Virginia Confessions of Judgments Can Be Fragile
A recent Fairfax County Circuit Court case highlights how fragile confessions of judgments can be in Virginia. The case, Superior Paving v. Bud & The Boyz Construction, resulted in a confessed judgment being set aside by the trial court.
Virginia law provides at Code of Virginia Section 8.01-433.1 that the note, bond or other evidence of a debt with a confession of judgment provision contain a notice provision stating:
IMPORTANT NOTICE
THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS THE CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.
In Superior Paving, the plaintiff included the statutory notice language in the original credit agreement related to asphalt purchases. The defendant later requested a proposal from plaintiff for paving the entrance of an industrial building. Defendant accepted the proposal. According to the court's opinion, neither the proposal nor the later resulting invoices contained the statutory notice language. The opinion is silent on whether the proposal, acceptance, and invoices expressly incorporated the terms of the credit application.
The court initially entered judgment in favor of plaintiff in March. On October 5, the court set the judgment aside ruling that "any and all notes or evidence of debt upon which a confessed judgment is to be based must unclude the 8.01-433.1 language".
There are a couple take-aways from this case:
- 1: Assume that confessions of judgment provisions are fragile and easily undone
- 2: Even after judgment is entered, See No. 1
- 3: Include the confession of judgment notice into the actual contracts
Image by Haole Punk
At least you have them in VA. When I moved to TN, I tried to negotiate one into a settlement agreement and could not find anyone here who had experience with them. I researched and learned why ... void and unenforceable by statute!?!?!?
Good post.
Wow! Interesting case. Just goes to show that the Virginia Courts will look at statutes and construe them strictly (see Mechanic's liens)
Thanks for the comments!
Matt, I am really hit watching both our blogs by how different Tennessee law is. I saw recently that you were a DC transplant which I did not know before, where were you up here?
Chris - good analogy for sure. Like the mechanic's liens, the courts look at confessed judgments very strictly. I can understand why, the judges really do not like these and almost look for reasons to toss them. Even in cases involving settlement agreements and no real defenses, I have seen parties undo them with some frequency.