Beech Mtn. Lakes Assoc. v. Maurer, S. ( 2024 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37
BEECH MOUNTAIN LAKES : IN THE SUPERIOR COURT OF
ASSOCIATION : PENNSYLVANIA
:
:
v. :
:
:
SETH MAURER AND CHRISTINA :
FORTIN-MAURER, BLOOMING : No. 1468 MDA 2023
DREAMS DEVELOPMENT, LLC, DEEP :
WOODS LAKE, LLC, JAMES POPSON :
ANDDEBORAH POPSON AND :
MICHAEL W. GIEDOSH :
:
:
APPEAL OF: BLOOMING MOUNTAIN :
DREAMS DEVELOPMENT, LLC :
Appeal from the Order Dated September 13, 2023
In the Court of Common Pleas of Luzerne County Civil Division at No(s):
2022-02647
BEFORE: PANELLA, P.J.E., KING, J., and STEVENS, P.J.E.*
MEMORANDUM BY STEVENS, P.J.E.: FILED: NOVEMBER 26, 2024
Blooming Dreams Development, LLC (“Blooming Dreams”) appeals from
the order entered in the Court of Common Pleas of Luzerne County, which
denied its motion to strike and/or open the default judgment obtained by
Beech Mountain Lakes Association, Inc. (“Beech Mountain”). We affirm.
The trial court aptly set forth the factual and procedural history
underlying this litigation in its opinion, which we adopt.
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* Former Justice specially assigned to the Superior Court.
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On March 18, 2022, [Beech Mountain] initiated the
underlying action with the filing of a complaint setting forth claims
for declaratory and injunctive relief. [Beech Mountain] is a
Pennsylvania non-profit corporation whose members consist of
various owners of interests in real estate comprising a pair of
residential developments (referred to hereinafter collectively as
the “Development”) surrounding a lake (referred to hereinafter as
the “Lake”) in Butler Township, Luzerne County, Pennsylvania.
[Beech Mountain]’s claims were filed against, inter alia, Deep
Woods Lake, LLC (DWL)—the then-owner of certain tracts in close
proximity to the Development—seeking: (1) our declaration in
adjudication of the issue as to whether rights to access the Lake
are or continue to be held by the various defendants, including
DWL; and (2) an order restraining DWL from marketing the lots
comprising its tracts as inclusive of an attendant right to access
the Lake.
On April 14th, 2022, DWL executed a deed transferring to
[Blooming Dreams] ownership of the subject tracts and reserving
certain interests related to an ongoing well-water operation. On
June 7, 2022, [Beech Mountain] filed, with an accompanying
notice to defend, its Second Amended Complaint and therein
named [Blooming Dreams] as a new co-defendant to the
underlying action. …
On September 16, 2022, [Beech Mountain] filed a ten-day
notice of default, which along with cover letter was served upon
[Blooming Dreams] at its certified registered office provider on the
same date. On October 14, 2022, [Beech Mountain] filed a
praecipe for entry of default judgment against [Blooming
Dreams], which along with cover letter was served upon
[Blooming Dreams] at its certified registered office provider on the
same date. On October 14, 2022, the prothonotary indexed to the
record entry of judgment against [Blooming Dreams] and in favor
of [Beech Mountain] on the issue of liability.
On January 5, 2023, [Beech Mountain] filed a motion to
enter final default judgment against [Blooming Dreams] in
accordance with the procedure set forth in Pa.R.C.P. 1037(d).
[Blooming Dreams] filed a response to the motion on January 31,
2023.
Trial Court Opinion (TCO), 11/27/23, at 2-4 (footnotes omitted).
