No. 510 Philadelphia 1982, Appeal from the Order of the Court of Common Pleas, Civil Division, of Philadelphia County at No. 1591 February Term, 1981.
John M. Corcoran, Philadelphia, for appellant.
Barry H. Oxenburg, Philadelphia, for Steinberg, appellee.
Gary Keith Feldbaum, Philadelphia, for Duralite, appellee.
Spaeth, President Judge, and Montemuro and Popovich, JJ.
[ 325 Pa. Super. Page 191]
This is an appeal by appellant, Sears, Roebuck & Company, from an order of the trial court which denied appellant's "PETITION TO OPEN DEFAULT JUDGMENT". We must reverse and remand for the reasons herein stated.
The dispute in this case arose initially from a complaint in assumpsit and trespass which was filed on February 10, 1981, by appellee-plaintiff, Blanche Steinberg, against appellant-defendant, Sears, Roebuck & Company, and appellee-defendant, Duralite Company, Incorporated. According to appellee-plaintiff's complaint, she "sat down in [a certain lawn or beach chair which was sold by Sears and manufactured by Duralite] . . ., at which time the seat portion of said chair broke away, and the chair then and there tipped over and/or collapsed beneath Plaintiff, causing" the appellee-plaintiff to suffer "a fracture of the surgical neck" and other damages. "COMPLAINT IN TRESPASS AND ASSUMPSIT" at No. 10 and 13.
[ 325 Pa. Super. Page 192]
Then, on March 17, 1981, a default judgment was entered against Sears only. Three days later, appellant filed a Petition to Open Judgment, which was denied by the trial court. This appeal followed.
The standard of review which governs this case has been set forth in the following manner:
"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 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)."
Ecumenical Enterprises, Inc. v. Nadco Construction, 253 Pa. Super. 386, 390-92, 385 A.2d 392, 394-5 (1978).
Additionally, we have said a meritorious defense must be shown in a trespass action only when the equities are not otherwise clear. Balk v. Ford Motor Co., 446 Pa. 137, 285 A.2d 128 (1971); Sines v. Packer, 316 Pa. Super. 500, 503, 463 A.2d 475, 477 (1983). Applying these standards to the instant case, this Court concludes that the trial court abused its discretion.
With respect to the first element, the timeliness of the petition to open, the parties do not dispute, and we have no doubt that the petition was timely since it was filed only three days after the default judgment was taken. See Main Line Abstract Co. v. Penn Title Insurance Co., 282 Pa. Super. 545,
[ 325 Pa. Super. Page 193423]
A.2d 379 (1980) (five days after default was taken was timely).
When analyzing the second element, the trial court stated the following:
"In the instant case, plaintiff's Complaint in Trespass and Assumpsit was served upon Sears on February 13, 1981. A default occurred on March 5, 1981, when no entry of appearance or responsive pleading was filed. Pursuant to Pa.R.C.P. 237.1, plaintiff, by notice dated March 6, 1981, advised Sears of her intention to take a default. Despite said notice, an entry of appearance or responsive pleading was not filed. A default was then taken on March 17, 1981.
The crux of the defendant's Petition to Open is that there exist inherent delays in processing a Complaint through a complicated corporate structure such as the Sears, Roebuck Company, and because of such inherent delays, the twenty day period which is provided by the Pennsylvania Rules of Civil Procedure for answering a Complaint, is not practical. Defendant's petition cites the step-by-step process by which the Complaint and Rule 237.1 notice was transferred through the various offices and agents of Sears before arriving in the hands of counsel.
Here, the failure to enter an appearance or file an Answer cannot be excused merely because of the cumbersome and complicated structure the defendant itself has created for processing such complaints. This Court cannot elevate the defendant to a special status on its own initiative. To do so, would be a clear abuse of discretion and would infringe on the function of the Legislature. Thus, the second factor of the three prong test has not been met." Trial Court Opinion at 1-2. (Emphasis added).
According to appellant, however, "Sears believed that a tender of defense had been accepted by its co-defendant in this litigation and that its interests were being protected by
[ 325 Pa. Super. Page 194]
that co-defendant. Therefore, appellant did not seek to retain independent legal counsel until after the default had been taken, and it was clear its interests were not being served." Brief for Appellant at 9.
