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City of Philadelphia Water Revenue Bureau v. Towanda Properties

July 24, 2009

CITY OF PHILADELPHIA WATER REVENUE BUREAU
v.
TOWANDA PROPERTIES, INC., APPELLANT



The opinion of the court was delivered by: Judge Simpson

Argued: June 11, 2009

BEFORE: HONORABLE ROBERT SIMPSON, Judge, HONORABLE MARY HANNAH LEAVITT, Judge, HONORABLE JIM FLAHERTY, Senior Judge.

OPINION

Towanda Properties, Inc. (Property Owner) appeals an order of the Court of Common Pleas of Philadelphia County (trial court) denying Property Owner's petition to strike the City of Philadelphia, Water Revenue Bureau's (Bureau) default judgment against Property Owner for unpaid water and sewer services. Property Owner argues (1) the trial court erroneously granted the Bureau permission for alternative service, (2) the Bureau did not properly serve Property Owner pursuant to the alternative service order, (3) the alternative service order violated Property Owner's due process rights, and (4) the Bureau's bad faith violations of the rules of civil procedure warrant dismissal of the complaint with prejudice. Upon review, we reverse the trial court's denial of Property Owner's petition to strike the default judgment. We remand to the trial court to address Property Owner's preliminary objections consistent with this opinion.

I. Background

Property Owner, a Pennsylvania corporation, is the registered owner of a property (subject property) located in Philadelphia. The Bureau provides water and sewer service to the subject property and is seeking $45,987.16 in past due charges, including statutorily-allowed penalties, fines, and attorney's fees.

In April 2007, the Bureau filed a complaint against Property Owner. In June, the Bureau attempted to personally serve the complaint at the record address of Property Owner's principal corporate office (principal address) pursuant to Pa. R.C.P. No. 402. The process-server was unable to serve Property Owner and noted the building at the location appeared to be abandoned.

In October, the Bureau made three further unsuccessful attempts to personally serve the complaint on Property Owner at the subject property, finding the property under construction with no sign of people coming or going from the premises. Following these unsuccessful attempts to personally serve Property Owner, the Bureau moved for alternative service pursuant to Rule 430. The trial court granted the motion and permitted service by (1) regular mail to Property Owner's principal address, (2) regular mail to a post office box listed as Property Owner's mailing address in the City of Philadelphia Board of Revision of Taxes list, and (3) by posting at the subject property. Subsequently, the Bureau offered proofs of service in accordance with the alternate service order.

Property Owner filed no answer to the Bureau's complaint. On January 15, 2008, the Bureau filed a praecipe to enter default judgment. Two days later, on January 17, 2008, Property Owner filed preliminary objections alleging inadequate service of process and filed a petition to strike the default judgment, which the trial court denied. This appeal followed.

Property Owner argues: the trial court erred by refusing to strike or open the default judgment; the trial court's alternative service order was not an adequate substitute for legal notice; service pursuant to the alternative service order violated Property Owner's due process rights; and, the complaint should be dismissed due to the Bureau's bad-faith noncompliance with the Pennsylvania Rules of Civil Procedure.

II. Petition to Strike the Default Judgment

To obtain relief from the entry of a default judgment, the law provides two distinct remedies. An aggrieved party may file a petition to strike a default judgment or a petition to open a default judgment, but the remedies are not interchangeable. Cintas Corp. v. Lee's Cleaning Serv., Inc., 549 Pa. 84, 700 A.2d 915 (1997). A petition to strike operates as a demurrer to the record and does not involve the discretion of the court. Id. As such, the court may only look to the facts of record at the time the judgment was entered to decide if the record supports the judgment. Id. A petition to strike can only be granted if a fatal defect appears on the face of the record. Id.

In contrast, a petition to open judgment is an appeal to the court's equitable powers. Id. It is committed to the sound discretion of the court and will not be disturbed absent a manifest abuse of discretion. Id. To be successful, a petition to open a judgment must meet the following test: the petition must be promptly filed; the failure to appear or file a timely answer must be excused; and, the party seeking relief must show a meritorious defense. Id. A party seeking to challenge the factual averments in the record at the time the judgment was entered must file a petition to open the judgment. Id.

Here, the only petition before the trial court was Property Owner's unverified petition to strike the default judgment.*fn1 See Pa. R.C.P. No. 206.3 (petitions containing allegations of fact not of record shall be verified).

A. Alternative Service Order

Property Owner attacks the trial court's rationale for issuing a special order permitting alternative service. Property Owner argues (1) defects in the Bureau's returns of non-service precluded permitting alternative service, (2) the Bureau's failure to include an affidavit of good-faith investigation precluded permitting alternative service, (3) the alternative service order violated Property Owner's due process rights, and (4) the Bureau's bad-faith violations of the Rules of Civil Procedure warrant dismissing the complaint with prejudice. Property Owner maintains the alternative service order constitutes a fatal error on the record warranting striking the default judgment. For the following reasons, we discern no error in the trial court's order granting permission for alternative service.

1. Returns of Non-Service

We first address whether the record contained evidence of the Bureau's attempts to personally serve Property Owner at the time the trial court ordered alternative service. Property Owner argues the docket contains no entries reflecting the Bureau's unsuccessful attempts at service and thus the record before the ...


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