Easton Condominium Association, Inc. v. K.A. Nash ( 2015 )


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  •            IN THE COMMONWEALTH COURT OF PENNSYLVANIA
    
    
    Easton Condominium Association,       :
    Inc.                                  :
                                          :
                v.                        : No. 2015 C.D. 2014
                                          : Submitted: August 28, 2015
    Kristina A. Nash,                     :
                        Appellant         :
    
    
    BEFORE:     HONORABLE DAN PELLEGRINI, President Judge
                HONORABLE MARY HANNAH LEAVITT, Judge
                HONORABLE ANNE E. COVEY, Judge
    
    
    OPINION BY
    PRESIDENT JUDGE PELLEGRINI                           FILED: September 18, 2015
    
    
                Kristina A. Nash appeals the order of the Northampton County Court of
    Common Pleas (trial court) denying her petition to open the default judgment entered
    in favor of Easton Condominium Association, Inc. (Association) and against Nash in
    the amount of $16,490.44 for unpaid assessments, late charges, fees, costs and
    interest. We vacate and remand.
    
    
                In January 2014, the Association filed a complaint in the trial court
    alleging that Nash is the record owner of a residential condominium unit in the
    Eastonian Condominium in Easton, Northampton County. The Association alleged
    that it was authorized to recover the unpaid assessments, late charges, fees, costs and
    interest pursuant to the Declaration of Condominium and the Uniform Condominium
    Act, 68 Pa. C.S. §§3101-3414. The Association also alleged that because Nash had
    filed a Chapter 7 Bankruptcy Petition in the United States Bankruptcy Court for the
    Eastern District of Pennsylvania on May 9, 2013, and that that court entered a
    Discharge Order in Nash’s favor on November 13, 2013, it was only seeking the
    recovery of unpaid assessments, late charges, fees, costs and interest for the period of
    May 10, 2013, through June 30, 2014, and thereafter under Section 523(a)(16) of the
    United States Bankruptcy Code.1
    
    
                     After Nash failed to respond to the complaint, on March 31, 2014,
    default judgment was entered against her in the amount of $16,490.44 pursuant to Pa.
    R.C.P. No. 1037(b).2 As a result, on April 10, 2014, Nash filed the instant petition to
    open the default judgment pursuant to Pa. R.C.P. No. 237.3(b) which states that “[i]f
    the petition is filed within ten days after the entry of the judgment on the docket, the
    
           1
               Section 523(a)(16) of the Bankruptcy Code states, in relevant part:
    
                     (a) A discharge under … this title does not discharge an individual
                     debtor from any debt—
    
                                                   *   *    *
    
                             (16) for a fee or assessment that becomes due and payable
                     after the order for relief to a membership association with respect to
                     the debtor’s interest in a unit that has condominium ownership … for
                     as long as the debtor or the trustee has a legal, equitable, or
                     possessory ownership interest in such unit, … but nothing in this
                     paragraph shall except from discharge the debt of a debtor for a
                     membership association fee or assessment for a period arising before
                     entry of the order for relief in a pending or subsequent bankruptcy
                     case.
    
    11 U.S.C. §523(a)(16).
    
           2
              Pa. R.C.P. No. 1037(b) states, in pertinent part, that “[t]he prothonotary, on praecipe of the
    plaintiff, shall enter judgment against the defendant for failure to file within the required time a
    pleading to a complaint which contains a notice to defend….”
    
    
    
                                                       2
    court shall open the judgment if the proposed complaint or answer states a
    meritorious … defense.” In Paragraph 5 of the petition, Nash alleged that because
    she listed the Association as a creditor when she filed for Chapter 7 bankruptcy
    protection on May 9, 2013, and because she received a Chapter 7 discharge on
    November 13, 2013, the Association “has not correctly taken into account the legal
    significance of the discharge” and, in the alternative, that “the amount of the
    judgment is incorrect and bears no relationship to [her] actual liability, if any.”
    (Reproduced Record (RR) at 23a, 24a).
    
    
                 At argument on the petition, Nash asserted that because her petition was
    filed within 10 days of the entry of default judgment, Pa. R.C.P. No. 237.3(b)
    provides that the first two of the three prongs necessary to open judgment, i.e., that
    the petition is timely filed and that she had excusable neglect in failing to respond,
    have been satisfied, and that she has met the third required prong, i.e., that she has
    alleged a meritorious defense to the Association’s complaint. (RR at 36a-37a). She
    argued that because the Association was listed as a creditor in her bankruptcy petition
    and because a discharge was granted, “there is a legal issue as to what extent, if at all,
    that this charge may impact on the amount that the [Association] is seeking. Miss
    Nash has already vacated the condominium and wasn’t present during these periods
    that they’re seeking assessment for.” (Id. at 35a-36a). Nash also argued that there
    are factual defenses to the amount owed because “[i]t’s a fairly complicated
    complaint alluding to various kinds of liens and assessments that they allege that they
    can charge.” (Id. at 36a).
    
