Litigation

By: Kristen Wetzel Ladd

The recent Pennsylvania case The Bancorp Bank v. Mancini highlights the importance of re-stating warrants of attorney in modification documents involving Pennsylvania commercial loans.

The facts, which are not clearly stated in the trial judge’s opinion, are summarized as follows: Mancini guaranteed a loan to a business in 2006. In connection with the transaction, Mancini executed a Surety Agreement, which contained a warrant of attorney, and a separate Disclosure for Confession of Judgment referencing the Surety Agreement. The loan was later modified in 2009 by a Modification Agreement. The Modification Agreement contained a warrant of attorney, a provision whereby guarantors consented to the modification and signature lines for the guarantors. However, Mancini did not sign a separate Surety Agreement in connection with the Modification Agreemen t, nor a Disclosure for Confession of Judgment. It is not clear from the trial court’s opinion how the warrant of attorney was written or if the surety agreements were referenced in any way beyond the consent of the sureties. Further, the Court does not describe the language in the original surety agreement or how it dealt with amendments or modifications.

Another loan was made to the business in 2009. The 2009 loan documents included a warrant of attorney. It is not clear from the facts stated if Mancini also guaranteed that loan or if the original surety agreement extended to all indebtedness of the borrower.

In 2012, the Bank filed a confession of judgment against Mancini, as guarantor, for amounts due under both the 2006 loan (as modified) and the 2009 loan. The Bank subsequently filed a Motion to Amend its Confession of Judgment to remove the amounts due under the 2009 loan (suggesting that in fact, Mancini had not guaranteed the 2009 loan). The trial court granted the Motion to Amend, and the Bank amended its Complaint in Confession of Judgment to reflect only the amounts due under the 2006 loan.

Mancini filed a Petition to Open or Strike the Judgment. The trial court granted the Petition to Strike the Judgment, basing its decision on three factors:

1. The fact that Mancini executed a separate Surety Agreement and Disclosure for Confession in connection with the original loan in 2006, but did not execute separate agreements in connection with the 2009 Modification Agreement, and that the Modification Agreement did not clearly or expressly incorporate the warrant of attorney provisions of the 2006 loan documents, as to Mancini, and as such, the record upon which the Bank sought to confess judgment was not self-sustaining;
2. The fact that notice under Rule 2958.1 (30 day notice of execution) was not properly served on Mancini, which precluded the court from having jurisdiction to enter the judgment by confession and supported striking the judgment; and
3. The fact that the Bank amended its Complaint in Confession of Judgment after originally confessing judgment for the entire amount due under both the 2006 and 2009 loans , to include only the 2006 loan amount. The trial court held that such an amendment was a prohibited duplicative attempt to collect a single debt and that the warrant of attorney had been exhausted by attempting to collect the debt in the original Complaint in Confession of Judgment.

The second and third grounds for the trial court’s decision are problematic and not likely to be upheld. The 30 day notice under rule 2958.1 is an execution procedure which may be sent 30 days prior to execution on a confessed judgment. There is also a procedure for immediate execution (see my blog entry Execution on a Confessed Judgment Against Personal Property). However, a judgment creditor can choose not to send an execution notice for months or even years after the judgment is entered, or until the creditor actually executes on the judgment. The notice is not necessary for the court’s jurisdiction to enter the confessed judgment.

Likewise, the argument that the Bank was attempting to collect the same debt twice in contravention of Pennsylvania law seems dubious where the Bank was specifically granted leave to amend its complaint. Pennsylvania law does provide for a warrant to be exhausted once it is used. Again, the Court granted a motion to amend the judgment. It then treated it as a separate judgment and ignored the fact that it approved it. This seems incongruous.

However, the first ground might be upheld but requires a more thorough review of the language in the underlying documents. Even if not upheld, the issue could have easily been avoided . Pennsylvania law requires that the warrant of attorney be in writing and signed by the person to be bound. There is case law which states that a modified contract can incorporate a warrant of attorney from an original contract if it is clearly and expressly incorporated into the modified contract. Although the Modification Agreement in the instant case contained a warrant of attorney and was signed by Mancini, the court refused to consider the warrant of attorney from Mancini’s 2006 Surety Agreement as incorporated in th e modification documents. Again, it is not clear from the trial court’s recitation of the facts if this refusal was due to the wording of the Modification Agreement itself being insufficient to incorporate the warrant of attorney, or the fact that Mancini did not execute a separate Surety Agreement and Disclosure for Confession in connection with the Modification Agreement.