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This January 31, 2023, response to the motion to enter final default
judgment referenced by the trial court was not a motion to open or strike the
default judgment. Instead, it was captioned as a brief in opposition to the
motion for final default judgment, arguing that Beech Mountain “never
perfected service” of the second amended complaint. Brief in opposition,
1/31/23, at 1. The brief argued that the trial court “lack[ed] jurisdiction to
enter the final default judgment[.]” Id. at 3. The court held a hearing, stating
at the outset that “[t]here has not been a motion to open or vacate a default
judgment. But you had filed a response … why you believe that default
judgment may not have been entered properly.” N.T., 5/30/23, at 5. Blooming
Dreams agreed with that summary and presented testimony from one
witness, Shlomo Kanarek, who identified himself as “the main owner” of
Blooming Dreams. Id. at 11. He explained that he purchased Blooming
Dreams because the “fellow who formed the corporation … couldn’t close on
the property so I took over. … I took over the [Deep Woods] contract and
closed on the property.” Id. He did not receive any notice about the suit, and
learned of its existence through a “fellow named John who … I used to call
him for advice. He told me, ‘you know there’s a suit on your property.’” Id. at
16. On cross-examination, Mr. Karanek agreed that he was “well aware of this
complaint [i.e., the first complaint] against the lake.” Id. at 24. However, he
stated that the “seller told me, don’t worry about it. It’s taken care of. … I
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wasn’t aware of any judgment served to me. I thought it was being dealt with
by the firm.”
The trial court issued an order the next day with accompanying findings
of fact, concluding that Beech Mountain properly served Blooming Dreams.1
The order also scheduled a hearing for July 25, 2023, to address the
outstanding motion for entry of final default judgment. On June 30, 2023,
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1 The trial court opinion relates the facts relevant to service as follows:
On June 3, 2021, a certificate of organization was filed with
the Pennsylvania Department of State organizing [Blooming
Dreams] as a Pennsylvania limited liability company. In its
certificate of organization, [Blooming Dreams] certified its
commercial registered office provider as “c/o Registered Agents
Inc.” of Montgomery County, Pennsylvania. Registered Agents
Inc. at that time utilized a business address within Montgomery
County. On January 3, 2022, Registered Agents Inc. filed with the
Pennsylvania Department of State a letter of December 29, 2021,
certifying that “[a]ll entities that have Registered Agents Inc, as
their [commercial registered office provider] have been notified of
the change to the address and county” of 502 W 7th St Ste 100
Erie PA 16502 in Erie County.
As noted, [Beech Mountain]’s Second Amended Complaint
was filed to the record on June 7, 2022, along with an
accompanying notice to defend. The return of service filed on July
27, 2022, indicates that on June 7, 2022, the Sheriff of Luzerne
County deputized the Sheriff of Erie County to serve a copy of the
Second Amended Complaint with notice to defend “on Blooming
Dreams Development LLC at 502 W 7th St, Ste 100, Erie, PA
16502. On July 5, 2022, the Erie County Sheriff served a copy of
the said complaint and notice on "Sara Simmons Paralegal, who
accepted as ‘Adult Person in Charge’ for BLOOMING DREAMS
DEVELOPMENT LLC at 502 W. 7th ST., SUITE 100, ERIE, PA
16502.”
TCO at 2-3 (footnotes omitted).
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Blooming Dreams filed a petition to open/strike the default judgment, which
the court denied on September 13, 2023. The company timely filed a notice
of appeal and complied with the order to file a concise statement.
The trial court authored a comprehensive eighteen-page opinion in
response. As a prefatory matter, the trial court observed that Blooming
Dreams framed its issues as involving requests to strike and/or open the
default judgment. The court correctly separated those theories, as they “are
distinct vehicles capable of achieving similar outcomes” but differ markedly
with respect to the standard of review applied. TCO at 6. A motion to strike is
“aimed at defects that affect the validity of the judgment and that entitle the
petitioner, as a matter of law, to relief.” Oswald v. WB Pub. Square
Assocs., LLC, 80 A.3d 790, 794 (Pa. Super. 2013) (citation omitted). The
purported defect alleged by Blooming Dreams concerned the manner of
service. Since service is the mechanism by which a court obtains jurisdiction
over the defendant, invalid service is a fatal defect. See Cintas Corp. v. Lee’s
Cleaning Services, Inc., 700 A.2d 915, 917-18 (Pa. 1997). The court cited
its factual findings regarding Blooming Dreams’ designation of Registered
Agents Inc. as its agent for accepting service and the delivery of the complaint
to that entity. Thus, “[n]o fatal defect existed in the record” to permit striking
the judgment. TCO at 9.
