thus mandated the

opening of the judgment.” Id. at 17

      We discern no error in the trial court’s decision. As cited by the court,

13 Pa.C.S. § 3605(i) specifically allows for the waiver of certain defenses,

including impairment of collateral.    The guaranties signed by Appellants

clearly contain waiver provisions, disallowing the parties from raising such a

defense.   D’Elia’s contention that he did not understand what the term



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impairment of collateral meant and that no one from PNC pointed out the

waiver language to him, is unavailing. Absent more,2 Appellants are unable

to overcome the unambiguous waiver language within the contracts they

signed. As this Court held in a case involving a similar argument,

     [a]lthough [the defendant] was ostensibly attacking the validity
     of the waiver, [she] did not present any basis for finding the
     waiver provisions invalid or unenforceable. Her failure to read
     her agreement does not render it either invalid or unenforceable.
     The law of Pennsylvania is clear. One who is about to sign a
     contract has a duty to read that contract first. As this Court has
     stated:

           It is well established that, in the absence of fraud,
           the failure to read a contract before signing it is “an
           unavailing excuse or defense and cannot justify an
           avoidance, modification or nullification of the
           contract”; it is considered “supine negligence.”
           Germantown Sav. Bank v. Talacki, [657 A.2d
           1285, 1289 (Pa. Super. 1995)].

Hinkal v. Pardoe, 133 A.3d 738, 743 (Pa. Super. 2016) (some citations

and quotation marks omitted).



2
  Appellants cite Union National Bank & Trust Co. v. Lumish, 1 Phila. 177
(1978), averring that the court in Union “held that a similar clause
constituted a ‘contract of adhesion,’ and thus did not serve as a waiver of an
impairment of collateral defense.” D’Elia’s Brief at 15; Wittkofski’s Brief at
15. However, unlike in this case, the guarantor in Union alleged that the
one page form agreement he signed was fraudulent.             Concluding the
guarantor had relied on false representations, the trial court found the
contract was one of adhesion. The court did not, however, find that all
contracts containing a provision waiving the impairment of collateral defense
were invalid; instead it determined under the particular facts of the Union
case, there was no meeting of the minds, and thus the contract was
unenforceable. Regardless, even if Union were directly on point, this 1978
trial court case is not binding precedent.

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     Accordingly, the trial court did not err in entering the September 27,

2016 order denying Appellants’ petitions.   Rather, it correctly determined

that Appellants’ impairment of collateral defense was waived, and as such, it

could not have been raised as a meritorious defense that would warrant the

opening of the confessed judgment.3

     Order affirmed.



Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary

Date: 9/12/2017




3
  In reaching this conclusion we need not address Appellants’ remaining
arguments that (1) PNC impaired the collateral; and (2) PNC’s impairment of
the collateral constituted a breach in their duties of good faith and fair
dealing.

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