DeLage Landen Financial v. Voices of Faith ( 2015 )

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NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P 65.37
DELAGE LANDEN FINANCIAL : IN THE SUPERIOR COURT OF
SERVICES, INC., : PENNSYLVANIA
:
Appellee :
:
v. :
:
VOICES OF FAITH MINISTRIES, INC., :
:
Appellant : No. 2145 EDA 2014
Appeal from the Order entered June 26, 2014,
Court of Common Pleas, Chester County,
Civil Division at No. 2011-03131-CT
BEFORE: BOWES, DONOHUE and STABILE, JJ.
MEMORANDUM BY DONOHUE, J.: FILED APRIL 28, 2015
Appellant, Voices of Faith Ministries, Inc. (“Faith Ministries”), appeals
from the order entered on June 26, 2014 by the Court of Common Pleas,
Chester County, denying its petition to strike/open default judgment. For
the reasons set forth herein, we affirm.
The facts and procedural history is as follows. On November 7, 2006,
Faith Ministries entered into a Master Lease Agreement with DeLage Landen
Financial Services, Inc. (“DLL”) for audio and visual equipment. The initial
Master Lease Schedule (“Schedule I”) obligated Faith Ministries to make
installment payments of $6,097.73 per month for a period of sixty months.
On November 21, 2006, Faith Ministries entered into Master Lease Schedule
II (“Schedule II”) for additional equipment. Schedule II obligated Faith
Ministries to pay $1,029.77 per month for a period of sixty months.
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On November 14, 2006, Faith Ministries and DLL executed an
addendum to Schedules I and II (collectively the “Schedules”), increasing
the amount of the payments to account for taxes that became due after
Faith Ministries failed to provide documentation to certify that it was a tax
exempt organization. 1 In accordance with the addendums, the payments
due under Schedule I increased from $6,097.73 to $6,524.47, while the
payments due under Schedule II increased from $1,029.77 to $1,101.85 per
month.
Faith Ministries made monthly payments in accordance with the
Schedules for approximately forty months. On March 24, 2011, DLL filed a
complaint in civil action against Faith Ministries, alleging that Faith Ministries
defaulted on its payments under the Schedules on January 10, 2010. DLL
served Faith Ministries with the complaint on April 2, 2011. On May 10,
2011, the trial court entered default judgment against Faith Ministries after
it failed to file a responsive pleading. Faith Ministries thereafter filed a
petition to strike/open default judgment on May 20, 2011, and on the same
day, the trial court issued an order to show cause and indicated that
discovery, including depositions, were to be completed within forty-five
days.
1
We note that for reasons unknown to this Court, the parties executed the
addendum to Schedule II before executing the Master Lease Schedule II.
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On May 31, 2011, DLL sent a request via email to Faith Ministries for
the deposition of a Faith Ministries representative. Faith Ministries refused
to participate. On June 28, 2011, DLL faxed a notice of telephonic
deposition of a representative for Faith Ministries. Faith Ministries thereafter
filed a motion for protective order on July 1, 2011, asserting that a
deposition was unnecessary. On November 4, 2011, DLL filed a motion to
compel Faith Ministries’ deposition.
The case was placed in deferred status after Faith Ministries filed a
suggestion of bankruptcy on December 5, 2011. The bankruptcy was
dismissed on June 7, 2013. On October 21, 2013, DLL filed a Praecipe to
Vacate Bankruptcy Stay and Reinstate Case.
On January 17, 2014, the trial court, after considering Faith Ministries’
motion for protective order and DLL’s motion to compel deposition, granted
DLL’s motion to compel deposition. On April 16, 2014, DLL deposed a
representative of Faith Ministries. On May 30, 2014, DLL filed a second brief
in opposition of Faith Ministries’ petition to open/strike judgment.
On June 26, 2014, the trial court issued an order denying Faith
Ministries’ petition to strike/open default judgment. Faith Ministries filed a
motion for reconsideration on July 7, 20142 and a notice of appeal to this
2
The trial court states in its opinion that Faith Ministries filed its motion for
reconsideration on July 7, 2014, but the Prothonotary’s Office did not
forward the motion for reconsideration to the trial court until August 1,
2014. Since Faith Ministries filed the instant appeal to this Court on July 25,
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Court on July 25, 2014. On appeal, Faith Ministries raises the following
issues for our review:
1. Did [Faith Ministries] plead meritorious defenses
in the pleadings of record, including but not limited
[to Faith Ministries’] Answer and New Matter as
attached to the Petition to Strike/Open Default
Judgment [e]ntered May 10, 2011, and/or any other
supplemental pleadings, which if proven at trial
would entitle [Faith Ministries] to relief?
