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AMERICAN MUTUAL LIABILITY INSURANCE COMPANY v. ZION & KLEIN (03/08/85)

filed: March 8, 1985.

AMERICAN MUTUAL LIABILITY INSURANCE COMPANY, APPELLANT,
v.
ZION & KLEIN, P.A., AND THE FIDELITY BANK, APPELLEES



No. 540 Philadelphia, 1983, Appeal from Order of the Court of Common Pleas, Civil Division, of Montgomery County, No. 80-17462.

COUNSEL

Robert E. Slota, Bryn Mawr, for appellant.

Michael G. Trachtman, Norristown, for appellees.

Wieand, Olszewski and Popovich, JJ. Popovich, J., dissents.

Author: Wieand

[ 339 Pa. Super. Page 477]

This is an appeal by a judgment creditor from an order awarding counsel fees to a garnishee who was required to defend an attachment execution which, the court found, had been pursued in a vexatious manner. We conclude that counsel fees were properly awarded and, therefore, affirm.

The Judicial Code, at 42 Pa.C.S. ยง 2503, provides that certain litigants shall be entitled to reasonable counsel fees as part of taxable costs. Included is "(7) [a]ny participant who is awarded counsel fees as a sanction against another participant for dilatory, obdurate or vexatious conduct during the pendency of a matter." Vexatious conduct has been defined as that which is "without sufficient grounds and serving only to cause annoyance." Chervenak, Keane & Co. v. Hotel Rittenhouse Associates, Inc., 328 Pa. Super. 365, 372, 477 A.2d 487, 490 (1984) quoting Santoro v. City of Philadelphia, 59 Pa. Commw. 114, 122, 429 A.2d 113, 117 (1981). The amount of counsel fees in such instances depends upon the exercise of a sound discretion by the trial court. Chervenak, Keane & Co. v. Hotel Rittenhouse Associates, Inc., supra, 328 Pa. Superior Ct. at 372, 477 A.2d at 491; Shearer v. Moore, 277 Pa. Super. 70, 78, 419 A.2d 665, 669 (1980).

In the instant case, American Mutual Liability Insurance Co. (AMI) held a judgment against Zion & Klein, P.A., for

[ 339 Pa. Super. Page 478]

$7,682.75. This was the basis for an attachment execution issued by AMI to The Fidelity Bank (Fidelity), which was named garnishee. The writ sought to attach accounts in the names of "Zion & Klein, P.A.," and "Benson Zion Associates." Although Fidelity immediately put a hold on both accounts, it subsequently released the Benson Zion Associates account when it learned that it was owned by a separate entity which threatened legal action if its funds were withheld. This information was given to AMI's counsel, who was told that the situation was unusual and that Fidelity's answers to interrogatories would be delayed pending further investigation. AMI insisted that the Benson Zion Associates account was available for payment of the debts of Zion & Klein. When answers to interrogatories were not filed by the twentieth day following service, AMI caused a default judgment to be entered against Fidelity, without notice, on the twenty-first day. Unaware that a default judgment had been entered against it, Fidelity filed answers to the interrogatories on the twenty-seventh day. When Fidelity thereafter learned of the entry of the default judgment, it promptly notified AMI that answers had been filed and requested that AMI agree to remove the default judgment. It suggested to AMI that its default judgment was defective for failure to give the notice required by Pa.R.C.P. 237.1 and cited AMI to the official commentary to the rule which instructed that the rule was applicable to attachment executions issued under Pa.R.C.P. 3146. When AMI refused to act, Fidelity was forced to employ counsel who filed a petition to strike or open the judgment and obtained a stay of execution, for which Fidelity was required to post a bond. Fidelity's counsel also forwarded to AMI's attorney a copy of the slip opinion of the Supreme Court in Queen City Electrical Supply Co. v. Soltis Electric Co.,*fn1 and called attention to Footnote 8 wherein the Court had noted the applicability of Pa.R.C.P. 237.1 to default judgments entered against garnishees. AMI continued

[ 339 Pa. Super. Page 479]

    to refuse any agreement to open or strike the judgment against Fidelity. This continued even after Fidelity proposed separate litigation to determine whether the Benson Zion Associates account had been properly subjected to attachment for payment of debts owed by Zion & Klein, P.A. AMI's continuing attempts to force Fidelity to pay the Zion & Klein judgment or collect payment thereof from Zion & Klein were clearly without foundation and served only to increase Fidelity's counsel fees. In addition, AMI rejected proposals by Fidelity to submit the underlying issue for decision to the court in an expeditious and inexpensive manner without the taking of depositions. Ultimately, the judgment was stricken by court order.*fn2

The default judgment which AMI caused to be entered against Fidelity without notice on the twenty-first day, when it knew that Fidelity's answers had been delayed because of its efforts to determine the relationship between Benson Zion Associates and Zion & Klein, P.A., was patently defective. Its attempt to use that invalid judgment as a device by which to force Fidelity to settle or obtain payment of AMI's claim against Zion & Klein, P.A., was without legal support. This conduct by AMI, the trial court could find, was arbitrary, obdurate and vexatious. An award of counsel fees as taxable costs, therefore, could properly be made. See and compare: Brenckle v. Arblaster, 320 Pa. Super. 87, 93-95, 466 A.2d 1075, 1078-1079 (1983); In re Estate of Roos, 305 Pa. Super. 86, 451 A.2d 255 (1982). See also: Queen City Electrical Supply Co. v. Soltis Electric ...


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