CLAIMS AGAINST ENTIRETIES PROPERTY
A recent case of first impression in Pennsylvania was recently addressed by the Pennsylvania Superior Court in the case of Rajaratnam v. Rajaratnam, 2013 WL 6164324 (Pa.Super. Nov. 25, 2013). Husband signed a guarantee in favor of a bank for a business debt in 2005. Husband and wife both signed a guarantee in favor of the same bank for the same business debt in 2007. The bank confessed judgment against husband under his 2005 guaranty in 2009. The bank sued wife under the 2007 guaranty and obtained a judgment in 2012. The bank then tried to use these judgments to execute on certain real property owned by husband and wife as tenants by the entireties.
The Superior Court held that the bank could not execute on the entireties property because the bank did not hold a joint claim against the husband and wife, even though the separate judgments were claims for the same underlying indebtedness.
Thus, when executing on entireties property, joint judgments against husband and wife are required. Separate judgments, even if the claims underlying them are for the same indebtedness, cannot be consolidated in Pennsylvania or used to execute on entireties property.
IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING
Is there an implied covenant of good faith and fair dealing in Pennsylvania? The issue has been the subject of conflicting case law in Pennsylvania, and even the Pennsylvania Supreme Court has acknowledged a considerable amount of confusion as to whether such an implied covenant arises in every contract under Pennsylvania law.
The United States District Court for the Western District of Pennsylvania recently joined those courts answering the question affirmatively, holding that “an implied covenant of good faith and fair dealing is incorporated into every Pennsylvania contract”. Hersh v. CitiMortgage, 2013 WL 6858443 (W.D.Pa. Dec.30, 2013). The court noted that a claim for breach of this implied covenant could only be raised as a standalone breach of contract claim, and could not be raised together with a claim for breach of an express contract provision (because the implied covenant is “subsumed” within the breach of contract claim).