Hotel Furniture Liq. v. Castor Avenue Prop. ( 2016 )

J-S11043-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
HOTEL FURNITURE LIQUIDATORS OF : IN THE SUPERIOR COURT OF
PHILADELPHIA, INC. : PENNSYLVANIA
:
v. :
:
CASTOR AVENUE PROPERTIES, LLC, :
:
Appellant : No. 2075 EDA 2015
Appeal from the Order entered on May 27, 2015
in the Court of Common Pleas of Philadelphia County,
Civil Division, No(s): December Term, 2014, No. 00855
HOTEL FURNITURE LIQUIDATORS OF : IN THE SUPERIOR COURT OF
PHILADELPHIA, INC. : PENNSYLVANIA
:
v. :
:
CASTOR AVENUE PROPERTIES, LLC, :
:
Appellant : No. 2377 EDA 2015
Appeal from the Judgment entered on June 26, 2015
in the Court of Common Pleas of Philadelphia County,
Civil Division, No(s): December Term, 2014, No. 00855
BEFORE: FORD ELLIOTT, P.J.E., OTT and MUSMANNO, JJ.
MEMORANDUM BY MUSMANNO, J.: FILED APRIL 29, 2016
Castor Avenue Properties, LLC (“Castor”) appeals from the Order
denying its Petition to Open Default Judgment. In this consolidated appeal,
Castor also appeals from the Judgment entered against it and in favor of
Hotel Furniture Liquidators of Philadelphia, Inc. (“Hotel Furniture”), in the
amount of $375,388.24. We affirm.
J-S11043-16
The trial court set forth the relevant underlying factual and procedural
history as follows:
The instant action arises from a lease dispute between the
parties. The tenant is plaintiff Hotel Furniture …. The landlord is
defendant Castor …. On December 31, 2010, [Hotel Furniture]
and [Castor] entered into a lease agreement for 50,000 square
feet of rental space located at 2222-2230 Castor Avenue,
Philadelphia, Pa. 19134. The property consisted of three
separate rental units[:] the leased property and two other rental
units. Paragraph 1 of the lease provided that [Hotel Furniture] is
permitted to use the leased premises for the purpose of
warehouse storage and selling furniture and fixtures to other
businesses and the public. Paragraph 2 of the lease provided as
follows:
Compliance with Law. Each party, its officers, employees,
agents and servants, shall comply fully and promptly with
all applicable laws....
The lease was for a period of five (5) years, commencing on
August 15, 2010[,] and expiring on October 31, 2015[,] with a
five year option. On October 15, 2012, the City of Philadelphia
commenced a lawsuit against [Castor] in the Court of Common
Pleas of Philadelphia County under docket number October Term
2012 No. 1842 in code enforcement. The court found [Castor] in
violation of the City of Philadelphia [Building] Code and Fire
Code[,] and stated the following:
The subject premises with existing Fire Code and other
violations, poses a serious fire hazard, safety threat, and
immediate serious danger to any occupants of the subject
premises. The structure is therefore in a seriously
dangerous condition due to inadequate maintenance, and
may result in potential serious injury to persons occupying
the subject building.
On March 17, 2014, the City of Philadelphia Department of
Licenses and Inspections directed [Hotel Furniture] to vacate the
leased premises on four hours’ notice. [Hotel Furniture] was
ordered to remove all furniture and other items warehoused at
the leased premises. [Hotel Furniture] leased vehicles to
remove its inventory from the leased premises, employed
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personnel to remove the inventory and employed fire watch
personnel from an outside professional security company trained
in and devoted to fire watch services. [Hotel Furniture] vacated
the premises with as much inventory as could be removed on
short notice.
On May 1, 2014, [Hotel Furniture] leased a facility[,] which was
much smaller than the leased property. The new space at 4343
Widacor Avenue in Philadelphia was 25,000 square feet. As a
result, [Hotel Furniture] was forced to leave some of its
inventory at the leased premises, discard some and donate
some. Sixty percent of its inventory was dumped, donated or
recycled. Forty percent was transported to the new space. The
new space was not as visible or accessible as the leased property
to the public and walk[-]in traffic declined significantly.
On September 15, 2014, counsel for [Hotel Furniture] notified
[Castor] that it was in default of the lease for failing to comply
with Philadelphia Code Ordinances. [Hotel Furniture] inquired
into the status of its expected compliance with the ordinances
[and] informed [Castor] that [Hotel Furniture] suffered damages
for which it would seek reimbursement. On December 3, 2014,
[Hotel Furniture] filed the instant [C]omplaint against [Castor]
alleging breach of lease, breach of implied covenant of quiet
enjoyment and constructive eviction. According to the Affidavit
of Service filed with the court, [Castor] was served with the
[C]omplaint on December 24, 2014[,] by personal service at 203
Meserole Avenue, Brooklyn, New York. [Castor] did not file an
answer to the [C]omplaint or otherwise plead. On January 13,
2015, [Hotel Furniture] served a ten[-]day letter of [N]otice to
take a default for failing to answer or otherwise plead to the
[C]omplaint to the same address where the [C]omplaint was
served. [Castor] once again did not answer or file a response.
