Becrett, LLC v. R & H Resources, Inc. ( 2018 )

J-A15020-18
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
BECRETT, L.L.C. : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
R & H RESOURCES, INC.; JOSEPH M. : No. 1460 MDA 2017
RASMUS AND DIANE RASMUS; :
DOUGLAS HOGREBE, CHERY :
HOGREBE; AND NATIONAL :
COOPERATIVE BANK, FSB :
Appeal from the Order Entered August 23, 2017
In the Court of Common Pleas of Luzerne County Civil Division
at No(s): 201301823
BEFORE: PANELLA, J., MURRAY, J., and FORD ELLIOTT, P.J.E.
MEMORANDUM BY MURRAY, J.: FILED SEPTEMBER 12, 2018
Becrett, L.L.C. (Appellant) appeals from the order denying its petition to
open the order of summary judgment entered in favor of National Cooperative
Bank, FSB (the Bank). We affirm.
Appellant is the owner of a strip mall property in Hanover, Pennsylvania.
According to Appellant’s complaint, in August of 2007, R & H Resources, Inc.
(R & H) executed a lease for retail space with Appellant’s predecessor, so that
R & H could operate a hardware store. R & H’s officers, Joseph M. Rasmus,
Diane Rasmus, Douglas Hogrebe, and Chery Hogrebe, executed personal
guarantees of R & H’s obligations under the lease agreement. Appellant’s
Complaint, 2/12/13, at 6.
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In October of 2007, R & H obtained a $630,000 loan from the Bank,
under which the Bank gained a first priority security interest in R & H’s
equipment, fixtures, inventory, accounts, etc. See Bank’s Answer, New
Matter & Counterclaims, 9/4/13, at 7. In July of 2011, Appellant purchased
the strip mall property from its predecessor and was assigned all of the title
and interests the predecessor had in the lease with R & H. Appellant’s
Complaint at 2.
According to Appellant, sometime after November of 2010, R & H failed
to make rent and other required payments under the lease, and in October of
2012, R & H closed its hardware store. Id. at 2-3, 9. Appellant and the Bank
agreed that the store’s inventory would be sold at auction and the proceeds
held in escrow by Appellant’s attorney, Michael J. Rowland, Esquire, while
Appellant and the Bank negotiated their competing claims. Appellant’s Brief
at 13. These negotiations were apparently unsuccessful.
On February 12, 2013, Appellant filed a seven-count complaint, averring
generally that R & H failed to make rent payments as required under the lease,
and that Appellant was entitled, against the Bank, to the funds held in escrow.
Count 1 of the complaint was against R & H only; Counts 2, 3, and 4 were
against R & H, the Rasmuses and the Hogrebes; and Counts 5, 6, and 7 were
against the Bank. R & H and Joseph M. Rasmus filed a joint answer, which
averred, inter alia, that Diane Rasmus had filed a bankruptcy case. The Bank
filed an answer, new matter, and two counter-claims against Appellant for the
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funds held in escrow. Appellant filed an answer to the Bank’s counterclaims.
Diane Rasmus, Douglas Hogrebe, and Chery Hogrebe have not filed any
pleading defending against the litigation.1
On February 5, 2015, the Bank filed a motion for summary judgment.
Appellant filed a response, and the trial court denied summary judgment on
June 29, 2015.
The next pleading on the docket is a January 7, 2016 “Motion to Compel
Discovery and to Deem Admissions Admitted” filed by the Bank. The Bank
stated that although Appellant’s counsel, Attorney Rowland, acknowledged its
request to schedule a deposition of Appellant’s managing member, Kevin
Beccia, Attorney Rowland did not respond to two earlier requests for
discovery. The Bank further stated that Attorney Rowland’s office had
informed it that Attorney Rowland suffered a stroke on October 25, 2015, but
the office expected to provide the requested discovery by November 16th.2
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1 However, as stated infra, in October of 2017, Douglas and Chery Hogrebe
filed a suggestion of bankruptcy, advising the trial court that they had
commenced a bankruptcy action in October of 2013, which is past the date
that a responsive pleading was due.
2 The Bank’s motion stated: “On October 26, 2015, [Appellant’s] Counsel sent
[the Bank’s] counsel a letter stating that Mr. Beccia had suffered stroke on
October 25, 2015 . . . .” Bank’s Motion to Compel Discovery & to Deem
Admissions Admitted, 1/7/16, at ¶ 8 (emphasis added). However, the Bank
attached the letter as an exhibit, and the letter, signed by Attorney Rowland’s
assistant, clearly stated that it was Attorney Rowland who suffered a stroke.