The trial court then addressed the request to open the default judgment,
which implicates “the equitable powers of the court[.]” Id. Pursuant to our
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Supreme Court’s decision in Schultz v. Erie Insurance Exchange, 477 A.2d
471 (Pa. 1984), a court may exercise its discretion to open a judgment only
when “(1) the petition has been promptly filed; (2) a meritorious defense can
be shown; and (3) the failure to appear can be excused.” Schultz, 477 A.2d
at 472 (citation omitted; emphasis in original). The court determined that
Blooming Dreams “failed to establish any of the three prongs of the
conjunctive test set forth in Schultz[.]” Id. at 14.
With respect to the promptness of the petition to open, the trial court
explained that there is no bright-line test and promptness is measured by
considering “(1) the length of delay between discovery of the entry of a default
judgment; and (2) the reason for the delay.” Id. at 11 (quoting Dumoff v.
Spencer, 754 A.2d 1280, 1282 (Pa. Super. 2000)). The trial court computed
a 259-day delay as measured from entry of default judgment on October 14,
2022, to the petition to open that judgment, filed on June 30, 2023. The trial
court therefore did not consider the January 31, 2023, motion to preclude
entry of final judgment as a valid motion to open the judgment. Additionally,
consistent with that determination, the trial court reasoned that the filing was
not promptly made because Blooming Dreams had obviously learned of the
default judgment no later than January 31, 2023. “Having determined that
[Blooming Dreams] waited, at minimum, 5 months after discovery of the entry
of default judgment, we must also look to what justification, if any, for the
delay has been put forth for our consideration.” Id. The court could not
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“ascertain any reason” to explain the delay and pointed out that Blooming
Dreams waited “until another month had come and gone” following the May
31, 2023, order rejecting its jurisdictional argument to file a formal petition to
open judgment. Id.The court next determined that even if the petition were promptly filed
Blooming Dreams failed to allege a meritorious defense. The court turned to
Rule of Civil Procedure 237.3, which governs petitions seeking relief from
default judgments and requires the petitioner to include “a copy of the
complaint, preliminary objections, and/or answer which the petitioner seeks
leave to file.” Pa.R.C.P. 237.3(a). Additionally, where, as here, the petition is
filed more than ten days after entry of a default judgment, the court “shall
open the judgment if one or more of the proposed preliminary objections has
merit or the proposed answer states a meritorious defense.” Pa.R.C.P.
237.3(b)(2). Because Blooming Dreams did not file a proposed responsive
pleading, the court concluded that its petition was defective. To the extent
that the equitable nature of the remedy permitted the court to overlook that
procedural defect, it examined the contents of the petition to open judgment
and quoted four relevant paragraphs from that document which could be read
to raise a defense. The trial court characterized that material as amounting to
“at best a bald denial of [Beech Mountain]’s claims,” since it did little more
than aver “its position as being ‘directly contrary’” to Beech Mountain. TCO at
13.
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Finally, the court did not find a reasonable excuse or explanation
justifying the failure to file a response to the complaint. Blooming Dreams
alleged only “that it never received [the] complaint and [Beech Mountain] was
fully aware from both the recorded deed and the tax documents that its
principal place of business was in New Jersey and not Erie County.” Id. at 14
(quoting petition). The court disagreed, referencing its earlier conclusion that
Beech Mountain properly served Blooming Dreams. “As noted previously, we
have concluded this argument is unavailing and, similarly, we conclude that it
fails to serve as a reasonable excuse or explanation” for its failure to respond.
