Mosne, R. v. Heritage Food of Hazleton, LLC ( 2016 )

J-A09028-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
ROBERT MOSNE AND JEAN MOSNE, HIS IN THE SUPERIOR COURT OF
WIFE PENNSYLVANIA
Appellees
v.
HERITAGE FOOD OF HAZLETON, LLC
Appellant No. 1397 MDA 2015
Appeal from the Order Entered July 20, 2015
in the Court of Common Pleas of Luzerne County
Civil Division at No(s): 2014-11116
BEFORE: FORD ELLIOTT, P.J.E., JENKINS, J., and PLATT, J.*
MEMORANDUM BY JENKINS, J.: FILED MAY 23, 2016
Heritage Food of Hazelton, LLC (“Appellant”) appeals the Luzerne
County Court of Common Pleas’ July 20, 2015 order denying Appellant’s
petition to open default judgment. After careful review, we affirm.
On January 24, 2014, Robert Mosne sustained injuries when he slipped
on ice on an inclined surface at Appellant’s place of business, a grocery store
in Hazleton, Pennsylvania.1 On March 26, 2014, counsel for Appellees2 sent
____________________________________________
*
Retired Senior Judge assigned to the Superior Court.
1
The grocery store ceased operations during the pendency of this lawsuit,
although it was still in business as of June 19, 2015, when its general
manager was deposed in this matter.
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a letter informing Appellant that he had been retained to represent Appellees
in relation to the January 24, 2014 incident. On August 20, 2014, Appellees’
counsel sent a second letter3 advising that Appellees intended to file suit
within 30 days absent a response from Appellant’s insurance carrier.
Appellant acknowledges receipt of both letters, which Appellant claims its
general manager4 forwarded to its insurance broker.5
On September 26, 2014, Appellees filed their Complaint, a copy of
which the Luzerne County Sheriff’s Department served at Appellant’s place
of business on October 1, 2014. Included with the Complaint was a Notice
_______________________
(Footnote Continued)
2
Appellee’s wife, Jean Mosne, was also a plaintiff in the underlying matter
and is an Appellee in the instant appeal. Robert and Jean Mosne are
collectively referred to herein as “Appellees”.
3
The second letter was sent to Hered, LLC, the company that owned the
property on which the Appellant’s grocery store was located. Both Appellant
and Hered, LLC were owned by the same individuals.
4
Iftekhar Biplob had been Appellant’s general manager for five years. See
Deposition of Iftekhar Biplob, June 19, 2015, p. 6. Mr. Biplob has a
bachelor’s degree in management and had previously worked as an assistant
controller in a hotel in New York City. Mr. Biplob attended to all Appellant’s
insurance concerns.
5
Appellant did not forward the claim to their insurer. Instead, Appellant
explained its “procedure was to forward every claim to Appellant’s insurance
broker, Gary Burdick of GDB & Associates, LLC, who would then handle the
claim on behalf of Appellant.” Appellant’s Brief, p. 6; see also Deposition of
Iftekhar Biplob, June 19, 2015, p. 7. Appellant further explained that its
general manager “always worked with and through the insurance broker
directly and did not work with the insurer.” Id. at 7; see also Deposition of
Iftekhar Biplob, June 19, 2015, pp. 7-8.
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to Defend.6 Appellant’s general manager forwarded the Complaint to
Appellant’s insurance broker.
On January 3, 2015, Appellant was served with Appellees’ Notice of
Intent to Take Default Judgment pursuant to Pa.R.C.P. 237.1.7 Appellant’s
____________________________________________
6
The Complaint included the following notice to defend text in both English
and Spanish:
NOTICE
YOU HAVE BEEN SUED IN COURT.
If you wish to defend against the claim set forth in the
following pages, you must take action within twenty (20) days
after this complaint and notice are served, by entering a written
appearance personally or by an attorney and filing in writing with
the court your defenses or objections to the claims set forth
against you. You are warned that if you fail to do so the case
may proceed without you and a judgment may be entered
against you by the court without further notice for any money
claimed in the complaint or for any other claim or relief
requested by the plaintiff. You may lose money or property or
other rights important to you. YOU SHOULD TAKE THIS PAPER
TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER,
GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS
OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING
A LAWYER, IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS
OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION
ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO
ELIGIBLE PERSONS AT A REDUCED RATE OR NO FEE.
See Notice to Defend, filed September 26, 2014 (legal services information
omitted).
