No. 2877 Philadelphia, 1980, Appeal from the Order of the Court of Common Pleas, Civil Action, Law, of Montgomery County, at No. 79-7770
Joseph S. U. Bodoff, Philadelphia, for appellant.
James W. Adelman, Philadelphia, for appellees.
Brosky, Popovich and Montgomery, JJ. Brosky, J., files a dissenting opinion.
[ 297 Pa. Super. Page 169]
The instant appeal by the Plaintiff-Appellant arises from a lower court order granting a petition to open a default judgment filed by the Defendant-Appellee, Automotive Merchandisers of Texas, Inc. The lower court considered the petition, an answer filed by the Appellant, and argument by the parties. We have thoroughly reviewed the entire record and the issues raised, and conclude that the lower court committed no error in opening the judgment.
In our review of this appeal, we are guided by several well-established principles. We have said that a petition to open judgment is a matter of judicial discretion. It is an appeal to the court's equitable powers, and is to be exercised only when three factors coalesce: (1) the petition has been promptly filed; (2) a meritorious defense can be shown; and (3) default can be excused. See Quaker Transit Co. v. Jack W. Blumenfeld and Co., 277 Pa. Superior Ct. 393, 419 A.2d 1202 (1980). Moreover, the grant or denial of a petition to open judgment is a matter within the sound discretion of the trial court, and will not be reversed in the absence of a manifest abuse of that discretion. Cruse v. Woods, 279 Pa. Superior Ct. 242, 420 A.2d 1123 (1980).
The record shows that the Appellant filed suit on May 2, 1975 seeking an accounting as well as the distribution of profits from a joint venture in which the three named Defendants had been involved. The Appellant alleged that the Defendant Richard Kastner Co., Inc. had assigned to him
[ 297 Pa. Super. Page 170]
a fifty percent interest in the anticipated share of the joint venture profits which would have been due to Kastner. It was alleged by the Appellant that after that assignment, all of the Defendants, with knowledge of the assignment, entered into an agreement intended to defeat the Appellant's claim to the profits. The Defendant Richard Kastner Co., Inc. had retained Attorney I. David Pincus, of Philadelphia, to represent it in the action. After receiving notice of the action, the general counsel for the Appellee Automotive Merchandisers of Texas, Inc. (hereinafter referred to as "Automotive"), also retained Attorney Pincus to represent the interest of his company in the action. More particularly, Automotive's general counsel transmitted letters to Pincus, dated May 22 and September 21, 1979, authorizing Pincus to file an answer on behalf of Automotive. Shortly after he was retained by Automotive, Pincus notified its general counsel that the Plaintiff-Appellant and the Defendant Kastner were attempting to work out a settlement, so that the filing of an answer was then unnecessary as the suit had been put on "hold" by the parties. Settlement efforts between the Plaintiff and Kastner apparently proceeded poorly, for in late September, 1979, Pincus received a letter from Plaintiff's counsel, which stated that ". . . in the event a responsive pleading is not made to the Complaint on or before October 7, 1979, I shall take judgment against your clients on October 7, 1979." However, judgment was not taken by the Plaintiff-Appellant against either Automotive or Kastner on October 7, 1979, despite the fact that neither Defendant filed any responsive pleading. Settlement discussions apparently continued as did extensions of the date when responsive pleadings were expected. However, such discussions were apparently not fruitful, and counsel for the Plaintiff sent a letter to the office of Attorney Pincus, dated January 24, 1980, which demanded that an answer be filed on or before February 13, 1980, or ". . . we will take judgment against your clients by default." On February 8, 1980, Attorney Pincus advised the general counsel for Automotive that settlement discussions had broken down. Further, Pincus advised that he was withdrawing as counsel for
[ 297 Pa. Super. Page 171]
Automotive, to avoid a conflict between its interests and those of Kastner. By letter dated February 7, 1980, an associate of Pincus notified counsel for the Appellant of the filing of a notice of the withdrawal of the appearance on behalf of Automotive. Automotive, through its general counsel, whose office was in Boston, Massachusetts, immediately took steps to employ another Philadelphia attorney to represent its interest in litigation. However, on February 25, 1980, with no further communication as to any specific date when he would do so, the Plaintiff-Appellant entered a judgment by default against Automotive.
Automotive filed its petition to open judgment thirty-three (33) days after the default judgment had been taken. The lower court concluded that Automotive, in that regard, had acted promptly.*fn1 In support of its finding that the petition to open had been promptly filed, the lower court pointed out that Automotive had acted immediately to retain other local counsel after the apparent sudden breakdown in settlement negotiations and contemporaneous withdrawal as counsel by Attorney Pincus. These circumstances, as well as the fact that the Plaintiff-Appellant had taken judgment without any notice as to a specific date, other than the one it had given five ...