Regardless, to avoid this from becoming an issue, creditors should always re-state the warrant of attorney in all modification documents (not merely incorporate the warrant by reference).

The trial court’s decision was appealed to the Superior Court of Pennsylvania, which sua sponte quashed the appeal because it determined that there was no automatic right of appeal where a confessed judgment has been stricken. The propriety of the appeal being quashed is left for another day. The Bank filed a petition for allocator with the Supreme Court of Pennsylvania on March 22, 2013. The petition has not yet been decided by the court.

Kristen Ladd

Kristen Ladd is an associate at Unruh, Turner, Burke and Frees, Kristen practices in the areas of Pennsylvania Litigation, and Pennsylvania Creditors’ Rights and Bankruptcy Law. The firm maintains law offices in Malvern, Phoenixville, and West Chester Pennsylvania which serve the Main Line, and many surrounding communities such as Devon, Exton, West Chester, Ardmore and others.

By: Kristen Wetzel Ladd

Pennsylvania law provides for two alternative methods of execution on a confessed judgment against personal property.[1] After judgment has been confessed and the creditor wants to proceed with execution, the creditor must decide whether to proceed with the 30 day notice procedure under Pennsylvania Rule 2958.1 or proceed with immediate execution under Pennsylvania Rule 2958.3.  There are advantages and disadvantages to both procedures.  How the creditor should proceed depends on a multitude of factors unique to each case.

The 30 day Notice Procedure

If the creditor decides to proceed under Rule 2958.1, it must serve written notice upon the judgment-debtor at least 30 days prior to filing a Writ of Execution on the judgment.  The notice can be served by the sheriff, certified mail, or pursuant to a special order of court.  Once the creditor has served notice under Rule 2958.1, it cannot file its Writ of Execution until the thirty day period has expired.

Immediate Execution Procedure

Under Rule 2958.3, the Writ of Execution is served immediately with the notice of execution.  Use of this procedure also requires service of a form of a petition to strike the judgment and request for a prompt hearing.  The petition to strike form is a certification by the judgment-debtor that he/she/it did not voluntarily, knowingly and intelligently waive the right to notice and hearing prior to the entry of judgment.  If the judgment-debtor files the form with the sheriff, the court is required to hold a hearing regarding the petition within three business days.  Execution is stayed during the period between the filing of the form petition and the prompt hearing.

At the prompt hearing, the only issue to be decided is whether the judgment-debtor voluntarily, knowingly and intelligently waived the right to notice and hearing prior to the entry of judgment.  It is the creditor who bears the burden, by a preponderance of the evidence, of proving a knowing, voluntary and intelligent waiver.  If the creditor does not meet this burden of proof, the judgment will be stricken.

After service of the notice of execution, under either procedure outlined above, the judgment-debtor has 30 days in which to file a petition to open or strike the judgment.  If a petition to open or strike is filed after the 30 day period following service of the notice, it will be denied by the court unless there are compelling reasons for the delay.

The History of Confession of Judgment in Pennsylvania and the Creation of the Two Procedures for Execution

Pennsylvania’s confession of judgment procedure has withstood constitutional attack in the past.  However, in 1994, the Third Circuit Court of Appeals held that while the entry of judgment by confession was not unconstitutional, the entry of judgment together with immediate seizure of personal property without providing a means for obtaining a prompt hearing for relief, violated the Due Process Clause of the U.S. and Pennsylvania Constitutions.  See, Jordan v. Fox Rothschild, 20 F.3d 1250 (3d Cir. 1994).

In 1996, the Pennsylvania Rules of Civil Procedure were revised to address the requirements set forth in the Jordan case.  The two alternative procedures for execution against personal property were created under Rules 2958.1 and 2958.3.  The prompt post-seizure hearing provided for in Rule 2958.3, which authorizes immediate execution, is an attempt to address the due process concerns raised in Jordan.  However, there has not been a ruling by the Court that the new rules sufficiently address the issues raised in Jordan. Consequently, there is still a risk associated with engaging in immediate execution upon a confessed judgment.

Contrasting the Two Procedures

Below is a list of pros and cons for each method of proceeding:

[1] Actually, there is a third method of execution under Rule 2958.2 that is applicable only when the property to be levied upon is real property. This article will only deal with execution against personal property under Rules 2958.1 and 2958.3.