7
The notice Appellant received reads as follows:
IMPORTANT NOTICE
TO: Heritage Food of Hazelton, LLC
(Footnote Continued Next Page)
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general manager promptly forwarded each pleading to Appellant’s insurance
broker via email.8
On January 23, 2015, Appellees filed a praecipe for default judgment.
Also on January 23, 2015, the Luzerne County Court of Common Pleas
Prothonotary entered a default judgment and mailed Appellant a copy
_______________________
(Footnote Continued)
DATE: January 2, 2015
YOU ARE IN DEFAULT BECAUSE YOU HAVE FAILED TO ENTER A
WRITTEN APPEARANCE PERSONALLY OR BY AN ATTORNEY AND FILE IN
WRITING WITH THE COURT YOUR DEFENSES OR OBJECTIONS TO THE
CLAIMS SET FORTH AGAINST YOU. UNLESS YOU ACT WITHIN TEN (10)
DAYS FROM THE DATE OF THIS NOTICE, A JUDGMENT MAY BE ENTERED
AGAINST YOU WITHOUT A HEARING AND YOU MAY LOSE PROPERTY OR
OTHER IMPORTANT RIGHTS.
YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF
YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET
FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION
ABOUT HIRING A LAWYER.
IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY
BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT
MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE
OR NO FEE.
Notice of Intent to Take Default Judgment, served on January 3, 2015 (legal
services information omitted).
8
A dispute exists as to whether the general manager actually attached all
pleadings and notices to his emails to the broker. We need not address this
question, however, because even had he attached the notices, the result of
this case would not change for the reasons discussed infra.
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thereof.9 Appellant received notice of the entry of the default judgment on
January 29, 2015. Appellant’s general manager wrote another email to the
insurance broker explaining that Appellant had received another notice, but
did not forward the notice.
Forty-six (46) days later, on March 16, 2015, Appellant improperly
electronically filed a petition to open default judgment. 10 Appellant properly
filed the petition to open judgment in person on April 9, 2015. Each petition
claimed Appellant operated a supermarket, was not litigation savvy, and did
not forward the default notice to its insurance broker because it did not
understand the importance of the default notice. On July 20, 2015, following
oral argument, the trial court denied Appellant’s petition to open the default
judgment.
Appellant timely filed its notice of appeal on August 14, 2015. The
trial court did not order, and Appellant did not file, a Pa.R.A.P. 1925(b)
____________________________________________
9
The notice of entry of default judgment forwarded to Appellant by the
Prothonotary of the Luzerne County Court of Common Pleas reads as
follows:
AS PRESCRIBED BY LAW, YOU ARE NOTIFIED THAT A
JUDGMENT DEFAULT HAS BEEN FILED IN THIS OFFICE AGAINST
YOU BY ROBERT MOSNE, PLAINTIFF, CREDITOR, ETC. IN THE
AMOUNT OF TO BE ASSESSED ON January 23, 2015.
Notice of Entry of Default Judgment, mailed January 23, 2015.
10
Appellant filed this petition electronically, in violation of the local rules of
Luzerne County Court of Common Pleas, which require petitions to open
default judgment to be filed by hand delivery.
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statement of matters complained of on appeal. The trial court entered its
Pa.R.A.P. 1925(a) opinion on November 18, 2015.
Appellant raises the following five (5) claims for review:
1. Whether the [t]rial [c]ourt erred and/or abused its discretion
when it denied [Appellant’s] Petition to Open Default Judgment
pursuant to Pa.R.Civ.P. 237.3 and established case law where
the evidence established that [Appellant] met the following three
requirements: (1) a prompt filing of a petition to open the
default judgment; (2) a meritorious defense; and (3) a
reasonable excuse or explanation for their failure to file a
responsive pleading?
2. Whether the [t]rial [c]ourt erred and/or abused its discretion
when it denied [Appellant’s] Petition to Open Default Judgment
because, in reaching its conclusion that [Appellant’s] reasons for
delay did not excuse the delay and that the Petition was not filed
promptly, the [c]ourt exercised judgment which is manifestly
unreasonable under the circumstances?
3. Whether the [t]rial [c]ourt erred and/or abused its discretion
when it denied [Appellant’s] Petition to Open Default Judgment
because the [c]ourt’s analysis regarding the promptness
requirement is at odds with modern jurisprudence and the
typical timeline associated with litigation of civil matters in the
state court system from inception through trial?
4. Whether the [t]rial [c]ourt erred and/or abused its discretion
when it denied [Appellant’s] Petition to Open Default Judgment
where equity clearly favored opening the judgment?
