Fiore v. Oakwood Plaza Shopping Center

Leonard Fiore and others (collectively, Fiore) (plaintiffs) sold land in Pennsylvania in an arm’s-length transaction for more than $1 million to a predecessor of Oakwood Plaza Shopping Center, Inc. and others (collectively, Oakwood) (defendants). Oakwood was a sophisticated entity that was represented by counsel. Oakwood agreed to a purchase-money mortgage, which included a cognovit provision by which Oakwood confessed judgment in the event of a default. Fiore initially sought a lump-sum payment from Oakwood at closing but agreed to receive payment over two years in exchange for the cognovit provision. The bond and warrant document for the mortgage was three pages long, with the cognovit clause the only provision on the third page, just above the signature lines. Upon Oakwood’s failure to make its mortgage payments, Fiore obtained cognovit judgments against Oakwood in Pennsylvania state court. Pursuant to Pennsylvania law, Oakwood had an opportunity to contest the merits of the judgment and received notice of entry of the judgment from the court clerk. Oakwood was unsuccessful in invalidating the cognovit judgments on the merits in Pennsylvania, after which Fiore sued Oakwood in New York state court to enforce the Pennsylvania judgments. The supreme court granted summary judgment to Fiore. The appellate division affirmed, ruling that the Pennsylvania judgments were entitled to full faith and credit. Oakwood appealed, arguing that, as a matter of law, cognovit judgments were not entitled to full faith and credit in New York. Fiore responded that the cognovit judgments against Oakwood were enforceable in New York because Oakwood waived its due-process rights to notice and an opportunity to be heard.