Delaware lenders and their attorneys are accustomed to seeing affidavits at commercial loan closings of borrowers and guarantors authorizing the entry of a judgment by confession, which state their contact with Delaware, and include the mailing address of their residence. The affidavits' genesis is a Delaware statute, 10 Del. C. § 2306(c), requiring parties that are not Delaware residents to sign this document, which the lender must produce to the Prothonotary in order to enter the judgment. A 2014 Delaware Supreme Court case demonstrates how critical it is to obtain such affidavits in loan closings, but also provides a path to obtain confessed judgments even if the document does not exist.
In Zimmerman v. Customers Bank, 94 A.3d 739 (Del. 2014), Michael Zimmerman, the Dover developer who tragically and unexpectedly passed away earlier this month, and his wife obtained two loans, defaulted under the loans, and entered into a forbearance agreement with the bank. The forbearance agreement included a warrant of attorney to confess judgment. The bank did not obtain the non-resident affidavit required by the statute, as the borrowers had provided Delaware addresses. Customers Bank filed a complaint in Delaware Superior Court seeking the entry of the judgment by confession against the Zimmermans under Superior Court Civil Rule 58.1. The Zimmermans argued at the Superior Court's hearing on the entry of the judgment that when the forbearance agreement was executed they were residents of Florida; therefore, the bank had not obtained a valid judgment by confession because it did not file the non-resident affidavit with the request for the judgment. The assertion of Florida residence was made despite Delaware notice addresses in the signed loan documents and no change in address having been filed with or requested of the bank.
However, the Supreme Court held that the lack of the affidavit did not matter, because the confessed judgment was not entered by the Prothonotary under Superior Court Civil Rule 58.1; instead it was entered directly by the Superior Court itself under rule 58.2. Unlike the rules regarding the entry of judgment by the Prothonotary, the provisions permitting the Superior Court to enter a judgment by confession do not include the requirement of an affidavit for non-residents.