Id.
Blooming Dreams presents these two issues for our consideration:
1. Did the [t]rial [c]ourt err as a matter of law in denying Blooming
Dreams’ Motion to Strike and/or Open Default Judgment when
[Blooming Dreams] demonstrated with unrebutted evidence that
it had not received actual notice of being named in litigation, once
aware of the litigation entered its appearance to defend the case
on the merits, and where no party … would suffer prejudice by the
[t]rial [c]ourt striking and/or opening the default judgment?
2. Did the [t]rial [c]ourt err as a matter of law in denying Blooming
Dreams’ Motion to Strike and/or Open judgment because of the
risk of inconsistent decisions or verdicts which would determine
the vested property rights to the same tract of land which had
been owned by both Deep Woods, LLC, and Blooming Dreams,
LLC?
Blooming Dreams’ Brief at 5.
The questions presented concern motions to strike and/or open the
default judgment. See id. These are “distinct remedies and are generally not
interchangeable.” Stauffer v. Hevener, 881 A.2d 868, 870 (Pa. Super. 2005)
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(citation omitted). A petition to strike a default judgment is a question of law;
therefore, our standard of review is de novo and our scope of review is
plenary. Oswald, 80 A.3d at 793. Opening a default judgment, in contrast, is
an equitable power. Therefore, we must affirm an order denying a petition to
open the default judgment unless the court abused its discretion.
It is well settled that a petition to open a default judgment
is an appeal to the equitable powers of the court, and absent an
error of law or a clear, manifest abuse of discretion, it will not be
disturbed on appeal. An abuse of discretion occurs when a trial
court, in reaching its conclusions, overrides or misapplies the law,
or exercises judgment which is manifestly unreasonable, or the
result of partiality, prejudice, bias or ill will.
US Bank N.A. v. Mallory, 982 A.2d 986, 994 (Pa. Super. 2009) (citation
omitted). As previously stated, the trial court’s equitable power to open the
judgment requires the petitioning party to establish all three Schultz factors.
The party challenging the court’s exercise of discretion “bears a heavy
burden.” In re Milton S. Hershey Medical Center, 634 A.2d 159, 161 (Pa.
1993). “[I]t is not sufficient to persuade the appellate court that it might have
reached a different conclusion if, in the first place, charged with the duty
imposed on the court below; it is necessary to go further and show an abuse
of the discretionary power.” Id. (citation omitted).
We begin with the petition to strike, which presents a pure question of
law. “[S]ervice of original process pursuant to the Rules of Civil Procedure is
required to confer the jurisdiction of the court over a defendant.” Ferraro v.
Patterson-Erie Corp., 313 A.3d 987, 1008 (Pa. 2024). Accordingly, the
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default judgment would be facially defective if Beech Mountain failed to
properly serve the second amended complaint.
Notably absent from Blooming Dreams’ brief is any discussion of Rule of
Civil Procedure 424, which the trial court cited as its basis for finding that
service was properly made. That rule states, in pertinent part:
Service of original process upon a corporation or similar entity
shall be made by handing a copy to any of the following persons
provided the person served is not a plaintiff in the action:
* * *
(3) an agent authorized by the corporation or similar entity in
writing to receive service of process for it.
Pa.R.C.P. 424(3); see also Pa.R.C.P. 2176 (providing that “corporation or
similar entity” includes a “limited liability company”).
Blooming Dreams does not address the trial court’s conclusion that
service was perfected pursuant to Rule 424(3). Indeed, Blooming Dreams
effectively concedes that the trial court’s ruling was legally sound, as it
describes Beech Mountain as having “technically complied with the Rules of
Civil Procedure[.]” Blooming Dreams’ Brief at 14. Blooming Dreams simply
complains that it “had no actual notice” of the complaint due to its own failure
to revise the registered agent established by the previous owner. See id. at
20 (“Certainly, Mr. Kanarek, once he obtained a controlling interest in
Blooming Dreams, could and should have taken steps to revise the registered
agent for the limited liability company”). We agree with the trial court that
there was no fatal defect and thus no basis to strike the default judgment.
