Pennsylvania Elect. Co. v. Harnish, M. ( 2023 )

J-A16041-23
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT OP 65.37
PENNSYLVANIA ELECTRIC CO. : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
AARON S. RUSSELL, KARP :
EXCAVATING LTD, MICHELLE L. :
HARNISH, LYNN R. HOTTLE : No. 1472 MDA 2022
:
:
APPEAL OF: AARON S. RUSSELL :
Appeal from the Order Entered September 23, 2022
In the Court of Common Pleas of Bradford County Civil Division at No(s):
2020CV0114
BEFORE: PANELLA, P.J., BENDER, P.J.E., and McCAFFERY, J.
MEMORANDUM BY McCAFFERY, J.: FILED: AUGUST 15, 2023
In this negligence, unjust enrichment, and quantum meruit matter,
Aaron S. Russell (Appellant) appeals from the order entered in the Bradford
County Court of Common Pleas, denying his motion to open the default
judgment of $291,823.96 against him, and in favor of Pennsylvania Electric
Co. (Appellee). Appellant avers the trial court erred in: (1) finding he had no
reasonable excuse for not responding to the complaint, where Appellant had
argued communications with Appellee’s counsel led to an “honest belief that
he would be dropped from this lawsuit[;]”and (2) refusing to hold a hearing
on this issue. See Appellant’s Brief at 12. We agree Appellant is entitled to
a hearing, and thus vacate the order denying his petition to open default
judgment and remand for further proceedings.
J-A16041-23
I. Complaint Allegations
Appellee is a Pennsylvania public electric utility company. Appellee’s
Complaint, 7/20/20, at ¶ 1. Its complaint averred the following: Appellant
was the title owner of real property located on Route 187 in Rome Township,
Bradford County. Id. at ¶ 6. Appellee owned and maintained on this property
electric lines, utility poles, and other appliances necessary to its electric utility
work. Id. at ¶ 9. At the time of the underlying incident, Appellant had entered
into a contract to sell the property to defendants Michelle L. Harnish and Lynn
R. Hottle. They in turn hired defendant Karp Excavating Ltd. (Karp) to perform
excavation and construction work on the property. Id. at ¶ 7. Nevertheless,
Appellee stated, Appellant “maintained an ownership interest in the
Property[,]” while Harnish and Hottle “had equitable rights to the Property.”1
Id. at ¶ 8.
The complaint further alleged that sometime in the winter of 2018 or
spring of 2019, defendant Karp “knocked down [Appellee’s] utility poles,”
causing environmental damage, specifically the leaking of oil, a hazardous
material, from transformers into the soil. Id. at ¶¶ 12-15, 19. Appellee
repaired the damage and hired environmental contractors to assist in the
cleanup.
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1In a later filing, Appellant averred the deed, transferring the property to
Harnish, was recorded on July 24, 2020. Appellant’s Motion for
Reconsideration, 10/7/22, at 2 (unpaginated).
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On July 20, 2020, Appellee filed the underlying complaint, raising claims
of: (1) negligence against Karp; (2) negligence against Harnish and Hottle;
and (3) unjust enrichment and quantum meruit against Appellant, Harnish,
and Hottle, asserting they all “received a valuable benefit by having [Appellee]
clean and rectify the oil spill[.]” See Appellee’s Complaint at ¶ 28(f). The
complaint sought damages of $291,823.96 — the alleged cost of the cleanup.
We review the following docket activity in chronological order. In August
of 2020, defendant Karp filed an answer and new matter. On October 5, 2020,
Appellee filed a reply thereto. On October 8th (80 days after the filing of the
complaint), Appellee apparently sent a Pa.R.C.P. 237.1 10-day notice to
Appellant, advising that judgment could be entered against him for failure to
enter his appearance and file any response. As we discuss infra, Appellant
avers he did not receive his notice. In any event, in March of 2021, Harnish
and Hottle together filed a joint answer, new matter, and cross-claim, and
Appellee filed a reply thereto.
Over the next 10 months, there is minimal activity on the trial docket,
all relating to discovery and depositions concerning the defendants Karp,
Harnish, and Hottle. See Trial Docket at 2. Appellant, however, had not filed
any responsive pleading to Appellee’s complaint.