    
    
    
                                                3
                 The Association argued that Nash was still required to “provide a
    reasonable excuse as to why [she] hasn’t filed an answer” for the default judgment to
    be opened. (RR at 40a). The Association also argued that Nash failed to allege a
    valid defense because Section 523(a)(16) of the Bankruptcy Code “says that even if
    after you filed your form for leave of bankruptcy court, the dues of the [Association]
    are still owed. You still owe them; you still have to pay them.” (Id. at 37a-38a). As
    to the amount owed, the Association alleged that based on Section 523(a)(16), it
    “prorated all the fees from the time she filed” so that “[t]he fees that we’re seeking in
    our complaint started on May 10th, 2013 up to the time of complaint….” (Id. at 39a).
    
    
                 In May 2014, the trial court issued an order denying Nash’s petition to
    open the default judgment. In its opinion, the trial court explained:
    
                 [T]o obtain relief from default judgment a defendant must
                 file a petition to strike off the judgment or to open it and
                 must allege facts showing that: (1) the petition is timely
                 filed; (2) a meritorious defense can be shown; and (3) the
                 failure to appear can be excused. Pa. R.C.P. [No.] 237.3(b);
                 Schultz v. Erie Ins. Exchange, [
    477 A.2d 471
     (Pa. 1984)]
                 (emphasis added). This Court notes that the first prong of
                 the test has been met as [Nash] filed the [Petition] on April
                 10, 2014 – ten (10) days after default judgment was entered
                 against her. The second prong of the test has also been met
                 as [Nash] has pled a meritorious defense in Paragraph 5 of
                 the Petition. However, [Nash] has failed to plead an
                 adequate explanation for the cause of delay in answering
                 the Complaint. [Nash] does not even give a cursory
                 explanation as to why an answer to the Complaint was not
                 filed. As no legitimate excuse or reasonable explanation
                 has been given, this Court is constrained to deny [Nash]’s
                 Petition.
    
    
    
    
                                               4
    (RR at 45a).
    
    
                   In this appeal,3, 4 Nash argues that the trial court erred in denying her
    petition to open the default judgment as she was not required to assert any reasonable
    excuse for the inactivity or delay under Pa. R.C.P. No. 237.3(b) because her petition
    was filed within 10 days of the entry of judgment and the trial court found that she
    alleged a meritorious defense.5 We agree.
    
           3
             Nash initially filed this appeal to the Superior Court, but that court transferred the appeal to
    this Court by order dated September 23, 2014. By order dated August 21, 2015, this Court
    precluded the Association from filing an appellate brief based on its failure to comply with our prior
    order directing it to do so.
    
           4
             A petition to open a default judgment is addressed to the trial court’s equitable powers, and
    the decision to grant or deny such petition is within that court’s discretion. Seeger v. First Union
    National Bank, 
    836 A.2d 163
    , 165 (Pa. Super. 2003). This Court will only overturn an order
    denying a petition to open a default judgment if the record shows a manifest abuse of discretion or
    an error of law. Id.
    
           5
             “The requirement of a meritorious defense is only that a defense must be pleaded that if
    proved at trial would justify relief. The defense does not have to prove every element of its
    defense[;] however, it must set forth the defense in precise, specific and clear terms.” Seeger, 836
    A.2d at 166 (citation omitted). As noted above, in Paragraph 5 of her petition, Nash alleged that
    because she listed the Association as a creditor when she filed her petition on May 9, 2013, and
    because she received a discharge on November 13, 2013, the Association “has not correctly taken
    into account the legal significance of the discharge” and, in the alternative, that “the amount of the
    judgment is incorrect and bears no relationship to [her] actual liability, if any.” (RR at 23a, 24a). In
    addition, while Nash merely asserted at argument in the trial court that she had vacated the
    condominium, she stated that the unit was sold at sheriff’s sale in February 2014 in the verified
    answer that she appended to her petition to open judgment.
    
           In this regard, the United States Bankruptcy Court has explained:
    
                           Section 523(a)(16) was amended in 2005 to significantly
                   broaden the exception to discharge with respect to condominium fees.
                   Prior to the amendment, post-petition fees were dischargeable as long
                   as the debtor did not occupy or rent the property. The legislative
    (Footnote continued on next page…)
    
                                                       5
                   As noted above, Pa. R.C.P. No. 237.3(b) states, in relevant part, that “[i]f
    the petition is filed within ten days after the entry of the judgment on the docket, the
    court shall open the judgment if the proposed complaint or answer states a
    meritorious … defense.” In addition, as the Superior Court has explained:
    
                          Recently, in Attix v. Lehman, 
    925 A.2d 864
     (Pa.
                   Super. 2007), we interpreted Rule 237.3(b) based on these
                   principles of rule construction. We concluded that a
                   petitioner does not need to satisfy the common law
                   requirement that he provide a reasonable excuse for the
                   failure that led to the judgment by default, if his petition to
                   open is filed within 10 days of the judgment and states a
                   meritorious defense. Id. at 866. In doing so, we recognized
                   that Rule 237.3(b) presupposes that a petition filed within
    
