United States District Court, W.D. Pennsylvania
October 26, 2005.
LABORORERS COMBINED FUNDS OF WESTERN PENNSYLVANIA, Plaintiff,
HUNTAR DEVELOPMENT CORPORATION, CINDRA DALE and MARK DALE, Defendants. v. S&T BANK, SKY BANK, NORTHSIDE BANK, YARBOROUGH DEVELOPMENT and JENDOCO CONSTRUCTION CORPORATION, Garnishees.
The opinion of the court was delivered by: MAURICE COHILL JR., Senior District Judge
MEMORANDUM OPINION AND ORDER
Garnishee Yarborough Development has filed a Petition to
Strike/Open the judgment by admission entered against it by the
Clerk of Court on February 16, 2005. Plaintiff Laborers Combined
Funds of Western Pennsylvania ("Funds") has filed a brief
opposing the petition.
This action grows out of a construction contract for a
development in Monroeville, Pennsylvania, known as Monroe
Meadows. Yarborough Development ("Yarborough") was the general
contractor on the project. Yarborough and Huntar Development
Corporation ("Huntar") entered into a contract requiring Huntar
to perform site work and earth work, to install storm and
sanitary sewers, and to provide inspections and certifications of
Funds sent interrogatories to the garnishees, including
Yarborough. Yarborough's answers to interrogatories in this case
show that it is holding $38,000.00 as retainage.
The interrogatories at issue are numbers 1 and 2. Interrogatory
1 is as follows:
1. At the time you were served, or at any subsequent
a. did you owe defendant any money?
b. were you liable to defendant pursuant to any note
or agreement? c. did defendant claim that you owed him any money or
were liable to defendant for any reason?
Yarborough denied any liability to the defendant by answering
"no" to parts (a), (b) and (c) of Question 1.
Interrogatory 2 states:
2. If the answer to interrogatory No. 1 is "yes",
state for each account:
a. Parties to the instrument/agreement;
b. Date of the instrument/agreement;
c. Nature/description of the instrument/agreement;
d. Amount of the payments due thereunder;
e. Frequency of payments;
f. Amount of the payments made to date;
g. Balance due under the instrument/agreement.
Although Yarborough answered "no" to interrogatory No. 1, it
answered interrogatory No. 2 by stating:
2. (a)-(g) As a result of a construction project
known as Monroe Meadows, Yarborough Development is
holding $38,000.00 in retainage.
Funds filed a Praecipe for Judgment by Admission against
Yarborough, pursuant to the answer to interrogatory 2. On
February 18, 2005, the Clerk of Court entered judgment by
admission in the amount of $15,200.00 in favor of Funds and
against Yarborough. Yarborough now petitions to strike or open
that judgment. Funds opposes the petition.
The parties agree that Pennsylvania law governs this action.
Pa. R. Civ. P. 3146(b) provides for judgment against a garnishee
by admissions contained in answers to interrogatories as follows:
The prothonotary on praecipe of the plaintiff, shall
enter judgment against the garnishee for the property
of the defendant admitted in the answer to
interrogatories to be in the garnishee's possession
subject to any right therein claimed by the
garnishee, but no money judgment entered against the
garnishee shall exceed the amount of the judgment of the plaintiff
against the defendant together with interest and
costs. . . .
Pa. R. Civ. P. 3146(b).
Under Pennsylvania law, the admissions of a garnishee, made as
answers to a judgment creditor's interrogatories, will support
the entry of judgment "only in a clear case, where there is a
distinct admission of liability by the garnishee to the
defendant." Ruehl v. Maxwell Steel Co., Inc. 474 A.2d 1162
(Pa.Super. 1984), quoting Bartram Building and Loan Association v.
