O'Rourke v. PNC Bank ( 2021 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
PATRICIA O’ROURKE, )
)
Plaintiff, )
)
v. ) C.A. No. N20C-08-064 JRJ
)
PNC BANK, MATCH GROUP, )
INC., LEAF OF LIFE COVENANT )
MINISTRY INCORPORATED, )
LEAF OF LIFE COVENANT )
MINISTRY INC., HAJIA LAMPO, )
LAWANDA WILLIAMS, )
EUROSTAR LUXURY MOTORS, )
ALVANNDY VENTURES, AND )
JOHN DOE, )
)
Defendants. )
Date Submitted: May 28, 2021
Date Decided: August 9, 2021
ORDER
Upon consideration of Defendant PNC Bank’s Motion to Vacate Default
Judgment Pursuant to Rule 60(b),1 IT APPEARS THAT:
1. On March 16, 2021, Plaintiff Patricia O’Rourke (“O’Rourke”) filed a
Motion Pursuant to Rule 55(b)(2) for Entry of Default Judgment (“Motion for
Default Judgment”) because Defendant PNC Bank (“PNC”) had failed to timely
1
Defendant PNC Bank’s Motion to Vacate Default Judgment Pursuant to Superior Court Rule
60(b) (“Motion to Vacate Default Judgment”) (Trans. ID. 66452921).
respond to her Complaint.2 On March 23, 2021, the Court entered default judgment
against PNC.3
2. The next day, PNC filed the instant Motion to Vacate Default Judgment
Pursuant to Superior Court Rule 60(b) (the “Motion”).4 In its Motion, PNC asks the
Court to vacate default judgment on the ground of excusable neglect.5 With its
Motion, PNC filed a declaration made by Ariel N. Forbes (“Forbes”), Senior
Counsel in PNC’s Legal Department, describing the circumstances surrounding
PNC’s failure to respond to the Complaint.6 Forbes explained that after the
Complaint had been served in Delaware, it was forwarded to PNC’s main office in
Pittsburgh, Pennsylvania.7 Upon its arrival in Pittsburgh, the Complaint—like all
legal mail—was supposed to be processed by PNC’s Legal Department Operations
Team (the “Operations Team”).8 But due to COVID-19, the Operations Team had
been working under modified protocols, which limited the number of members who
2
Motion Pursuant to Rule 55(b)(2) for Entry of Default Judgment (Trans. ID. 66385842).
3
Order Granting Plaintiff's Motion for Entry of Default Judgment (Trans. ID. 66443162). As the
Court noted in its Order, O’Rourke’s Complaint was served on PNC in Delaware on September
30, 2020, so PNC’s response was due by October 20, 2020. Id. ¶¶ 2–3 (citations omitted).
4
Motion to Vacate Default Judgment.
5
See id. at ¶ 9 (quoting Wynnwood Condo., Assoc. v. Cekine, 2021 WL 287834, at *2 (Del. Super.
Ct. Jan. 27, 2021)) (“First, the Court must look to whether the party’s failure to appear was the
result of ‘neglect which might have been the act of a reasonable person under the
circumstances.’”).
6
See generally Unsworn Declaration Pursuant to 10 Del. C. § 3927 in Support of Motion to Vacate
Default Judgment Pursuant to Superior Court Rule 60(b) (Trans. ID. 66452921).
7
Id. at ¶¶ 5–6.
8
Id. at ¶¶ 6, 9.
2
could be on site at one time.9 This limitation—and “an unknown event”—caused
“the Complaint to be misplaced from other legal materials awaiting processing.”10
Forbes states that PNC first received notice of O’Rourke’s suit on March 18, 2021,
when Forbes received a copy of O’Rourke’s Motion for Default Judgment.11 Soon
after, Forbes requested a copy of the Complaint from O’Rourke’s counsel and then
retained Delaware counsel.12
3. On April 19, 2021, O’Rourke filed a response arguing that PNC’s
explanation failed to demonstrate excusable neglect.13
4. On May 12, 2021, the Court held oral argument on PNC’s Motion.14
After hearing from both parties, the Court asked PNC to submit a supplemental
declaration explaining the way that it processed legal mail before COVID-19 in
contrast to its modified procedures. The Court also asked PNC for any additional
details about what might have happened to the Complaint and what PNC did to
locate the Complaint.
5. On May 21, 2021, PNC submitted a supplemental declaration made by
Forbes elaborating on PNC’s procedures for processing legal mail—both before and
9
Id.
10
Id. at ¶ 11.
11
Id. at ¶ 14.
12
Id. at ¶¶ 15–16.
13
See generally Plaintiff’s Response to Defendant’s Motion to Vacate Default Judgment (Trans.
ID. 66526525).
14
See Judicial Action Form for Motion to Vacate Judgment (Trans. ID. 66593601).
