Preview:

J. A09017-10 2010 PA Super 144 ESB BANK, Appellee v. JAMES E. MCDADE A/K/A JAMES E. MCDADE JR. AND JEANNE L. MCDADE, APPEAL OF: JEANNE L. MCDADE, Appellant : : : : : : : : : : : : IN THE SUPERIOR COURT OF PENNSYLVANIA

No. 1593 WDA 2009

Appeal from the Order Entered August 19, 2009, in the Court of Common Pleas of Washington County, Civil Division, at No 2005-9185. BEFORE: BENDER, BOWES, and COLVILLE*, JJ. OPINION BY BOWES, J.: Filed: August 6, 2010

Jeanne L. McDade ("Appellant") appeals the order entered on August 19, 2009, wherein the trial court denied her petition to open and/or strike the confessed judgment entered against her and in favor of ESB Bank ("ESB"). We reverse. Appellant and her husband, James E. McDade,1 owned JEM Builders, Inc. ("JEM"), which was engaged in residential construction. ESB financed four commercial construction loans for JEM projects to be built in Washington and Allegheny Counties. ESB held first mortgages against the
* 1

Retired Senior Judge assigned to the Superior Court.

James McDade did not file the underlying petition to strike or open the confessed judgment, and he is not a party in this appeal.

J. A09017-10

four properties and Appellant and her husband provided personal guaranties through an Agreement of Guaranty and Suretyship, which specifically referenced those four loans. ESB also held first and second mortgages on Appellant's personal residence located at 525 Circle Drive in Washington County. The General Loan Conditions, which apparently were incorporated by reference in the four construction loans, included a cross-collateralization provision that extended the security Appellant furnished for the construction loans to any other loan between Appellant and ESB.2 The relevant proviso follows. Cross Default and Cross Collateralization. An event of Default under the loan Security Documents shall also include a default by Borrower or any Guarantor under any Note, Mortgage, Guaranty or any other agreement or Loan Security Document relating to this loan or any other loan between lender and Borrower or any Guarantor. Further, the Security given for this loan shall extend to any other loan between Borrower and Lender, and the Security given for any other loan shall extend to this loan. See Answer to Petition to Strike, 5/12/09, Exhibit A (General Loan Conditions), at 5. JEM eventually defaulted on the commercial construction loans, and on December 5, 2005, ESB confessed judgment in Washington County against Appellant for $1,169,566.93 based upon her personal guaranty relating to

The precise documents that allegedly incorporated the loan conditions into the personal guaranty are not contained in the certified record.

2

-2-

J. A09017-10

those loans. Commercial

ESB's "Complaint and Confession of Judgment on the Transaction" did not reference the cross-collateralization

provision or the two mortgages it held on Appellant's residence, and it did not purport to confess judgment on any debts relating to those mortgages. Thereafter, ESB foreclosed on the four properties and purchased them at a sheriff's sale. As ESB did not obtain deficiency judgments, the debts secured by those properties were deemed satisfied as a matter of law under the Deficiency Judgment Act, 42 Pa.C.S.

Download a09017-10.pdf

Pennsylvania Law