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Having rejected that component of Blooming Dreams’ claim, we now
proceed to its arguments regarding its motion to open the judgment. We
conclude that the trial court did not abuse its discretion in finding that
Blooming Dreams failed to establish a reasonable excuse for the delay.
Additionally, we agree its petition to open failed to assert a meritorious
defense.2
We begin with the reasonable excuse prong as Blooming Dreams’
argument that Beech Mountain only “technically” complied with the Rules of
Civil Procedure segues into its justification for not responding to the amended
complaint. “Whether an excuse is legitimate is not easily answered and
depends upon the specific circumstances of the case.” Castings
Condominium Ass’n, Inc. v. Klein, 663 A.2d 220, 223-24 (Pa. Super. 1995)
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2 As to the remaining requirement, which requires the party to promptly seek
relief, the parties disagree on what date controls our analysis. Like the trial
court, Beech Mountain calculates a delay of 259 days, i.e., the time between
entry of the default judgment on October 14, 2022, and the June 30, 2023,
petition to open the default judgment. Blooming Dreams, in contrast, argues
that it first sought to open the judgment on January 31, 2023. We accept that
the relevant date under these circumstances is January 31, 2023, which
challenged the motion seeking final entry of the judgment. See N.T., 5/30/23,
at 9 (“We are making an argument disputing the fact that merely because a
process server accepted service in Erie, there are other facts that would merit
not enforcing default judgment and then eventually reopening the default
judgment.”).
We note that Pennsylvania Rule of Civil Procedure 1028 dictates that an
allegation of improper service or lack of jurisdiction shall be made via
preliminary objection. Pa.R.C.P. 1027(a)(1). Since Beech Mountain did not
raise this irregularity, we credit the January 31, 2023, date and conclude that
Blooming Dreams promptly filed the petition.
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(citation omitted). Blooming Dreams cites the specific circumstances of how
the complaint was served, arguing that its failure to reply is attributable to
Beech Mountain choosing to serve the company’s agent. Its brief repeatedly
stresses its frustration that Beech Mountain did not also mail the complaint to
Mr. Kanarek’s New Jersey address. See Blooming Dreams’ Brief at 18 (“Beech
Mountain never sent a copy of the Second Amended Complaint to … New
Jersey”); 19 (“Blooming Dreams was served via a registered agent … despite
the company’s principal place of business” being in New Jersey”); 20 (“[Beech
Mountain] elected to only serve Blooming Dreams upon its purported
registered agent in Erie”); 22 (“[Mr.] Kanarek did not personally designate
[Registered Agents, LLC] as Blooming Dreams’ registered agent and he
believed that all official legal paperwork would be forwarded to his principal
place of business in New Jersey”). Blooming Dreams characterizes its failure
to answer as an acceptable oversight, which permits opening the judgment.
Blooming Dreams’ Brief at 26 (“[W]here the failure to answer was due to an
oversight, an unintentional omission to act, or a mistake of the rights and
duties of the appellant, the default judgment may be opened.”) (quoting
Myers v. Wells Fargo Bank, 986 A.2d 171, 177 (Pa. Super. 2009)).
We do not find the court abused its discretion in rejecting this excuse.
Each of the foregoing complaints about Beech Mountain’s failure to mail
additional copies to the New Jersey address implies that the fact Blooming
Dreams failed to update its preferred method of service and/or designate a
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new agent to accept service is irrelevant to the analysis. Blooming Dreams
emphasizes that “the uncontradicted evidence in this case, as testified to by
Mr. Kanarek, is that Blooming Dreams did not deliberately evade service of
process, willingly ignore its duty to defend, and/or intentionally sit on its
rights.” Blooming Dreams’ Brief at 29.