2. Did the trial court err when it found that [Faith
Ministries] admitted a breach of contract, [and]
therefore found no meritorious defense despite
[Faith Ministries’] assertion that the amount [DLL]
alleges in the Complaint was incorrect and then
supported the assertion through [Faith Ministries’]
representative’s deposition?
Faith Ministries’ Brief at 5. 3 In its brief, Faith Ministries combines these
issues into one discussion. Thus, for ease of disposition, and as both issues
raised by Faith Ministries relate to its claim that it plead meritorious
defenses, we will not separate our analysis into two distinct discussions.
Rule 237.3 of the Pennsylvania Rules of Civil Procedure governs the
procedure by which a party obtains relief from a default judgment, providing
as follows:
2014, the trial court no longer had jurisdiction to consider the motion for
reconsideration. See Trial Court Opinion, 9/19/14, at 1.
3
Preliminarily, we note that, although Faith Ministries also petitioned to
strike the default judgment, its arguments on appeal relate only to its
petition to open the default judgment. Thus, we will not address the trial
court’s denial of Faith Ministries’ petition to strike the default judgment.
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Rule 237.3 Relief From Judgment of Non Pros or by
Default
(a) A petition for relief from a judgment of non pros
or of default entered pursuant to Rule 237.1 shall
have attached thereto a verified copy of the
complaint or answer which the petitioner seeks leave
to file.
(b) If the petition is filed within ten days after the
entry of the judgment on the docket, the court shall
open the judgment if the proposed complaint or
answer states a meritorious cause of action or
defense.
Pa.R.C.P. 237.3.
We conduct our review of a petition filed under Rule 237.3, pursuant
to the following standard of review:
[a] petition to open a default judgment is an appeal
to the equitable powers of the court. The decision to
grant or deny a petition to open a default judgment
is within the sound discretion of the trial court, and
we will not overturn that decision absent a manifest
abuse of discretion or error of law.
However, we will not hesitate to find an abuse of
discretion if, after our o[w]n review of the case, we
find that the equities clearly favored opening the
judgment.
An abuse of discretion is not a mere error of
judgment, but if in reaching a conclusion, the law is
overridden or misapplied, or the judgment exercised
is manifestly unreasonable, or the result of partiality,
prejudice, bias or ill will, as shown by the evidence
or the record, discretion is abused.
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Smith v. Morrell Beer Distributors, Inc., 29 A.3d 23, 25 (Pa. Super.
2011) (quoting Dumoff v. Spencer, 754 A.2d 1280, 1282 (Pa. Super.
2000)).
It is well settled that a default judgment may generally be opened if
the moving party satisfies three requirements: (1) a prompt filing of a
petition to open the default judgment; (2) a meritorious defense; and (3) a
reasonable excuse or explanation for its failure to file a responsive pleading.
Id. In this case, there is no dispute regarding the first and third
requirements. This Court “recognize[s] that Rule 237.3(b) presupposes that
a petition filed within ten days of the default judgment is promptly filed and
sets forth a reasonable explanation or legitimate excuse for the inactivity or
delay resulting in the entry of the judgment.” Boatin v. Miller, 955 A.2d
424, 427 (Pa. Super. 2008) (quoting Attix v. Lehman, 925 A.2d 864, 866
(Pa. Super. 2007)). Faith Ministries filed its petition within ten days of the
entry of default judgment, and thus, satisfies the first and third
requirements. The central issue in this case, therefore, is whether Faith
Ministries, as the moving party, established a meritorious defense.
This Court previously established that “[t]he requirement of a
meritorious defense is only that a defense must be pleaded that if proved at
trial would justify relief. The defense does not have to prove every element
of its defense; however, it must set forth the defense in precise, specific and
clear terms.” Seeger v. First Union Nat. Bank, 836 A.2d 163, 166
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(Pa. Super. 2003) (quoting Penn-Delco School v. Bell Atlantic-PA, 745
A.2d 14, 19 (Pa. Super. 1999)). After our review of the record in the instant
matter, we conclude that Faith Ministries failed to set forth a precise and
specific defense, and instead, admitted to liability.
Under Rule 1029(b) of the Pennsylvania Rules of Civil Procedure, “[a]
general denial or demand for proof, except as provided by subdivisions (c)
4
and (e) of this rule, shall have the effect of an admission.” Pa.R.C.P.