Despite the 10-day period provided in the October 8, 2020, notice,
Appellee waited until July 19, 2022, 21 months later, to file a praecipe to enter
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default judgment against Appellant in the full amount of $291,823.96, plus
interest and costs.
On August 8, 2022, Appellant filed the underlying pro se petition to open
the default judgment. He acknowledged he was served with the complaint in
July of 2020, but averred he had a meritorious defense — namely, that he
was not in possession or control of the subject property at the time of the
incident. Instead, Appellant claimed, he merely had a “right to receive final
payment under an agreement of sale to Defendant Harnish[.]” Appellant’s
Petition to Open Default Judgment, 8/8/22, at 2 (unpaginated). Appellant
further alleged: (1) in August of 2020, his insurance carrier denied coverage
for this incident; and (2) he did not receive Appellee’s 10-day notice. See id.
at 1. He attached a pro se draft of preliminary objections, which argued the
same.
In opposition to the petition to open default judgment, Appellee argued,
inter alia: (1) Appellant could not “adequately explain his inaction after being
served with the Complaint on July 31, 2020[;]” (2) Appellant’s “vague claims
that the property was not in his possession . . . entirely misses the point of
the” complaint allegations, which was that Appellee “undertook significant
repairs” and “cleaned an oil spill on [his] property, the result of which greatly
increased the value of [his] property[;]” and (3) in any event, Appellant failed
to attached a proposed answer to his petition to open, as required by the
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rules. Appellee’s Answer & Brief in Opposition to Petition to Open Default
Judgment, 8/30/22, at 4 (unpaginated).
On September 23, 2022, the trial court denied Appellant’s petition to
open the default judgment. The court considered the relevant three-prong
test (discussed infra) and found in Appellant’s favor on two factors: he
promptly filed the petition to open and he raised a meritorious defense — that
he did not possess or have control of the property at the subject time. Order,
9/23/22, at 1. However, the court found Appellant failed to present a
reasonable excuse why he did not act on the complaint, which was served on
him two years earlier. The court reasoned Appellant’s additional claim, that
he did not receive the 10-day notice, was not relevant to this failure to respond
to the complaint. Id. at 1-2.
Appellant filed a pro se motion for reconsideration on October 7, 2020.
With regard to why he did not respond to the complaint, Appellant claimed:
(1) he had informed Appellee’s attorney he “sold the property to . . . Harnish
on September 1, 2018[, and she] took possession and full responsibility for
the property at that time and began the process of constructing her new sale
barn[;]”2 (2) Appellant thus did not have insurance on the property; (3)
Appellant did not benefit from Appellee’s repair of the damage to the property;
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2 Appellant also stated he “financed a portion of the sale” of the property to
Harnish. Appellant’s Motion for Reconsideration, 10/7/22, at 2.
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(4) the deed, transferring the property to Harnish, was recorded on July 24,
2020; (5) upon being served with the complaint on July 31, 2020, he
“immediately sought legal advice” and was advised to ascertain whether he
had insurance coverage; (6) on August 21, 2020, his insurance company sent
him a letter, stating his “farm policy did not cover the property[;]” (7)
Appellant believed his “name [w]ould be dropped from the lawsuit once it was
confirmed [Harnish] did indeed own the property[;]” (8) Appellant possessed
“voicemail messages from [Appellee’s] attorney on 6/10/2020 and 6/23/2020,
indicating [they] knew [Appellant] had sold the property[;]” (9) from the time
the complaint was served until August of 2022 (after default judgment was
entered), Appellant “received no communication from [Appellee’s] attorney
other than copies of filings regarding the other defendants[;]”3 (10) “[a]s far
as [he] knew, [Appellee] was still waiting for enough discovery
information . . . to have [his] name dropped from the lawsuit[;]” and (11)
Appellee’s “[a]ttorney had indicated . . . he would not enter” a default
judgment, Appellant “would have time and an opportunity to find and hire a
civil defense lawyer if it became apparent [he] needed to do so[, and he] was
told [Appellee] was required by law to file a 10-day notice and [he] would be
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3 Appellant averred that on August 2, 2023, he received a voicemail from
Appellee’s counsel requesting his attendance at a deposition, and he
(Appellant) gave a deposition on August 18th. Appellant’s Motion for
Reconsideration at 2. Appellant further insisted he has “cooperated to the
best of [his] ability[.]” Id.
