Scalla, E. v. KWS, Inc. ( 2020 )

J-A13021-20
2020 Pa. Super. 191
ERIC SCALLA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
KWS, INC., A MEMBER OF THE :
THIELE GROUP :
: No. 2003 EDA 2019
Appellant :
Appeal from the Order Entered April 12, 2019
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): 171202802
BEFORE: BENDER, P.J.E., LAZARUS, J., and STRASSBURGER, J.*
OPINION BY LAZARUS, J.: FILED AUGUST 11, 2020
KWS, Inc. (KWS), appeals from the order, entered in the Court of
Common Pleas of Philadelphia County, denying its petition to open a default
judgment. After careful review, we affirm.
On March 30, 2016, Eric Scalla worked as a laborer for Rockland
Manufacturing. On that day, Scalla was assisting other employees to use an
overhead crane to move an excavation ripper. The excavation ripper was
attached to the overhead crane with a chain hook, which was manufactured
by KWS. At one point, the excavation ripper detached from the chain hook
and crushed Scalla’s leg, which required a below-the-knee amputation.
On December 19, 2017, Scalla filed a products liability case against KWS
in Philadelphia County, seeking damages for his injuries. Scalla served his
____________________________________________
* Retired Senior Judge assigned to the Superior Court.
J-A13021-20
complaint on KWS via USPS certified mail, return receipt requested, and via
regular mail, to KWS’ Tulsa, Oklahoma office—its only United States office.
On January 23, 2018, Elizabeth Roberts, Vice President of Operations and
registered agent for KWS according to the Secretary of State of Oklahoma,
signed for the USPS return receipt. Roberts, KWS’ lone United States
employee, set the package containing Scalla’s complaint aside because she
did not recognize the sender. Setting mail and packages aside, unopened,
was Roberts’ usual practice for KWS’ mail received from senders that Roberts
did not recognize. Roberts’ superiors at KWS were familiar with her mail-
opening practices.
On March 13, 2018, Scalla served KWS with a 10-day notice of intention
to enter default judgment, pursuant to Pa.R.Civ.P. 237.1. Roberts received
and signed for this notice as well—she signed both the FedEx package receipt
and the USPS return receipt card, but, again, did not open the package. On
March 26, 2018, Scalla filed a praecipe to enter default judgment, which was
then entered in Scalla’s favor and against KWS that same day.
On March 27, 2018, Scalla’s counsel sent an email to KWS’ company
email address (sales@kwschain.com) notifying KWS that it was in default for
failure to respond to Scalla’s complaint. Roberts, who also monitored this
email account, opened the email and alerted her superiors to its contents. The
next day, KWS’ counsel responded to the email stating that they were retained
for the matter and would respond to the complaint the following day. On
March 29, 2018, KWS removed the action to federal court on the basis of
-2-
J-A13021-20
diversity of citizenship jurisdiction, pursuant to 28 U.S.C. § 1332(a), and, on
April 5, 2018, KWS filed an answer to Scalla’s complaint in federal court. On
April 19, 2018, Scalla filed a motion to remand the case back to state court,
pursuant to 28 U.S.C. § 1446(b), on the grounds that more than thirty days
had elapsed between KWS’ receipt of notice of the complaint, which was
effectuated on January 23, 2018. Because more than thirty days had elapsed,
Scalla argued, the federal court no longer had jurisdiction to hear the case.
On May 30, 2018, the federal court ordered that the parties engage in
additional discovery on the issue of the sufficiency of the service of process,
and ordered that the parties file supplemental briefs on that issue.
In an opinion filed November 30, 2018, the federal court agreed with
Scalla and remanded the case back to state court, finding that: (1) under
relevant Pennsylvania and Oklahoma law, Roberts was KWS’ registered agent,
at least between September 8, 2009 and May 31, 2018; (2) Roberts accepted
service of process on behalf of KWS on January 23, 2018, under Pennsylvania
law; (3) KWS’ time for removal began when it was served with Scalla’s
complaint, on January 23, 2018; and (4) KWS’ notice of removal to federal
court was untimely filed because it was filed sixty-five days after Roberts
accepted the complaint on behalf of KWS. Scalla v. KWS, 2018 WL 6271646
(filed November 30, 2018). On December 20, 2018, the federal court
remanded the record to state court.
On December 31, 2018, the Court of Common Pleas of Philadelphia
County acknowledged return of the record. On January 25, 2019, KWS filed
-3-
J-A13021-20
a petition to open the default judgment. The parties then filed a series of
counseled replies and sur-replies, amounting to ten briefs in total, which
caused the trial court “to endure a death by a thousand cuts from eight
separate sur-reply briefs.” Trial Court Opinion, 9/30/19, at 12.