Those points assume Blooming Dreams bears no blame for its ignorance.
The pertinent question is whether Blooming Dreams offered a valid excuse for
not knowing about a suit that was properly served on the company’s
registered agent. Blooming Dreams fails to show an abuse of discretion.
Blooming Dreams essentially asks this Court to pretend that Mr. Kanarek was
sued in his personal capacity. We decline to do so. He chose to buy Blooming
Dreams and enjoy the advantages offered by a limited liability company. That
Mr. Kanarek took over is irrelevant, and a multimillion-dollar business3 should
expect that it may become the target of lawsuits.4 The question is whether
Blooming Dreams, as a business entity, offered a valid excuse for its
ignorance. We find that it did not.
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3 Mr. Kanarek testified that the sale price for Blooming Dreams was
approximately $4,200,000. See N.T., 5/30/23, at 17.
4 Under the particular facts of this case, Blooming Dreams had every reason
to suspect that Beech Mountain would file suit against it after Deep Woods
sold the land. Mr. Kanarek testified that he knew of the complaint against
Deep Woods when he bought Blooming Dreams.
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Blooming Dreams’ failure to learn of this suit is somewhat analogous to
the circumstances of Flynn v. America West Airlines, 742 A.2d 695, 699
(Pa. Super. 1999). There, America West was served with a lawsuit by a
traveler whose luggage was lost. America West failed to appear at the hearing
and the plaintiff received a default judgment. Less than a month later, an
attorney for America West petitioned to open the judgment, which the trial
court rejected. We affirmed.
Regarding the reasonable excuse component of the inquiry, the America
West complaint had been “served on an America West employee who was
working at the ticket counter.”5 Elizabeth Jenkins, who managed that location,
testified that America West’s documents were “constantly being misplaced and
that they were often times found in a pile” containing mail from Continental
airline, which shared a counter with America West. Id. at 699. She stated that
Continental’s employees likewise often had mail belonging to America West.
Ms. Jenkins testified that she located the lawsuit in a pile of mail and
immediately sent it to corporate headquarters. By that point, default judgment
had been entered. The airline offered this breakdown as a reasonable excuse
for its failure to answer the suit.
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5 The opinion does not discuss the manner of service, but presumably this was
in line with Pa.R.C.P. 424(2), which authorizes service upon a corporation by
handing a copy to “the manager, clerk or other person for the time being in
charge of any regular place of business or activity of the corporation or similar
entity[.]”
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The Flynn Court disagreed that this was merely “an oversight, an
unintentional omission [to act], or a mistake of the rights and duties” of the
defendant. Id. at 699 (quotation marks and citation omitted). “America West
did not change its system of receiving documents, but allowed the loss of mail
to continue. As such, we conclude that it was not unjust for the trial court to
hold America West responsible for its failure to change its defective mail
receipt system.” Id.This case is not directly on point as there is no indication that Blooming
Dreams ignored a known systemic problem. Still, the case establishes that a
business must ensure that it has a working system for accepting lawsuits.
Beech Mountain properly served Blooming Dreams’ agent, and it was Blooming
Dreams’ responsibility to ensure that the system it inherited for accepting
lawsuits was functioning properly.6 The company has offered no explanation
for why it apparently did nothing to monitor whether it had been sued.
We also agree with the trial court that Blooming Dreams failed to
establish a meritorious defense. The court cited Rivers End Animal
Sanctuary & Learning Ctr., Inc. v. Eckhart, 253 A.3d 1220 (Pa. Super.
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6 Recently, in Ferraro v. Patterson-Erie Corp., 313 A.3d 987, 1010 (Pa.
