Direct Capital Corp. v. Claypoole, R. ( 2022 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
DIRECT CAPITAL CORPORATION : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
ROBERT CLAYPOOLE, DMD, PC AND :
ROBERT CLAYPOOLE, DMD :
: No. 1470 EDA 2021
Appellants :
Appeal from the Order Entered January 22, 2020
In the Court of Common Pleas of Montgomery County
Civil Division at 2019-00532
BEFORE: BENDER, P.J.E., MURRAY, J., and STEVENS, P.J.E.*
MEMORANDUM BY MURRAY, J.: FILED FEBRUARY 7, 2022
Robert Claypoole, DMD, PC, and Robert Claypoole, DMD (Claypoole)
(collectively, Appellants), appeal from the order denying their petition to strike
or open the $29,739.09 default judgment entered against them and in favor
of Direct Capital Corporation (Direct Capital), in this case involving breach of
a financing agreement. After careful review, we affirm.
The trial court explained:
In June 2016, the parties to this matter entered into [an
agreement (Agreement)] under which [Direct Capital] provided
financing for Appellants’ purchase of a piece of dental equipment
known as a CEREC machine from CAD/CAM Hero, reportedly a
reseller of CEREC machines. The piece of dental equipment is
described as a one-day visit crown inlay machine, according to []
Claypoole []. CAD/CAM Hero has offices located in Fort Worth,
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* Former Justice specially assigned to the Superior Court.
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Texas, and Appellants’ dental practice is operated in Hatboro
Township, Montgomery County.
Trial Court Opinion, 7/27/20, at 1-2. Direct Capital is a New Hampshire
corporation engaged in the business of “lending, equipment leasing and
corporate financing,” and has its primary place of business in Portsmouth, New
Hampshire. Complaint, 1/10/19, ¶ 1.
Direct Capital filed a civil complaint in Montgomery County,
Pennsylvania, on January 10, 2019. Direct Capital averred Appellants
“stopped making the payments under the terms of the Agreement, with a
principal amount still owed in the amount of $26,037.68.” Id. ¶ 10. Direct
Capital represented, “Pursuant to the Agreement, [Appellants] are responsible
to pay all costs incurred by [Direct Capital] in connection with the enforcement
of the terms of the Agreement, including collection and attorney’s fees.” Id.
¶ 12. As a result of Appellants’ breach, Direct Capital sought $29,739.09 in
damages, interest and fees. Id. ¶ 13.
Direct Capital served Appellants with the complaint on January 28,
2019. On February 22, 2019, Direct Capital filed notice of its intention to seek
default judgment pursuant to Pa.R.C.P. 1037. On March 13, 2019, the trial
court entered the $29,739.09 default judgment against Appellants.
Appellants filed a petition to strike or open the default judgment on July
22, 2019. Thereafter,
Appellants moved for a stay of execution which was granted by
order of the court dated August 27, 2019. The August 27, 2019,
order directed the parties to complete any discovery they intended
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to conduct concerning the issues raised in Appellants’ petition to
strike or open the default judgment, by September 20, 2019.
On September 26, 2019, [the trial court] issued its order
denying Appellants’ petition to strike or open the default
judgment. On October 9, 2019, Appellants filed a Motion to
Vacate Order and Reinstate Stay of Execution. The motion had
several exhibits attached to it, including copies of the September
20, 2019, deposition transcripts of Judith Claypoole [(Judith)] and
[] Claypoole. These depositions were part of the discovery
conducted in connection with Appellants’ petition to open or strike
the default judgment entered on March 13, 2019. On October 11,
2019, [the trial court] granted Appellants’ motion by vacating its
September 26, 2019, order and reinstating the stay of execution.
On December 11, 2019, [Direct Capital] moved to vacate
the stay order of October 11, 2019, and requested a decision on
Appellants’ petition to open or strike off the default judgment.
Argument was conducted on January 22, 2020, and an order was
issued that same day lifting the stay and denying Appellants’
petition to strike or open the default judgment.
Trial Court Opinion, 7/27/20, at 2-3.