In an order dated April 10, 2019, the trial court denied with prejudice
KWS’ petition to open the default judgment, and issued a thirty-six-page
opinion in support thereof, finding that: (1) the federal court’s rulings have
collateral estoppel effect, which prevents KWS from re-litigating the issues of
Roberts’ authority and the validity of service of Scalla’s complaint; (2) KWS’
petition was not verified, and four of five of KWS’ reply briefs were unverified,
which required that the court could not consider the claims made within those
filings, pursuant to Pa.R.C.P. 206.3; (3) KWS filed an inappropriate number
of reply briefs; and (4) on the merits, KWS failed each of the prongs of the
three-part test for opening a default judgment. See Trial Court Opinion,
4/10/19. KWS appealed, and KWS and the trial court timely complied with
Pa.R.A.P. 1925. On September 30, 2019, the trial court issued a thirteen-
page opinion, and, in so doing, incorporated and adopted its initial thirty-six-
page opinion dated April 10, 2019.
On appeal, KWS presents the following issues for our review:
(1) Did KWS establish its right to open the default judgment
against it by proving each of the three prongs for opening
under controlling Pennsylvania law?
(2) Does Pennsylvania law obligate courts to balance the
equities in considering petitions to open default judgments?
-4-
J-A13021-20
(3) Did KWS establish its right to open the default judgment
against it by proving that a balancing of the equities favored
opening under controlling Pennsylvania law?
Appellant’s Brief, at 6.
Our standard of review for a trial court’s ruling on a petition to open a
default judgment is well-settled:
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 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. Moreover, this Court must determine
whether there are equitable considerations that weigh in favor of
opening the default judgment and allowing the defendant to
defend the case on the merits. Where the equities warrant
opening a default judgment, this Court will not hesitate to find an
abuse of discretion.
Stabley v. A&P, 89 A.3d 715, 719 (Pa. Super. 2014) (quoting Castings
Condominium Ass’n, Inc. v. Klein, 663 A.2d 220, 222-23 (Pa. Super.
1995)) (internal brackets omitted).
KWS first claims that the trial court abused its discretion in finding that
it failed to satisfy each of the three prongs for opening a default judgment.
With regard to the first prong, KWS claims that, “the undisputed record shows
that it promptly filed its [p]etition once the [t]rial [c]ourt regained jurisdiction
following the [f]ederal [c]ourt’s remand ruling.” See Appellant’s Brief, at 23-
-5-
J-A13021-20
24. KWS cites to our Court’s decision in Kelly v. Siuma, 34 A.3d 86 (Pa.
Super. 2011), and our Supreme Court’s decision in Queen City Elec. Supply
Co., Inc. v. Soltis Elec. Co., Inc., 421 A.2d 174 (Pa. 1980), for the argument
that,
Pennsylvania courts have not established a specific time period
within which a petition to open a default 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. It is well established that where
equitable circumstances exist, a default judgment may be opened
regardless of the time that may have elapsed between entry of
the judgment and filing of the petition to open.
Appellant’s Brief, at 24 (internal citations, quotation marks, brackets, and
original emphasis omitted). KWS claims that because it was actively litigating
the case in federal court, there was good reason to delay filing its petition to
open, since it was exercising “its ‘important [] right’ to remove the case to
federal court on the basis of the parties’ uncontested diversity of citizenship.”
See id. at 25 (internal citation and footnote omitted).
In Kelly, supra, we discussed the timeliness requirement of the first
prong of the three-part test when considering a petition to open a default
judgment:
[w]ith regard to the first prong, whether the petition to open was
timely filed, we note:
The timeliness of a petition to open a judgment is measured
from the date that notice of the entry of the default
judgment is received.
* * *
-6-
J-A13021-20
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 (Pa. Super. 1993) (one day is timely); Alba v.
Urology Associates of Kingston, [] 598 A.2d 57 (Pa.
Super. 1991) (fourteen days is timely); Fink v. General
Accident Ins. Co., [] 594 A.2d 345 (Pa. Super. 1991) ([]
five days is timely).
[US Bank N.A. v. Mallory, 982 A.2d 986, 995 (Pa. Super. 2009)]
(quotation omitted) (finding eighty-two day delay was not timely).
[]
Kelly, 34 A.3d at 92 (emphasis added).
Here, KWS claims that the trial court abused its discretion on the issue
of prompt filing because: (1) KWS was exercising its important federal
statutory right to seek removal based on diversity of citizenship;1 (2) KWS
filed a timely answer within one week of removing the case to federal court;
(3) KWS filed its petition to open the default judgment within twenty-one days
of the trial court’s post-remand listing of the case for “assessment”; and (4)
it would have been a waste of resources for KWS, Scalla, and the federal court,
to file the petition to open the judgment in federal court, since there existed
the prospect that the federal court’s ruling on the petition would be void if the
federal court remanded for lack of jurisdiction. See Appellant’s Brief, at 31-
33.