Id. at Exhibit E.
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However, the Bank averred, Appellant failed to provide the discovery and after
October 26, 2015, Attorney Rowland did not respond to any of the Bank’s
email or telephone inquiries. On February 23, 2016, the trial court issued a
rule for Appellant to show cause why the Bank was not entitled to relief.
Appellant did not respond. On March 28th, the court granted the Bank’s
“Motion to Compel Discovery and to Deem Admissions Admitted” and directed
Appellant to respond to the Bank’s interrogatories, provide the requested
discovery, and produce Mr. Beccia for a deposition. The order also awarded
attorneys’ fees and costs of approximately $3,300 to the Bank.3
Ten months later, on January 26, 2017, the Bank filed a second motion
for summary judgment on Counts 5, 6, and 7 of Appellant’s complaint — the
counts that were against the Bank — as well as both of the Bank’s
counterclaims against Appellant.4 The Bank averred that Appellant still had
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3 The order did not state the amount of the attorneys’ fees awarded, but a
subsequent motion by the Bank stated it had requested $3,325, and at the
August 2, 2017 hearing, Attorney Rowland acknowledged that the court
awarded $3,300. See N.T., 8/2/17, at 70; Bank’s Motion for Summary
Judgment, 1/26/17, at 8.
4 We note that on June 28, 2016, the Bank filed a “Motion for Additional
Sanctions and Attorney’s Fees,” averring that Appellant had done nothing to
comply with the trial court’s March 28, 2016 order. The trial court issued a
rule upon Appellant to show cause why the Bank was not entitled to relief, but
Appellant did not file any response. However, there is no indication in the
record or the trial docket that the court ruled upon the Bank’s motion, and the
parties’ subsequent filings — which included the Bank’s January 2016 motion
to compel— did not mention the June 2016 motion. See Appellant’s Petition
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not responded to any of its discovery requests; that per the trial court’s March
28, 2016 order, Appellant was deemed to have admitted the facts set forth in
the Bank’s request for admissions; and thus there were no genuine issues of
material fact. The Bank further requested attorneys’ fees and costs. Appellant
did not respond. On March 30, 2017, the trial court granted the Bank’s motion
for summary judgment, directed that all funds held in escrow — which were
still held by Attorney Rowland — be disbursed to the Bank, and awarded the
Bank $34,578.05 in attorneys’ fees. On May 8, 2017, upon praecipe by the
Bank, judgment was entered in favor of the Bank on the counts cited above.
According to Attorney Rowland, he sent a check to the Bank in the amount of
$71,000, representing the amount of the escrowed funds, but the Bank did
not cash it. N.T., 8/2/17, at 10, 74.
On June 14, 2017, five weeks after judgment was entered, Appellant’s
current counsel, Joseph P. Hanyon, Esquire, entered his appearance and filed
a “Petition to Open Summary Judgment.” The petition acknowledged that the
entry of summary judgment against Appellant “was the result of inaction and
neglect by” Appellant’s prior counsel, Attorney Rowland, which in turn was
caused by Attorney Rowland’s serious illness, including a stroke on October
25, 2015. Appellant claimed that after the stroke, Attorney Rowland had
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to Open Summary Judgment, 6/14/17, at 2-3; Bank’s Motion for Summary
Judgment, 1/26/17, at 8.
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assured it that he was handling the case and that a settlement was imminent,
while, in fact, Attorney Rowland was incapable of providing adequate legal
representation. Appellant explained that it did not learn that judgment was
entered until May 24, 2017, when Mr. Beccia returned home after a month-
long trip abroad and saw a notice sent by the trial court. According to
Appellant, Mr. Beccia contacted Attorney Rowland, who admitted that he was
not competent to handle the case, and Appellant retained new counsel.
Appellant’s Motion to Open Summary Judgment, 6/14/17, at ¶ 9. Appellant
asked the court to exercise its equitable power to open the judgment.