Kristen Ladd

Kristen Ladd is an associate at Unruh, Turner, Burke and Frees, Kristen practices in the areas of Pennsylvania Litigation, and Pennsylvania Creditors’ Rights and Bankruptcy Law. The firm maintains law offices in Malvern, Phoenixville, and West Chester Pennsylvania which serve the Main Line, and many surrounding communities such as Devon, Exton, West Chester, Ardmore and others.

By: Dan Dwyer

It was not so long ago that courts would not allow a litigant to access another litigant’s computer drives unless some sort of good cause – a likelihood of document destruction or tampering – was first shown.  The ever-increasing use of computers and e-mail forced courts to re-examine this requirement.  As a result, in 2010, the Federal Rules of Civil Procedure were amended to require litigants to identify and produce electronically-stored data that they reasonably anticipated would be used in their respective claims and defenses.   On June 26, 2012, the Supreme Court of Pennsylvania followed suit and enacted new rules governing electronic discovery.  Important aspects of these rules and rule a mendments are discussed below.

The previous rule required production of documents and electronically stored information.  The new rule, while still requiring production, also presumes that a forensic examination of a litigant’s computers and other electronic data devices could be permitted.  Specifically, the new rule requires:

(a) Any party may serve a request upon a party … or a subpoena upon a person not a party … to produce and permit the requesting party … to inspect and copy any designated documents (including writings, drawings, graphs, charts, photographs, and electronically stored information), or to inspect, copy, test or sample any tangible things or electronically stored information … which are in the possession, custody or control of the party or person upon whom the request or subpoena is served, and may do so one or more times.

(b) A party requesting electronically stored information may specify the format in which it is to be produced and a responding party or person not a party may object. If no format is specified by the requesting party, electronically stored information may be produced in the form in which it is ordinarily maintained or in a reasonably usable form.

Pa.R.C.P. 4009.1 (effective Aug. 1, 2012)(emphasis added).  In other words, it is now presumed that party can repeatedly request the inspection of another litigant’s computers (work stations and servers), external drives, back-up tapes, notebooks, cellular telephones and other sources of electronic data to obtain e-mails, texts, deleted documents and drafts of documents that include meta-data indicating documents authors, revisions and dates and times of revisions.  Moreover, when requesting documents, a party may demand that the documents and data be produced in a specific format.

These amendments raise the following issues for clients and lawyers alike:

1.      Employers should assure that their employees are mindful of what they convey in texts and e-mails.  Although people often assume an informal tone in these forms of communication, texts and e-mails are just as relevant, discoverable and potentially binding as any other form of written communication.  Attorneys know this and often pay particular attention to e-mails when looking for adverse information and admissions.

2.      Businesses should assure that document retention and destruction policies are implemented and current.  These policies should include provisions that address the retention and destruction of electronic equipment (such as computers, external drives, electronic notebooks and cellular telephones) as well as, in some cases, overwrite protocols.

3.       People and businesses who are involved in or anticipate litigation should include computers, cellular telephones, notebooks, external drives and back-up tapes in any litigation holds that are placed on documents and other sources of information.  Failure to do so could result in sanctions, adverse inference instructions and, in extreme cases, liability.

Please contact us if you require any additional information or guidance on this issue.

Daniel P. Dwyer

Dan Dwyer is an associate at Unruh, Turner, Burke and Frees, Dan practices in the areas of Pennsylvania Commercial Litigation and Governmental Law. The firm maintains law offices in Phoenixville, Malvern, and West Chester Pennsylvania which serve the Main Line, and many surrounding communities such as Devon, Exton, West Chester, Ardmore and others.

By: Kristen Wetzel Ladd

The Pennsylvania Superior Court issued a recent decision which may impact many pending mortgage foreclosure actions and cause lenders to look more closely at notices that are sent. The case involved the question of whether the Act 91 Notice (required under 35 P.S. § 1680.403c) sent by Beneficial to a mortgagor – the same notice promulgated by the Pennsylvania Housing Finance Agency (“PHFA”) prior to September 8, 2008 – was deficient under the Act. Although the notice advised of the right to have a meeting with a credit counseling agency it did not advise of the right to have the same meeting with the mortgagee. The statutory language required that the notice should provide notice regarding one or the other. Again, the notice used by Beneficial was the notice promulgated by the PHFA. The trial court specifically held that the Act 91 Notice was deficient because it omitted language informing of the right to seek a face-to-face meeting with the mortgagee within 30 days of issuance of the Notice. The trial court ordered the sheriff sale set aside and dismissed the action.