____________________________________________
1 In its opinion, the federal court denied Scalla’s motion for attorney’s fees
connected with the remand. In support of its ruling, the federal court found
that KWS had “an objectively reasonable basis for seeking removal,” and that
there was “no reason to believe that [KWS’] position (i.e., that it was not
properly served with the [c]omplaint) [was] not asserted in good faith.”
Scalla v. KWS, 2018 WL 6271646, at 9 (filed November 30, 2018).
-7-
J-A13021-20
As an initial matter, we note that the March 26, 2018 docket entry of
“Judgment Entered by Default,” states, “Notice Under Rule 236 Given. Notice
Under 237.1 Given.” Such a notation is sufficient to prove that the
prothonotary sent notice either to an unrepresented party or to KWS’ attorney
of record under Pa.R.C.P. 236 and 237.2 See Murphy v. Murphy, 988 A.2d
703, 710 (Pa. Super. 2010) (holding docket entry stating, “NS ORDER FOR
HEARING FILED; HEARING FIXED FOR JUNE 12, 2008 AT 8:30AM. DATE
REPLACES PRIOR HEARING DATE OF MAY 2, 2008,” satisfied notice
requirement and established presumption that opposing party received filing);
see also Fraternal Order of Police, Lodge No. 5 v. City of Philadelphia,
655 A.2d 666, 668 (Pa. Cmwlth. 1995) (holding docket entry stating, “Notice
Under Rule 236” sufficient to establish notice was sent); cf. Hepler v. Urban,
609 A.2d 152, 154 (Pa. 1992) (“[A prothonotary’s] notation [of ‘N.S.’] on a
blueback is not a ‘notation in the docket that notice of entry of the order has
been given.’”) (emphasis in original). Under these circumstances, we find that
the trial court did not err in determining that KWS received notice of the entry
____________________________________________
2 Pennsylvania Rule of Civil Procedure 236(b) provides in relevant part that
“[t]he prothonotary shall immediately give written notice by ordinary mail of
the entry of any order, decree or judgment.” See Pa.R.Civ.P. 236(b).
Additionally, Pa.R.A.P. 108(b) provides that “[t]he date of entry of an order in
a matter subject to the Pennsylvania Rules of Civil Procedure shall be the day
on which the clerk makes the notation in the docket that notice of entry of the
order has been given as required by Pa.R.Civ.P. 236(b).” See Pa.R.A.P.
108(b) (emphasis added). See also Hepler v. Urban, 609 A.2d 152, 154
n.2 (Pa. 1992).
-8-
J-A13021-20
of default judgment on March 26, 2018, when the prothonotary entered the
appropriate notice in the docket.3
With regard to KWS’ first argument on prompt filing—that KWS was
actively litigating the matter in federal court and exercising its important
federal right to do so—we note that there was nothing preventing KWS from
filing its petition to open the default judgment in federal court during the
pendency of the federal proceedings. Indeed, we have previously said that,
[w]henever any action is removed from a State court to a district
court of the United States, . . .[a]ll injunctions, orders, and other
proceedings had in such action prior to its removal shall remain in
full force and effect until dissolved or modified by the district
court. 28 U.S.C. § 1450. After removal, the federal court takes
the case up where the State court left it off. Granny Goose
Foods, Inc. v. Brotherhood of Teamsters and Auto Truck
Drivers Local No. 70 of Alameda County, 415 U.S. 423, 436
[] (1974) (quotation and citation omitted).
The federal court accepts the case in its current posture as though
everything done in state court had in fact been done in the federal
court. See also Nissho-Iwai American Corp. v. Kline, 845
F.2d 1300, 1303 (5th Cir. 1988) (quotation and citation omitted).
Kurns v. Soo Line R.R., 72 A.3d 636, 639 (Pa. Super. 2013) (internal
quotation marks omitted). Also, federal courts are empowered to set aside a
default judgment that was entered in state court and prior to the removal to
federal court. See Butner v. Neustadter, 324 F.2d 783, 785-86 (9th Cir.
1963) (“The federal court takes the case as it finds it on removal and treats
everything that occurred in the state court as if it had taken place in federal
____________________________________________
3The trial court calculated that 304 days elapsed between March 26, 2018
and January 25, 2019, however, 306 days elapsed, in actuality.
-9-
J-A13021-20
court. Therefore, this default judgment should be treated as though it had
been validly rendered in the federal proceeding. . . . [A] motion to set aside
a default may be made in the district court under Fed. R. Civ. P. 60(b) because
of mistake, inadvertence, surprise, or excusable neglect.”).
Here, KWS is correct in noting that there was nothing that required it to
file its petition in federal court. See Appellant’s Brief, at 33. Nevertheless,
KWS was permitted to do so. See Kurns, supra; see also Butner, supra.
