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Archive for the tag “acknowledge”

Don’t Like An Award From Compulsory Arbitration? You Must Appeal

Can a party to a case where a judgment has been entered in compulsory arbitration have that judgment modified without appealing? This is the underlying question in the recent matter heard by the Pennsylvania Superior Court, captioned as Blucas v. Agiovlasitis, 2018 Pa.Super. 25.

In Blucas, tenants brought suit against their former landlord for the return of their security deposit. The landlord, of course, claimed the leasehold had damages for which he incurred expenses and he needed compensation/reimbursement from the tenants.

The case was tracked into compulsory arbitration pursuant to 42 Pa.C.S.A. Section 7361. After a hearing before a panel of arbitrators, a judgment was entered awarding the tenants $10,000 and the landlord $1,450, for a net award to the tenants of $8,550.

Pursuant to Pa.R.C.P. 1307 and established case law, the entry of an award following compulsory arbitration has the force and effect of a final judgment. The court contrasted an award flowing from compulsory arbitration with one following statutory or common law arbitration. Unlike an award from compulsory arbitration, a party must petition the trial court to confirm an award from statutory or common law arbitration 30 days or more following the date of the award. For an award from compulsory arbitration neither party must file a præcipe to enter judgment on the award.

In July 2016, an award and notice of the same was entered on the docket in this matter, and was final (unless appealed). A judgment on the award was entered in November 2016. Within less than two weeks following the entry of the judgment in Blucas, the landlord remitted a check to the tenants for the full amount of the judgment ($8,550). Pursuant to Pa.R.C.P. 1307, a party must file an appeal within 30 days from when the award and notice are entered on the docket in order to further litigate the matter. No appeal was ever filed. Instead of appealing, the tenants, in April 2017, filed a motion for costs and prejudgment interest (motion) requesting a recalculation of the award.

The court reviewed the various case, statutory, and procedural laws applicable to the instant matter, and unequivocally concluded that the sole remedy for an adverse or unsatisfactory compulsory arbitration award is an appeal within 30 days from the award and notice. The only exception to the above the court could discern is Pa.R.C.P. 1307(d), which provides for a means to “mold” a previously entered award for obvious errors, in either arithmetic or language, that do not go to the substance and/or merits of the award.

The tenants’ motion did not address basic errors in arithmetic and language but, rather, asked the trial court to award them additional damages in prejudgment interest and costs. Inexplicably, and without citing support, the trial court granted the tenants’ motion, which led to the landlord’s appeal to Pennsylvania Superior Court, resulting in the decision, cited above, that is the subject of this article.

Superior Court noted that the motion did not comply with the law and procedure cited above.  The motion clearly is not an example of “molding.” More importantly, it was not filed within 30 days of the award.  The trial court was unclear as to precisely how it calculated the award and what the figures in the award exactly represented (e.g., interest and costs? security deposit? pet deposit? etc.). As a result, there is no way for Superior Court to even attempt to “mold” the award regarding prejudgment interest, even if it could. Consequently, as the tenants did not file an appeal of the compulsory arbitration award, the trial court was without authority to attempt to revisit the award with regard to prejudgment interest.

As always, it is absolutely critical for practitioners to be totally cognizant of the applicable deadlines and time periods mandated by law or procedure and act accordingly to ensure compliance with the same and opportunity to litigate a matter as fully as possible.

Originally published in The Legal Intelligencer on March 19, 2018 and can be found here.

A Collection of Personal Injury Writings by James W. Cushing, Esquire

Over the course of my career, I have written extensively on a wide variety of personal injury legal principles.  These writings have been published in The Legal IntelligencerUpon Further Review, and The Pennsylvania Family Lawyer as well as posted onto my blog.  I have collected these articles and blog posts and have listed them below.  Thanks for reading!

Musings:

My Articles:

A Collection of Contract and Debt Collection Writings by James W. Cushing, Esquire

Over the course of my career, I have written extensively on a wide variety of contract law issues and debt collection legal principles.  These writings have been published in The Legal IntelligencerUpon Further Review, and The Pennsylvania Family Lawyer as well as posted onto my blog.  I have collected these articles and blog posts and have listed them below.  Thanks for reading!

