J. S66033/18


NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

LIVE OAK BANKING COMPANY                 :   IN THE SUPERIOR COURT OF
                                         :         PENNSYLVANIA
                    v.                   :
                                         :
APPLEBROOK, LLC;                         :
APPLEBROOK KENNELS, LLC;                 :
APPLEBROOK VETERINARIANS, PLLC;          :
APPLEBROOK LIVESTOCK                     :
VETERINARIANS, LLC; AND                  :
CURTIS BAUGHMAN,                         :        No. 1122 EDA 2018
                                         :
                         Appellants      :


                Appeal from the Order Entered March 6, 2018,
               in the Court of Common Pleas of Chester County
                      Civil Division at No. 2016-03620-JD


BEFORE: GANTMAN, P.J., PANELLA, J., AND FORD ELLIOTT, P.J.E.


MEMORANDUM BY FORD ELLIOTT, P.J.E.:                 FILED APRIL 15, 2019

      Applebrook, LLC; Applebrook Kennels, LLC; Applebrook Veterinarians,

PLLC; Applebrook Livestock Veterinarians, LLC (together, “Applebrook

Entities”);   and   Curtis   Baughman,   M.S.,   D.V.M.   (“Dr.   Baughman”)

(collectively, “appellants”) appeal the March 6, 2018 order of the Court of

Common Pleas of Chester County that denied appellants’ petition to strike

and/or open judgment entered by confession and stay execution.          After

careful review, we affirm.

      All of the Applebrook Entities were involved in small and large animal

veterinary and animal boarding services in Oxford, Chester County,
J. S66033/18

Pennsylvania. Dr. Baughman is a veterinarian and was a member of each

Applebrook entity.

     On December 28, 2009, Live Oak Banking Company (“Bank”) extended

a commercial Small Business Administration loan to the Applebrook Entities

in the amount of $1,750,000. On that same date, the Applebrook Entities

executed a U.S. Small Business Administration promissory note (“Note”) in

favor of the Bank for the principal amount of the loan.       That same day,

Dr. Baughman executed and delivered to the Bank a commercial guaranty,

whereby he absolutely and unconditionally guaranteed full and punctual

payment    and   satisfaction   of   any   and    all   indebtedness   of   the

Applebrook Entities to the Bank under the Note.

     Under the terms of the Note, the Applebrook Entities were required to

pay the Bank $10,231 each month, commencing on March 5, 2009, and

continuing on the fifth of each month until April 5, 2034, when all

outstanding balances on the Note were due and payable. Failure to make a

monthly payment when due constituted an event of default.                   The

Applebrook Entities failed to make multiple monthly payments.

     By letter dated November 7, 2014, the Bank advised appellants of the

defaults and demanded immediate payment in full of the indebtedness owed

under the Note. The Note contained a confession of judgment clause, which

authorized the Bank to confess judgment upon the occurrence of a default.

The Note required the Applebrook Entities to pay applicable attorneys’ fees,



                                     -2-
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collection costs, and all other expenses incurred by the Bank in connection

with the enforcement of its rights under the Note.

        Specifically, the confession of judgment clause provided in pertinent

part:

             POWER TO CONFESS JUDGMENT. UNDERSIGNED
             HEREBY EMPOWERS ANY ATTORNEY OF ANY COURT
             OF RECORD, AT ANY TIME AFTER THE OCCURRENCE
             OF ANY EVENT OF DEFAULT HEREUNDER, TO
             APPEAR FOR THE UNDERSIGNED AND, WITH OR
             WITHOUT COMPLAINT FILED, CONFESS JUDGMENT,
             OR A SERIES OF JUDGMENTS, AGAINST THE
             UNDERSIGNED IN FAVOR OF THE LENDER OR ANY
             HOLDER HEREOF FOR THE ENTIRE PRINCIPAL
             BALANCE OF THIS NOTE, ALL ACCRUED INTEREST
             AND ALL OTHER AMOUNTS DUE HEREUNDER,
             TOGETHER WITH COSTS OF SUIT AND AN
             ATTORNEY’S COMMISSION OF 10% OF SUCH
             PRINCIPAL   AND   INTEREST    ADDED    AS   A
             REASONABLE ATTORNEY’S FEE, AND FOR DOING
             SO, THIS NOTE OR A COPY VERIFIED BY AFFIDAVIT
             SHALL    BE  SUFFICIENT    WARRANT.       THE
             UNDERSIGNED HEREBY FOREVER WAIVES AND
             RELEASES ALL ERRORS IN SAID PROCEEDINGS AND
             ALL RIGHTS OF APPEAL AND ALL RELIEF FROM ANY
             AND ALL APRAISEMENT [sic], STAY OR EXEMPTION
             LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER
             ENACTED.

Note at 5.

        On April 18, 2016, the Bank filed a complaint in confession in

judgment.     In the complaint, the Bank stated that the Applebrook Entities

were in default under the terms of the Note and that Dr. Baughman had

failed to pay the amounts owed pursuant to the guaranty.       Consequently,

the Bank stated that it was authorized to confess judgment against



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J. S66033/18

appellants in the total amount of $1,095,359.20. This amount consisted of

principal – $964,616.37, interest through April 11, 2016 – $116,424.22, late

fees through April 8, 2016 of $10,769.61, and attorneys’ fees through

April 11, 2016 of $3,549.00.     In addition, the Bank stated that interest

would continue to accrue from April 12, 2016 at the per diem rate of

$138.75 along with all costs and reasonable attorneys’ fees that the Bank

could incur until the outstanding indebtedness was collected. (Complaint in

confession of judgment, 4/18/16 at 3-5.) Also, on April 18, 2016, the Bank

confessed judgment against each appellant, praeciped for entry of judgment

by confession, and praeciped for a writ of execution.

      On May 18, 2016, appellants petitioned to strike and/or open the

confessed judgment and stay execution.        Appellants alleged that the trial

court must strike the judgment because the warrant of attorney clause that

served as the basis for the entry of judgment by confession against the

Applebrook Entities and Dr. Baughman “is inconspicuous, does not appear on

the same page as the signature page, does not immediately precede the

executor’s signature, does not bear any ‘direct relation’ to his signature, and

is otherwise wholly insufficient under Pennsylvania law to apprise the

executor of the rights being waived. . . .”    (Petition to strike and/or open

judgment entered by confession and stay execution, 5/18/16 at 2.)1


1 The petition does not contain page numbers. For clarity in organization,
this court has counted the page numbers beginning with the first page of the
petition.


                                     -4-
J. S66033/18

Appellants also asserted that the judgment should be stricken because the

Bank failed to properly itemize damages and because they claim that the

Bank prematurely executed on the judgment.            In addition, appellants

petitioned to open the judgment because appellants could not reasonably

comprehend what they waived when they agreed to it. (Id. at 13.)

      In the petition to open the confession of judgment, appellants stated

that to the extent the trial court determined that the grounds raised for

striking the judgment were more appropriate for opening the judgment, the

grounds should be used as a basis for opening the judgment. (Id.)

      Following discovery and the submission of briefs, the trial court denied

appellants’ petition to strike and/or open by order filed on March 6, 2018.

On April 5, 2018, appellants filed a timely notice of appeal.      On April 6,

2018, the trial court ordered appellants to file a concise statement of errors

complained of on appeal, pursuant to Pa.R.A.P. 1925(b).             Appellants

complied with the order on April 27, 2018. On May 16, 2018, the trial court

issued an opinion, pursuant to Pa.R.A.P. 1925(a).

      On appeal, appellants raise the following issues for this court’s review:

            1.    Did the trial court err in concluding that
                  [a]ppellants’ waiver of notice and opportunity
                  to be heard was knowing and voluntary?