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notified ahead of time[.]” Appellant’s Motion for Reconsideration at 1-3
(unpaginated). Finally, Appellant conceded he “should have . . . hired a civil
defense lawyer at the onset of the this lawsuit[,]” but as he lacked insurance
coverage, “the cost of doing so was very significant at the time. [He] truly
believed that once [Appellee] discovered [he] no longer owned the property
and had given up possession . . . long before [the underlying] incident[,] that
[Appellee] would drop [his] name from the suit.” Id. at 3.
Appellee filed a response, denying it ever informed Appellant he would
be removed from the lawsuit, and “certainly not that he was granted an
extension to plead.” Appellee’s Response to Appellant’s Motion for
Reconsideration, 10/17/22 at 2 (unpaginated)4
The trial court denied the motion for reconsideration on October 14,
2022. Appellant took this timely appeal5 and complied with the court’s order
to file a Pa.R.A.P. 1925(b) statement of errors complained of on appeal. The
court did not file an opinion, but instead relied on the statements in its
September 23rd order. Statement in Lieu of Opinion, 12/15/22.
____________________________________________
4 Appellee’s response to Appellant’s motion of reconsideration was entered as
filed on the trial docket on October 17, 2022, three days after the October
14th order denying the motion for reconsideration.
5 The order denying the petition to open default judgment was entered on
September 23, 2022, and Appellant filed the notice of appeal within the 30-
day appeal period, on October 19th. See Green v. Tr. of the Univ. of Pa.,
265 A.3d 703, 707 n.4 (Pa. Super. 2021) (filing of a timely motion for
reconsideration does not toll running of 30-day appeal period).
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Subsequently, present counsel for Appellant entered their appearance in this
Court.
II. Statement of Questions Involved
Appellant raises two related issues for our review:
1. Whether the trial court erred by denying the Petition to Open
Default Judgment when it determined that [Appellant] did not
have a “reasonable excuse” for failing to act upon the original
Complaint?
2. Whether the trial court erred by failing to grant [Appellant] an
evidentiary hearing as to whether there existed a “reasonable
excuse” for failing to act upon the original Complaint?
Appellant’s Brief at 5.
III. Standard of Review & Relevant Law
We first review the relevant standard of review and guiding principles
on opening default judgments.
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
of law 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.
Myers v. Wells Fargo Bank, N.A., 986 A.2d 171, 175 (Pa. Super. 2009)
(citations omitted).
This Court has stated:
A default judgment will 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.”
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Green, 265 A.3d at 709 (citations omitted). We further consider:
[D]efault judgments are not favored at law or in equity. Hence,
we liberally apply equitable principles that favor allowing parties
to defend causes of action on the merits in deciding whether to
open a default judgment.
Id. (citation omitted).
A petition to open a judgment by default is addressed to the equity
side of the court:
In determining whether a judgment by default should be
opened, we must ascertain whether there are present
any equitable considerations in the factual posture of the
case which require that we grant to a defendant against
whom the judgment has been entered an opportunity to
have his “day in court” and to have the cause decided
upon the merits. In so doing, we act as a court of
conscience.
Provident Credit Corp. v. Young, 446 A.2d 257, 260-61 (Pa. Super. 1982)
(en banc) (citations omitted).
With regard to the second prong of the test above — whether the
petitioner has presented a reasonable explanation for not filing a responsive
pleading — this Court has stated:
“[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). “[W]here the failure to answer
was due to an oversight, an unintentional omission to act, or a mistake of the
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rights and duties of the [petitioner], the default judgment may be opened.”
Id. at 177 (citation omitted).
This Court has explained:
The [above tripartite] test will often provide a ready
determination — a navigator’s “quick fix” — of where the equities
lie. For example, in a case where no attempt has been made to
explain the default or delay, or where, in an assumpsit case, no
defense has been pleaded, or only one clearly without merit, it is
difficult to imagine that the equities would favor opening the
judgment. But where some showing has been made with
regard to each part of the test, a court should not blinder
itself and examine each part as though it were a water-
tight compartment, to be evaluated in isolation from other
aspects of the case. Instead, the court should consider
each part in light of all the circumstances and equities of
the case. Only in that way can a chancellor act as a court of
conscience.
