No. 1137 April Term, 1978, Appeal from the Order in the Court of Common Pleas of Washington County, Civil Action - Law, No. 333 April Term, 1977.
Herbert Grigsby, Pittsburgh, for appellants.
Joseph P. Moschetta, Pittsburgh, for appellees.
Price, Hester and Montgomery, JJ. Hester, J., files a dissenting opinion.
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This is an appeal from an order of the court of common pleas granting appellees', Frank L. Black, Jr., Inc. (Black) and United States Fidelity and Guaranty Company (Fidelity),
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petition to open a default judgment. Carroll Township is not a party to this appeal as no default judgment was entered against it. In accord with the reasons framed below, we affirm.
The salient facts may be briefly stated as follows. A dispute arose between appellants-excavating contractors, and appellee-general contractor, Black, during construction of a sewer system for the Carroll Township Authority. Appellants left the job site on May 12, 1976, and on April 28, 1977, filed a complaint against Carroll Township, Black, and Fidelity, the bonding company for Black.
Counsel entered an appearance for Black and Fidelity and on May 16, 1977, received a phone call from appellants' counsel. Appellees' counsel, due to the complexity of the case, requested and was granted a 30 day extension to file a responsive pleading. In subsequent months, appellants made several requests for action, but the record shows statements were also made to opposing counsel that, "You may have whatever time you need in order to prepare your case." (N.T. 50a). The possibility of settlement was mentioned as early as October 5, 1977, although the record indicates appellees' counsel did not meet with his clients until December 29, 1977. Settlement negotiations continued, and as of March 1, 1978, appellants indicated they believed $14,622.84 to be a reasonable settlement. By letter of April 19, 1978, appellants' counsel withdrew the offer and informed appellees' counsel that he had twenty days to file an answer to the complaint or a default judgment would be entered.
On May 8, 1978, appellees' counsel telephoned appellants' counsel and requested an extension of "ten days or so" in order that the answer then in typed, rough draft form, could be reviewed and finalized. An extension of ten days was granted. On May 23, 1978, two business days after the extension for filing had expired, a default judgment in the amount of $80,141.33 was taken by appellants for appellees' failure to file. Appellees' counsel received notice of the default judgment on May 30, 1978, and on May 31, filed a
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petition to open the judgment. Following a hearing, the trial court opened the judgment.
It is a well-settled principle that a petition to open a default judgment is an appeal to the court's equitable powers. Since the matter is one involving judicial discretion, the scope of review is limited and reversal will occur only when it is demonstrated that the action of the court below was clearly an abuse of discretion.*fn1 McCoy v. Public Acceptance Corp., 451 Pa. 495, 305 A.2d 698 (1973); Kraynick v. Hertz, 443 Pa. 105, 277 A.2d 144 (1971); Ecumenical Enterprises, Inc. v. NADCO Construction, Inc., 253 Pa. Super. 386, 385 A.2d 392 (1978). The petition to open should be granted only if three conditions coincide: (1) the petition must have been promptly filed; (2) the default must be reasonably explained; and (3) a meritorious defense must be shown. Ruczynski v. Jesray Construction Corp., 457 Pa. 510, 326 A.2d 326 (1977); Balk v. Ford Motor Co., 446 Pa. 137, 285 A.2d 128 (1971); St. Joe Paper Co. v. Marc Box Co., 260 Pa. Super. 515, 394 A.2d 1045 (1978).
The sole issue for our consideration in this appeal is whether the failure to file a responsive pleading was reasonably explained such that the trial court properly exercised its discretion in excusing it. Appellees initially argue that this issue has been waived because of appellants' failure to file exceptions under Pa.R.Civ.P. 1038(d),*fn2 and thus, they are
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precluded from raising the issue now, for the first time, on ...