            2.    Did the trial court err in upholding the
                  confessed judgment where there was no
                  Warrant of Attorney language in the Personal
                  Guaranty of the Note by Dr. Baughman?




                                     -5-
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            3.     Did [the Bank] fail to sufficiently specify and
                   itemize the damages?

            4.     Did [the Bank] improperly and prematurely
                   execute on [a]ppellants’ bank account without
                   advance or simultaneous notice in violation of
                   [a]ppellants’ Due Process rights?

            5.     Did the trial court err in concluding that
                   [a]ppellants have not raised a meritorious
                   defense?

Appellants’ brief at 4.

      This court’s standard of review of petitions to strike and/or open

judgments is as follows:

            We review the trial court’s order denying
            Appellant/Borrower’s petition to strike or open for an
            abuse of discretion. Neducsin v. Caplan, 121 A.3d
            498, 506 (Pa. Super. 2015). “[T]he court abuses its
            discretion if, in resolving the issue for decision, it
            misapplies the law or exercises its discretion in a
            manner lacking reason.” Id.

            “A petition to strike a judgment is a common law
            proceeding which operates as a demurrer to the
            record. [It] may be granted only for a fatal defect or
            irregularity appearing on the face of the record.”
            Knickerbocker Russell Co., Inc. v. Crawford, 936
            A.2d 1145, 1146–1147 (Pa. Super. 2007) (citations
            omitted).    In assessing whether “there are fatal
            defects on the face of the record . . . , a court may
            only look at what was in the record when the
            judgment was entered.” Cintas Corp. v. Lee’s
            Cleaning Servs., Inc., 549 Pa. 84, 700 A.2d 915,
            917 (1997) (quoting Resolution Trust, Corp. v.
            Copley Qu-Wayne Assocs., 546 Pa. 98, 683 A.2d
            269, 273 (1996)). Therefore, the original record
            that is subject to review in a petition to strike a
            confessed judgment consists only of the complaint in
            confession of judgment and the attached exhibits.
            See id.


                                     -6-
J. S66033/18



                 In contrast, “if the truth of the factual
                 averments contained in [the complaint in
                 confession of judgment and attached
                 exhibits is] disputed, then the remedy is
                 by proceeding to open the judgment,”
                 not to strike it. A petition to strike a
                 confessed judgment and a petition to
                 open a confessed judgment are distinct
                 remedies; they are not interchangeable.
                 A petition to open a confessed judgment
                 is an appeal to the equitable powers of
                 the court. Factual disputes by definition
                 cannot be raised or addressed in a
                 petition to strike off a confession of
                 judgment, because factual disputes force
                 the court to rely on matters outside the
                 relevant record to decide the merits of
                 the petition.

           Midwest Fin. Acceptance Corp. v. Lopez, 78 A.3d
           614, 622-23 (Pa.Super. 2013) (internal citations
           omitted).

Gur v. Nadav, 178 A.3d 851, 856 (Pa.Super. 2018).



I.   Petition to Strike.

     A.    No Direct Relation Between Cognovit Clause and
           Signature.

     Initially, appellants assert that while the Note includes language that

purportedly permits the entry of judgment by confession, there is neither a

separate signature for the cognovit clause nor does the cognovit clause

immediately precede the executor’s signature. (Appellants’ brief at 11-12.)

As a result, the cognovit clause did not bear a direct relation to the




                                   -7-
J. S66033/18

signatures   of   Dr.   Baughman    as   the   authorized    member   of   the

Applebrook Entities. (Id.)

     In Graystone Bank v. Grove Estates, LP., 58 A.3d 1277 (Pa.Super.