We conclude that the trial court did not abuse its discretion in finding it
unpersuasive that KWS did not file the motion in federal court because it was
exercising its “important federal right,” given that a motion to set aside the
default judgment could have been made in that court. See Stabley, supra.
Also, with regard to the “prompt filing” prong, KWS argues that it filed
its petition to open within twenty-one days of the trial court’s post-remand
listing of the case for “assessment.” See Appellant’s Brief, at 31. This may
be true, but is of no moment; our precedent is well-settled that, “[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.” See Kelly, supra
(emphasis added). Here, more than three-hundred days elapsed after KWS
received notice of the default judgment and before it filed its petition to open.
See Stabley, supra.
Finally, KWS argues that its answer, filed in federal court less than ten
days after the entry of default, should serve as the functional equivalent of a
petition to open. First, this argument was never raised in the trial court.
- 10 -
J-A13021-20
Second, when KWS ultimately filed a petition to open the default judgment, it
was filed pursuant to the three-part test, and made no mention of Rule 237.3.
See Petition to Open Default Judgment, 1/25/19, ¶ 22. Claims raised for the
first time on appeal are waived. See Pa.R.A.P. 302(a) (“Issues not raised in
the lower court are waived and cannot be raised for the first time on appeal.”)
As a result, we discern no abuse of discretion where the trial court found that
KWS did not promptly file its petition to open the default judgment on January
25, 2019.4 See Stabley, supra.
KWS also claims the trial court abused its discretion with regard to the
second prong of the of the three-part test; the trial court found that KWS
failed to provide a reasonable explanation or excuse for its default. See Trial
Court Opinion, 4/10/19, at 30-33. One basis upon which the trial court relied
for concluding that KWS failed to submit a reasonable explanation for its delay
was that the court had no obligation to consider the contents of the eight sur-
replies filed between the parties. The trial court stated:
There is no provision in our rules for filing reply briefs to petitions
to open default judgments. Petitions are ripe for disposition after
the expiration of the response period. A judge has discretion to
consider a reply brief as a matter of grace but not as of right.
____________________________________________
4 Since the three-part test is conjunctive and not disjunctive, we could end
our analysis here. See Stabley, supra at 719. Because of the equitable
nature of KWS’ second and third claims on appeal, however, we will review all
of the three-part test. See id. (“Moreover, this Court must determine whether
there are equitable considerations that weigh in favor of opening the default
judgment and allowing the defendant to defend the case on the merits. Where
the equities warrant opening a default judgment, this Court will not hesitate
to find an abuse of discretion.”).
- 11 -
J-A13021-20
This [c]ourt finds it hard to understand how two law firm partners
believed that it was appropriate or necessary to inundate the
[c]ourt with five [] separate reply briefs on behalf of KWS. The
[p]laintiff was forced to file four [] briefs in response. For the
most part, each reply brief filed by KWS addressed issues raised
in the [p]laintiff’s original answer to the petition to open. All of
those issues could—and should—have been addressed in KWS’
first reply brief. Any new issues or factual allegations could not
be raised in any of KWS’[] subsequent reply briefs. They should
have been raised in the petition itself.
Id. at 13-14. The trial court further clarified its position as to why it would
not consider KWS’ reply briefs in its opinion issued on September 30, 2019:
The court’s original opinion cited three Pennsylvania Supreme
Court and one recent Superior Court decisions that held that reply
briefs cannot be used to raise new issues or to remedy the original
brief’s deficient discussion of an issue. This trial court recognized
that those cases were discussing appellate procedure but
believed, and still believes, that []the principles they espouse are
equally relevant to reply briefs filed in the trial courts.[]
The usual course of events is that a lawyer files a motion, the
opponent files an answer, and the first lawyer may file a reply.
There is no provision in the Pennsylvania Rules of Civil Procedure
or in the local Philadelphia Civil Rules that permitted KWS to file
its sur-reply, sur-sur-reply, sur-sur-sur-reply, and sur-sur-sur-
sur-reply. Further research revealed that the issue of sur-replies,
sur-sur-replies, etc., is apparently one of first impression for
Pennsylvania trial courts, although Pa.R.A.P. 2113(c) mandates
that after a reply brief is filed, “no further briefs may be filed
except with leave of court.” The issue has been discussed at
length by the federal courts. While federal court decisions are not
binding on Pennsylvania courts, this [c]ourt found the reasoning
of the federal cases discussed below to be very persuasive.
***
An endless volley of briefs and sur-replies occurred in the often-
cited case of U.S. ex rel. Hockett v. Columbia/HCA
Healthcare Corp., 498 F. Supp. 2d 25 (D. D.C. 2007). The court
set forth the standard of review as follows:
The decision to grant or deny leave to file a sur-reply is
committed to the sound discretion of the court. If the
- 12 -
J-A13021-20
movant raises arguments for the first time in his reply to the
non-movant’s opposition, the court will either ignore those
arguments in resolving the motion or provide the non-
movant an opportunity to respond to those arguments by
granting leave to file a sur-reply.