Appellants timely filed a notice of appeal. On February 25, 2020, the
trial court entered an order requiring Appellants to file a Pa.R.A.P. 1925(b)
statement, “not more than twenty-one (21) days after the entry of this order
on the docket[.]” Order, 2/25/20. The court cautioned that the failure to
timely file a concise statement would result in waiver of all issues. See id.
Twenty-two days later, on March 18, 2020, Appellants filed their Rule 1925(b)
concise statement.
Direct Capital subsequently filed with this Court an application to dismiss
the appeal, based on Appellants’ failure to timely file their Rule 1925(b)
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concise statement.1 Application to Dismiss, 8/20/21, ¶¶ 30-41. Direct Capital
claimed that by untimely filing their concise statement, Appellants preserved
no issues for appellate review. Id. ¶ 40. Direct Capital also argued Appellants
violated “Pa.R.A.P. 2:5-2,” by failing to “deposit with the clerk of the appellate
court $300 to answer the costs of the appeal,” or providing notice they paid
the deposit. Id. ¶¶ 44, 46. As a result, Direct Capital requests the dismissal
of Appellants’ appeal. See id. (prayer for relief).
Appellants’ response was that “all of March 2020 and the months
following proved to be a dizzying, confusing time riddled with government
officials … scrambling to handle the COVID-19 pandemic.” Answer in
Opposition to Application to Dismiss, 8/3/21, at 2. Appellants asked this Court
to take judicial notice of the various orders issued as a result of the COVID-
19 pandemic. Id.
We recognize that on March 16, 2020, the Pennsylvania Supreme Court
declared “a general, statewide judicial emergency until April 14, 2020, on
account of COVID-19.” Supreme Court of Pennsylvania No. 531 Judicial
Administration Docket, Order, 3/16/20, at 1. The order authorized president
judges in the individual judicial districts to, in part, “suspend time calculations
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1 On September 15, 2021, this Court entered an order denying Direct Capital’s
application to dismiss without prejudice to raise the issue before the merits
panel. Direct Capital Corp. v. Claypoole, DMD, 1470 EDA 2021 (Pa. Super.
filed 9/15/21) (order). Direct Capital has presented the claim to this panel for
review. Appellee’s Brief at 9.
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for the purposes of time computation relevant to court cases ... as well as
time deadlines[.]” Id. at 2. The Supreme Court extended and expanded the
scope of the judicial emergency in several supplemental orders but directed
that the emergency cease on June 1, 2020. Supreme Court of Pennsylvania
Nos. 531 & 532 Judicial Administration Docket, Order, 5/27/20.
On March 16, 2020, the president judge of the Montgomery County
Court of Common Pleas entered an order declaring a judicial emergency,
providing:
All statewide procedural and administrative rules involving time
calculations within the 38th Judicial District for the filing of
documents with the court or taking of judicially mandated action
are suspended for the period of time covered by the emergency
declaration. Beginning date March 12, 2020, ending date to
be determined.
38th Judicial District Administrative Order (AD00001-2020), 3/16/20
(emphasis added). On March 31, 2020, the President Judge filed an
administrative order extending the judicial emergency to April 30, 2020.
Pursuant to the above orders, we deem Appellants’ concise statement (due
March 17, 2020, and filed March 18, 2020), to be timely filed. See id.
We next address Direct Capital’s assertion that this appeal should be
dismissed based on Appellants’ failure to pay the appeal deposit pursuant to
“Pa.R.A.P. 2:5-2.” Application to Dismiss, 8/20/21, at ¶¶ 42-47. There is no
Pennsylvania Rule of Appellate Procedure “2:5-2.” In addition, Direct Capital
cites no legal authority in support of this request. We therefore deny Direct
Capital’s application to dismiss the appeal. See Pa.R.A.P. 2119(a) (the Rules
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of Appellate Procedure require the argument section of an appellate brief to
include “citation of authorities as are deemed pertinent.”).
Appellants present the following issues for our review:
1. Should the trial court have required [Direct Capital] to file an
amended complaint before entering judgment by default where
the complaint omits pages containing material allegations such
that it cannot be answered by a responsive pleading?