5. Whether the [t]rial [c]ourt erred and/or abused its discretion
when it denied [Appellant’s] Petition to Open Default Judgment
where [Appellees] did not suffer any prejudice based on the
delay between the entry of default judgment and the filing of the
Petition to Open Default Judgment?
Appellant’s Brief, pp. 4-5.
The decision to grant or deny a petition to open a default judgment is
a matter of judicial discretion. Schultz v. Erie Ins. Exchange, 477 A.2d
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471 (Pa.1984). “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.” Graziani v. Randolph, 856 A.2d 1212, 1223
(Pa.Super.2004).
This Court’s standard of review regarding the denial of a petition to
open or strike a default judgment requires that the Court
examine the entire record for any abuse of discretion, reversing
only where the trial court’s findings are inconsistent with the
clear equities of the case. Moreover, this Court must determine
whether there are equitable considerations which require that a
defendant, against whom a default judgment has been entered,
receive an opportunity to have the case decided on the merits.
Where the trial court’s analysis was premised upon record
evidence, where its findings of fact were deductions from other
facts, a pure result of reasoning, and where the trial court made
no credibility determinations, this Court may draw its own
inferences and arrive at its own conclusions. Finally, where the
equities warrant opening a default judgment, this Court will not
hesitate to find an abuse of discretion.
Reid v. Boohar, 856 A.2d 156, 159 (Pa.Super.2004).
Pennsylvania’s Rules of Civil Procedure allow for the entry of default
judgments as follows:
Rule 1037. Judgment Upon Default or Admission.
Assessment of Damages
...
(b) The 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
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to defend or, except as provided by subdivision (d), for any relief
admitted to be due by the defendant’s pleadings.
(1) The prothonotary shall assess damages for the amount
to which the plaintiff is entitled if it is a sum certain or
which can be made certain by computation, but if it is not,
the damages shall be assessed at a trial at which the
issues shall be limited to the amount of the damages.
...
(c) In all cases, the court, on motion of a party, may enter an
appropriate judgment against a party upon default or admission.
Pa.R.C.P. 1037. The Rules further provide:
Rule 237.1 Notice of Praecipe for Entry of Judgment of
Non Pros for Failure to File Complaint or by Default for
Failure to Plead
...
(2) No judgment of non pros for failure to file a complaint or by
default for failure to plead shall be entered by the prothonotary
unless the praecipe for entry includes a certification that a
written notice of intention to file the praecipe was mailed or
delivered
...
(ii) in the case of a judgment by default, after the failure
to plead to a complaint and at least ten days prior to the
date of the filing of the praecipe to the party against whom
judgment is to be entered and to the party’s attorney of
record, if any.
Pa.R.C.P. 237.1.
“Generally speaking, 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
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pleading, and (3) pleaded a meritorious defense to the allegations contained
in the complaint.” Myers v. Wells Fargo Bank, N.A., 986 A.2d 171, 175-
76 (Pa.Super.2009); see also Reid, 856 A.2d at 160.11 “[A]ll three factors
must appear before a court is justified in opening a default judgment.”
McCoy v. Pub. Acceptance Corp., 305 A.2d 698, 700 (Pa.1973). Further,
a trial court cannot open a default judgment based on the “equities” of the
case where the defendant fails to establish all three of the required criteria.
Seeger v. First Union Nat. Bank, 836 A.2d 163, 167 (Pa.Super.2003).
The third prong, a meritorious defense to the underlying matter, is not
at issue in this matter. For purposes of a petition to open a default
judgment, “[t]he requirement of a meritorious defense is only that a defense
must be pleaded that if proved at trial would justify relief.” Seeger, 836
A.2d at 166. “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.” Id.
Here, Appellant’s petition to open default judgment alleged various
defenses to the underlying action including comparative negligence, lack of
notice, assumption of the risk, open and obvious risk, choice of ways, and
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11
Pennsylvania’s Rules of Civil Procedure provide that, where a party files a
petition for relief from a default judgment that attaches a proposed answer
that states a meritorious defense within 10 days of the entry of the default
judgment on the docket, the trial court must open the judgment. See
Pa.R.C.P. No. 237.3. In the case sub judice, however, Appellant concedes it
failed to file its petition to open default judgment within 10 days.
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trivial defect. Any of these pleaded defenses amount to a “meritorious”
defense to a slip and fall claim for the purpose of satisfying the third prong
required for a petition to open a default judgment.