2012), affirmed sub nom. Graystone Bank v. Grove Estates, L.P., 81

A.3d 880 (Pa. 2013), this court explained the requirements of the warrant of

attorney to authorize a confession of judgment:

             To validate a warrant of attorney appearing in a
             promissory note, the signature of the executor must
             “directly relate” to the warrant.         How this
             relationship manifests may be understood by a
             review of precedent:

                  We have noted the need for strict
                  adherence to rules governing confessed
                  judgments.[]      As a matter of public
                  policy, Pennsylvania applies a similar
                  strict standard to establish the validity of
                  a clause. This is so because “a warrant
                  of attorney to confess judgment confers
                  such plenary power on the donee in
                  respect of the adjudication of his own
                  claims that certain specific formalities are
                  to be observed in order to effectuate the
                  granting of such a power.”           Frantz
                  Tractor Co. v. Wyoming Valley
                  Nursery, 384 Pa. 213, 120 A.2d 303,
                  305       (1956).     Accordingly,      “[a]
                  Pennsylvania warrant of attorney must
                  be signed. And it will be construed
                  strictly against the party to be benefited
                  by it, rather than against the party
                  having drafted it.”     Egyptian Sands
                  Real Estate, Inc. v. Polony, 222
                  Pa.Super. 315, 294 A.2d 799, 803
                  (1972) (citations omitted). “A warrant of
                  attorney to confess judgment must be
                  self-sustaining and to be self-sustaining
                  the warrant must be in writing and


                                     -8-
J. S66033/18


               signed by the person to be bound by it.
               The requisite signature must bear a
               direct relation to the warrant of attorney
               and may not be implied.” L.B. Foster
               Co. v. Tri-W Const. Co., 409 Pa. 318,
               186 A.2d 18, 20 (1962) (emphasis
               added).

                     A general reference in the
                     body of an executed lease to
                     terms and conditions to be
                     found is insufficient to bind
                     the lessee to a warrant of
                     attorney not contained in
                     the body of the lease
                     unless the lessee signs the
                     warrant    where     it   does
                     appear. In short, a warrant
                     of   attorney    to     confess
                     judgment is not to be foisted
                     upon anyone by implication
                     or by general and nonspecific
                     reference.

               Frantz Tractor Co., supra at 305
               [emphasis added]; accord Egyptian
               Sands Real Estate, Inc., supra at 804
               (stating, “a warrant of attorney on the
               second page of a document will not be
               conclusive against the signer of the first
               page”), Jordan v. Fox, Rothschild,
               O’Brien & Frankel, 20 F.3d 1250,
               1274-1275 (3d Cir.1994) (same).

          Hazer v. Zabala, 26 A.3d 1166 (Pa.Super.2011)
          (holding cognovit invalid where located in unsigned
          addendum “incorporated by reference” in, and
          attached subsequent to signature page of,
          agreement.).

          Here,   the    warrant    of   attorney    appeared
          conspicuously in all caps on the very bottom of the
          penultimate page of the agreement and immediately
          preceded where the executor (Mr. Pasch) signed at


                                  -9-
J. S66033/18


            the top of the following, final page. Evidence of this
            location of a conspicuous cognovit contained within
            the body of the agreement sufficed to establish that
            Mr. Pasch effectively signed his name to the warrant
            of attorney.

            We therefore distinguish the present matter from
            precedent cited above invalidating warrants of
            attorney located either altogether outside the body
            of the agreement, too remote from the signature, or
            on pages subsequent to the signature. Because the
            location of the warrant of attorney related directly to
            the signature that immediately followed it, albeit on
            the next page, we concur with the trial court that a
            valid, signed, and self-sustaining warrant of attorney
            resulted.      Accordingly, we reject Appellants’
            contention that a signature must appear on the same
            page as the cognovit in order to validate it.

Graystone, 58 A.3d at 1282-1283 (emphasis in original).

      In order to ascertain the accuracy of appellants’ claims, it is necessary

to examine the Note itself. Page 5 of the Note contains the confession of

judgment clause, which is printed in all capital letters. Page 5 of the Note

also contains paragraphs regarding the governing law and the waiver of a

jury trial. Dr. Baughman initialed that page. Page 6 of the Note contains a

space for the borrower’s name and signature.       Dr. Baughman signed the

Note on Page 6 in four different places as manager of the four different

Applebrook entities.     As in Graystone, the cognovit clause appears

conspicuously in capital letters on the next to last page of the Note.     The

location of the warrant of attorney contained in Paragraph 10 of the Note on

Page 5 directly related to the signatures on Page 6 of the Note. The trial

court did not err when it did not strike the judgment on this basis.