On February 24, 2015, [Hotel Furniture] filed a [P]raecipe to
enter default judgment against [Castor] for failure to answer the
[C]omplaint and a default judgment was entered against
[Castor]. In the meantime, the court scheduled an assessment
of damages hearing. [Castor’s] General Counsel received notice
of the assessment and at that time contacted local counsel to file
a [P]etition to open the default judgment.
On April 10, 2015, [Castor] filed its [P]etition to [O]pen the
[D]efault [J]udgment. On May 27, 2015, the court denied the
[P]etition to [O]pen the [D]efault [J]udgment. On June 11,
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2015, an assessment of damages hearing was held wherein
testimony was presented and exhibits introduced. On June 25,
2015, the court entered a [Judgment] assessing damages
against [Castor] and in favor of [Hotel Furniture] in the amount
of $375,388.24. [Castor] appealed. On June 25, 2015, [Castor]
filed an appeal of [the trial] court’s [O]rder … denying the
[P]etition to [O]pen the [D]efault [J]udgment. On July 24,
2015, [Castor] filed an appeal of [the trial] court’s finding
assessing damages against [Castor] in the amount of
$375,388.24[.]
Trial Court Opinion, 8/28/15, at 1-4.1
On appeal, Castor raises the following questions for our review:
I. Whether the court of common pleas erred as a matter of
law in denying [Castor’s] Petition to Open Default
Judgment where all three parts of the three[-]part test [for
opening a default judgment] were not considered?
II. Whether the court of common pleas erred as a matter of
law in concluding that [its] assessment of damages against
[Castor] was proper and supported by the record?
III. Whether the court of common pleas erred as a matter of
law in concluding that the June 11, 2015 assessment of
damages hearing was a trial[,] and [Castor] waived its
right to appeal?
Brief for Appellant at 5 (some capitalization omitted).
In its first claim, Castor contends that the trial court erred in denying
its Petition to Open Default Judgment without considering all of the prongs of
the three-part test to open a default judgment. Id. at 17, 18, 19-20.
Castor argues that Castor’s New York attorney did not timely file an answer
to Hotel Furniture’s Complaint due to confusion and oversight. Id. at 18,
20-21, 26-27, 29-31. Castor claims that its “young” New York attorney was
1
This Court consolidated the two appeals.
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unaware of the existence of the Pennsylvania business, which was the only
business owned by its members outside of New York state, and the attorney
mistakenly sent the Complaint to Castor’s other business. Id. at 20-21, 23-
24, 25, 26-27, 30-31. Castor also asserts that while it filed a Petition to
Open Default Judgment forty-five days after the entry of default judgment,
the Petition was filed just four days after receiving Notice of the entry of
judgment. Id. at 18, 21, 22, 24, 26. Castor claims that upon receiving the
notice of default judgment, it hired counsel in Pennsylvania and took all
necessary steps to open the judgment. Id. at 21, 25, 27-28; see also id.
at 28 (arguing that it is the date Castor received Notice of the default
judgment that is relevant to determining promptness of filing a petition to
open). Castor further argues that it has a meritorious defense to Hotel
Furniture’s Complaint. Id. at 18, 32-36. Castor contends that most of the
licenses and inspections violations were caused by Hotel Furniture’s own
acts, and that under the lease, Hotel Furniture would be responsible for all
costs resulting from modifications to meet any applicable legal standards.
Id. at 34-35.
Our standard of review is as follows:
A petition to open a default judgment is an appeal to the
equitable powers of the court. The decision to grant or deny a
petition to open a default judgment is within the sound discretion
of the trial court, and we will not overturn that decision absent a
manifest abuse of discretion or error of law.
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However, we will not hesitate to find an abuse of discretion if,
after our own review of the case, we find that the equities clearly
favored opening the judgment.
An abuse of discretion is not a mere error of judgment, but if in
reaching a conclusion, the law is overridden or misapplied, or the
judgment exercised is manifestly unreasonable, or the result of
partiality, prejudice, bias or ill will, as shown by the evidence or
the record, discretion is abused.
Smith v. Morrell Beer Distributors, Inc., 29 A.3d 23, 25 (Pa. Super.
2011) (citation and brackets omitted).