    
    (continued…)
    
                   history of the 2005 amendment indicates Congress’ intention to
                   render     post-petition    condominium        fees   non-dischargeable
                   “[i]rrespective of whether or not the debtor physically occupies such
                   property … during the period the debtor or the trustee has legal,
                   equitable, or possessory ownership interest.” H.R.Rep. No. 109-31, at
                   88 (2005), U.S. Code Cong. & Admin. News 2005 at pp. 88, 154.
                   The amendment was enacted to prevent the discharge of post-petition
                   condominium fees and assessments that arise while a debtor who, as
                   in this case, continues to own the unit after vacating it.
    
    In re Ames, 
    447 B.R. 680
    , 683 n. 4 (Bankr. D. Mass. 2011). See also Hijjawi v. Five North Wabash
    Condominium Association, 
    495 B.R. 839
    , 848-49 (Bankr. N.D. Ill. 2013) (“In 2005, section
    523(a)(16) was amended to its current version, which further limits the dischargeability of post-
    petition condominium assessments. Pursuant to the current version, post-petition condominium
    assessments are not only excepted from discharge when the debtor physically occupies or receives
    rental income from the unit, they are non-dischargeable ‘as long as the debtor or the trustee has a
    legal, equitable, or possessory ownership interest’ in the property. It is clear that with this
    amendment, Congress sought to ‘broaden the protections accorded to community associations with
    respect to fees or assessments arising from the debtor’s interest in a condominium, cooperative, or
    homeowners’ association,’ even at the expense of the debtor’s ‘fresh start.’….”) (citations omitted).
    
    
    
    
                                                     6
                   ten days of the default judgment is promptly filed and sets
                   forth a reasonable explanation or legitimate excuse for the
                   inactivity or delay resulting in the entry of the judgment.
                   Id. Thus, we held that under Rule 237.3(b), a trial court
                   must open a default judgment, if the petitioner files a
                   petition to open within ten days of its entry and states a
                   meritorious defense. Id. at 867.
    
    
    Boatin v. Miller, 
    955 A.2d 424
    , 427 (Pa. Super. 2008).6 Because the trial court found
    that Nash had filed the petition within 10 days of the entry of default judgment and
    had alleged a meritorious defense, it erred in denying the petition under Pa. R.C.P.
    No. 237.3(b) on the basis that she failed to assert any reasonable excuse for the
    inactivity or delay resulting in the entry of the judgment because she is explicitly not
    required to do so under that Rule.
    
    
                   Accordingly, the trial court’s order is vacated and the case is remanded
    to the trial court to open the default judgment and to permit Nash to file an answer to
    the Association’s complaint.
    
    
    
                                                  ____________________________________
                                                  DAN PELLEGRINI, President Judge
           6
              See also Explanatory Comment to Pa. R.C.P. No. 237.3 (“[T]he rule supplied two of the
    three requisites for opening judgments by presupposing that a petition filed as provided by the rule
    is timely and with reasonable explanation or legitimate excuse for the inactivity or delay resulting in
    the entry of the judgment….”); Stauffer v. Hevener, 
    881 A.2d 868
    , 871 (Pa. Super. 2005) (“The
    default judgment was entered against Appellants on January 27, 2004, and Appellants filed their
    petition to strike and/or open the default judgment on February 5, 2004. Appellants filed their
    petition nine days after the judgment was entered against them, thus complying with the ten-day
    requirement of Rule 237.3(b). Because Rule 237.3(b) states that a court ‘shall’ open a default
    judgment in such circumstances, the trial court was required to open the judgment entered against
    Appellants if they stated a meritorious defense.”).
    
    
    
                                                      7
               IN THE COMMONWEALTH COURT OF PENNSYLVANIA
    
    
    Easton Condominium Association,        :
    Inc.                                   :
                                           :
                v.                         : No. 2015 C.D. 2014
                                           :
    Kristina A. Nash,                      :
                        Appellant          :
    
    
    
    
                                         ORDER
    
    
                AND NOW, this 18th day of September, 2015, the order of the
    Northampton County Court of Common Pleas dated May 28, 2014, at No. 2014-763,
    is vacated and the case is remanded to that court to open the default judgment entered
    in favor of Easton Condominium Association, Inc. (Association) and against Kristina
    A. Nash (Nash) in the amount of $16,490.44 and to permit Nash to file an answer to
    the Association’s complaint.
    
    
                Jurisdiction is relinquished.
    
    
    
                                           ____________________________________
                                           DAN PELLEGRINI, President Judge
    

Document Info

DocketNumber: 2015 C.D. 2014

Judges: Pellegrini, President Judge

Filed Date: 9/18/2015

Precedential Status: Precedential

Modified Date: 9/18/2015