3
during COVID-19.15 Forbes explained that in the early stages of COVID-19, PNC
divided its Pittsburgh employees into two groups, “Orange” and “Blue,” to minimize
the number of employees who were on site at one time.16 The Orange and Blue
groups were each assigned a member of the Operations Team so that legal mail could
be processed regardless of which group was on site on a particular day.17 For a
while, the COVID-19 procedures operated smoothly; an in-house attorney could
receive a piece of legal mail from Delaware within one or two days after it arrived
in Pittsburgh.18 But that changed on September 28, 2020, when PNC instituted a
reorganization of the Orange and Blue groups.19 Under the reorganization, the
Orange group was inadvertently left without a member of the Operations Team to
process legal mail.20 And then O’Rourke’s Complaint arrived:
According to delivery records, the mail package from the Delaware
Offices containing the Complaint was received in the mailroom at the
Pittsburgh Office on Thursday, October 1, 2020. A mail clerk then
placed the mail package on Mr. Fishman’s desk and informed the
Delaware Office that the package had been received.21
15
Supplemental Unsworn Declaration Pursuant to 10 Del. C. § 3927 in Support of Motion to
Vacate Default Judgment Pursuant to Superior Court Rule 60(b) (“Supplemental Declaration”)
(Trans. ID. 66623184).
16
Id. at ¶¶ 6–7, 28–29.
17
Id. at ¶ 32.
18
Id. at ¶ 40.
19
Id. at ¶¶ 45–46.
20
See id. at ¶ 47.
21
Id. at ¶ 49. Mr. Fishman is a member of the Operations Team. Id. at ¶ 7.
4
The Orange group was on site when the package containing the Complaint arrived,
so there was no one to process it.22 By the time that PNC resolved its reorganization
issue—around October 8, 2020—494 pieces of unprocessed legal mail had
accumulated.23 “Absent from the 494 pieces of mail process was [O’Rourke’s]
Complaint.”24
6. On May 28, 2021, O’Rourke responded to PNC’s supplemental
declaration.25 She argued that PNC had again failed to demonstrate excusable
neglect.26 In O’Rourke’s view, PNC’s “explanation is that the Complaint was
‘absent’ from the documents that were processed by its Operations team,” which
“does little to enlighten the Court as to what actually occurred.”27 O’Rourke further
contends that “[i]f neglect is to be excused, PNC at the least should have investigated
what happened and provided the Court with the results of that investigation.”28
7. Under Superior Court Civil Rule 60(b)(1), “[o]n motion and upon such
terms as are just, the Court may relieve a party or a party's legal representative from
a final judgment, order, or proceeding for . . . excusable neglect . . . .”29 To be
22
Id. at ¶ 50.
23
Id. at ¶¶ 51–52.
24
Id. at ¶ 53.
25
Plaintiff’s Response to Defendant’s Supplemental Affidavit (Trans. ID. 66643388).
26
See generally id.
27
Id. at ¶ 5.
28
Id. at ¶ 8.
29
Super. Ct. Civ. R. 60(b)(1).
5
relieved of default judgment because of excusable neglect, a defendant must show
the following:
(1) excusable neglect in the conduct that allowed the default judgment
to be taken;
(2) a meritorious defense to the action that would allow a different
outcome to the litigation if the matter was heard on its merits; and
(3) that substantial prejudice will not be suffered by the plaintiff if the
motion is granted.30
“The defendant must first establish excusable neglect before the Superior Court will
consider whether a meritorious defense or prejudice to the plaintiff exists.”31
“Excusable neglect is defined as ‘neglect which might have been the act of a
reasonable prudent person under the circumstances.’”32 “A mere showing of
negligence or carelessness without a valid reason may be deemed insufficient.”33
8. Here, the Court finds that PNC has not met its burden of showing
excusable neglect. PNC concedes that on October 1, 2020, it received a package
containing the Complaint and that it placed that package on the desk of a member of
the Operations Team. But PNC did not act on the Complaint until March 18, 2021—
after O’Rourke had filed her Motion for Default Judgment. At issue, then, is whether
30
Christiana Mall, LLC v. Emory Hill and Co., 90 A.3d 1087, 1091 (Del. 2014) (brackets and
internal quotation marks omitted) (quoting Verizon Delaware, Inc. v. Baldwin Line Const. Co.,
Inc., 2004 WL 838610, at *1 (Del. Super. Ct. Apr. 13, 2004)).
31
Id. (citations omitted).
32
Id. (quoting Watson v. Simmons, 2009 WL 1231145, at *2 (Del. Super. Ct. Apr. 30, 2009)).
33
Dalton v. Pacific Rim Capital, Inc., 2020 WL 6158115, at *3 (Del. Super. Ct. Oct. 20, 2020)
(internal quotation marks omitted) (quoting Watson v. Simmons, 2009 WL 1231145, at *2 (Del.