Pennsylvania Rule of Civil Procedure 237.3(b) provides that “[i]f the
petition [challenging the default judgment] 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 cause of action or
defense.” Pa.R.C.P. 237.3(b). However, where a petition to open a default
judgment is not filed within ten days of its entry, “a default judgment may
be opened if the moving party has (1) promptly filed a petition to open the
default judgment, (2) provided a reasonable excuse or explanation for failing
to file a responsive pleading, and (3) pleaded a meritorious defense to the
allegations contained in the complaint.” US Bank N.A. v. Mallory, 982
A.2d 986, 994-95 (Pa. Super. 2009). The moving party must meet all of
these requirements to open a default judgment. Id. at 995.
With regard to the first prong, “[t]he law does not establish a specific
time period within which a petition to open a judgment must be filed to
qualify as timely.” Kelly v. Siuma, 34 A.3d 86, 92 (Pa. Super. 2011)
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(citation omitted). “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.” Id. (citation
omitted).
With regard to the second prong, “[w]hether an excuse is legitimate is
not easily answered and depends upon the specific circumstances of the
case. The appellate courts have usually addressed the question of legitimate
excuse in the context of an excuse for failure to respond to the original
complaint in a timely fashion.” Myers, 986 A.2d at 176 (citation omitted).
“Excusable negligence must establish an oversight rather than a deliberate
decision not to defend.” Seeger v. First Union Nat. Bank, 836 A.2d 163,
167 (Pa. Super. 2003) (citation omitted); see also Bahr v. Pasky, 439
A.2d 174, 177 (Pa. Super. 1981) (stating that “[w]hile some mistakes will be
excused, … mere carelessness will not be….”).
With regard to the third prong, asserting a meritorious defense, the
petitioner must aver facts that if proved at trial, would justify relief.
Duckson v. Wee Wheelers, Inc., 620 A.2d 1206, 1209 (Pa. Super. 1993).
Here, the trial court found that, with regard to the first prong, the
Petition to Open Default Judgment, filed forty-five days after the entry of
default judgment, was not prompt. See Trial Court Opinion, 8/28/15, at 5-
6; see also Pappas v. Stefan, 304 A.2d 143, 146 (Pa. 1973) (concluding
that a fifty-five day delay was not prompt); US Bank N.A., 982 A.2d at 995
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(concluding that an eighty-two day delay was not prompt); Schutte v.
Valley Bargain Center, Inc., 375 A.2d 368, 371 (Pa. Super. 1977)
(concluding that a forty-seven day delay in filing a petition to open was not
prompt).2
Further, the trial court found that, with regard to the second prong,
Castor did not provide a reasonable excuse for its failure to file a responsive
pleading. See Trial Court Opinion, 8/28/15, at 6-7; see also Myers, 986
A.2d at 177-78 (concluding that a miscommunication of a duty to defend by
the in-house counsel, where counsel was unaware of the registered owner of
the property in question, did not constitute a reasonable excuse for
defendant’s failure to file a responsive pleading, warranting the opening of
default judgment); US Bank N.A., 982 A.2d at 996 (stating that appellant
did not provide a reasonable excuse for failing to file a responsive pleading
2
We note that Castor cites to Alba v. Urology Assocs. of Kingston, 598
A.2d 57, 58 (Pa. Super. 1991), for the proposition that when determining
whether an appellant promptly filed a petition to open the default judgment,
courts must look to the date that the party received notice of the entry of
default judgment. Brief for Appellant at 28. Castor argues that it did not
receive Notice of the default judgment until April 6, 2015, which made its
April 10, 2015 Petition to Open Default Judgment timely. Id. However, the
trial court found Castor’s claim that it did not receive the Notice of default
judgment until April 6, 2015, to be not credible. See Trial Court Opinion,
8/28/15, at 5-6. The trial court specifically found that Castor received
Notice of the default judgment in February 2015. See id. at 6; see also
Alba, 598 A.2d at 58 (concluding that the appellant received notice of the
default judgment at the time the judgment was entered). We conclude that
the trial court did not abuse its discretion in finding that Castor received
Notice of the default judgment in February 2015. See Smith, 29 A.3d at
25.
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where, despite numerous notices, appellant made a deliberate decision not
to defend).
After a thorough review of the record, the briefs of the parties, and the
applicable law, we agree with the sound reasoning of the trial court, as set
forth in its Opinion, and affirm on this basis. See Trial Court Opinion,
8/28/15, at 5-7.3
As an addendum, we note that in light of its conclusion that Castor
failed to meet the first two prongs of the test, the trial court did not
specifically consider whether Castor had satisfied the third prong by pleading
a meritorious defense to the allegations in Hotel Furniture’s Complaint. We
conclude that, even assuming Castor had pleaded a meritorious defense, the
trial court properly denied its Petition to Open Default Judgment based upon
Castor’s failure to meet its burden as to the first two prongs. See Myers,
986 A.2d at 178 (concluding that even if the moving party presented a
meritorious defense, the trial court did not abuse its discretion in denying
the petition to open default judgment where the moving party failed to meet
its burden as to the first two prongs); US Bank, 982 A.2d at 996-97
(affirming denial of petition to open default judgment where the trial court
failed to analyze the meritorious defense prong based on the fact that the
3
Upon our review, the cases cited by Castor to support its argument are
unavailing based upon the fact that Castor, despite being a limited liability
company with legal representation, took no action on Hotel Furniture’s
Complaint, and waited forty-five days to file the Petition to Open Default
Judgment, without providing a reasonable excuse.