[Hockett,] 498 F. Supp. 2d at 35.
A “popular mode of advocacy” in Hockett were motions seeking
to strike filings or seeking leave to file sur-replies. [Id.] at 34.
This left the “[c]ourt as the owner of what may be the world’s first
sur-sur-sur-reply, a position in which no [c]ourt should ever find
itself.” Id. at 35. The court granted the [p]laintiff leave to file
the sur-sur-sur-reply because it responded to evidence first raised
in HCA’s reply. Id. The [c]ourt also was presented “with
something it never thought it would see, a sur-sur-sur-sur-reply
(hereinafter, ‘reply’). All of these papers, particularly the reply,
add very little that is new, and do not respond to any improper
argument. We are now several steps removed from a substantive
motion, and are faced only with filings about filings. Eventually
we reach a point where all this metapleading must stop, and this
is that point. The [m]otion ... is denied.” Hockett, 498 F. Supp.
2d at 36 (emphasis added). []
The problem with KWS’ fusillade of sur-reply briefs was they raised
issues and facts that could have been, and should have been,
raised either in KWS’[] petition or in its first reply brief. [Scalla]
raised issues in his answer to the [p]etition that certainly
warranted a reply by KWS discussing them. Instead of discussing
all of those issues in one reply brief, however, KWS spread them
out among four separate sur-reply briefs, which necessitated
[Scalla] filing four of his own sur-reply briefs in response.
Between February 27 and March 11, 2019, the court was forced
to endure a death by a thousand cuts from eight separate sur-
reply briefs.
For example, KWS did not deign to submit the affidavit of
[Attorney] Galligan[] until KWS’[] second reply brief, i.e., its first
sur-reply, on February 28th. The matters [Attorney] Galligan
discussed all occurred in the month before the petition to open
was filed; they were not newly-discovered after the first reply brief
had been filed by KWS.
The matters set forth in the affidavit went to the heart of KWS’[]
claim that the petition to open was timely filed. Timeliness was
- 13 -
J-A13021-20
the first of the three elements KWS had to prove to open the
default judgment. The affidavit should have been filed as part of
the petition to open to prove that the petition was filed timely.
There should have been no difficulty in obtaining the affidavit in
time for inclusion in the petition to open because [Attorney]
Galligan is counsel of record for KWS in this case. After [Scalla’s]
answer to the petition disputed timeliness, the affidavit should
have been included in KWS’[] first reply to [Scalla’s] answer, not
in its second reply. Counsel for KWS have never explained why
they failed to include [Attorney] Galligan’s affidavit in the petition
to open or in their first reply to [Scalla’s] answer to the petition.
Trial Court Opinion, 9/30/19, at 8-12 (internal citations and footnote omitted).
As stated above by the trial court, there is no provision under
Pennsylvania law for filing reply briefs to petitions to open a default judgment.
Nevertheless, we note that our Supreme Court has stated:
Although the [Pennsylvania] Constitution does not enumerate
every specific power inherent in courts and incidental to the grant
of judicial authority under Article V, the Judicial Code serves to
codify some of these non-particularized powers. Section 323 of
the Judicial Code provides:
Every court shall have power to issue, under its judicial seal,
every lawful writ and process necessary or suitable for the
exercise of its jurisdiction and for the enforcement of any
order which it may make and all legal and equitable powers
required for or incidental to the exercise of its jurisdiction,
and, except as otherwise prescribed by general rules, every
court shall have power to make such rules and orders of
court as the interest of justice or the business of the court
may require.
42 Pa.C.S. § 323. Section 912 of the Judicial Code similarly
establishes that every court of common pleas “shall have power
to issue, under its judicial seal, every lawful writ and process . . .
as such courts have been heretofore authorized by law or usage
to issue[,]” and every judge of a court of common pleas “shall
have all the powers of a judge or magisterial district judge of the
minor judiciary.” 42 Pa.C.S. § 912.
- 14 -
J-A13021-20
In re Return of Seized Prop. of Lackawanna Cty, 212 A.3d 1, 12 (Pa.
2019) (emphasis added).
Here, despite citing no binding precedent for refusing to consider the
reply briefs filed by the parties, the trial court nevertheless had the authority
to limit its consideration of the reply briefs. The court has the “power to make
such rules and orders of court as the interest of justice or the business of the
court may require.” See In re Return of Seized Prop. of Lackawanna
Cty, supra. It is evident that the parties’ use of reply briefs placed an undue
burden on the “business of the court[.]” See id. KWS’ series of reply briefs
added no claims that could not have been raised in earlier filings; and, as
noted by the trial court, the common sense considerations underlying
Pa.R.A.P. 2113(c), which governs the submission of appellate briefs, are
“equally relevant” to briefs submitted in the trial court. See Trial Court
Opinion, 9/30/19, at 9. Consequently, the trial court did not abuse its
discretion in refusing to consider the contents of KWS’ sur-reply briefs. See
Stabley, supra.