The moral of the story is that the model notices promulgated by an agency do not provide a safe harbor. The statute controls and when in doubt, provide as much and as expansive of a notice as possible.

The courts of this Commonwealth have long held that a deficient Act 91 notice strips the court of subject matter jurisdiction to entertain the action. Act 91 provides, in pertinent part, as follows:

Before any mortgagee may accelerate the maturity of any mortgage obligation covered under this article, commence any legal action including mortgage foreclosure to recover under such obligation, or take possession of any security of the mortgage debtor for such mortgage obligation, such mortgagee shall give the mortgagor notice as described in section 403-C. Such notice shall be given in a form and manner prescribed by the [Pennsylvania Housing Finance Agency ("agency") ]…

… The agency shall prepare a notice which shall include all the information required by this subsection and by section 403 of the act of January 30, 1974 (P.L. 13, No. 6), referred to as the Loan Interest and Protection Law. This notice shall be in plain language and specifically state that the recipient of the notice may qualify for financial assistance under the homeowner’s emergency mortgage assistance program. This notice shall contain the telephone number and the address of a local consumer credit counseling agency. This notice shall be in lieu of any other notice required by law. This notice shall also advise the mortgagor of his delinquency or other default under the mortgage and that such mortgagor has thirty (30) days to have a face-to-face meeting with the mortgagee who sent the notice or a consumer credit counseling agency to attempt to resolve the delinquency or default by restructuring the loan payment schedule or otherwise. (emphasis added).

Again, the Notice received by the mortgagor informed her that she had thirty days to have a face-to-face meeting with a consumer credit counseling agency, but did not inform her that she could meet face-to-face with the mortgagee within those thirty days. The trial court interpreted the language highlighted above to mean that the Act 91 notice sent by Beneficial to the mortgagor had to inform of the right that the mortgagor had thirty days either to have a face-to-face meeting with Beneficial or to have a face-to-face meeting with a consumer credit counseling agency. Because the Act 91 notice Beneficial sent to the mortgagor failed to inform of the right to meet with Beneficial, the trial court concluded that the notice was deficient and that the court thus lacked subject matter jurisdiction to entertain the matter.

Beneficial argued to the Superior Court that the trial court’s interpretation of Section 1680.403c failed to give effect to the word “or.” Beneficial further argued that the PHFA was vested with the discretion to decide whether the notice sent from a mortgagee to a mortgagor should include the option of the mortgagor meeting face-to-face with the mortgagee or the alternate option of the mortgagor meeting face-to-face with a consumer credit counseling agency, and that Beneficial was entitled to rely on the notice promulgated by the PHFA.

However, the Superior Court refused to provide a “safe harbor” based on Beneficial’s reliance on the form notice and affirmed the trial court’s finding that Subsection 1680.403c(b)(1) clearly and unambiguously required a mortgagee to provide to a mortgagor notice that the mortgagor had a choice of whether to meet face-to-face with the mortgagee or a consumer credit counseling agency. Since Beneficial’s Act 91 Notice – and the form notice provided by the PHFA – did not include the language regarding the right to meet face-to-face with the mortgagee, the notice was defective, which deprived the court of jurisdiction to hear the matter, relating back to the filing of the original complaint.

On May 28, 2011, the PHFA provided notice in the Pennsylvania Bulletin (41 Pa.B. 2789) that it had insufficient money available in the Homeowner’s Emergency Mortgage Assistance Program to accept new applications for emergency mortgage assistance on or after July 1, 2011. By supplemental notice published in the Pennsylvania Bulletin (41 Pa.B. 3943), PHFA established the date of August 27, 2011, after which mortgagees shall no longer be subject to the notice provisions of the Act. Thus, at any time on or after August 27, 2011, mortgagees may take legal action to enforce a mortgage without any further restriction or requirement of the Act (i.e., the Act 91 notice) without respect to the date upon which a mortgage obligation becomes delinquent. However, mortgagees are still required to issue the notice as provided by Section 403 of the Act of January 30, 1974 (P.L. 13, No. 6), 41 P.S. § 403, (the “Act 6 Notice”) under the provisions of that Act. The Act 6 Notice is required before accelerating the maturity of residential mortgage obligations of $221,540* or less, commencing any legal action including mortgage foreclosure to recover under such obligations, or taking possession of any security of the residential mortgage debtor for such residential mortgage obligations.

