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City of Philadelphia v. David J. Lane Advertising

October 4, 2011

CITY OF PHILADELPHIA
v.
DAVID J. LANE ADVERTISING, INC. AND DAVID J. LANE, OFFICER APPEAL OF: DAVID J. LANE



The opinion of the court was delivered by: P. Kevin Brobson, Judge

Submitted: September 14, 2011

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE BERNARD L. McGINLEY, Judge HONORABLE RENEE COHN JUBELIRER, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE JOHNNY J. BUTLER, Judge

OPINION BY JUDGE BROBSON

David J. Lane (Lane) appeals from the order of the Court of Common Pleas of Philadelphia County (common pleas court), which denied his Petition to Strike Off Default Judgment. For the reasons set forth below, we reverse the common pleas court.

On April 28, 1999, the City of Philadelphia (City) commenced an action against David J. Lane Advertising, Inc. (Company) and Lane as an officer of the Company (collectively, Defendants) pursuant to the Wage and Net Profits Tax Ordinance, Section 19-1500 of the Philadelphia Code. The City alleged that Defendants withheld wage taxes from the Company's employees but failed to remit the monies due for 1988 and 1989. The City alleged that Lane was personally liable for the amounts set forth in the complaint, as trustee ex maleficio.

The City sought a monetary judgment against each defendant in the amount of $27,919.43, plus interest, penalties, attorneys' fees, and costs.

Pursuant to local rule of court, the matter was assigned to arbitration based on the amount in controversy. The prothonotary of the common pleas court stamped a notice in red ink on the cover sheet of the complaint, which provided that the matter had been assigned to arbitration and that the arbitration hearing would take place on December 24, 1999, 2:30 p.m., at 1601 Market Street, 2nd Floor, Philadelphia. The stamp also provided that notwithstanding the assignment to arbitration, "YOU MUST STILL COMPLY WITH THE NOTICE BELOW," meaning the notice to defend on the cover of the complaint. (Reproduced Record (R.R.) at 9a.)

The Sheriff of Montgomery County served the City's complaint on Defendants on May 4, 1999. Defendants did not file a responsive pleading to the complaint within twenty (20) days, as required by Pa. R.C.P. No. 1026(a).

Roughly six (6) months thereafter, the City sent a notice to each defendant dated November 17, 1999, indicating its intention to seek a default judgment if Defendants failed to act within ten (10) days (10-Day Notice). (R.R. at 26a, 27a.)

See Pa. R.C.P. No. 237.1(a)(2).*fn1 Defendants did not file a responsive pleading. On December 2, 1999 (i.e., weeks before the scheduled arbitration hearing), acting on the City's praecipe, the common pleas court entered judgment by default in the City's favor and against Defendants.

The certified docket entries reflect that in or around July 2009, the City began collection efforts through writs of attachment against several banks as garnishees, which appear to have been unsuccessful. In November 2009, counsel entered their appearance for Lane and petitioned to strike the default judgment.*fn2 Lane raised five (5) grounds to support his request:

(1) the City's 10-Day Notice was deficient;

(2) the multiple notices affixed to the City's Complaint, separately or collectively, were contradictory and misleading and failed to provide the notice required by Pa. R.C.P. No. 1018.1;

(3) the City's underlying claim was barred by laches;

(4) the City's complaint lacks sufficient averments to establish a claim against Lane personally; and

(5) the common pleas court erred in assigning the matter to arbitration because a panel of arbitrators lacked the authority to grant the relief that the City sought in its complaint.

(R.R. at 31a-41a.) The common pleas court denied the petition by order dated January 27, 2010.

Lane appealed,*fn3 and the common pleas court filed an opinion in support of its order on March 24, 2010.*fn4 In support of its order, the common pleas court found that there was no question that Lane was properly served with the complaint, that he received the City's 10-Day Notice, and that he received the notice of entry of a default judgment. The common pleas court concluded that the City's 10-Day Notice complied with Rules 237.1 and 237.5 and, therefore, was not deficient as Lane claimed. The common pleas court refused to consider Lane's argument that the notices misled and confused him, as to do so would have required the common pleas court to consider matters not of record. The trial court did not specifically address in its opinion any of the other arguments Lane raised in his petition to strike.*fn5 On appeal, Lane essentially raises the same issues that he raised in his petition to strike.*fn6

We begin our analysis by noting that default judgments are generally not favored. See Kennedy v. Black, 492 Pa. 397, 402, 424 A.2d 1250, 1252 (1981). In considering a motion to strike a default judgment the court is limited to the facts of record at the time the judgment was entered. Cintas Corp. v. Lee's Cleaning Servs., Inc., 549 Pa. 84, 700 A.2d 915 (1997). Importantly, a petition to strike is not a chance to review the merits of the allegations of a complaint. Rather, a petition to strike is aimed at defects that affect the validity of the judgment and that entitle the ...


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