Additionally, the trial court found there were no facts before it that
supported opening the default judgment because KWS’ petition to open was
not verified, and because four of the five reply briefs it filed were also
unverified. See Trial Court Opinion, 4/10/19, at 12.
Pennsylvania Rule of Civil Procedure 206.3 requires verification of a
petition to open a default judgment. Rule 206.3 states, “A petition or an
answer containing an allegation of fact which does not appear of record shall
- 15 -
J-A13021-20
be verified.” Pa.R.C.P. 206.3. With regard to verification, we have previously
stated that,
the failure to verify a petition to open or strike a default judgment
should not be routinely condoned. However, the error may be
excused where it is inconsequential and not prejudicial.
Moreover, courts should not be astute in enforcing technicalities
to defeat apparently meritorious claims. . . . To determine
whether the error is inconsequential and not prejudicial, we must
examine the function of the allegation within the context of the
petition to open.
Penn-Delco Sch. Dist. v. Bell Atlantic-Pa, Inc., 745 A.2d 14, 18 (Pa.
Super. 1999) (internal citation, quotation marks, and brackets omitted).
In Penn-Delco Sch. Dist., we excused a party’s failure to verify the
allegation that “counsel filed the petition to open immediately after
discovering the default judgment” because that allegation was immaterial and
not prejudicial. See id. In that case, we held the allegation was immaterial
and the opposing party was not prejudiced because the petition to open was
filed pursuant to Pa.R.C.P. 237.3, which states that so long as the petition to
open is filed within ten days after the entry of the judgment on the docket,
the petition may be granted if a meritorious defense is stated. See id. The
petition to open in Penn-Delco Sch. Dist. was filed within the ten-day period,
and as such, the unverified allegation was “mere surplusage.” See id. at 19.
In declining to consider the unverified allegations in KWS’ petition and
reply briefs, the trial court stated the following in its opinion accompanying its
order:
The first, and only, document to contain a verification was KWS’[]
third reply brief, filed March 6, 2019. That document, however,
- 16 -
J-A13021-20
cannot be considered by the [c]ourt because a reply brief,
especially a third reply brief, cannot raise new facts or legal
arguments that could—and should—have been raised in the
original petition.
* * *
KWS filed its second reply brief on February 28, 2019, which
attached for the first time, an affidavit by defense counsel Thomas
Galligan, Esq.
Based on that affidavit, KWS’[] attorneys claim that “only after
this case was remanded did KWS’ counsel notice a docket entry
indicating that a default judgment was entered by the [c]ourt,
which led KWS to file its [p]etition to [o]pen [d]efault
[j]udgment.” [Attorney] Galligan stated in his [a]ffidavit:
2. On Monday, December 3, 2018, I reviewed the online
docket for this case to determine whether the matter had
been remanded back to this [c]ourt. Upon reviewing the
docket, I noticed for the first time that beneath the docket
entry for [p]laintiff[’]s [p]raecipe to [e]nter [d]efault
[j]udgment was the language: “JUDGMENT IN FAVOR OF
ERIC SCALLA AND AGAINST KWS[,] INC[.,] A MEMBER OF
THE THIELE GROUP[,] FOR FAILURE TO FILE ANSWER
WITHIN REQUIRED TIME. PRO-PROTHONOTARY. NOTICE
UNDER RULE 236 GIVEN.”
3. The foregoing language on the docket came as a surprise
because neither KWS nor its counsel received any separate
order or judgment entered by this [c]ourt in response to
[p]laintiff[’]s [p]raecipe to [e]nter [d]efault [j]udgment.
Galligan Affidavit[, 2/28/19, at] ¶ ¶2 & 3.
The [p]etition and its memorandum of law, and the first reply brief
filed February 26, 2019, do not mention [Attorney] Galligan’s
discovery of the default on [December] 3, 2018. [Attorney]
Galligan’s discovery was first raised by KWS in its second reply
brief filed on February 28, 2019. KWS has not alleged that it only
discovered [Attorney] Galligan’s proposed evidence between
February 26th and 28th. Thus, the affidavit cannot be considered
because a reply brief, especially a second reply brief, cannot raise
new facts or legal arguments that could—and should—have been
raised in the original petition.
- 17 -
J-A13021-20
Trial Court Opinion, 4/10/19, at 12, 24 (internal citations omitted).