Appellee argues that this contention "has not been raised by Appellant, and it is, therefore, waived." Brief for Appellee-Plaintiff at 16 n. 6. We cannot agree.
In appellant's petition to open judgment, appellant raised the issue in the following manner:
"25. Plaintiff's counsel never served the Rule 237.1 notice directed to Sears or the papers requesting a Default Judgment on counsel for Duralite Co., in violation of Rule 233(c). The Plaintiff's counsel knew of Mr. Bogdanoff's [Duralite's Attorney] entry of appearance on or about March 6, 1981.
26. If Plaintiff had complied with Rule 233(c), Duralite's counsel would have been able to take action to protect Sears by entering an appearance and by filing an Answer. Defense Counsel could have taken such a step because of the prior contact between the Defendants. Therefore, Plaintiff's failure to comply with Rule 233(c) prejudiced Defendant Sear's substantive rights. If Plaintiff is going to demand literal compliance with the Rules by Defendant Sears, then the Plaintiff should itself be held to the same standard."
"PETITION TO OPEN JUDGMENT" at No. 25-26. (Emphasis added).
Appellee -- co-defendant, Duralite Company, also states the following:
"[P]laintiff was obligated to serve Duralite with a copy of the Rule 237.1 notice addressed to Sears. In the absence of an entry of appearance for Duralite, plaintiff was obligated to serve Duralite with this copy by mail. Plaintiff has admitted that she did not serve Duralite with a copy of the notice directed to Sears. The failure to serve Duralite, to whom the defense of Sears had been tendered, deprived Duralite of the knowledge, required by the rules, that prompt action was needed to protect Sears.
[ 325 Pa. Super. Page 195]
If the notice had been given as required, Duralite would have taken action to obtain an extension for Sears or otherwise tried to prevent entry of the default judgment through its Philadelphia counsel." Brief for Appellee-Duralite at 9.
Appellee-plaintiff concedes that a copy of the notice was not sent to Duralite's counsel. However, appellee-plaintiff makes no mention of whether such a notice was sent to the company, Duralite. Appellee frames the argument in the following manner:
"25. It is admitted that the Rule 237.1 Notice directed to Sears was not sent to counsel for Duralite. It is denied that the same is a violation of Rule 233(c).
The Rule 237.1 Notice was mailed to Defendant, Sears, on March 6, 1981 before Plaintiff's counsel knew of Mr. Bogdanoff's appearance.
Rule 233(c) does not direct that copies of legal papers, etc., which have been served on party 'x' also be served on party 'y' ab initio, when party 'y's' entry of appearance is served subsequent to the service of the legal paper in question on party 'x'.
26. Denied. It is specifically denied that Defendant Sear's rights were affected by the fact that Duralite's counsel did not receive a copy of the 237.1 notice directed to Defendant, Duralite, or that Plaintiff did not literally comply with the Rules. See Answer to paragraph 25 above.
Further, it is specifically denied that the alleged but non-existent violation of Rule 233(c) would have prompted Duralite's counsel to take action to protect Sears. The entry of appearance and jury demand received by Plaintiff's counsel on March 7, 1981, was specifically for Defendant, Duralite, only. See Exhibit 'B.'" (Emphasis in original)
"PLAINTIFF'S ANSWER TO DEFENDANT, SEARS, ROEBUCK AND COMPANY'S PETITION TO OPEN DEFAULT JUDGMENT"
[ 325 Pa. Super. Page 196]
Thus, appellee-plaintiff contends that her failure to send the Rule 237.1 notice is not pivotal because Duralite's counsel, party "y's" attorney, did not enter an appearance until March 7, 1981, which was after the notice was sent to Sears, party "x". In any event, the argument goes, appellant was not prejudiced because counsel for Duralite entered an appearance for Duralite only.
To begin with, we have concluded that appellee's failure to send Duralite notice of her intent to enter a default judgment against Sears constitutes a violation of our rules of civil procedure.