The instant matter instead hinges on the first prong, whether
Appellant promptly filed its petition to open default judgment, which
necessarily depends on the second prong, Appellant’s excuse for the delay.
With regard to the first prong, whether the petition was timely filed,
this Court has noted the following:
The timeliness of a petition to open judgment is measured from
the date that notice of the entry of the default judgment is
received.
US Bank N.A. v. Mallory, 982 A.2d 986, 995 (Pa.Super.2009) (some
internal quotations omitted).
Pennsylvania law does not establish a specific period of time within
which a party may promptly file a petition to open or strike a default
judgment. US Bank, N.A., 982 A.2d at 995. This Court has suggested that
the Court should consider the length of time from the date that notice of the
entry of judgment was received and the reason for the delay in filing the
petition. Flynn v. Casa Di Bertacchi Corp., 674 A.2d 1099, 1102
(Pa.Super.1996). Previous decisions have determined a fourteen-day delay
to be timely in one instance, Alba v. Urology Associates of Kingston, 598
A.2d 57 (Pa.Super.1991), but that a seventeen-day delay was untimely in
another. McCoy v. Public Acceptance Corp. et al., 305 A.2d 698
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(Pa.1973) (“Although such a delay might not be considered excessive under
certain circumstances, filing the petition to open after two and one-half
weeks can hardly be considered prompt.”); see also Flynn v. Casa Di
Bertacchi Corp., 674 A.2d 1099, 1102 (Pa.Super.1996) (finding that, given
defendants’ previous inactivity, the trial court was generous in concluding
that a seventeen-day delay between notice of default judgment and the
filing of a petition to open judgment was prompt). Generally, the Court has
been willing to accept a delay of around one month or less. See Duckson
v. Wee Wheelers, Inc., 620 A.2d 1206 (Pa.Super.1993) (filing prompt only
one day after entry of default judgment); Reid, supra (filing of petition
prompt one month after entry of default judgment); Penneys v. Richard
Kastner Co., Inc., 443 A.2d 353 (Pa.Super.1982) (thirty-three day delay
considered prompt). Beyond that, however, the Court has not been so
patient, especially in reference to sophisticated defendants. See DiNardo
v. Central Penn Air Services, Inc., 516 A.2d 1187 (Pa.Super.1986)
(three-month delay not prompt for sophisticated entity).
Here, Appellant acknowledges it received the notice of entry of default
judgment on January 29, 2015. Appellant’s general manager acknowledged
he understood the notice or at least understood that it was important. See
Deposition of Iftekhar Biplob, June 19, 2015, pp. 52-54. Despite knowledge
of the existing default judgment entered against it, Appellant did not
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attempt to file its petition to open judgment until 46 days later, on March
16, 2015.12 Our case law indicates this period is too long for a corporate
defendant. See DiNardo, supra. Accordingly, Appellant fails to prove the
first prong – that it promptly filed its petition to open default judgment. This
failure is fatal to Appellant’s petition to open judgment.
Even assuming, however, that it timely filed its petition to open the
default judgment, Appellant still failed to argue an adequate excuse for its
delay.
“Whether an excuse [for delay in filing a petition to open a default
judgment] is legitimate is not easily answered and depends upon the specific
circumstances of the case.” Seeger, 836 A.2d at 166. “Excusable
negligence must establish an oversight rather than a deliberate decision not
to defend.” Id. at 167. “[U]nacceptable mistakes involve attorney
carelessness or dilatoriness, a failure to act by one who knows its
implications, or a deliberate decision not to defend. Acceptable mistakes
involve the misplacement or handling of papers through no fault of the
appellant or its attorney, or a clerical oversight resulting in an attorney’s
being unaware of the suit from the outset.” Keystone Boiler Works, Inc.
v. Combustion & Energy Corp., 439 A.2d 792, 794 (Pa.Super.1982).
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12
In the interest of fairness, we will not punish Appellant for counsel’s lack
of knowledge of Luzerne County Court of Common Please local rules and will
consider March 16, 2015 as the filing date for the purpose of the prompt
filing analysis.
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Generally speaking, a default attributable to a defendant’s
justifiable belief that his legal interests are being protected by
his insurance company is excusable. However, if the insured
fails to inquire of the insurer as to the status of the case after
events have occurred which should have reasonably alerted the
insured to a possible problem, the insured is precluded from
asserting a justifiable belief that its interests were being
protected.
Duckson, 620 A.2d at 1210 (internal citation omitted) (emphasis in
original).