The Bank filed a response and the trial court conducted a hearing on
August 2, 2017. Attorney Rowland testified that he suffered strokes in July,
August, and October of 2015, and that since November of 2015, he had six or
seven “stroke episodes,” which involved vomiting and dizziness. N.T., 8/2/17,
at 65-67. Attorney Rowland was also diagnosed with retinopathy in March of
2015, which rendered him unable to read and caused him to rely on a
secretary to read mail and documents to him. Id. at 67-69. Since November
of 2015, Attorney Rowland has worked “on a restricted schedule”; he works
in the office from 9:00 a.m. to noon or 1:00 p.m., becomes “wiped out,” and
then goes home to “sleep most of the rest of the day.” Id. at 67.
Attorney Rowland admitted that after October 2015, the only status
update he gave to Mr. Beccia was that he believed the case would settle, and
that he purposefully did not tell Mr. Beccia about the Bank’s request for
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discovery, the court’s March 28, 2016 order (which granted the Bank’s motion
to compel and imposed awarded attorneys’ fees to the Bank), the Bank’s
second motion for summary judgment, or the March 30, 2017 order (granting
summary judgment and awarding the Bank approximately $34,578 in
attorneys’ fees). Id. at 70, 75. Attorney Rowland acknowledged that he knew
that the March 30, 2017 order granting the Bank’s motion for summary
judgment “was very bad news for” his client, yet he did not notify Mr. Beccia.
Id. at 71. Attorney Rowland further testified that he sent a check for $71,000
to the Bank but likewise did not inform Mr. Beccia. Id. at 70-71. Attorney
Rowland admitted that he lied to Mr. Beccia, but stated that he did so because
he was embarrassed and ashamed. Id. at 72-73. When repeatedly asked
why he did not respond to the Bank’s various motions or communicate with
his client, Attorney Rowland responded that he did not know. Id. at 72 (when
asked why he did not notify Mr. Beccia that he was sending a $71,000 check
to the Bank, Attorney Rowland stated: “To be honest, I searched my soul
many times and I don’t know the answer to that question . . . .”), 75 (“I can
only say to you that I don’t have an excuse and I don’t have an explanation.”),
75-76 (“I don’t have either an explanation or an excuse for what has
happened.”) Attorney Rowland also testified that Mr. Beccia called him on
May 30, 2017 about the judgment that was entered, and Attorney Rowland
advised him to seek new counsel. Id. at 74. Finally, Attorney Rowland, who
was a sole practitioner, stated that this may be the last year that he practices
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law, and that he has not maintained professional liability insurance since 2010.
Id. at 76-77.
On August 23, 2017, the trial court denied Appellant’s “Petition to Open
Summary Judgment,” finding that Attorney Rowland’s conduct “was not the
type which would warrant the extraordinary relief requested by [Appellant]
and which has sometimes resulted in the opening of judgments on equitable
grounds.” Trial Court Opinion, 11/17/17, at 2, citing Estate of Gasbarini v.
Med. Ctr. Of Beaver Co., Inc. 409 A.2d 343, 345 (Pa. 1979) (attorney’s
neglect does not constitute extraordinary cause requiring the granting of the
equitable relief of opening a judgment).
Appellant timely appealed. On October 30, 2017, Douglas and Chery
Hogrebe filed a suggestion of bankruptcy, advising the court that they had
filed a bankruptcy petition four years earlier, on October 8, 2013. The trial
court did not order compliance with Pa.R.A.P. 1925(b), but issued an opinion.
Appellant presents the following issues for our review:
1. When it considered [Appellant’s] Petition to Open an
interlocutory summary judgment order, did the lower court err
when, rather than requiring a showing of “proper cause,” it applied
the standard for granting nunc pro tunc appeals?
2. Did [Appellant] show “proper cause” for the opening of the
interlocutory order?
3. Even if “extraordinary cause” is the applicable standard, did the
lower court abuse its discretion by denying the Petition to Open?
Appellant’s Brief at 4.
We summarize Appellant’s arguments together. First, Appellant avers
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that the trial court erred in requiring it to show fraud or extraordinary cause
for opening the judgment. Instead, Appellant contends, it merely had to
establish “proper cause,” the lower standard applicable to petitions to open
default judgments. Id. at 25, citing Lewis v. Reid, 366 A.2d 923, 924 (Pa.