In pertinent part, Rule 237.1 provides:
"Rule 237.1. Notice of Praecipe for Entry of Default Judgment
(a) No judgment by default shall be entered by the prothonotary unless the praecipe for entry includes a certification that a written notice of intention to file the praecipe was mailed or delivered to the party against whom judgment is to be entered and to his attorney of record, if any, after the default occurred and at least ten days prior to the date of the filing of the praecipe. If a written agreement for an extension of time specifies a time within which the required action must be taken and a default occurs thereafter, judgment by default may be entered by the prothonotary without prior notice under this rule. A copy of the notice or agreement shall be attached to the praecipe." (Emphasis added).
This rule also must be examined in conjunction with another rule, Pa.R.C.P. 233 which provides:
"Rule 233. Service. Legal Papers other than Writs and Pleadings
[ 325 Pa. Super. Page 197]
(a) All legal papers, except writs and pleadings, to be served upon a party under any Rule of Civil Procedure including but not limited to motions, petitions, answers thereto, rules, orders, notices, interrogatories and answers thereto, shall be served by leaving a copy for or mailing a copy to him at the address of the party or his Page 197} attorney of record endorsed on an appearance or prior pleading of the party, but if there is no such endorsement then
(1) within the county in which the action is pending by leaving a copy for or mailing a copy to him at the residence or place of business of the party;
(2) outside the county in which the action is pending, whether or not within the Commonwealth, by
(a) having a competent adult hand a copy to the person to be served; or
(b) leaving a copy at or mailing a copy by registered mail to the last known address of the party to be served; or
(c) if no address is known, publication in such manner as the court by local rule or special order shall direct.
Note: Writs and complaints used as process are served under Rule 1009. Pleadings generally are served under Rule 1027.
(b) Whenever an affidavit of service is filed it shall state the time, place and manner of service with sufficient particularity to enable the court to determine whether proper service has been made.
(c) A copy of every legal paper served upon a party under Subdivision (a) above shall be served upon ever [sic] other party to the action." (Emphasis added).
In a recent case, we applied Rule 233 and commented in the following manner:
" Research has disclosed no appellate cases dealing with a failure to comply with Pa.R.Civ.P. 233(a). The rule, being straight-forward, has evidently not been the source of controversy. However, an addition to Rule 233 has generated one instructive case. Rule 233(c) requires that all parties to a suit be served with all papers that must be served under subsection (a). Where such service was not made on another party to the suit the order pursuant to those papers was declared invalid. Falco v. Insurance Co. of North America, 72 Pa.D. & C.2d 436
[ 325 Pa. Super. Page 198]
(1975). If an order is rendered invalid through the failure of one of the parties to a suit receiving service, then we may fairly extrapolate the same result when the only opposing party in a suit does not receive service." (Emphasis added).
Pflugh v. Pflugh, 311 Pa. Super. 221, 226, 457 A.2d 575, 577 (1983).
The case of Falco v. Insurance Co. of North America, supra, provides some insight into the meaning of Rule 233. In Falco, the plaintiffs, Rosco and Gloria Falco, sued the defendant, the Insurance Company of North America, in order to recover the insurance proceeds because the Falcos' business had been destroyed by fire. The Allentown Bar and Restaurant Supply, Inc. filed a petition to intervene as a plaintiff and mortgagee of certain personal property which had been destroyed in the fire. This petition was granted. A trial was held, and a verdict was entered in favor of the Falcos. In announcing the verdict, the court ordered part of the insurance proceeds to be held in escrow until the claims of judgment creditors, as well as the claim of the Allentown Bar and Restaurant Supply, Inc., could be resolved.
Subsequently, a judgment creditor, William Shannon, served a rule to show cause why a portion of the escrow fund should not be paid to him. A copy of this rule, however, was served only on the clerk of the courts, who was trustee of the fund. The rule was made absolute and the court ordered the monies to be paid to Shannon out of the fund and consolidated Shannon's claim with the Falcos' suit against the insurance company.
Another judgment creditor, Easton National Bank and Trust Company, also filed a petition to seek partial distribution of the funds because the Falcos assigned the funds to the bank. This petition was served on all of the parties. The supplier, Allentown Bar and Restaurant Supply, Inc., filed an answer alleging its priority to the funds. Then the supply company filed ...