Allegheny Hydro No. 1 v. Am. Line Builders, 722 A.2d 189, 192 (Pa.
Super. 1998) (emphasis in original), quoting Provident Credit Corp., 446
A.2d at 264. Finally, should a trial court find that all three prongs have been
met, the court should consider the prejudice to both parties in opening, or
refusing to open, a default judgment. See Fink v. Gen. Acci. Ins. Co., 594
A.2d 345, 349 (Pa. Super. 1991); but see Dumoff v. Spencer, 754 A.2d
1280, 1283 (Pa. Super. 2000) (prejudice is not a separate element examined
by the courts if a petitioner did not establish all three requirements of the test
to open the default judgment).
IV. Appellant’s Arguments
We review Appellant’s two issues together. First, he avers the trial court
erred in denying his petition to open the default judgment, and in finding he
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did not have a reasonable excuse for not acting on the complaint. Appellant
acknowledges he received the complaint but insists he had “legitimate reasons
not to respond to” to the complaint, and this was not “a case where absolutely
no action was taken.” Appellant’s Brief at 11-12. Appellant maintains “he
consulted with an attorney, checked with his insurance company,” and,
through communications with Appellee’s counsel, honestly believed “he would
be dropped from the lawsuit.” Id. at 12. Furthermore, Appellant reiterates:
(1) he was “neither in possession or control of the land[;]” (2) he “was never
served with the requisite Ten Day Notice[;]” and (3) in October of 2020, when
the 10-day notice was mailed, the post office “was in a state of upheaval and
mail was simply not being delivered due to the COVID-19 pandemic.” Id. at
11-12.
In his second issue, Appellant alleges the trial court erred in failing to
conduct a hearing on the issue of whether he had a reasonable excuse for not
acting on the complaint. He emphasizes that “lack of notice is fatal to the
entry of a default judgment,” and Appellee has not disputed that he did not
receive the 10-day notice. Appellant’s Brief at 13-14. Appellant acknowledges
“that courts often treat assertions of lack of notice as . . . disingenuous or self-
serving[,]” but asserts that here, the court undertook “absolutely no inquiry”
into his claims. Id. at 14.
Appellee responds Appellant is due no relief on his “bald allegations of
[his] inexplicable [and bizarre] ‘understanding’ that he would be removed
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from the lawsuit for no apparent reason[,]” where he “chose to undertake no
discovery or create any sort of record to explain or justify these
‘understandings[.]’” Appellee’s Brief at 7. Appellee further points out
Appellant did not “request an evidentiary hearing or delay decision on the
Petition and Answer such that depositions could be taken.” Id.
We conclude that under the particular averments in this case, Appellant
was entitled to a hearing on his petition to open default judgment.
V. Analysis
Our review is guided by the well-established principles that: default
judgments are not favored at law or in equity; “we liberally apply equitable
principles that favor allowing parties to defend causes of action on the
merits[;]” and this Court may act as a court of conscience. See Green, 265
A.3d at 709; Provident Credit Corp., 446 A.2d at 260-61. We emphasize
the trial court found — in addition to Appellant’s prompt filing of a petition to
open default judgment — that he had a meritorious defense: that Appellant
did not possess or have control of the property at the subject time. See Order,
9/23/22, at 1.
At this juncture, we reiterate there was no hearing on Appellant’s
petition to open default judgment, and the trial court did not issue a Rule
1925(a) opinion. With respect to the third prong of the open-default judgment
test — whether Appellant provided a reasonable excuse for failing to file a
responsive pleading — the trial court’s rationale was, in sum:
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The failure to act on the original complaint can[not] be reasonably
excused. Here, [Appellant] has not set forth a reasonable excuse
as to why he has not acted upon the original complaint being
served upon him in the past two (2) years. Although he claims he
did not receive the Notice of Default Judgment served upon him
on or about October 8, 2020, this does not explain why has done
nothing in regards to the original complaint being filed.
Because [Appellant’s] petition does not meet all three (3)
elements, it must be DENIED.
See Order, 9/23/22, at 1-2.