Since Act 91 Notices are no longer required, this is not an issue that creditors need to be concerned going forward unless and until the funding is restored or the ACT 91 Notice is otherwise reinstated. An en banc re-argument of the Vukmam decision has been requested. Stay tuned for more developments in this interesting case.

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* The dollar figure applicable to the Act 6 Notice changes annually as published by the Department in the Pennsylvania Bulletin, typically in November of each year. See, e.g., 40 Pa.B. 6537.

Kristen Ladd

Kristen Ladd is an associate at Unruh, Turner, Burke and Frees, Kristen practices in the areas of Pennsylvania Litigation, and Pennsylvania Creditors’ Rights and Bankruptcy Law. The firm maintains law offices in Malvern, Phoenixville, and West Chester Pennsylvania which serve the Main Line, and many surrounding communities such as Devon, Exton, West Chester, Ardmore and others.


By: Kristen Wetzel Ladd

It is not uncommon in a commercial credit transaction to have a loan to a business which is guaranteed by the principals and secured by a mortgage on the principals’ residence.  When a default occurs, the creditor must choose how to proceed to collect, usually either by confessing judgment on the note or filing an action in mortgage foreclosure.  Confessing judgment is highly efficient (see my previous blog on The Utility of Confessed Judgments) – it allows for an instant lien against all real property owned by the defendant in the county in which judgment is confessed.  It further allows for execution against all types of property – personal property (bank accounts, cars, etc.) and real property owned by the judgment-debtor, even if the creditor does not have a mortgage on the real property.

Confessing Judgment On The Note
OR
Filing An Action In Mortgage Foreclosure

However, if the creditor is going to specifically target “residential real property” as the source of payment of the judgment, the creditor may gain nothing by confessing judgment.  This is because when executing on a confessed judgment against residential real property (defined in Act 6 as “real property located within this Commonwealth containing not more than two residential units or on which not more than two residential units are to be constructed and includes a residential condominium unit”), the creditor must first file an action to conform its confessed judgment prior to obtaining a writ of execution.  The action to conform is a de novo action, meaning that the defendant may raise defenses in the conform case, even if defendant ignored the confessed judgment for years or waived those defenses by failing to include them in a previous petition to open.

If the creditor wants to specifically pursue a sheriff sale of residential real property, the creditor may be better served by initially filing an action in mortgage foreclosure.    Once suit is filed, normal timelines can be expected for service on defendant and filing of default judgment if the defendant does not file any responsive pleading.  One advantage of a mortgage foreclosure over an action on the note is that a mortgage foreclosure case has extremely narrow grounds for counterclaims by defendants.  Also, there is no right to a jury trial in a mortgage foreclosure action.  There is no such ban on jury trials on actions under the note, unless the defendant waived the right to jury trial in the note itself.  An uncontested mortgage foreclosure action with no service issues takes approximately six months to complete in Pennsylvania, from the date of filing the complaint.

If you are a creditor who needs assistance deciding whether to proceed with an action on a note vs. a mortgage foreclosure action, the law firm of Unruh Turner Burke & Frees, P.C. may be able to assist you.

Kristen Ladd

Kristen Ladd is an associate at Unruh, Turner, Burke and Frees, Kristen practices in the areas of Pennsylvania Litigation, and Pennsylvania Creditors’ Rights and Bankruptcy Law. The firm maintains law offices in Malvern, Phoenixville, and West Chester Pennsylvania which serve the Main Line, and many surrounding communities such as Devon, Exton, West Chester, Ardmore and others.

By: Kristen Wetzel Ladd

Pennsylvania is one of the few states that allows judgment to be entered by confession in connection with a commercial credit transaction. Obtaining judgment by confession is desirable for a creditor in that it is usually easier, faster, and less costly than acquiring judgment through normal litigation procedures. There are several factors which contribute to the usefulness of a confessed judgment:

• Potentially Reducing Court Time and Attorney Expenses – Because the entering of a judgment by confession is performed by the Prothonotary, the judgment is of record as soon as it is filed by the creditor’s attorney.   This single act through the warrant of attorney avoids the adversary litigation that may ensue through normal litigation procedures. The creditor can quickly attempt to collect on the debt owed.
• Shifting Burden – Once a judgment is entered by confession, there is a presumption that it is a valid judgment. The judgment-debtor has the initial burden of proving that the judgment should be open or stricken, should the debtor seek to attack the judgment. Instead of the creditor needing to prove its case, the debtor is required to do so in order to have the judgment opened. A debtor seeking to open a confessed judgment must demonstrate that there is evidence of meritorious defenses to survive a directed verdict motion and reach a jury.
• Locks Lien Priority – The date that the judgment is entered by confession locks in the creditor’s lien priority on real estate on which the creditor does not already have a mortgage. The judgment acts as a general lien against all real property owned by the debtor in the county where the judgment is entered. This is distinguishable from a mortgage, which is a specific lien against a particular piece of real property. Lien priority may become important in subsequent foreclosure or bankruptcy proceedings, as the priority affects when and if a creditor will be paid through a bankruptcy or sheriff sale of real property. The confession of judgment clause is an important tool for obtaining security for an otherwise unsecured debt.
• The Mere Filing Of A Petition To Strike And/Or Open A Confessed Judgment Does Not Act As An Automatic Stay– a debtor wishing to remove a confessed judgment must act promptly and present evidence of meritorious defenses. However, the mere filing of a petition to open or strike does not automatically affect the lien of the judgment or the right to execution. The debtor must request and obtain from the court a stay of execution in order to halt the creditor’s rights of execution.

A warrant of attorney to confess judgment is one of the most powerful clauses in a contract due to its power, as outlined above, to divest the debtor of constitutional rights and procedural protections. Therefore, courts strictly construe the language of a warrant of attorney and a creditor must be certain to follow specific procedures when obtaining a contract with a confession clause.  If you are a creditor who needs assistance with drafting a contract with the power to confess judgment, the law offices of Unruh Turner Burke & Frees may be able to assist you.

Kristen Ladd

Kristen Ladd is an associate at Unruh, Turner, Burke and Frees, Kristen practices in the areas of Pennsylvania Litigation, and Pennsylvania Creditors’ Rights and Bankruptcy Law. The firm maintains law offices in Malvern, Phoenixville, and West Chester Pennsylvania which serve the Main Line, and many surrounding communities such as Devon, Exton, West Chester, Ardmore and others.

By: Nancy J. Glidden

Powers of Attorney (“POA’s”) are authorized under Pennsylvania law and are integral to many types of transactions. The Pennsylvania Supreme Court’s relatively recent decision in Vine v. Commonwealth of Pennsylvania[1], however, has injected uncertainty into the immunity afforded when a third party acts in good faith reliance upon a POA.

Section 5608(b) of Pennsylvania’s Probate, Estates and Fiduciaries Code provides:

Any person who acts in good faith reliance on a power of
attorney shall incur no liability as a result of acting in
accordance with the instructions of the agent.

In Vine, the Court held that the immunity of Section 5608(b) applies only in circumstances where the POA is actually valid and, by extension, the agent is legally an agent. While at first glance this may not appear to be such a radical concept, the practical effect is quite disturbing and disruptive for third parties who regularly engage in transactions involving POA’s. Prior to Vine, when an agent presented a POA that facially met all statutory requirements and thus appeared to be valid, a third party had comfort level in carrying out the agent’s directions because it was believed that in instances where a problem developed, Section 5608 provided immunity.

Now in a post-Vine world, a third party who acts at an agent’s direction pursuant to a POA does so at their peril unless determining first that the POA is in fact valid and the agent is in fact authorized. Since conducting such an investigation is time-consuming, potentially costly, and cumbersome, an alternative is for third parties to simply decline to engage in transactions in which a POA is involved. Since Vine, increasingly many third parties are opting for this latter approach. A disruption to banking affairs, real estate transactions, and estate planning is the obvious result.

To ameliorate the effects of Vine, and restore commercial viability to POA’s, discussions are under way to amend the Probate, Estates and Fiduciaries Code to provide greater safeguards to principals executing POA’s, and to clarify the circumstances under which third parties acting in good faith when presented with POA’s can expect immunity. For principals, amending Section 5601(b) to both require and increase the number of witnesses, requiring specific averments as to free will and capacity, and requiring formal execution by the principal and witnesses in the presence of a notary public, are apt to provide greater protections and reduce the chances of fraudulent or invalid POA’s entering the stream of commerce. For third parties, amending Section 5608(b) to expressly provide immunity when a third party acts in good faith reliance upon a POA that appears to be valid makes a great deal of sense and would go a long way toward returning POA’s to the level of acceptance found prior to Vine.