My Articles:

Musings:

The Secret Defense to Debt Collection Matters

Unfortunately, many people find themselves in a situation where they get behind on paying their bills and, due to lack of funds, wind up not paying some of them.  Not paying one’s bills will more often than not result in that debt being sold to a collections agency and that agency suing the debtor for payment (and adding on all kinds of things, like interest, attorney’s fees, penalties and the like to boot).

Selling one’s debt to a collection agency is an important step in the process that directly affects the subsequent lawsuit against the debtor.  Typically, large lenders – especially lenders like credit cards companies – have a fair amount of debtors who stop paying (for whatever reason) on the debt owed to the lender which results in their debts being sent to collections.  When these lenders send debts to collections, they do so by selling the debts to a collection agency.  When they sell the debts to a collection agency, they will often sell the debts in bulk, often for pennies on the dollar.  The transaction benefits the creditor as it gets something for the debts owed without having to pursue costly and time consuming litigation.  The transaction benefits the collection agency because it can pursue collection (including law suit) against a debtor for the full amount despite having bought the debt for far less than its principal value, let alone its value inflated by interest and such.

More often than not, when debts are sold to collection agencies, the initial creditor (e.g.: a credit card company) simply provides an affidavit to the collection agency regarding the amount of the debts and the names of those who owe the debts.  Typically, no other document is supplied by the initial creditor to the collection agency, including any contracts with the debtor or anything bearing the signature on the debtor.  Once the collection agency assumes the debt, it has the right to bring suit against the debtor for the unpaid debt.

The lack of documentation of the contract with the debtor is absolutely key to any defense to the collection of the debt.  If the creditor brings suit against the debtor in the Court of Common Pleas and does not attach the contract between the debtor and the creditor which underlies the alleged debt, the debtor can file objections to the complaint (the document which initiates the law suit) asking for it to be dismissed due to the lack of a contract.  I can say, from personal experience, that such a tactic works as, very often, the collection agency pursing the debtor simply does not have the underlying contractual documentation to prove its case against the debtor.

If the case is brought in small claims court, the creditor does not have the obligation to include a copy of the contract to the complaint, so successfully defending against a collections law suit takes some shrewd strategy.  The lack of documentary evidence is still a huge problem for the creditor, but the small claims aspect of this matter makes the approach different and much trickier.  As the complaint does not require the contract to be appended to it, and the primary place for these matters to be resolved is at a hearing before a judge, the creditor has the procedural advantage.  At the hearing, the collection agency, armed with an affidavit from the initial creditor (as described above), secures almost all of the other evidence it needs to win against the debtor through the debtor’s testimony.

Here is how the hearing would play out: the creditor describes the claim to the judge, which is that the debtor had a contract with a credit card company (for example), he did not pay the debt owed, and is now in collections and all of this is supported by the affidavit.  Now, the affidavit, taken alone, is insufficient to win the case as there is no evidence that the debtor actually contracted with the creditor.  So, at the appropriate time during the trial, the creditor will ask the debtor some questions (i.e.: cross-examination).  These questions will be something like: “did you have a credit card from XYZ company on these dates”?  “Did you make charges on it?” “Did you make all the payments on it?”  “Do you owe $XYZ on the credit card?” And other questions like it.  At the end of the examination, the debtor himself provides all of the evidence against himself that the creditor needs to win the case against him.   As a result, the creditor will win the case against the debtor thanks to the debtor supplying all of the evidence, via his testimony, need by the creditor.

So, how does a debtor avoid the fate of the debtor in the above scenario?  That is where a good lawyer comes into play.

Debt Acknowledgment: Going Beyond Limitations

Anyone considering bringing a lawsuit needs to be aware of the relevant statute of limitations applicable to one’s case.  A statute of limitations establishes a hard deadline by which a particular suit must be brought, which, if missed, bars the potential plaintiff from bring it.

 

Generally speaking, in the context of a debt collection contract claim, the applicable statute of limitations sets a four (4) year deadline to bring suit after a breach of contract.  This limitations period is set by 42 Pa.C.S.A. Section 5525(a)(1).  A breach of contract occurs upon non-performance of a contractual duty, which, in this case, would be the non-payment of a debt.