2. Did not the trial court commit an error by its refusal to strike
or open a default judgment where the dominant party to a
contract of adhesion disregards provisions requiring all
litigation to be conducted in its chosen forum applying its
choice of law?
3. Should the trial court have stricken or opened the default
judgment entered by the plaintiff equipment lessor against the
lessee contrary to material terms of the contract regarding
choice of forum and choice of law?
Appellants’ Brief at 8 (issues renumbered for disposition).
Appellants first challenge the trial court’s refusal to strike or open the
default judgment. Id. at 13, 16. Appellants claim Direct Capital did not serve
Appellants with its entire complaint, as several pages were missing. See id.
at 17. According to Appellants, it is “prejudice” to allow Direct Capital to “get
away without serving a full complaint on [Appellants] … and then move for
judgments (and corresponding damages), without ever providing notice of the
claims.” Id. Upon careful review, we disagree.
Preliminarily, we note that striking a default judgment and opening a
default judgment are “distinct remedies and generally not
interchangeable.” Green Acres Rehab. and Nursing Ctr. v. Sullivan, 113
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A.3d 1261, 1270 (Pa. Super. 2015) (quoting Stauffer v. Hevener, 881 A.2d
868, 870 (Pa. Super. 2005)). We first address the denial of Appellants’
petition to strike the default judgment.
An appeal from the denial of “[a] petition to strike a default judgment
presents us with a question of law; consequently, our standard of review is de
novo and our scope of review is plenary.” U.S. Bank Nat’l Ass’n for
Pennsylvania Hous. Fin. Agency v. Watters, 163 A.3d 1019, 1028 n.9 (Pa.
Super. 2017).
This Court has explained,
[a] petition to strike a judgment is a common law proceeding
which operates as a demurrer to the record. A petition to strike a
judgment may be granted only for a fatal defect or irregularity
appearing on the face of the record. A petition to strike is not
a chance to review the merits of the allegations of
a complaint. Rather, a petition to strike is aimed at defects that
affect the validity of the judgment and that entitle the petitioner,
as a matter of law, to relief. A fatal defect on the face of the
record denies the prothonotary the authority to enter judgment.
When a prothonotary enters judgment without authority, that
judgment is void ab initio. ...
Bank of New York Mellon v. Johnson, 121 A.3d 1056, 1060 (Pa. Super.
2015) (citation omitted, emphasis added). “The standard for ‘defects’ asks
whether the procedures mandated by law for the taking of default judgments
have been followed.” Continental Bank v. Rapp, 485 A.2d 480, 483 (Pa.
Super. 1984) (citation omitted). For example, noncompliance with the
Pennsylvania Rules of Civil Procedure when attempting service of process
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constitutes a fatal defect. See Cintas Corp. v. Lee’s Cleaning Services,
Inc., 700 A.2d 915, 917-18 (Pa. 1997).
Appellants do not dispute that Direct Capital properly served the
complaint and afforded appropriate notice of its intent to secure a default
judgment. Further, the complaint’s missing pages do not implicate the trial
court’s jurisdiction. See, e.g., Sullivan, 113 A.3d at 1268 (explaining “[a]
judgment is void on its face if one or more of three jurisdictional elements is
found absent: jurisdiction of the parties; subject matter jurisdiction; or the
power or authority to render the particular judgment.”). Finally, the
complaint, even with its missing pages, notified Appellants of the claims
against them. See Complaint, 1/10/19, ¶¶ 10, 12-13 (alleging a breach of
the Agreement and a claim for $29,739.09 in damages). We therefore discern
no error by the trial court in refusing to strike the default judgment based on
the complaint’s missing pages. See Rapp, 485 A.2d at 483.
Appellants also claim the trial court improperly failed to open the default
judgment. Appellants’ Brief at 16. Appellants again rely on their claim of
missing pages in the complaint. See id. at 16-18.