This conclusion, however, was not supported by any particular
discussion of the parties’ competing arguments, as to whether Appellant had,
following communications with Appellee’s counsel, a good faith understanding
he would be removed from the suit once it was determined he had sold the
property. Appellant claimed he received voicemails from Appellee’s counsel,
while Appellee denied it ever advised Appellant he could be removed from the
suit.
The trial court also did not address the weight, if any, it gave to exhibits
submitted by Appellee, which would support Appellant’s claim that he
initially consulted with an attorney. Appellee attached, to its response to the
motion for reconsideration, a copy of an email message, dated August 31,
2020, from Robert Chappell, Esquire, and addressed to Appellee’s attorney.
Attorney Chappell stated: (1) Appellant and defendants Harnish and Hottle
had contacted him regarding the complaint, although they had not formally
retained him; and (2) each defendant had “been directed to contact their
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respective insurance companies.”6 Exh. 1 to Appellee’s Response to
Appellant’s Motion for Reconsideration. Attorney Chappell requested
additional time to file a responsive pleading for each defendant. Id.Appellee’s counsel replied the following day, agreeing to an extension. Exh.
2 to Appellee’s Response to Appellant’s Motion for Reconsideration. Almost
two months later, on October 27, 2020, Appellee’s counsel emailed Attorney
Chappell, acknowledging that Hottle and Harnish had retained other counsel,
advising he was prepared to file a default judgment against Appellant, and
inquiring whether Appellant had counsel. Exh. 3 to Appellee’s Response to
Appellant’s Motion for Reconsideration. However, Appellee explained, its
counsel “did not hear from Attorney Chappell again until after the Default
Judgment was filed.” Appellee’s Response to Appellant’s Motion for
Reconsideration at 2. In any event, Appellee did not state whether Attorney
Chappell conveyed the above information to Appellant. See id.We further consider that although the trial docket indicates that Appellee
and the other three defendants have engaged in some discovery — and
Appellant has averred he attended a deposition — the entire amount of the
alleged damages, $291,823.96, has now been imposed on Appellant solely.
We reiterate the trial court found Appellant had a meritorious defense to
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6 Harnish and Hottle’s answer, new matter, and counter claim were not filed
by Attorney Chappell.
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Appellee’s unjust enrichment/quantum meruit claim — that he was not in
possession or control of the property.
While it is true Appellant did not articulate a specific request for a
hearing, a court may liberally construe materials filed by a pro se litigant. See
Commonwealth v. Blakeney, 108 A.3d 739, 766 (Pa. 2014). But see id.(under Pennsylvania law, pro se litigants are subject to the same rules of
procedure as are represented clients, pro se status confers no special benefit
upon a litigant).7 In his petition to open judgment and motion for
reconsideration, Appellant requested the opportunity to respond to the
complaint and defend himself in this matter. Appellant’s Petition to Open
Default Judgment at 2; Appellant’s Motion for Reconsideration at 4. Finally,
we consider that Appellant has now retained counsel.
In light of all the foregoing pleadings, as well as equitable
considerations, we conclude Appellant is entitled to limited relief in the form
of an evidentiary hearing. See Provident Credit Corp., 446 A.2d at 260-61.
We vacate the order of the trial court denying his petition to open default
judgment, and we remand for a hearing, where both parties may present oral
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7 Furthermore, we note Appellant did address why he did not respond to the
complaint until his motion for reconsideration. See Pa.R.C.P. 227.1(b)(1)
(“post-trial relief may not be granted unless the grounds therefor . . . were
raised in pre-trial proceedings or by motion, objection, point for charge,
request for findings of fact or conclusions of law, offer of proof or other
appropriate method at trial”). Nevertheless, neither the trial court nor
Appellee has suggested these arguments should be found waived.
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argument and evidence. In reviewing whether Appellant had a reasonable
excuse or explanation for failing to file a responsive pleading, the court shall
consider whether “the failure to answer was due to an oversight, an
unintentional omission to act, or a mistake of the rights and duties of”
Appellant. See Myers, 986 A.2d at 176. The court may also consider, if
applicable, whether each party would be prejudiced by opening default
judgment. See Fink, 594 A.2d at 349.
VI. Conclusion
For the foregoing reasons, we vacate the order of the trial court denying
Appellant’s petition to open default judgment and remand for a hearing.
September 23, 2022, order denying petition to open default judgment
vacated. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/15/2023
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