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ECUMENICAL ENTERPRISES v. NADCO CONSTRUCTION (04/13/78)

decided: April 13, 1978.

ECUMENICAL ENTERPRISES, INC., APPELLEE,
v.
NADCO CONSTRUCTION, INC., DEFENDANT, THE TRAVELERS INDEMNITY COMPANY, AND SMITH MILLER & ASSOCIATES, A PARTNERSHIP, GENERAL ROOFING & INSULATION COMPANY, INC., FIDELITY & DEPOSIT OF MARYLAND, A CORPORATION, GASPARINI EXCAVATING COMPANY, INC. AND UNITED STATES FIDELITY AND GUARANTY COMPANY, ADDITIONAL DEFENDANTS. APPEAL OF THE TRAVELERS INDEMNITY COMPANY



COUNSEL

Philip Baskin, Pittsburgh, with him Jerome M. Libenson, Pittsburgh, for appellant.

Jerry B. Chariton, Wilkes-Barre, for appellee.

Watkins, President Judge, and Jacobs, Hoffman, Cercone, Price, Van der Voort and Spaeth, JJ. Watkins, former President Judge, did not participate in the consideration or decision of this case.

Author: Cercone

[ 253 Pa. Super. Page 389]

This is an appeal from an order of the Court of Common Pleas of Luzerne County refusing to open a default judgment. Appellant, The Travelers Indemnity Company (hereafter Travelers), contends the lower court abused its discretion in declining to open the judgment. We agree and, therefore, reverse.

On August 13, 1975, the plaintiff-appellee, Ecumenical Enterprises, Inc. (hereafter EEI), filed an action in assumpsit against NADCO Construction, Inc. (hereafter NADCO) and Travelers. The suit was predicated upon a contract for the construction of a housing complex in Wilkes-Barre.*fn1 Appellee's complaint was served upon NADCO on August 19, 1975, and upon Travelers on September 2, 1975. On the same day it was served NADCO forwarded a copy of the complaint to its counsel, Jerome M. Libenson, Esq., and advised him that it was presumed Travelers would agree to his representation of both parties. Attorney Libenson responded immediately by filing preliminary objections to the complaint.*fn2 Unfortunately, counsel neglected to enter an appearance on behalf of Travelers or specifically plead the same preliminary objections on Traveler's behalf. For various

[ 253 Pa. Super. Page 390]

    reasons this serious oversight went unrecognized and, on October 7, 1975, a default judgment in the amount of $142,500.00 was entered against Travelers. A petition to open the judgment was filed two days after Travelers received notice of its entrance. Depositions in support of the petition were subsequently taken, and on February 23, 1976, the lower court entertained argument on the petition. At the time of argument, however, NADCO's preliminary objections, in which Travelers sought permission to join through its petition to open, were still pending before another judge in the lower court. The preliminary objections were later dismissed on April 2, 1976, following which an answer, new matter and counterclaim were filed by both NADCO and Travelers on April 20, 1976. By decision and order dated June 1, 1976, the lower court denied the petition to open on the grounds that Travelers failed to establish the existence of a meritorious defense to the complaint. Nevertheless, the court granted Travelers permission to apply for a rule to show cause why it should not be allowed to amend its petition strictly for the purpose of alleging as an additional reason for opening the judgment, that it was not for a sum certain and a trial should be conducted solely to assess the exact amount of damages.*fn3 Furthermore, Travelers filed a motion for stay; a motion for reconsideration to make new findings and conclusions; and a motion to clarify, amend or modify the decision. These motions were denied and this appeal ensued.

It is fundamental that a petition to open a default judgment is an appeal to the court's equitable powers and, absent a clear abuse of discretion, the court's decision will not be disturbed. McCoy v. Public Acceptance Corp., 451 Pa. 495, 305 A.2d 698 (1973); Pappas v. Stefan, 451 Pa. 354, 304 A.2d 143 (1973); Balk v. Ford Motor Co., 446 Pa. 137, 285 A.2d 128 (1971); Hersch v. Clapper, 232 Pa. Super. 550, 335 A.2d 738 (1975). Moreover, it is equally well-settled that in an assumpsit action a petition to open should not be granted

[ 253 Pa. Super. Page 391]

    unless three conditions coalesce: (1) the petition has been filed promptly; (2) the default is reasonably explained; and (3) a meritorious defense is shown. Ruczynski v. Jesray Const. Corp., 457 Pa. 510, 326 A.2d 326 (1974); McCoy v. Public Acceptance Corp., supra; Jost v. Phoenixville Area School Dist., 237 Pa. Super. 153, 346 A.2d 333 (1975).

Instantly, the court below concluded that although appellant's petition to open had been promptly filed, a meritorious defense had not been shown. In reaching this conclusion, the court noted that the petition to open, in relevant part, simply alleges the following:

"8. Defendant, The Travelers Indemnity Company, has a meritorious defense to the Plaintiff's claim based upon the defenses of Nadco Construction, Inc., all of which are known to Plaintiff, the Plaintiff having sent copies of correspondence to this Defendant. ...


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