Here, the instant facts can be distinguished from those in Penn-Delco
Sch. Dist. In addition to KWS’ failure to verify its petition to open the default
judgment, KWS also failed to verify all of its reply briefs, except for its third
reply brief. Additionally, KWS, unlike the petitioner in Penn-Delco Sch.
Dist., did not file its petition to open the default judgment pursuant to Rule
237.3. Thus, KWS was required to satisfy all three prongs of the test for
opening a default judgment, instead of only satisfying the meritorious defense
prong; KWS’ unverified allegations, therefore, are not “mere surplusage.”
See Penn-Delco Sch. Dist., supra at 19. The unverified allegations here at
issue are material, and would prejudice Scalla if they were considered by the
court. See id. Moreover, in looking at the allegation’s “function within the
context of the petition,” see id., the allegation itself does not withstand
scrutiny. In its response to Scalla’s motion to remand, filed in federal court
on March 3, 2018, KWS stated, “Although a default judgment was entered
against KWS by the Court of Common Pleas, service was improper.”
Defendant’s Response in Opposition to Plaintiff's Motion to Remand, 3/3/18,
at ¶ 9 (emphasis added). The unverified allegation at issue is material,
prejudicial, and lacks indicia of truthfulness; therefore, the trial court did not
abuse its discretion, under these circumstances, in declining to consider the
contents of the unverified petition and briefs. See Stabley, supra; see also
Penn-Delco Sch. Dist., supra.
- 18 -
J-A13021-20
Additionally, on this second “reasonable explanation” prong of the
analysis, KWS argues that,
the [t]rial [c]ourt ignores the undisputed facts that [] Roberts was
the only employee of KWS in the United States; did not have a
sophisticated understanding of legal mail or service of process;
did not open any mail that appeared to be spam or from an
unknown sender; and had no knowledge of the lawsuit until March
27, 2018. And it disregards the undisputed fact that once []
Roberts—and KWS—learned of the lawsuit, KWS acted
expeditiously to mount a vigorous defense and litigation strategy.
Appellant’s Brief, at 45-46.
We addressed a similar argument in Autologic, Inc. v. Cristinzio
Movers, 481 A.2d 1362 (Pa. Super. 1984), where we stated,
we find appellant’s excuse is rendered no more reasonable
because its reliance on its insurance company was through what
it now characterizes as an “unsophisticated, low-level employee.”
The fact remains that it was this type of employee that appellant
chose to give responsibility to for handling damage claims. While
it has been held that an employee’s clerical error may constitute
sufficient legal justification to open a default judgment, see
e.g., Campbell v. Heilman Homes, Inc., [] 335 A.2d 371 ([Pa.
Super.] 1975) (observing that [] employee’s failure to forward []
complaint was not unlike [] clerical error), we do not believe the
instant case falls within that category. Appellant gave Ms. Fahrer
the responsibility not simply to forward in every case all papers
she received to her superiors, but to make the decision whether
or not there was a need to do so. Thus, appellant’s failure to
respond to the complaint was not due simply to the
inattentiveness of its employee, but to her conscious decision
which it had empowered her to make. We do not find it unjust to
hold appellant responsible for that decision. If we were to hold
otherwise, employers could cause interminable delays in litigation
simply by intentionally choosing unqualified employees to handle
claims brought against them.
Id. at 1364 (emphasis added).
- 19 -
J-A13021-20
Indeed, during her deposition, Roberts stated that her superiors were
aware of her mail-opening practices:
Q. Does the—the president, Mr. Kurz—is he aware that you don’t
open mail if you don’t know who it’s from?
A. Yes.
Q. And is he okay with that, as far as you know?
A. We are changing procedure, yes.
Q. What’s the new procedure?
A. I open everything.
Q. Have you ever been reprimanded for not opening mail?
A. No.
Roberts Deposition, 7/12/18, at 39.
Here, like the appellant in Autologic, KWS argues that it should be
excused for the error of its “unsophisticated” employee. Also, similar to the
appellant in that case, KWS gave its employee both the responsibility of
deciding whether to open mail, and the power of deciding whether to forward
that mail to her superiors. Like, in Autologic, supra, it is similarly not “unjust
to hold appellant responsible for that decision.” Id. Consequently, we cannot
find an abuse of discretion in the trial court’s dismissal of this argument under
the “reasonable explanation” prong of the three-part analysis. See Stabley,
supra.
Finally, the third prong of the three-part test requires KWS to plead an
arguably meritorious defense sufficient to justify relief if proven. See
Castings Condominium Ass’n v. Klein, 663 A.2d 220, 224 (Pa. Super.
- 20 -
J-A13021-20
1995). KWS need not prove every element of the defense, however, it must
plead the defense in precise, specific, and clear terms. Id. See also Miller
Block Company v. United States National Bank in Johnstown, 567 A.2d
695, 700 (Pa. Super. 1989).