Super. 1976) (for court to open judgment of non pros, “(1) a petition to open
must be promptly filed; (2) there must be a reasonable explanation or excuse
for the default; and (3) facts constituting grounds for a cause of action or a
meritorious defense must be alleged”). Appellant maintains that the March
30, 2017 order granting the Bank’s motion for summary judgment was an
interlocutory order — because it did not dispose of all the issues between all
the parties — and thus, unlike a final order, the trial court retained the power
to modify it at any time during the proceedings.5 Appellant’s Brief at 24, citing
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5 While the Bank argues the court’s March 30, 2017 order granting its motion
for summary judgment was a final order, Bank’s Brief at 14, we agree with
Appellant that it was not, because the order did not dispose of the claims
against the remaining five defendants — R & H, Joseph and Diane Rasmus,
and Douglas and Chery Hogrebe. See Appellant’s Brief at 24-26. Were
Appellant appealing from that order, this Court would not have jurisdiction.
See Pa.R.A.P. 341(c) (when more than one claim is presented or when
multiple parties are involved, trial court may enter a final order as to fewer
than all of the claims and parties only upon an express determination that an
immediate appeal would facilitate resolution of the entire case; in the absence
of such a determination, the order shall not constitute a final order); K.H. v.
J.R., 826 A.2d 863, 869 (Pa. 2003) (in action involving multiple defendants,
and in the absence of an express determination by the trial court under Rule
341(c), an order granting summary judgment as to one party is treated as
appealable as of right only after the disposition of the claims involving the
remaining parties).
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Key Automotive Equip. Specialists v. Abernethy, 636 A.2d 1126, 1128
(Pa. Super. 1993) (while trial court has 30 days to reconsider a final order,
such time period is not applicable to an interlocutory order).
In Appellant’s second issue, it asserts that under the standard for a
petition to open a default judgment, it established why judgment should be
opened: its prior counsel, Attorney Rowland, had poor eyesight and had
suffered several strokes, was only able to work part-time, admitted that he
failed to inform Appellant of key aspects of the litigation, including the Bank’s
motion to compel and motion for summary judgment, as well as the court
order granting summary judgment, and admitted that he “engaged in fraud
by misleading his client” and that he was dishonest. Appellant’s Brief at 38-
42. Appellant argues that in defining “proper cause,” the courts have
distinguished an attorney’s “oversight or neglect” from “deliberate decisions
made by attorneys . . .” Appellant’s Brief at 32. Appellant analogizes this
case to others in which an attorney’s illness or oversight justified opening a
default judgment and a judgment non pros. Id. at 32-33, citing Dep’t of
Transportation v. Nemeth, 442 A.2d 689, (Pa. 1982) (defense attorney’s
failure to answer complaint, due to confusion surrounding dissolution of his
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Here, however, judgment has been entered in favor of the Bank, and
Appellant is appealing from the order denying its motion to open judgment.
Accordingly, Appellant may take this interlocutory appeal as of right. See
Pa.R.A.P. 311(a) (“An appeal may be taken as of right and without reference
to Pa.R.A.P. 341(c) from . . . [a]n order refusing to open, vacate, or strike off
a judgment.”); Appellant’s Reply Brief at 3 (citing Rule 311(a)(1)).
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law firm, was an oversight and sufficient justification to support opening
default judgment); Thorn v. Clearfield, 218 A.2d 298, 298-299 (Pa. 1966)
(plaintiffs’ failure to file complaint, due to their attorney’s heart relapse and
aortic valve disease, was sufficient equitable consideration to set aside
judgment of non pros).
In its final issue, Appellant relies on the reasons presented in its second
issue to argue, in the alternative, that even if it were required to show
“extraordinary cause,” it has succeeded in doing so, because it showed that
Attorney Rowland engaged in fraud. Appellant cites Estate of Gasbarini, in
which the plaintiff’s attorney filed a complaint on November 15, 1974, then
failed to respond to preliminary objections, and was suspended from the
practice of law on November 27, 1974. See Estate of Gasbarini, 409 A.2d
at 344. In January of 1975, the trial court dismissed the complaint after the
attorney failed to appear for argument and entered judgment in favor of the
defendant. Id. Meanwhile, however, the attorney had assured the plaintiffs
“that he was providing proper representation.”6 Id. Our Supreme Court held
that the trial court properly granted the plaintiff’s petition to open the
judgment, reasoning, “We can perceive no greater equitable considerations
requiring opening of a judgment than the fact that the attorney allegedly
representing [the plaintiff] had been suspended from the practice of law prior
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6The attorney was subsequently disbarred from the practice of law in May of
1975. Estate of Gasbarini, 409 A.2d at 345.
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to the hearing at which [defense] preliminary objections had been sustained
and [the plaintiff’s] complaint dismissed. Further, [the plaintiff’s] attorney
never notified [the plaintiff] of his suspension.” Id. at 345. Appellant reasons
that here, “Attorney Rowland’s pattern of deception . . . prevented [it] from
taking timely action to retain another attorney.” Appellant’s Brief at 55.