                                    - 10 -
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      Appellants next assert that the cognovit clause was inconspicuous and

did not include unambiguous language sufficient to constitute a knowing and

intelligent waiver of rights because it consists of two, unbolded, capitalized,

single-spaced paragraphs that span 22 lines. (Appellants’ brief at 17.)

      Although appellants claim that the language in the confession of

judgment is ambiguous and inconspicuous, a review of the clause does not

support the assertion.    The clause is in capital letters.   Appellants do not

include any case law that requires the clause to be in bold type. Further,

even though appellants characterize the clause as confusing “legalese”

(appellants’ brief at 17), the clause specifically states that “the undersigned

hereby forever waives and releases all errors in said proceedings and all

rights of appeal and all relief from any and all apraisement [sic], stay or

exemption laws of any state now in force or hereafter enacted.” (Note at 5.)

In order to strike a judgment, a fatal defect must be apparent on the face of

the record. There is no such defect here. The trial court did not err when it

denied the petition to strike.



      B.    Confession of Judgment in Guaranty Agreement.

      Appellants next contend that even if the language of the cognovit

clause were sufficient to constitute a waiver of the Applebrook Entities’ right

to defend an action against them, the cognovit clause could not be enforced

against Dr. Baughman because the guaranty did not contain a warrant of



                                     - 11 -
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attorney or language sufficient under Pennsylvania law to authorize

judgment by confession.     (Appellants’ brief at 18.)   Appellants assert that

the guaranty is written in small print, and the warrant of attorney contained

in the guaranty is not capitalized, bolded, or italicized and is not highlighted

in a manner to call attention to the provision. (Id.) Appellants also assert

that the acknowledgement of terms contained in Paragraph 11 of the

guaranty contains no specific reference to the warrant of attorney or the

rights that an obligor must forego when he or she agrees to a warrant of

attorney. (Id. at 18-19.)

      While appellants are correct that the warrant of attorney in the

guaranty is not capitalized, bolded, or italicized, this court does not agree

that the confession of judgment clause is inconspicuous. It is on a page by

itself with a capitalized heading for Section 10 – State Specific Provisions. It

does not appear that the print is any smaller than the print in the rest of the

document. The clause states the following:

            Upon non-payment of the principal sum as aforesaid
            after any applicable grace periods and cure periods,
            the undersigned will be in DEFAULT and upon being
            given fifteen (15) days prior written notice by
            Lender, the undersigned hereby authorizes and
            empowers any justice of the peace or clerk of any
            court of record in Maryland or elsewhere to enter
            judgment by confession, waiving all further notice,
            demand and protest, against the undersigned for the
            amount hereof, interest and costs, including
            reasonable attorney’s fees, expressly waiving
            summons or other process and do further consent to
            the immediate execution of said judgment, expressly
            waiving the benefit of all exemption laws,


                                     - 12 -
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              irregularities or errors, and appeals, in entering said
              judgment or the execution thereon.

U.S. Small Business Administration Unconditional Guaranty, 12/28/09 at 4.

The trial court did not abuse its discretion when it found this language

sufficient.

      Appellants again raise the issue that the signature does not bear a

direct relation to the warrant of attorney. However, Dr. Baughman signed

near the top of the next page, Page 5.          The only paragraph or section

between Section 10 – State Specific Provisions – which contains the warrant

of attorney and Section 12 – Guarantor Name(s) and Signatures – is

Section 11 – Guarantor Acknowledgement of Terms – which contains one

sentence and states that the guarantor has read and understood the

significance of all terms in the Note and the guaranty, including all waivers.