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other prongs were not met). Thus, based upon the foregoing, the trial court
did not abuse its discretion in denying Castor’s Petition to Open Default
Judgment.
In its second claim, Castor contends that the trial court erred as a
matter of law in assessing damages against it. Brief for Appellant at 36.
Castor argues that the award of damages is based upon speculation and is
not supported by the record. Id. at 36, 37. Castor asserts that Hotel
Furniture could not collect damages for being evicted from the premises as
Hotel Furniture still maintains possession of the premises and continues to
store inventory at the location. Id. at 37, 38-39, 42. Castor claims that the
calculation of damages was based upon assumptions as to Hotel Furniture’s
income and expenses, which were not supported by the record. Id. at 37,
39-41. Castor further claims that the record evidence does not support an
award of damages related to Hotel Furniture’s move from the premises, the
losses of inventory, the trash removal, and labor and fire watch. Id. at 42-
46. Castor also contends that Hotel Furniture did not mitigate its losses by
failing to move its business to a main thoroughfare or advertise the new
location. Id. at 46-47.
Our standard of review is as follows:
The duty of assessing damages is within the province of the fact-
finder and should not be interfered with by the court, unless it
clearly appears that the amount awarded resulted from caprice,
prejudice, partiality, corruption or some other improper
influence. In reviewing the award of damages, the appellate
courts should give deference to the decisions of the trier of fact
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who is usually in a superior position to appraise and weigh the
evidence. If the verdict bears a reasonable resemblance to the
damages proven, we will not upset it merely because we might
have awarded different damages.
The fact-finder must assess the worth of the testimony, by
weighing the evidence and determining its credibility and by
accepting or rejecting the estimates of the damages given by the
witnesses.
Newman Dev. Grp. of Pottstown, LLC v. Genuardi’s Family Mkt., Inc.,
98 A.3d 645, 659-60 (Pa. Super. 2014) (citations, brackets, and quotation
marks omitted); see also Pollock v. Morelli, 369 A.2d 458, 462 (Pa.
Super. 1976) (stating that “where the tenant is deprived of the beneficial
enjoyment of the premises, it has been held that damages can be awarded
for losses which can be proved. … [T]he lessee may recover … for all losses
which he can prove he has actually sustained[, and] damages has been
liberally extended to include even well[-]established profits of the
business[.]”) (citations omitted).
Here, the trial court set forth the credible evidence presented at the
damages hearing and found that Hotel Furniture sustained $375,388.24 in
damages. See Trial Court Opinion, 8/28/15, at 8-9; see also Hatwood v.
Hosp. of the Univ. of Pennsylvania, 55 A.3d 1229, 1240 (Pa. Super.
2012) (stating that the calculation of damages is a question of fact); Empire
Properties, Inc. v. Equireal, Inc., 674 A.2d 297, 304 (Pa. Super. 1996)
(stating that in a breach of contract action, “[t]he purpose of damages is to
put the plaintiff in the position he or she would have been in but for the
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breach.”). While Castor argues that the award of damages was speculative,
the trial court did not abuse its discretion, as its findings are supported by
the evidence of record. See Newman Dev. Grp. of Pottstown, LLC, 98
A.3d at 659. We will not reweigh the evidence and, thus, affirm the award
of damages based upon the reasoning set forth in the trial court’s Opinion.
See Trial Court Opinion, 8/28/15, at 8-9.4
In its third claim, Castor contends that the trial court erroneously
found that Castor had waived its damages claims based upon a failure to file
a motion for post-trial relief pursuant to Pennsylvania Rule of Civil Procedure
227.1. Brief for Appellant at 47-53. As we addressed Castor’s damages
claims above, we deny its third claim as moot.5
Order and Judgment affirmed.
4
With regard to Castor’s claim that Hotel Furniture had not been
constructively evicted from the premises and thus was not entitled to
damages, we note that such a claim is a liability issue, which had been
resolved by the default judgment. Moreover, Castor’s claim that Hotel
Furniture failed to mitigate its losses is without merit. The fact that the new
location, which was found on short notice, was smaller than the premises in
question and was not on a main throughway did not evidence a failure to
mitigate.