While Appellant relies on Interest of C.K. for arguing why the standard
for opening default judgments should apply, that decision also explains:
A final judgment in a contested proceeding is to be contrasted with
. . . a final judgment entered by default . . . . [A] judgment
entered by default . . . is not entered after both parties have had
a full opportunity to present their positions on the issues and the
interest in preserving the finality of such judgments is
correspondingly lower than where a final judgment has been
entered after a complete adverse proceeding. Thus, a default or
confessed judgment may be opened at any time upon proper
cause shown. Similarly, an interlocutory order of a trial court may
be modified at any time. . . .
See Interest of C.K., 535 A.2d at 641 n.3 (citations omitted). On the other
hand:
a judgment entered in an adverse proceeding ordinarily cannot be
disturbed after the expiration of the term at which it is entered . .
. . [T]he discretionary power of the court over such judgments is
quite limited. Generally, the rule has been relaxed only where
fraud appeared or the circumstances were so grave or compelling
as to constitute “extraordinary cause” justifying intervention by
the court.
Id. at 640 (citations omitted). This extraordinary cause “is generally an
oversight or action on the part of the court or the judicial process which
operates to deny the losing party knowledge of the entry of final judgment so
that the commencement of the running of the appeal time is not known to the
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losing party.” Shelly Enters., Inc. v. Guadagnini, 20 A.3d 491, 494 n.3
(Pa. Super. 2011) (citation omitted). A party’s attorney’s neglect “is not
enough” to show extraordinary cause. Interest of C.K., 535 A.2d at 641.
In arguing its “Petition to Open Summary Judgment” should have been
evaluated against the lower standard imposed on petitions to open default
judgments, Appellant does not acknowledge that judgment was entered after
“a complete adverse proceeding.” See Interest of C.K., 535 A.2d at 641
n.3. Unlike a default judgment, which is entered simply when a complaint is
filed and the defendant fails to answer, in this case, Appellant filed a
complaint, the Bank filed an answer and counterclaims, and Appellant filed an
answer to those counterclaims. Additionally, when the Bank filed its first
motion for summary judgment in February of 2015, Appellant filed a response,
and the trial court denied the motion. When the Bank filed its January 2016
motion to compel and January 2017 motion for summary judgment, both with
rules to show cause upon Appellant, Appellant had — Attorney Rowland’s
health issues notwithstanding — “a full opportunity to present [its] positions
on the issues.” See id. Accordingly Appellant’s claim that its “Petition to
Open Summary Judgment” should have been treated as a petition to open a
default judgment is meritless. The trial court did not err in evaluating
Appellant’s petition by the standard for petitions to open judgment. See Trial
Court Opinion, 11/17/17, at 2.
In light of the foregoing, we do not reach Appellant’s second claim —
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that it established “proper cause” under the standard applicable to petitions
to open default judgments.
In reviewing Appellant’s third claim — that it showed “extraordinary
cause” to open the judgment — we hold no relief is due. We reiterate that
when Attorney Rowland was repeatedly asked why he did not inform his client,
Appellant, of the developments in the litigation, he replied that he did not
know or that he had no excuse. See N.T., 8/2/17, at 72-73, 75-76. This
scenario is distinguishable from Estate of Gasbarini, 409 A.2d at 345 (“We
can perceive no greater equitable considerations requiring opening of a
judgment than the fact that the attorney allegedly representing appellant had
been suspended from the practice of law . . . .”). Furthermore, Appellant has
not alleged any court action or oversight which operated to deny it knowledge
of the entry of judgment. See Interest of C.K., 535 A.2d at 641. Instead,
we agree with the trial court that, pursuant to the principle that attorney
neglect “is not enough,” Attorney Rowland’s conduct in this matter does not
warrant the extraordinary relief of opening judgment. See id. Accordingly,
we affirm the order denying Appellant’s “Petition to Open Summary
Judgment.”
Order affirmed.
Judge Panella joins the memorandum.
P.J.E. Ford Elliott files a dissenting memorandum statement.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 09/12/2018
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