2024), our Supreme Court remarked, “We have never held that any notice to
a defendant of the pendency of a lawsuit is a substitute for service of process
and we refuse to do so here.” Thus, had Beech Mountain chose to serve
Blooming Mountain at the New Jersey address, the company would have
opened itself up to a claim that it failed to comply with the Rules of Civil
Procedure.
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2021), which reversed a trial court’s order opening a default judgment due to
the petitioner’s failure to offer a meritorious defense. The Rivers End panel
examined the defendant’s petition to open, which contained “boilerplate
language, i.e., ‘Your Petitioner believes and therefore asserts that he has
meritorious defenses and counterclaims which, in the interest of substantial
justice and fairness, he should be granted leave to present under the
circumstances.’” Id. at 1224. The Court held that this “bald assertion of belief”
did not indicate what defenses defendant would have advanced. Id. We agree
with the trial court’s assessment that Blooming Dreams’ petition to open is
similarly flawed.7 See TCO at 12-13.
Blooming Dreams offers two arguments in response. First, the company
reasons that the relief sought by Beech Mountain is effectively in the nature
of quiet title as it seeks to establish which rights belong to the landowners. In
this regard, Blooming Dreams submits that there is no real “defense” to raise
as “the legal battlefield is fairly narrow[.]” Blooming Dreams’ Brief at 23.
Second, Blooming Dreams notes that Deep Woods, which transferred property
to Blooming Dreams after the first amended complaint was filed, remains in
the case. “Consequently, there was sufficient evidence in the record for the
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7 As the trial court also pointed out, in Rivers End the Court separately held
that the trial court ignored the command of Rule 237.3(a), which requires that
the preliminary objections or answer be attached to the petition. Blooming
Dreams’ petition suffers from the same flaw.
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Court to evaluate the merits of Blooming Dreams’ defense by looking to Deep
Woods’ Answer and New Matter.” Blooming Dreams’ Brief at 24.
We are not persuaded. The second point undermines the first: that Deep
Woods presented an answer and new matter indicates that Blooming Dreams
could have done the same. More importantly, Blooming Dreams cites no
authority for the proposition that a court is required to examine the pleadings
filed by other parties to determine if the same legal theories apply equally to
an entirely separate party. It is the advocate’s duty to present arguments to
the judge. We note that Deep Woods cited, among other potential defenses:
the statute of limitations, laches, unclean hands, “the failure of condition(s)
precedent to maintain this action,” and estoppel. Deep Woods’ Answer and
New Matter, 7/13/22, at 14. Neither this Court nor the trial court is obligated
to sift through the record and determine which company owns which tracts of
land and which of these legal theories would support Blooming Dreams’
position. We thus agree that Blooming Dreams did little more than offer a bald
denial of Beech Mountain’s legal claims, which does not suffice to establish a
potentially meritorious defense.
Finally, Blooming Dreams’ second claim on appeal asks this Court to
examine the equities with respect to the risk of inconsistent verdicts. If Deep
Woods prevails the result will be that “Deep Woods possessed water access
rights and transferred such rights to Blooming Dreams, which subsequently
divested itself through a procedural default[.]” Blooming Dreams’ Brief at 28.
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Similarly, if Deep Woods loses then Blooming Dreams will have lost, too.
Blooming Dreams submits that the fair result is to let it back in the case so
that the legal claims are addressed together.
The equitable power to open a default judgment is conditioned upon the
petitioning party establishing all three prongs of the Schultz test. “[T]he trial
court cannot open a default judgment based on the ‘equities’ of the case when
the defendant has failed to establish all three of the required criteria.”
Castings Condominium Ass’n, 663 A.2d at 225. Because Blooming Dreams
failed to establish those criteria, we decline to address the potential
ramifications of the default judgment.
Order affirmed.
Judge King joins the memorandum decision.
President Judge Emeritus Panella notes his dissent.
Judgment Entered.
Benjamin D. Kohler, Esq.
Prothonotary
Date: 11/26/2024
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