5
We note that the issues raised by Castor on appeal are the same ones it
argued during the damages hearing, i.e., the damages requested by Hotel
Furniture were speculative and not supported by evidence, that Hotel
Furniture was still in possession of the premises, and that Hotel Furniture did
not mitigate its damages. See N.T., 6/11/15, at 138-42; see generally
Warfield v. Shermer, 910 A.2d 734, 737 (Pa. Super. 2006) (stating that
“[t]he purpose for Rule 227.1 is to provide the trial court with an opportunity
to correct errors in its ruling and avert the need for appellate review.”)
(citation omitted).
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President Judge Emeritus Ford Elliott joins the memorandum.
Judge Ott files a concurring and dissenting statement.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/29/2016
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Circulated 03/31/2016 04:06 PM
IN THE COURT OF COMMON PLEAS OF PHILADELPHIA COUNTY
FIRST JUDICIAL DISTRICT OF PENNSYLVANIA
TRIAL DIVISION-CIVIL
:~·
HOTEL FURNITURE LIQUIDATORS OF December Term 2014
PHILADELPHIA, INC.,
Plaintiff, No. 855
V.
CASTOR AVENUE PROPERTIES, LLC, COMMERCE PROGRAM
Defendant.
· ~-~. 2377 EDA 2015
2075 EDA 2015
OPINION
This opinion is submitted relative to two appeals taken by defendant Castor Avenue
Properties, LLC from this court's order dated May 27;·2015 and docketed on May 28, 2015
denying defendant's petition to open default judgment and this court's entry of a finding on June
25, 2015 and docketed on June 26, 2015 assessing damages against defendant in the amount of
..
$375,388.24. The instant action arises from a lease dispute between the parties. The tenant is
plaintiff Hotel Furniture Liquidators of Philadelphia, Inc. (hereinafter "Tenant"). The landlord is
defendant Castor Avenue Properties, LLC (hereinafter "Landlord"). On December 31, 2010, the
tenant and landlord entered into a lease agreement for 50,000 square feet of rental space located
at 2222-2230 Castor Avenue, Philadelphia, Pa. 19134. The property consisted of three separate
rental units, the leased property and two other rental units. Paragraph 1 of the lease provided that
tenant is permitted to use the leased premises for the purpose of warehouse storage and selling
furniture and fixtures to other businesses and the public. Paragraph 2 of the lease provided as
follows:
Compliance with Law. Each party, its officers, employees, agents and servants,
shall comply fully and promptly with all applicable laws .....
The lease was for a period of five (5) years, commencing on August 15, 2010 and
expiring on October 31, 2015 with a five year option. On October 15, 2012, the City of
Philadelphia commenced a lawsuit against landlord in the Court of Common Pleas of
Philadelphia County under docket number Qctober Te~2012 No. 1842 in code enforcement.
The court found landlord in violation of the City of Philadelphia Code and Fire Code and stated
the following:
"The subject premises with existing Fire Code and other violations, poses a serious fire
hazard, safety threat, and immediate serious danger to any occupants of the subject
premises. The structure is therefore jn a seriously dangerous condition due to inadequate
maintenance, and may result in potential serious injury to persons occupying the subject
building."
On March 17, 2014, the City of Philadelphia Department of Licenses and Inspections
directed tenant to vacate the leased premises on four hours' notice. Tenant was ordered to
remove all furniture and other items warehoused at theleased premises. Tenant leased vehicles
to remove its inventory from the leased premises, employed personnel to remove the inventory
and employed fire watch personnel from an outside professional security company trained in and
devoted to fire watch services. Tenant vacated the premises with as much inventory as could be
removed on short notice.
On May l, 2014, tenant leased a facility which was much smaller than the leased
property. The new space at 4343 Widacor Avenue in Philadelphia was 25, 000 square feet. As a
result, tenant was forced to leave some of its inventory at the leased premises, discard some and
donate some. Sixty percent of its inventory was dumped, donated or recycled. Forty percent was
transported to the new space. The new space was not as visible or accessible as the leased
property to the public and walk in traffic declined significantly.
2
On September 15, 2014, counsel for tenant notified landlord that it was in default of the
lease for failing to comply with Philadelphia Code Ordinances. Tenant inquired into the status of
its expected compliance with the ordinances as well as informed the landlord that it suffered
.. °''--,.
damages for which it would seek reimbursement. On December 3, 2014, tenant filed the instant
complaint against landlord alleging breach of lease, breach of implied covenant of quiet
enjoyment and constructive eviction. According to the Affidavit of Service filed with the court,
landlord was served with the complaint on J?ecember 24, 2014 by personal service at 203
Meserole Avenue, Brooklyn, New York. Landlord did not file an answer to the complaint or
otherwise plead. On January 13, 2015, tenant served a ten day letter of notice to take a default
for failing to answer or otherwise plead to the complaint to the same address where the complaint
was served. Landlord once again did not answer or file a response. On February 24, 2015,
tenant filed a praecipe to enter default judgment against landlord for failure to answer the
complaint and a default judgment was entered against landlord. In the meantime, the court
scheduled an assessment of damages hearing. Landlord's General Counsel received notice of the
assessment and at that time contacted local counsel
-·
to file
~- -·
a petition
.
to open the default
judgment.