We review the denial of a petition to open a default judgment under the
following standard:
A petition to open a default judgment is addressed to the equitable
powers of the court and the trial court has discretion to grant or
deny such a petition. The party seeking to open the default
judgment must establish three elements: (1) the petition
to open or strike was promptly filed; (2) the default can be
reasonably explained or excused; and (3) there is a
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meritorious defense to the underlying claim. The court’s
refusal to open a default judgment will not be reversed on appeal
unless the trial court abused its discretion or committed an error
of law. An abuse of discretion is not merely an error in judgment;
rather it occurs when the law is overridden or misapplied, or when
the judgment exercised is manifestly unreasonable or the result
of partiality, prejudice, bias or ill-will. Where the equities warrant
opening a default judgment, this Court will not hesitate to find an
abuse of discretion.
Scalla v. KWS, Inc., 240 A.3d 131, 135-36 (Pa. Super. 2020) (citations
omitted, emphasis added).
The trial court did not address the first element of the test in its July 27,
2020, opinion. Nevertheless, our review discloses that Appellants failed to
demonstrate prompt filing of their petition to open. As this Court has
explained,
[t]he timeliness of a petition to open a judgment is measured from
the date that notice of the entry of the default judgment is
received. The law does not establish a specific time period within
which a petition to open a judgment must be filed to qualify as
[timely.] Instead, the court must consider the length of time
between discovery of the entry of the default judgment and the
reason for delay.
...
In cases where the appellate courts have found a “prompt” and
timely filing of the petition to open a default judgment, the period
of delay has normally been less than one month. See Duckson
v. Wee Wheelers, Inc., [] 620 A.2d 1206, 423 Pa. Super. 251(1993) (one day is timely); Alba v. Urology Associates of
Kingston, [] 598 A.2d 57, 409 Pa. Super. 406 (1991) (fourteen
days is timely); Fink v. General Accident Ins. Co., [] 594 A.2d
345, 406 Pa. Super. 294 (1991) (period of five days is timely).
Myers v. Wells Fargo Bank, N.A., 986 A.2d 171, 176 (Pa. Super. 2009)
(citation omitted); but see Allegheny Hydro No. 1 v. American Line
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Builders, Inc., 722 A.2d 189, 193-94 (Pa. Super. 1998) (holding a 41-day
delay in filing a petition to open a default judgment was untimely; collecting
and setting forth cases holding delays in filing a petition to open a default
judgment of 21 days and 37 days rendered those petitions untimely).
Here, the trial court entered its default judgment against Appellants on
March 13, 2019. Appellants filed their petition to open over 130 days later,
on July 22, 2019. See Petition to Strike or Open, 7/22/19. In their petition,
Appellants did not explain their delay. See id. Similarly, at the hearing on
the petition to open, Appellants presented no argument regarding the prompt
filing requirement. See generally N.T., 1/22/20. Rather, Appellants relied
on the complaint’s omission of several pages, and a forum-selection clause in
the Agreement. See id. at 7. Thus, Appellants failed to establish the prompt
filing of their petition to open. See Scalla, 240 A.3d at 135-36.
Regarding the second element, Appellants offered no reasonable excuse
or explanation for their failure to file a timely response to Direct Capital’s
complaint. Although Appellants claim there are pages missing from the
complaint, they did not file a preliminary objection challenging the pleading’s
failure to conform to the rule of law. See Pa.R.C.P. 1028(1)(2). Further, as
discussed above, the complaint notified Appellants of Direct Capital’s claim
against them, and the basis for that claim. See Complaint, 1/10/19, ¶¶ 10,
12-13.
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Finally, Appellants did not establish a meritorious defense to the
underlying cause of action. See Scalla, supra. As the trial court explained:
Appellants presumably offered the Agreement and the depositions
of Judith [] and [] Claypoole to show that meritorious defenses to
[Direct Capital’s] claim did exist. In their depositions, Judith []
and … Claypoole complained about inadequacies of the dental
equipment purchased under the Agreement and efforts taken to
correct or ameliorate the alleged malfunctioning of the equipment.