In Castings Condominium Ass’n, we stated that an averment was
insufficient to establish a meritorious defense because it “summarily denie[d]
any wrongdoing” and failed “to refute any of the allegations with particularity.”
Id. at 224. In its brief before this Court, KWS first argues that the trial court
placed a burden on KWS in conflict with our precedent by requiring KWS to
prove its defenses with “supporting facts.” See Appellant’s Brief, at 39.
Second, KWS asserts that the trial court mischaracterized KWS’ “detailed
averments supporting its defenses as ‘boilerplate.’” Id.
The trial court found that all of KWS’ allegations were boilerplate
statements that failed to establish a meritorious defense:
KWS’ principal defense is that service of the complaint was
improper. ¶ ¶ 38-47 of Petition. That defense fails due to [the
federal court’s] conclusive ruling that the complaint was validly
served upon KWS. The [p]etition specifies only these other
defenses that were raised in KWS’[] federal court [a]nswer to
[Scalla’s c]omplaint:
50. KWS’[] answer denies all material allegations and pleads
numerous affirmative defenses, that, if proved at trial, will
absolve it of liability. First, KWS denies that it manufactured
the product which is the subject of [p]laintiff’s lawsuit.
Further, proof that KWS produced this product has not been
presented.
51. If any product designed, manufactured, distributed
and/or sold by KWS is, in fact, made the basis of this lawsuit
(which is categorically denied), then KWS denies that this
- 21 -
J-A13021-20
product was in any way defective and/or unreasonably
dangerous.
52. KWS averred that to the extent it manufactured the
product at issue, this product was in all respects properly
designed, manufactured, assembled, tested, inspected,
distributed and/or sold, and the product departed KWS’[]
control equipped with all elements necessary to make it safe
and containing no elements making it unsafe, and was
properly equipped with all necessary warnings and
instructions for correct and safe use, operation,
maintenance and servicing. No proof to the contrary has
been presented.
53. Finally, in the further alternative, KWS averred that if
any defect is found to have existed or exists in any KWS
product made the basis of this lawsuit, which was again
categorically denied, then KWS averred that any such defect
was caused solely and wholly by the misuse, abuse,
alteration, modification, damage or improper maintenance,
repair, operation, handling, servicing, installation and/or
contributory and comparative negligence, breach of duty
and/or fault of others now unknown.
All of these defenses are boilerplate allegations devoid of any
supporting facts that establish that they are genuinely meritorious
and can be established at trial. They fail the meritorious defense
test.
Trial Court Opinion, 4/10/19, at 35-36 (internal citation, quotation marks, and
ellipsis omitted).
Here, we agree with the trial court, and find that KWS’ defenses do not
refute any of Scalla’s allegations with particularity. See Castings
Condominium Ass’n, 663 A.2d at 225. Instead, all of the defenses
summarily state that KWS denies any wrongdoing. As such, the above
averments are insufficient to raise a meritorious defense under the third prong
of the three-part test for opening a default judgment. See id. Accordingly,
- 22 -
J-A13021-20
there was no abuse of discretion under this prong of the trial court’s analysis.
See Stabley, supra.
In turning to KWS’ second and third issues on appeal—claims that relate
to the equitable nature of the above three-part test—we have previously
stated that,
[w]e recognize the equitable nature of the trial court’s task when
deciding whether to open a default judgment. However, the 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. In Provident Credit Corporation[ v.
Young, 446 A.2d 257 (Pa. 1982)], the defendant seeking to open
the default judgment established two of the three elements—she
pled a meritorious defense to the plaintiff’s complaint and offered
a reasonable excuse for the default. [Id.] at 262-63. Under these
circumstances, the Court concluded that it would be inequitable to
deny the request to open the judgment simply because she did
not promptly file the petition to open. The Court weighed the
equities of the case and ruled in favor of granting the petition to
open the judgment. [Appellant], on the other hand, has
not established any of the three elements in the tripartite test.
Therefore, we reject her argument that the “equities” weigh in her
favor requiring that we open the default judgment.
Castings Condominium Ass’n, 663 A.2d at 225.
Here, KWS, like the defendant in Castings Condominium Ass’n,
argues that the equities required the court to open the default judgment. See
Appellant’s Brief, at 49-57. Nevertheless, KWS, also like the defendant in that
case, failed to establish any of the three elements of the three-part test for
opening a default judgment. Accordingly, we reject KWS’ argument that the
equities weigh in its favor with regard to opening the default judgment. See
- 23 -
J-A13021-20
Castings Condominium, supra; see also Seeger v. First Union Nat’l
Bank, 836 A.2d 163, 167 (Pa. Super. 2003).
Order affirmed.
President Judge Emeritus Bender joins this Opinion.
Judge Strassburger files a Concurring Opinion.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/11/2020
- 24 -