Super. Apr. 30, 2009)).
6
PNC acted reasonably in the period of over five months in which it had possession
of the Complaint but failed to respond to it.34
9. Weighing against a finding of reasonableness is PNC’s failure to
investigate what happened to the Complaint. After the reorganization issue was
resolved, the Operations Team identified a backlog of 494 pieces of unprocessed
legal mail. But the Complaint was absent from the backlog, so PNC had reason to
know that it was missing. Yet PNC has not explained what it did to investigate
where the Complaint might have gone. This failure to investigate is unreasonable,
especially in light of PNC’s sophistication.35 Accordingly, the Court finds that PNC
has not provided a sufficient factual basis to establish that its failure to respond to
the Complaint constitutes excusable neglect under Rule 60(b)(1). “Because [PNC]
cannot establish excusable neglect, the Court need not address the meritorious
defense and substantial prejudice prongs . . . .”36
34
PNC argues that it acted diligently after learning of the suit, immediately contacting O’Rourke’s
counsel and retaining Delaware counsel, who then promptly entered her appearance. Motion to
Vacate Default Judgment, at ¶ 9. In PNC’s view, this post-notice conduct “weigh[s] in favor of
vacating the default judgment.” Id. (citing Shah v. Coupe, 2014 WL 5712823, at *2 (Del. Super.
Ct. Nov. 3, 2014)). In support of its view, PNC relies on this Court’s decision in Shah v. Coupe.
But in Shah, it was the State’s “proffered explanation,” not the State’s post-notice conduct, that
the Court found to “constitute[] excusable neglect.” Shah, 2014 WL 5712823, at *2.
35
Cf. Christiana Mall, LLC, 90 A.3d at 1091 (Del. 2014) (“Christiana is owned by Fortune 500
trust company, General Growth Property . . . , that has an office of general counsel and a legal
department headed by Francone. An entity with this level of sophistication and resources should
not have engaged in what it admitted was ‘foolish behavior.’”).
36
Dalton, 2020 WL 6158115, at *5 (citing Apartment Communities Corp. v. Martinelli, 859 A.2d
67, 72 (Del. 2004)).
7
10. Even though PNC has not established excusable neglect, the Court may
nonetheless vacate default judgment under Rule 60(b)(6) for “any other reason
justifying relief from the operation of the judgment.”37 The Court did just that in
Dalton v. Pacific Rim Capital, Inc.38 The Court in that case found that the moving
defendant did not demonstrate excusable neglect.39 But the Court ultimately vacated
default judgment under Rule 60(b)(6)—in part because the moving defendant “acted
reasonably upon receiving notice” of the suit in which it was named a defendant.40
And it did so in the midst of the COVID-19 pandemic, “an unprecedented time that
included national and local states of emergencies.”41
11. Here, there is no dispute that PNC acted diligently after learning of
O’Rourke’s suit. PNC immediately contacted O’Rourke’s counsel to ask for a copy
of the Complaint and then retained Delaware counsel to represent it in this case.
Although PNC’s post-notice conduct does not factor into the Court’s Rule 60(b)(1)
analysis, the Court finds—in line with Dalton—that it weighs in favor of vacating
default judgment under Rule 60(b)(6). In addition, all of the procedural events in
this case have occurred in the midst of COVID-19, as did many of the procedural
37
Super. Ct. Civ. R. 60(b)(6).
38
Dalton, 2020 WL 6158115, at *6 (granting the moving defendant’s motion to vacate default
judgment under Rule 60(b)(6) despite finding that the defendant failed to meet “its burden under
Superior Court Rule 60(b)(1) to show [that] its failure to respond was the product of excusable
neglect”).
39
Id. at *5.
40
Id. at *6.
41
Id.
8
events in Dalton. COVID-19 has wreaked havoc on businesses, requiring them to
respond to ever-changing regulations and public-health guidance. The Court’s Rule
60(b)(6) analysis takes this into account. Finally, the Supreme Court of Delaware
has stated that “Courts should apply rules with ‘liberal construction because of the
underlying public policy that favors a trial on the merits, as distinguished from a
judgment based on a default.’”42 For these reasons, the Court exercises its discretion
under Rule 60(b)(6) to vacate the default judgment against PNC.
NOW, THEREFORE, IT IS HEREBY ORDERED that Defendant PNC
Bank’s Motion to Vacate Default Judgment Pursuant to Rule 60(b) is GRANTED.
IT IS SO ORDERED.
Jan R. Jurden
Jan R. Jurden, President Judge
cc: Prothonotary
42
Dishmon v. Fucci, 32 A.3d 338, 346 (quoting Beckett v. Beebe Medical Center, 897 A.2d 753,
757–57 (Del. 2006)).
9