Despite not having attached a copy of the answer or other
pleading they intended to file in the event the default was opened
or stricken, pursuant to Pa.R.C.P. 237.3(a), Appellants attempted
to show that they had meritorious defenses to [Direct Capital’s]
claims. Certain provisions of the Agreement are noteworthy,
particularly Sections 2, 3, and 4 concerning the Equipment, No
Warranty, and Representations, respectively. Thereunder,
Appellants agreed that their obligation to make payments to
[Direct Capital] was absolute and unconditional. See Section 4 of
the Agreement concerning Representations. The parties further
agreed that [Direct Capital] made no warranties as to the
condition of the equipment and that [Direct Capital] was providing
financing only and that Appellants were duty bound to continue to
make payments under the Agreement regardless of any claim
against any supplier of the equipment. See Section 3 of the
Agreement concerning No Warranty. Moreover, Appellants
understood that the only remedy they had if they found the
equipment to be unsatisfactory is against the supplier or
manufacturer. See Section 2 of the Agreement concerning
Equipment.
Trial Court Opinion, 7/27/20, at 6. The record confirms the trial court’s
analysis and conclusion, and we discern no abuse of discretion in this regard.
See id. Because the missing pages in the complaint provide no basis on which
to strike or open the default judgment, Appellants’ first issue fails.
We address Appellants’ second and third issues together, as Appellants
addressed the issues together in their brief. Appellants claim the trial court
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improperly failed to strike or open the default judgment, because “contract
principles demand that this matter be litigated in New Hampshire,” and the
trial court erred in ignoring this legal principle. Appellants’ Brief at 13.
Appellants direct our attention to the following forum-selection provision of
the Agreement: “The [Agreement] is governed exclusively by the laws of New
Hampshire. You agree and consent to the exclusive jurisdiction and venue of
any State or Federal Court in Rockingham County, New Hampshire.” Id. at
13-14 (citation omitted). Appellants argue this clause is enforceable because
the parties agreed to the clause, and enforcement would not be unreasonable.
Id. at 16.
Appellants do not challenge the trial court’s subject matter jurisdiction
over Direct Capital’s cause of action. Rather, they challenge personal
jurisdiction based on the forum-selection clause of the Agreement. “Personal
jurisdiction is a court’s power to bring a person into its adjudicative
process.” Grimm v. Grimm, 149 A.3d 77, 83 (Pa. Super. 2016) (citation
omitted). Importantly, unlike subject matter jurisdiction, “personal
jurisdiction is readily waivable.” Id. Because the defense is waivable, the
existence of a forum-selection clause is not a “defect” on the face of the record
that precluded entry of the default judgment. See Johnson, 121 A.3d at
1060. Consequently, Appellants’ challenge to the denial of their motion to
strike based on the forum-selection clause fails.
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Appellants also challenge the trial court’s failure to open the default
judgment based on the forum-selection clause. See Appellants’ Brief at 13-
16. As discussed above, Appellants failed to establish (1) they promptly filed
their petition to open, or (2) their default can be reasonably explained. See
Scalla, 240 A.3d 135-36. Thus, Appellants’ issue does not merit relief
because they failed to establish two of the three elements necessary to open
a default judgment.2 See id.For the above reasons, we affirm the trial court’s dismissal of Appellants’
petition to strike or open the default judgment.
Appellee’s Application to Dismiss denied. Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/7/2022
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2Regarding the third element, a party may challenge personal jurisdiction only
by means of a preliminary objection. Monaco v. Montgomery Cab Co., 208
A.2d 252, 255 (Pa. 1965); Scoggins v. Scoggins, 555 A.2d 1314, 1317 (Pa.
Super. 1989). Appellants did not attach a proposed preliminary objection to
their petition to open. See Pa.R.C.P. 237.3(a) (providing “[a] petition for
relief from a judgment … by default … shall have attached thereto a copy
of the … preliminary objections … which the petitioner seeks leave to file.”
(emphasis added)). Thus, Appellants failed to present a meritorious defense
based upon the forum-selection clause. See Pa.R.C.P. 1032 (stating that a
party waives all defenses and objections which are not presented either
by preliminary objection, answer or reply, except any nonwaivable defense or
objection).
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