 

Although the four-year statute of limitations identified above serves as a hard deadline in most debt collection cases, there is an important exception to this statute which serves to extend the time to bring suit and/or serve to toll the statute of limitations: the so-called “acknowledgement doctrine.”

 

Pennsylvania law has well established the acknowledgement doctrine.  The doctrine states that “[a] clear, distinct and unequivocal acknowledgement of a debt as an existing obligation, such as is consistent with a promise to pay, is sufficient to toll the statute.”  In Re David Cutler Industries, Ltd., 502 B.R. 58 (2013)

 

The acknowledgement doctrine in practice serves to restart the running of the applicable statute of limitations cited above, which would begin upon a reasonable elapse of time from the date of acknowledgement.

 

For example, if the statute of limitations for the failure to pay a debt is set to expire on August 1, 2015, a debtor’s acknowledging the debt on July 25, 2015 would serve to toll the statute of limitations and reset the hard deadline set by the statute to four years after a reasonable elapse of time from July 25, 2015.  A debt customarily must be paid within thirty days of when it comes due; therefore, the new statute of limitations in the example above would be four years from August 25, 2015.

 

When litigating a breach of contract claim, particularly a debt collection matter, and a statute of limitations deadline is approaching, or has passed, practitioners would be wise to explore the possibility of trying to have the debtor acknowledged the debt at some point.  Doing so could serve to save the viability of a case and go a long way to ensuring the debt owed is paid.

 

For more information on the issues addressed above, be sure to also review these cases: Colonial Assur. Co. v. Mercantile and General Reinsurance Co. Ltd., 297 F.Supp.2d 764 (2003); Huntingdon Fin. Corp. v. Newtown Artesian Water Co., 442 Pa.Super. 406 (1995); Camenisch v. Allen, 158 Pa.Super. 174 (1945); In Re Maniatakis’ Estate, 258 Pa. 11 (1917).

Originally published in The Legal Intelligencer Blog on July 21, 2015 and can be seen here.

Acknowledging a Debt to Toll the Statute of Limitations

As every lawyer knows, the statute of limitations is the death knell for any case if the deadline it sets to bring a lawsuit is missed.

Collecting on money owed pursuant to a contract is generally governed by a four (4) year statute of limitations which begins to run upon the breach of that contract. One way to extend that four (4) year statute is to find a way to toll it. The case of In Re Michael Angelo Corry Inn, Inc., 297 B.R. 435 (W.D., PA 2003), provides one innovative way to try and toll it.  Specifically, the Court in the above case analyzed whether acknowledging a debt and promising to repay serves as a way to toll the statute of limitations.

The underlying case involved the filing of a proof of claim by a creditor against a debtor who has filed for bankruptcy. The fact that the context of the case was bankruptcy has no effect or relevance on how the statute of limitations for a contract claim functions and/or applies. The issue was the fact that the creditor did not pursue the alleged debt with any alacrity and many years passed with no action taken on the loan and/or its repayment. The time that elapsed from the potential breach was longer than four (4) years in this case and, therefore, on its face, any action to pursue the contract claim would then be barred by the relevant statute of limitations. In order to avoid the contract claim from being a non-starter due to being barred by the statute of limitations, the creditor attempted to argue that the aforesaid statute is tolled by an acknowledgment of the debt made my the debtor.

The Court agreed that the statute of limitations on contract claims can be tolled if the debtor acknowledges a debt. The caveat, however, is that acknowledgment is more than merely expressing a willingness to pay it.

The acknowledgement doctrine requires a debtor’s acknowledging the existence of, and obligation for, a debt to be clear, distinct, and unequivocal, along with a promise to pay that is similarly doubtless. The Court made it clear that there must be no uncertainty in the debtor’s identification of the specific debt owed, acknowledgment of his own obligation to pay that debt, and a clear promise to pay. A debtor who simply declares an intention or desire to honor his obligation is not considered to have made a promise to pay sufficient to toll the statute of limitations under the acknowledgment doctrine.

So, when litigating a breach of contract claim for an unpaid debt, if one thinks the case can no longer be pursued due to the expiration of the statute of limitations, remember to fully explore the acknowledgement doctrine. It may allow a creditor to successfully pursue a debtor far beyond the four (4) years permitted by the statute of limitations.

Originally published on September 8, 2014 in The Legal Intelligencer Blog and can be found here.

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