4
Subdivisions (c) and (e) of Rule 1029 provide:
(c) A statement by a party that after reasonable
investigation the party is without knowledge or
information sufficient to form a belief as to the truth
of an averment shall have the effect of a denial.
***
(e) In an action seeking monetary relief for bodily
injury, death or property damage, averments in a
pleading to which a responsive pleading is required
may be denied generally except the following
averments of fact which must be denied specifically:
(1) averments relating to the identity of the
person by whom a material act was
committed, the agency or employment of such
person and the ownership, possession or
control of the property or instrumentality
involved;
(2) if a pleading seeks additional relief,
averments in support of such other relief; and
(3) averments in preliminary objections.
Pa.R.C.P. 1029(c), (e). We note that neither of these subsections applies in
this case.
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1029(b). “[T]he determination of whether or not a denial is specific must be
made in light of the particular averments involved.” In re Estate of Roart,
568 A.2d 182, 186 (Pa. Super. 1989).
In this case, DLL asserted in its complaint that Faith Ministries
“breached the terms and conditions of [the Schedules], for failure to make
payment under the Schedules for January 1, 2010, and all monthly
payments thereafter. The date of default is January 10, 2010.” DLL’s
Complaint in Civil Action, 3/24/11, at 3 ¶ 8. Faith Ministries provided the
following response:
8. Denied. It is specifically denied that [Faith
Ministries] failed to make payment under the
[Schedules] for January 1, 2010 and all monthly
payments thereafter. Strict proof thereof to the
contrary will be demanded at the time of trial of this
matter. It is further denied that [Faith Ministries]
defaulted on its obligations under the [Schedules] on
January 10, 2010 and strict proof thereof to the
contrary will be demanded at the time of trial of this
matter.
Faith Ministries’ Petition to Strike/Open Default Judgment, 5/20/11, Exhibit B
¶ 8 (Faith Ministries’ Answer with New Matter).
DLL also alleged that Faith Ministries owes $183,004.07, plus interest.
DLL’s Complaint in Civil Action, 3/24/11, at 3 ¶ 11. In support of its
argument, DLL provided a four-line breakdown of the amounts owed under
each schedule, particularly accounting for the remaining payments, past due
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payments, late fees, and finance charges. Id. In response, Faith Ministries
stated:
11. Denied. … it is specifically denied that the
remaining discounted payments total $120,921.16
under [Schedule] I and $21,468.98 under [Schedule]
II. It is specifically denied that past due payments
total $32,622.85 under [Schedule] I and $5,509.25
under [Schedule] II. It is specifically denied that
late payments total $1,631.15 under [Schedule] I
and $275.50 under [Schedule] II. It is specifically
denied that that the [Faith Ministries] is obligated to
pay [DLL] a total amount of $155,684.87 under
[Schedule] I and $27,319.20 under [Schedule] II. It
is specifically denied that the [Faith Ministries] is
obligated to pay [DLL] a total amount of
$183,004.07. Strict proof thereof to the contrary
will be demanded at the time of trial of this matter.
Faith Ministries’ Petition to Strike/Open Default Judgment, 5/20/11, Exhibit B
¶ 11 (Faith Ministries’ Answer with New Matter).
As DLL’s complaint contains averments of fact, Faith Ministries was
required to file a responsive pleading with specific denials. See Rohrer v.
Pope, 918 A.2d 122, 129 (Pa. Super. 2007) (stating, “averments of fact
require a denial[.]”); see also Pa.R.C.P. 1029(a) (“A responsive pleading
shall admit or deny the averments of fact in the preceding pleading or part
thereof to which it is responsive.”). Faith Ministries asserts that it plead
meritorious defenses “to both liability, generally, and specifically, as to the
amount allegedly due. Our review of the record reveals, however, that
although Faith Ministries’ answers to DLL’s complaint include the language
“specifically denied,” Faith Ministries failed to assert any facts to deny DLL’s
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allegations or establish a defense. For example, Faith Ministries did not set
forth specifically the date on which it made its last installment payment, it
did not set forth the amount of money it believed was due and owing under
the contract nor did it set forth the amount of interest it claimed was due.
Instead, Faith Ministries simply denied that it missed payments, denied the
amount due to DLL, and demanded strict proof at trial, without any facts or
details to support its denials.
In Castings Condominium Ass’n, Inc. v. Klein, 663 A.2d 220 (Pa.