Eggleston, 6 A.2d 508, 510 (Pa. 1939). If there is any doubt
regarding the garnishee's admission, judgment should not be
entered. Ruehl, 474 A.2d at 1164, quoting Goodrich-Amram 2d §
3146(b): 1.1. Indeed, courts and commentators have emphasized
that judgment on admission "cannot be entered unless some part of
the plaintiff's claim is `unequivocally and unqualifiedly
admitted to be due by the defendant's answer.'" Id. (citations
omitted). Where judgment against a garnishee has been improperly
entered on the basis of such admissions, such judgment may be
Citing Ruehl, garnishee Yarborough petitions to have the
judgment in this case stricken because it clearly denied any
liability in its answer to interrogatory 1.
Plaintiff does not address Yarborough's response to
interrogatory 1, and the record shows that judgment was entered
against Yarborough solely on the basis of its answer to
interrogatory 2, which states that it is holding $38,000.00 in
retainage. Yarborough's brief explains that Huntar has not
provided the appropriate sewer certification, and that a
landslide has occurred on one of the hillsides Hunter graded. As
a result, Yarborough asserts that "[n]either Huntar nor its
creditors are entitled to receive this retention unless and until
Huntary [sic] provides the appropriate certification for the
storm water and sanitary sewage systems, and the owner is
satisfied that the aforesaid landslide is not the fault of
Huntar." (Petition to Strike at ¶ 10).
Funds asserts that the motion to strike or reopen must be
denied because Yarborough has failed to claim any interest in the
$38,000.00 under New Matter. Funds distinguishes Ruehl as a case where a judgment by admission was struck
because the garnishee made a claim against part of the funds
using this procedure. In that case, plaintiff obtained a judgment
by admission based on the balance in the defendant's bank
account. The garnishee bank challenged that judgment by
admission, and explained as New Matter that the defendant's
account actually had a balance far less than it had when the writ
was served. The court held that judgment could not be entered for
an amount that exceeded the funds in the defendant's account, and
reduced the amount of the judgment.
Since Yarborough's retainage argument is in the nature of a
defense to garnishment, it might have been presented, as in
Ruehl, as New Matter. The failure to do so, however, is not
fatal to Yarborough's petition. Ruehl was not concerned with
the question of liability presented here. The bank in Ruehl
admitted liability. The funds garnished were indisputably the
defendant's property because they were deposited in the
defendant's bank account. The only question was whether the
judgment could be struck or opened to correct the amount of those
funds, not whether or not judgment could be entered against the
bank to garnish them.
The record before us does not so clearly establish that
Yarborough holds the defendant's monies as opposed to its own
funds. It is not uncommon for a construction contract to permit a
general contractor to retain a certain percentage of payments due
to its subcontractors, in order to insure that the work
contracted for is performed. We have found no Pennsylvania
decisions directly addressing how retainage should be regarded in
a judgment action of this sort, and the parties have not cited to
any such authority themselves. However, Ruehl and the cases
cited therein explicitly state that a judgment creditor's
interrogatories will support the entry of judgment "only in a
clear case, where there is a distinct admission of liability" on
the part of the garnishee. 474 A.2d at 1164. Yarborough expressly
denied liability in its answers to interrogatory 1. We agree with
the garnishee that, based upon this answer, judgment should not
have been entered against it.
Moreover, although Yarborough did not present a defense in New
Matter as it could have done, its statement that it holds retainage indicates that
these funds may not belong to Huntar because the contract has not
been completely performed. The terms of that contract are not
before us. Nevertheless, Yarborough's statement further convinces
us that this is not the sort of clear case of admitted liability
that would make those monies subject to garnishment on the basis
of the answers to plaintiff's interrogatories.
Accordingly, Yarborough's Petition to Strike/Open the judgment
by admission shall be granted. An appropriate Order follows:
AND NOW, to-wit, this 25th day of October, 2005, for the
reasons set forth above, it is hereby ORDERED, ADJUDGED, and
DECREED that the Petition to Strike/Open Judgment by Admission
(Doc. 14) filed by garnishee Yarborough Development be and hereby
is GRANTED. The Clerk of Court be and hereby is directed to
strike the judgment entered against Yarborough Development, in
the amount of $15,200.00, on February 16, 2005.
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