Furthermore, regarding the opening of default judgments, this Court
makes a distinction between laypersons and corporate defendants with the
means to monitor legal claims. In DiNardo v. Central Penn Air Services,
Inc., supra, a corporate defendant averred its inaction (3-month delay)
resulted from relying on its insurer to represent its legal interests. The
Court found “that appellee did not act in a manner which would enable it to
justifiably rely upon legal representation by its insurance company.”
DiNardo, 516 A.2d at 1191. As the Court explained:
Appellee’s failure to answer the complaint was not due simply to
the failure of its insurance company, but also to [Appellee’s]
failure to seek reassurances that actions were being taken on its
behalf after events had occurred which should have reasonably
alerted it that a problem existed.
Id.
In Flynn v. Casa Di Bertacchi Corp., supra, the appellant explained
its 17-day delay in filing a petition to open a default judgment by likening
itself to the appellant in Duckson, in which case this Court found reliance on
an insurer for representation an acceptable excuse for delay in filing a
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petition to open a default judgment. Initially, the Court distinguished
Duckson by noting that Duckson involved an unsophisticated layperson
defendant, not a corporation.13 Flynn, 674 A.2d at 1103. The Court further
stated that corporate entities should have in-house mechanisms for
monitoring legal complaints lodged against it, and further that corporate
entities are obliged to seek reassurances from their insurers that actions are
being taken on their behalf after receiving a notice of intent to seek default
judgment. Id.
Here, Appellant is not an individual, but a corporate entity that has
previously been represented by counsel on various matters. See Deposition
of Iftekhar Biplob, June 19, 2015, pp. 28-29 (explaining Appellant has had
multiple attorneys represent it regarding ownership and taxation issues).
Appellant makes no claim that it lacked an in-house system for monitoring
claims against it. Instead, it explained its system for dealing with claims as
one whereby its general manager would forward the claims to its insurance
broker – not its insurance carrier – and let the broker handle the claims. As
a corporate entity, “[i]t was [] incumbent upon [Appellant] to seek
reassurance from its insurer when it received notification of [Appellees’]
intent to seek a default judgment.” Flynn, 674 A.2d at 1103. While
Appellant’s general manager did write an email to its insurance broker
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13
We further note that Duckson involved a delay of only one day.
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inquiring about the Mosne matter, Appellant did not forward the default
notice14 and, when it did not receive a response from the insurer, Appellant
did not inquire further. Appellant’s manager also testified that he would
have spoken with Appellant’s insurance brokers about this case multiple
times on the telephone during the pendency of this matter. These actions
do not suffice to satisfy the obligation of a corporate defendant to establish
in-house mechanisms to monitor legal complaints lodged against it and then
utilize those mechanisms to seek reassurance from an insurer that actions
were being taken on its behalf to protect its interests.15
Because the trial court properly determined Appellant did not establish
all three prongs required to successfully petition to open a default judgment,
the equitable concerns underlying this matter do not come into play.16
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14
The petition to open default judgment claims Appellant did not understand
the significance of the default notice.
15
To the extent Appellant likens itself to the unsophisticated layperson
defendant in Duckson because its general manager was not an attorney,
this argument is unpersuasive as a legitimate reason for the delay. See
Appellant’s Brief, p. 6. Corporations are often managed by non-attorneys.
As this Court has explained, corporations run by non-lawyer directors are
not excused from the corporate obligation to establish in-house mechanisms
to assure its legal interests are attended to by its legal representatives. See
Flynn, 674 A.2D at 1103.
16
If they did, however, they would likely lean in Appellees’ favor.
Appellant’s grocery store closed during the pendency of this lawsuit and
appeal. As a result, the store employees and other required witnesses may
very well be unavailable or difficult to locate, possibly resulting in prejudice
to Appellees’ case. Appellant’s suggestion that the fact Appellees were able
to depose its general manager despite the closing of the store indicates the
(Footnote Continued Next Page)
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The trial court’s denial of Appellant’s petition to open default judgment
does not represent either an abuse of discretion or an error of law.
Accordingly, we affirm the order of the trial court.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/23/2016
_______________________
(Footnote Continued)
store employee witnesses would still be available for a trial is unpersuasive.
At the time Appellees deposed Mr. Biplob, he testified he was still the
general manager of Heritage Food of Hazelton, and he described all duties of
the position in the present tense. See Deposition of Iftekhar Biplob, June
19, 2015, pp. 6-8. Appellees’ success in deposing then-employee Iftekhar
Biplob does not indicate any success in future attempts to locate employees
of a now-defunct grocery store.
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