The location of the warrant of attorney contained in Paragraph 10 on Page 4

of the guaranty agreement directly related to the signatures on Page 5. The

trial court did not abuse its discretion when it did not strike the judgment on

this basis.



      C.      Itemization of Damages.

      Next, appellants contend that the Bank failed to itemize damages

sufficiently, so the judgment should be stricken.        Appellants argue that

Paragraph 24 of the Complaint contains “nothing more than a boilerplate

statement of the damages that are allegedly owed by Appellants.”


                                      - 13 -
J. S66033/18

(Appellants’ brief at 20.)   Specifically, appellants argue that the account

statement attached to the Complaint is dated more than five months before

the Confession of Judgment was filed. There is no explanation as to how the

principal balance was calculated; there is no statement of a period for which

interest was accrued; there is no statement of the interest rate or

documentary support for the amount or rate of interest charged; and there

is no explanation for how the late fees were calculated.   (Appellants’ brief

at 21.) In addition, appellants argue that neither the warrant of attorney in

the Note nor in the guaranty permit the Bank to confess judgment for late

charges.

     Rule 2952(a)(7) of the Pennsylvania Rules of Civil Procedure sets forth

the requirements for the itemization of the amounts due in a complaint to

confess judgment:    “(a) The complaint shall contain the following: . . .

(7) an itemized computation of the amount then due, based on matters

outside the instrument if necessary, which may include interest and

attorneys’ fees authorized by the instrument.”    Pa.R.C.P. 2952(a)(7).    In

Davis v. Woxall Hotel, Inc., 577 A.2d 636, 638 (Pa.Super. 1990), this

court construed Rule 2952(a)(7) as to require only that a plaintiff aver a

default and allege the amounts due in a complaint for confession of

judgment.

     Here, the Bank alleged that appellants owed $964,616.37 in principal;

$116,424.22 in interest through April 11, 2016; $10,769.61 in late fees



                                    - 14 -
J. S66033/18

through April 8, 2016; and $3,549.00 in attorney’s fees through April 11,

2016, for a total of $1,095,359.20.           In addition, Paragraph 24 of the

Complaint states that interest from April 12, 2016 at the per diem rate of

$138.75 at an annual rate of 5.25% will be added to the total along with

costs and reasonable attorneys’ fees that the Bank will continue to incur in

the collection of the outstanding indebtedness.           (Complaint at 4-5.)

Therefore, we find that the listing of the amount due complies with the

requirements of Rule 2952(a)(7).

      With respect to the issue of late fees, the warrant of attorney in the

Note states that judgment can be confessed in favor of the lender for “the

entire principal balance of the Note, all accrued interest and other amounts

due hereunder together with costs of suit and an attorneys’ commission of

10%. . . .” (Note at 5 (capitalization omitted).) The term “other amounts

due hereunder” would include late fees. (See id. at 2.) Under the guaranty

agreement, the guarantor, Dr. Baughman, guarantees payment of all

amounts owing under the Note. The late charges were properly included in

the confession of judgment. The trial court did not abuse its discretion when

it declined to strike the judgment on this basis.



      D.    Execution.

      Appellants next contend that the Bank’s execution of appellants’ bank

account was without advance or simultaneous notice in violation of their due



                                     - 15 -
J. S66033/18

process rights.   Appellants argue that the Bank violated their due process

rights by attempting to execute on the judgment without first filing and

serving notice pursuant to either Rule 2958.1 or Rule 2958.3 of the

Pennsylvania Rules of Civil Procedure. (Appellants’ brief at 22.) However, in

the petition to strike, appellants only refer to Rule 2958.1.   Rule 2959(c),

which addresses the pleadings and procedure for striking off or opening a

judgment, provides, “A party waives all defenses and objections which are

not included in the petition or answer.” Pa.R.C.P. 2959(c). Consequently,

any argument with respect to Rule 2958.3 is waived because any objection

based on Rule 2958.3 was not included in the petition.          However, an

objection based on an alleged failure to comply with Rule 2958.1 is not

relevant as the trial court found, and this court agrees, that the Bank

proceeded under Rule 2958.3, which is an alternate means of service.