On April 10, 2015, landlord filed its petition to open the default judgment. On May 27,
2015, the court denied the petition to open the default judgment. On June 11, 2015, an
assessment of damages hearing was held wherein testimony was presented and exhibits
introduced. On June 25, 2015, the court entered a finding assessing damages against landlord
and in favor of tenant in the amount of $375,388.24. Landlord appealed. On June 25, 2015,
landlord filed an appeal of this court's order dated May 27, 2015 and docketed May 28, 2015
denying the petition to open the default judgment. On July 24, 2015, landlord filed an appeal of
3
this court's finding assessing damages against the landlord in the amount of $375,388.24 dated
June 25, 2015 and docketed June 26, 2015. This opinion addresses the respective appeals.
DISCUSSION
I. The Petition to Open Default Judgmentwas ProperlyDenied.
It is well settled that a petition to open a default judgment is an appeal to the equitable
powers of the court, and absent an error oflaw or a clear, manifest abuse of discretion, it will not
be disturbed on appeal. An abuse of discretion occurs when a trial court, in reaching its
conclusions, overrides or misapplies the law, or exercises judgment which is manifestly
unreasonable, or the result of partiality, prejudice, bias or ill will.1 A default judgment may be
opened if the moving party has (1) promptly filed a petition to open the default judgment, (2)
provided a reasonable excuse or explanation for failing to file a responsive pleading, and (3)
pleaded a meritorious defense to the allegations contained in the complaint.2 Moreover, a trial
court cannot open a default judgment based on the "equities" of the case when the defendant has
failed to establish all three of the required criteria. 3 In the case sub Judice, landlord failed to
meet the requisite criteria necessary to open the default judgment.
With regard to the first prong, whether the petition to open was timely filed, the law does not
establish a specific time period within which a petition to open a judgment must be filed to
1
Myers v. Wells Fargo Bank, NA., 986 A.2d 171, 17§ (Pa. Super, 2,009); US Bank NA. v. Mallory, 982 A.2d 986,
994 (Pa.Super.2009).
2
McFarland v. Whitham, 518 Pa. 496, 544 A.2d 929 (1988); Seeger v. First Union National Bank, 836 A.2d 163
(Pa.Super.2003). Where a petition to open is filed within ten days of the entry of judgment and is accompanied by a
proposed answer offering a meritorious defense, the court shall open the judgment. See Estate of Considine v.
Wachovia Bank, 966 A.2d 1148 (Pa.Super.2009). In the case sub judice, there is no dispute that landlord failed to
file its petition to open within ten days of the entry of judgment.
3
Myers v. Wells Fargo Bank, NA., 986 A.2d 171, 175-76 (Pa. Super. 2009).
4
qualify as timeliness. Instead, the court considers the length of time between discovery of the
entry of the default judgment and the reasori 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.4
Here, default judgment was entered against the landlord on February 23, 2015. Notice of
the entry of default judgment was sent on the same date by the court per Pa. R. Civ. P. 236.
Landlord filed its petition to open default judgment on April 10, 2015; forty five days after entry
of judgment. Landlord acknowledged that the notice of entry of default was entered on February
23, 2015 but avers in the affidavit of its agent, General Counsel, that it never received any other
documents from the court until April 6, 2015.5 Landlord became aware of the default judgment
on April 6, 2015 when it received the court's notice scheduling a damages hearing for April 9,
2015.6 The mailbox rule provides that "depositing in the post office a properly addressed,
prepaid letter raises a natural presumption, founded in common experience, that it reached its
destination by due course of mail."? As the Pennsylvania Supreme Court noted: "The
overwhelming weight of statistics clearly indicates that letters properly mailed and deposited in
the post office are received by the addressees."8 Evidence that a letter has been mailed is
sufficient to permit a jury to find that the letter was in fact received by the party to whom it was
4
See Duckson v. Wee Wheelers, Inc., 423 Pa.Super. 251, 620 A.2d 1206 (1993) (one day is timely); Alba v. Urology
Associates of Kingston, 409 Pa.Super. 406, 598 A.2d 57 (1991) (fourteen days is timely); Fink v. General Accident
Ins. Co., 406 Pa.Super. 294, 594 A.2d 345 (1991) (period of five days is timely).
5
Affidavit of General Counsel i[l O attached as Exhibit "B" to landlord's petition to open default judgment.
7
Jensen v. McCorkell, 154 Pa. 323, 325, 26 A. 366, 367 (Pa.1893) (citation omitted).
8
Meierdierck v, Miller, 394 Pa. 484, 487, 147 A.2d 406, 408 (Pa.1959).
