decided: June 29, 1977.
JOHN L. SCHUTTE AND ELVA SCHUTTE, HUSBAND AND WIFE, APPELLANTS,
VALLEY BARGAIN CENTER, INC.
Appeal from Order of January 30, 1976 at No. 825 of 1974, Court of Common Pleas, Civil Division, County of Beaver, Pennsylvania.
Oran W. Panner, Beaver, for appellants.
Thomas A. Lazaroff, Pittsburgh, for appellee.
Jacobs, Hoffman, Cercone, Price, Van der Voort and Spaeth, JJ. Hoffman, J., concurs in the result. Watkins, P. J., absent.
[ 248 Pa. Super. Page 534]
This case is an appeal by John and Elva Schutte from an order opening a default judgment which had been entered against the appellee, Valley Bargain Center, Inc. (Valley Bargain) for want of an appearance. Appellants, John and Elva Schutte, alleged that on June 28, 1972, Mr. Schutte, while a business visitor on the premises, fell in front of a retail store leased by Valley Bargain. On February 21, 1973, appellants' counsel wrote a letter to Valley Bargain advising that Mr. Schutte's injury was caused by a defect in the step or sidewalk of the premises. Appellants' counsel further advised Valley Bargain to turn the letter over to its insurance company and specifically requested that Valley Bargain or its insurance company communicate with him. Rather than responding to counsel's letter, Valley Bargain gave the letter to its landlord, Mrs. Kolumban, who in turn gave it to her insurance company, Erie Insurance Exchange. Valley Bargain was next alerted of appellants' claim when, on June 12, 1974, a complaint was personally served on Valley Bargain's manager. Once again, Valley Bargain gave the complaint to its landlord who forwarded it to her insurance company. Erie Insurance Exchange, which did not insure Valley Bargain, attempted to return the suit papers to Valley Bargain, but the manager refused to accept the papers. By letter dated June 20, 1974, the suit papers were mailed to Valley Bargain by Erie, and only then did Valley Bargain send the papers to its own insurance company. On
[ 248 Pa. Super. Page 535]
July 17, 1974, there being no communications to appellants' counsel, no appearance entered on behalf of Valley Bargain, and no answer filed, appellants took default judgment against Valley Bargain pursuant to Rule 1047 of the Pennsylvania Rules of Civil Procedure. Appellants' counsel immediately sent a letter to Valley Bargain, informing it of the action taken and enclosing a certified copy of the judgment. On September 11, 1974, Valley Bargain filed a petition for rule to show cause why the default judgment should not be opened, and the judgment was opened by order of court dated January 30, 1975. Hence this appeal.
The opening of a default judgment is a matter of judicial discretion which is to be exercised in trespass actions only if (1) the petition to open was promptly filed, and (2) there exists a legitimate explanation or excuse for the delay that occasioned the default judgment. Zellman v. Fickenscher, 452 Pa. 596, 307 A.2d 837 (1973). In the instant case, we believe that the lower court abused its discretion in ordering the default judgment opened.*fn1
Appellee, Valley Bargain, established a legitimate explanation for the delay that occasioned the default judgment. Since the letter from appellants' counsel alleged a defect in the step or sidewalk of the premises as the cause of appellants' injuries, and since Valley Bargain was only a lessee of the premises, it was reasonable for Valley Bargain to turn the letter over to its landlord. Furthermore, Valley Bargain was not informed prior to June 20, 1974, by either its landlord or its landlord's insurance company, that this procedure would not protect its interests. Therefore, Valley Bargain's failure to enter an appearance prior to June 20, 1974, was excused because it rested upon Valley Bargain's reasonable, though mistaken, belief that the suit papers had
[ 248 Pa. Super. Page 536]
been properly forwarded. As we recently noted in Sprouse v. Post No. 7155 VFW, 237 Pa. Super. 419, 423, 352 A.2d 134, 136 (1975):
"We are reluctant to let stand a default judgment where a litigant has taken steps that he reasonably believes will result in the protection of his interests. This would be a different case had [defendant] ignored the process and done nothing. In this case, however, [defendant] acted, although mistakenly, to protect his interests."
As noted earlier, the suit papers were returned to Valley Bargain by its landlord's insurance company, Erie, on June 20, 1974. An accompanying letter urged Valley Bargain to waste no time in turning the papers over to its own liability carrier. Eight days later, on June 28, Valley Bargain forwarded the complaint to its insurance company, Harris-Lawrence Company, the general agent for Valley Bargain's liability insurer, Reliance Insurance Company. The complaint was then forwarded to Reliance no later than July 8, 1974.*fn2 Rather than acting on the complaint, however, Reliance attempted to find a non-existent accident file in this case.*fn3 Subsequently, default judgment was entered on July 17, 1974, and appellant sent notice thereof to Valley Bargain. The lower court concluded that under the rule of Balk v. Ford Motor Co., 446 Pa. 137, 285 A.2d 128 (1971), Reliance's fruitless search for the non-existent file was sufficient justification to excuse the failure to enter an appearance or file an answer prior to the entry of default judgment. While we do not hold that Balk mandates such a
[ 248 Pa. Super. Page 537]
conclusion,*fn4 we cannot say that the lower court abused its discretion in finding the delay in entering an appearance or filing an answer excusable. Therefore, we conclude that the lower court was within the bounds of its discretion in finding that the failure to file a timely answer was reasonably explained or excused.
However, we hold that the lower court's conclusion that the petition to open was promptly filed was an abuse of its discretion. It is admitted that by July 26, 1974, all the previous confusion had been resolved because the claims manager of Valley Bargain's insurer had known of the claim by July 8, 1974 and knew that a default judgment had been entered against their insured on July 17, 1974. Despite this knowledge, Reliance did not retain counsel until August 14, 1974,*fn5 and the petition to open was not filed until September 11, 1974.
We conclude that this forty-seven day delay between July 26 and September 11 requires a finding that Valley Bargain's insurer did not act promptly in moving for the opening of the default judgment. In Pappas v. Stefan, 451 Pa. 354, 358, 304 A.2d 143, 146 (1973) the Pennsylvania Supreme Court noted:
"[We cannot] construe these facts as corroborative of the court's conclusion that the appellee 'acted promptly' in
[ 248 Pa. Super. Page 538]
filing his petition to open. Default judgment was taken November 9, 1971. By appellee's own admission, notice of the default judgment was brought home to appellee about one week later. The petition to open was not filed until January 13, 1972. In Texas & B. H. Fish Club v. Bonnell Corp., 388 Pa. 198, 203-4, 130 A.2d 508, 510 (1957), this Court held that, where a petition to open was filed twenty-seven days after notice of the default judgment was communicated to petitioner, the petition was properly denied. Here counsel for the appellee waited approximately fifty-five days from the date of notice to file his petition to open. No satisfactory explanation is offered for this eight-week delay. The finding of the court below that counsel acted promptly in filing his petition to open is unsupported by the evidence."
In the instant case the delay of forty-seven days was attributable both to counsel's unexplained delay in filing the petition to open and the insurance company's unreasonable delay in retaining counsel. Therefore, the lower court's finding that this negligence is excused was an abuse of its discretion.
The order of the lower court is, therefore, reversed and the judgment reinstated.