II.   Petition to Open.

      A.   Capacity.

      Appellants essentially raise the same issues in the petition to open as

they did in the petition to strike concerning whether the confession of

judgment and the cognovit clause were not set forth in a manner in which

appellants could not be expected to comprehend the meaning of the clauses.

Appellants argue that Dr. Baughman had only nominal experience in the

ownership, management, or financing of a business in 2009 and could not



                                   - 16 -
J. S66033/18

understand      the   significance    of   the   confession   of   judgment   clauses.

(Appellants’ brief at 25-26.)

      This court has held that where a debtor has not alleged fraud, and has

produced no evidence to indicate a lack of capacity to understand the signed

document or that he or she asked for an explanation of the contract

language, the debtor must be held to the contract’s terms. Germantown

Savings Bank v. Talacki, 657 A.2d 1285, 1288, 1289-1290 (Pa.Super.

1995), citing Provco Leasing Corp. v. Safin, 402 A.2d 510 (Pa.Super.

1979).

      Here, Dr. Baughman initialed the pages where the confession of

judgment was located in each agreement and signed each document on the

following page.       There was no evidence that Dr. Baughman lacked the

capacity to execute the agreements or that the Bank engaged in any type of

fraud or misrepresentation.          Appellants did not meet the requirements of

Germantown Savings Bank.



      B.     Unconscionability.

      Appellants also argue that enforcing the confession of judgment

against them would be unconscionable because they had no meaningful

choice but to accept the confession of judgment clauses together with

contract terms that were unreasonably favorable to the Bank. (Appellants’

brief at 27.)



                                           - 17 -
J. S66033/18

      Whether a contract is unconscionable is a matter of law. Snyder v.

Rogers, 499 A.2d 1369, 1372 (Pa.Super. 1985).           In Germantown Mfg.

Co. v. Rawlinson, 491 A.2d 138, 145-148 (Pa.Super. 1985), a case cited

by appellants, this court explained that unconscionability is a defensive

contractual remedy that relieves a party from an unfair contract or an unfair

portion of a contract.     Further, in general, unconscionability has been

recognized to include an absence of meaningful choice on the part of one of

the parties together with contract terms that are unreasonably favorable to

the other party.    This court explained that the need for the concept of

unconscionability is greatest when one party is inexperienced, uneducated,

and of low income. A contract provision will be found to be unconscionable

and unenforceable if the attempted reallocation of material risks is so

extreme and the only evidence of an agreement is an inconspicuous

provision in the “boilerplate” of a standard form.       In other words, the

reallocation of risks must be physically conspicuous and must have been

manifested in a manner that was understandable to the party against whom

the provision is sought to be enforced. In addition, the party must have had

a reasonable choice in relation to such reallocation.

      Here, we have already determined that the confession of judgment

clauses were easy to read. Dr. Baughman, an educated individual, agreed to

them. Dr. Baughman had the opportunity to consult with his counsel had he

wished to do so. He signed the documents in the presence of his attorney.



                                    - 18 -
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The documents were form documents as drafted by the United States Small

Business Administration.   Although appellants gave up certain rights when

they agreed to the confession of judgment clauses, the Bank loaned them a

considerable amount of money, in excess of $1,000,000. The Bank received

some protection in case of default that did later occur.         This court

determines that appellants have failed to prove that the clauses were

unconscionable.2 The trial court did not err when it denied the petition to

open.

        Order affirmed.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary




Date: 4/15/19




2 Appellants’ claims to open the judgment based on the failure to comply
with Pa.R.C.P. 2958.1 or Pa.R.C.P. 2958.3 are rejected for the same reasons
as in this court’s decision to affirm the petition to strike.     Similarly,
appellants do not develop any claim that the amounts owed were incorrectly
calculated.


                                   - 19 -