5
addressed.9 Here, the docket entries for this matter evidence that the notice of entry of judgment
was mailed by the court on February 25, 2015 to landlord to the same address in which the
complaint was served.!? As such, this court finds that the notice of entry of default judgment
was received by landlord sometime in February, 2015. Since landlord did not file its petition to
open default judgment until April 10, 2015, forty five days after the entry of default judgement,
11
the court finds that the filing of the petition to open judgment was not prompt.
With regard to the second prong, whether an excuse is legitimate depends upon the
specific circumstances of the case. The question is usually addressed in the context of an excuse
for failure to respond to the original complaint in a timely fashion.12 Here, landlord lays blame
on its New York General Counsel for its failure to timely answer the complaint. According to
General Counsel's affidavit, landlord believed that she was handling the matter for them or had
13
obtained Pennsylvania counsel to defend the action. General Counsel claims not to have
known of the landlord's entity known as Castor Avenue Properties, LLC, the defendant in the
instant action, when she received the complaint and passed it on to other tenants in the building
occupied by landlord, her employer. General Counsel's excuse of not recognizing the legal
entity sued as one belonging to her client is not reasonable. General Counsel simply had to
review the complaint to discover that her client was identified as the landlord, the individual to
9
Shafer v. A. I. T. S., Inc., 285 Pa.Super. 490, 428 A.2d 152, 156 (1981) (citations omitted).
10
Landlord does not dispute having received the complaint at the same address.
11
Courts have held that delays ofless than forty-one days have been untimely. See B.C. Y. Inc. Equipment Leasing
Assoc. v. Bukovich, 257 Pa. Super. 121, 390 A.2d 276, 278 (Pa. Super: 1978)(twenty-one day delay is not prompt);
Hatgimisios v. Dave's N.E. Mint, Inc., 251 Pa. Super. 275, 380 A.2d 485, 485 (Pa. Super. l 977)(thirty-seven day
delay is not prompt).
12
Myers v. Wells Fargo Bank, NA., 986 A.2d 171, 176 (Pa. Super. 2009).
13
Affidavit of General Counsel ,r9 attached as Exhibit "B" to landlord's petition to open default judgment.
6
whom notice was to be sent and the address where the notice was to be served was the building
owned by her client.14 General Counsel, hired to handle real estate matters, never questioned
landlord as to the identity of the entity nor contacted tenant's counsel. According to General
Counsel's affidavit, landlord had knowledge of the lawsuit since it thought General Counsel was
handling the situation. Landlord was provided with plenty of opportunities to discover the
existence of this lawsuit beginning with tenant counsel's September 15, 2014 letter providing
landlord with notice of an impending suit for damages; the complaint and the ten day letter of
impending default judgment. There is no reasonable excuse for the failure of landlord to file an
answer or otherwise plead. Although, the power to open a default judgment entered as a result of
a mistake or oversight by counsel may be exercised when a reasonable excuse is offered, here a
15
reasonable excuse has not been offered. Consequently, sirice landlord failed to satisfy two of
the three requirements necessary to open the default judgment, this court properly denied the
petition to open default judgment. Therefore, this court's May 27, 2015 order should be
affirmed.
II. Landlordfailed to file Post-Trial Motions of this court'sFinding dated June 25,
2015 and therefore waived its right to appeal.
Pursuant to Pa. R. Civ. P. 227 .1, a party must file post-trial motions at the conclusion of a
trial in any type of action in order to preserve claims that the party wishes to raise on appeal. In
other words, a trial court's order at the conclusion of a trial, whether the action is one at law or in
equity, simply cannot become final for purposes of filing an appeal until the court decides any
14
Lease Agreement attached to the Complaint as Exhibit "A" ,i 16.
15
An attorney's dilatoriness, failure to act with knowledge of the implications, or deliberate decision not to defend
are inadequate reasons for his or her failure to answer a complaint. Clerical oversight or the misplacement of papers
through no fault of the attorney that results in a failure to file a timely answer are reasonable excuses. See Shainline
v. Alberti Builders, Inc., 266 Pa. Super. 129, 403 A.2d 577 (1979).
7
timely post-trial motions.16 Pa. R. C. P. 227.l(c) requires the filing of post-trial motions "within
ten days after (1) verdict, discharge of the jury because of inability to agree, or nonsuit in the
case of a jury trial; or (2) notice of nonsuit or the filing of the decision in the case of a trial
without jury." Pennsylvania Rule of Appellate Procedure 302(a) states that "[i]ssues not raised in
the lower court are waived and cannot be raised for the first time on appeal."
The Supreme Court of Pennsylvania in Newman Development Group of Pottstown v.