Super. 1995), this Court determined that the appellant’s failure to refute the
allegations against her with particularity and summarily denying wrongdoing
was insufficient to establish a meritorious defense when the complaint
“alleged numerous factual details in support of its allegations.” Id. at 224.
Moreover, our Supreme Court has held that where the complaining party
provides factual details and allegations, it is imperative for the defending
party to deny specifically every fact put in issue that it does not wish to be
taken as an admission against it. See Com., by Truscott v. Binenstock,
57 A.2d 884 (Pa. 1948); see also 3 Goodrich-Amram 2d § 1029(b):1
(“Where a paragraph in a plaintiff’s pleading avers five different facts, a
defendant’s answer, to be sufficient, must deny each of the five facts
specifically.”). In this case, Faith Ministries failed to specifically deny the
facts alleged by DLL in its complaint. As a result, contrary to establishing a
meritorious defense, Faith Ministries generally denied the allegations against
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it, and therefore, under Rule 1029(b), admitted its liability. See Pa.R.A.P.
1029(b).
Furthermore, Faith Ministries’ new matter consists of twenty-three
paragraphs that contain conclusions of law with no factual support. Id. at
¶¶ 14-36. This Court has held that “[i]t is axiomatic, […] that new matter
must state facts, not conclusions.” Bowman v. Mattei, 455 A.2d 714, 716
(Pa. Super. 1983) (quoting Bureau for Child Care v. The United Fund of
the Philadelphia Area, 207 A.2d 847, 850 (Pa. 1965)). Accordingly, we
conclude that contrary to its assertion, Faith Ministries has not presented a
meritorious defense in either its answer or in its new matter.
Faith Ministries further contends that the trial court erred by denying
its petition to open default judgment before Faith Ministries completed
discovery, and that the deposition of its representative, Mia Hawkins
(“Hawkins”), supports it defense that the amount due claimed by DLL is
incorrect as her testimony “set[] forth a genuine issue of factual dispute in
this matter[.]”5 Faith Ministries’ Brief at 16-17. Given our determination,
however, that Faith Ministries, by its general denials, admitted the material
allegations of the complaint, we conclude that there are no issues remaining
regarding liability and the amount due that additional discovery or Hawkins’
deposition would address. By its admissions, Faith Ministries failed to
5
We note that while the existence of a genuine issue of material fact is
sufficient to defeat a motion for summary judgment, it does not present a
meritorious defense to a default judgment.
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present a meritorious defense to satisfy the requirements for opening a
default judgment. Faith Ministries admitted to liability and to the amount
due as alleged by DLL, and the trial court therefore entered default
judgment in the amount of $188,004.07 in accordance with DLL’s allegations
in its complaint. We discern of no error by the trial court in denying Faith
Ministries’ petition to open default judgment before Faith Ministries
conducted discovery and in light of Hawkins’ testimony.6
As Faith Ministries has not presented a meritorious defense, we
conclude that Faith Ministries failed to satisfy the requirements for opening a
6
Furthermore, even if we set aside Faith Ministries’ admissions, our
review of the record reveals that Hawkins’ testimony fails to provide a
meritorious defense that would require the trial court to open the default
judgment. Instead, Hawkins’ testimony, much like Faith Ministries’ Answer
and New Matter, provided only conclusory statements denying DLL’s
allegations. Hawkins did not bring any records of payments or any
information regarding the number of payments made by Faith Ministries.
N.T., 4/16/14, at 38, 41. Moreover, Hawkins directly admitted that Faith
Ministries did not make all of the payments under the Schedules. Id. at 41.
Hawkins also alleged that DLL’s calculations were inaccurate, but did
not provide any records regarding the outstanding balance, and stated on
two separate occasions that she was unable to provide calculations to
support why she believed the amounts DLL alleged to be owed were
incorrect. Id. at 41-42, 50-55. At the end of the deposition, Hawkins
contradicted her earlier statements and provided a calculation of the
outstanding balance, which consisted of multiplying the number of remaining
payments due to DLL, as alleged by DLL, by the amount of the monthly
payment. Id. at 62, 71-72. This calculation does not establish a
meritorious defense, however, as DLL’s complaint provided a four-line
breakdown of the balance due on each schedule. Hawkins never offered
specific facts, documentation, or other information to contest the amount
provided in the breakdown by DLL, and made no mention of the charges
aside from the remaining payments. Thus, we would conclude that Hawkins’
testimony was insufficient to establish a meritorious defense.
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default judgment. Accordingly, we conclude that the trial court did not err
or abuse its discretion in denying its petition to open the default judgment.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/28/2015
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