The Pennsylvania Bar Association’s Section on Real Property, Probate and Trusts, and the Elder Law Section jointly support such changes and it is hoped that the legislative process will move forward and act to amend the Probate, Estates and Fiduciaries Code at the earliest possible opportunity.

Ms.Glidden is a member of the Pennsylvania Bar Association’s Real Property, Probate and Trust Law Section Council.

Nancy Glidden

Nancy Glidden is an attorney at Unruh, Turner, Burke and Frees. Nancy practices in the areas of Pennsylvania litigation, mediation and arbitration. The firm maintains law offices in Malvern, Phoenixville, and West Chester Pennsylvania, which serve the Main Line and many surrounding communities such as Devon, Exton, West Chester, Ardmore and others.

[1] The Vine opinion was issued by the Pennsylvania Supreme Court on December 21, 2010, and it appears at 9 A.3d 1150 (Pa. 2010).

By: Kristen Wetzel Ladd

As the holder of an unsecured  debt (that is, a debt which is not secured by a mortgage on real estate  or a security interest in personal property), how does a creditor  proceed with collecting its debt in the event that its borrower ceases  payment? The first step is to determine what, if any, notice is required  to the borrower under the contract existing between the creditor and  borrower. After demand is made, the borrower usually has a set amount of  time in which to either reinstate or pay off the debt. If the borrower  is non-responsive to the payment demand, the creditor may then sue the  borrower for the unpaid debt. The borrower must respond to the  creditor’s complaint within a certain timeframe after service. If no  response is filed, the creditor will be able to obtain a default  judgment.

Once the judgment is acquired,  it acts as a lien against all real estate owned by the borrower in the  county where the judgment is entered. The creditor then has —if the  borrower still doesn’t pay — a number of methods to ensure repayment.   The judgment lien means that if the borrower’s property is sold,  proceeds of the sale (if there are proceeds; i.e. the property is not  “underwater” on equity) must be applied against the creditor’s debt. The  borrower’s property cannot be sold free and clear of all liens until  the creditor’s lien is paid off, which means that the lien both makes it  more difficult to sell the property (since the owner’s interest is not  free and clear) and also makes it more difficult to profit from the  property’s sale. The creditor can take a “sit and wait” approach until  the borrower tries to sell the property. If this strategy is taken, the  creditor must revive its judgment lien every five years to maintain its  priority.

Another option for the  creditor is to execute on the judgment against personal assets of the  borrower. While wages cannot be garnished in Pennsylvania (except for  certain types of debts such as a debt for a domestic support  obligation), other personal property such as a bank account in the  borrower’s name, may be attached. What this means is that any money  existing in the bank account as of the date of garnishment (excluding  the Pennsylvania statutory exemption and the garnishee bank’s  administrative fees) will become available to the creditor for  satisfaction of its judgment.

If you are a creditor who  needs assistance with collecting a debt, the law offices of Unruh Turner Burke & Frees may be able to assist you with your claim.

Kristen Ladd

Kristen Ladd is an associate at Unruh, Turner, Burke and Frees, Kristen practices in the areas of Pennsylvania Litigation, and Pennsylvania Creditors’ Rights and Bankruptcy Law. The firm maintains law offices in Malvern, Phoenixville, and West Chester Pennsylvania which serve the Main Line, and many surrounding communities such as Devon, Exton, West Chester, Ardmore and others.

By: Donald C. Turner

In these difficult economic times, employee theft is an all too frequent occurrence that can disrupt operations and wreak financial ruin. As a result, purchasing insurance to protect your business from such transgressions is advisable. Fidelity Insurance provides coverage for loss of money or property due to employee theft. Some policies also provide coverage of losses attributable to computer theft. Upon learning of a loss due to theft or fraud, business owners should immediately notify the insurance company in writing and conduct an investigation in an attempt to identify the scope of the loss, the perpetrator, and the disposition of the stolen property. In these matters, time truly can be of essence.

Donald C. Turner, a founding member of Unruh, Turner, Burke & Frees, has been practicing law in Chester County for over twenty years.  If you have any questions about protecting your business from employee theft, contact Donald Turner at our West Chester office by calling (610) 692-1371.

By: Nancy J. Glidden

Read my recent blog about Exactly How Confidential Is The Mediation Process? .

For more information, contact Nancy Glidden.