Genuardi's Family Markets, Inc., 617 Pa. 265, 52 A.3d 1233 (2012) while recognizing that not
all court proceedings constitute "trials" for the purpose of Pa. R.C.P. No. 227 .1, nevertheless
signaled that a hearing that bears the hallmarks of a trial by requiring or admitting evidence does
constitute a "trial" for the purposes of Pa. R.C.P. No. 227.1. Here, after entry of the default
judgment by praecipe, the court scheduled an assessment of damages hearing. At the hearing,
the parties, presented testimony, introduced exhibits and cross examined witnesses. After the
presentation by the parties, the court issued 'a finding assessing damages in favor of the tenant.
Landlord appealed the court's finding without filing post-trial motions as required by the rules.
As such, in accordance with Pa. R. Civ. P. 227.1 and Newman, landlord waived its right to raise
any issues concerning the Finding on appeal and therefore the appeal should be quashed.
III. The Court'sfinding assessing damages against the landlord was proper.
In the event the Court finds that landlord did not waive any issues on appeal regarding the
Finding, the Finding entered on June 25, 2015 and docketed June 26, 2015 assessing damages
against the landlord in the amount of $375,388.24 was properly entered and based on the record
evidence presented. During the hearing, an officer oftenanttestified that in 2013 its net profit
16
City of Philadelphia v, New Life Evangelistic Church, 114 A.3d 472, 477 (Pa. Cornrow. Ct. 2015).
after unusual expenses was $214,251.00. The officer further testified that prior to the cease and
desist order, the first three months of 2014 showed an upward trend in sales. For instance, in
January 2014 the growth was 19,151.00, representing a. percentage change of 38% from 2013, in
February 2014 the growth was $19,162.00, representing a percentage change of 24.17% and in
17
March 2014 the growth was $2,805.00, representing a percentage change of 12%. The officer
testified that in April 2014, tenant recorded no sales since it was looking for space to lease and
that from May to December 2014, losses were recorded, The losses were attributed to the
reduced space available for plaintiff to house inventory as well as the location of the new rental
space. The new space leased was one half the space previously leased and was not visible to the
public despite tenant's efforts to draw attention to itself. The accountant's testimony was
consistent with the testimony of the officer. Based onthe testimonial evidence, which the court
found credible and the exhibits, the court found that tenant was entitled to an assessment of
damages for lost profits for the year 201418 in the amount of $265,671.24.19
Tenant's officer further testified to the expenses incurred as a result of the move.
Tenant's officer testified that it incurred $1Q9,717 in expenses for the move. The expenses were
itemized as follows: donated furniture $37, 240; losses on inventory sold on recycling $34,706;
moving and storage expenses $7,544, trash removal $3,707 and labor and fire watch costs
$26,520. Based on the forgoing, the court found that tenant was entitled to $265,671.24 in lost
profits and $109, 717 in expenses associatedfrom the n:1ove. _
17
Tenant's Exhibit P-5 tab A identified the growth as $99,934.00 for March 2014. However, the officer of tenant
testified that $89,809 should not be included in the growth calculation since this sum was unrelated to the sales of
tenant but another business. As such said amount was deducted from the Loss or Growth column and the% Change
column was also revised based on the reduction in the Loss or Growth column.
18
Although tenant requested loss profits for 2015, the court found said damages to be speculative.
19
This figure represents the 2013 net profit after expenses $214,251 + the average percent change for January 2014,
February 2014 and March 2014 which is 25%.
9
The court further found that tenant was not entitled to recover attorney fees since it failed
to provide a basis for same. The attorney fees requested derive from fees associated with
- .
counsel's representation of tenant in this action and not as an expense incurred during the lease
period. Under the American Rule, applicable in Pennsylvania, a litigant cannot recover counsel
fees from an adverse party unless there is express statutory authorization, a clear agreement of
the parties, or some other established exception.i? The applicable lease did not contain any
..... ~, ·-.-,
provision regarding the payment of attorney fees, nor does tenant direct this court to any
statutory authority to support its request. Tenant relied upon a non-binding trial court opinion in
3 000 Barb. C. v. Bowman Properties Ltd, 2008 WL 5 544414 (2008) for an award of attorney fees.
Although, the court in 3000 B.C. did award~~ttorney f~es, there was no discussion as to basis for
the attorney fees; contract or statutory provision. This court elected not to follow 3000 Barb. C. as
it pertained to the award of attorney's fees.
For the foregoing reasons, this court's order dated May 27, 2015 denying landlord's
petition to open judgment and Finding dated June 26, 2015 assessing damages in favor of tenant
and against landlord for the sum of $375,388.24 should be affirmed.
Date: ~/~/J~- BYTHECOURT,
/7:L_/((/
PA~A.'Mc!NERNEY,
20
Trizechahn Gateway LLC v, Titus, 60 l Pa. 637, 652, 976 A.2d 474, 482-83 (2009), citing Mosaica Charter Sch. v.
Commonwealth, Dep't of Educ., 572 Pa. 191, 206-07, 813 A.2d 813, 822 (2002).
10