Est. of J.M.B., Appeal of: A.R.

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
ESTATE OF JOANNE M. BRADLEY : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
A.B.E. GROUP A PENNSYLVANIA :
GENERAL PARTNERSHIP AND ASOK :
RAGHUNATHAN, INDIVIDUALLY AND : No. 2461 EDA 2021
IN HIS CAPACITY AS GENERAL :
PARTNER :
:
:
APPEAL OF: ASOK RAGHUNATHAN :
Appeal from the Order Entered November 9, 2021
In the Court of Common Pleas of Delaware County Civil Division at
No(s): CV-2020-006823
BEFORE: BENDER, P.J.E., BOWES, J., and DUBOW, J.
MEMORANDUM BY BENDER, P.J.E.: FILED SEPTEMBER 16, 2022
Asok Raghunathan (“Appellant”) appeals from the order entered in the
Court of Common Pleas of Delaware County on November 9, 2021, denying
his petition to open a default judgment against him. After careful review, we
reverse and remand for further proceedings consistent with this
memorandum.
The Estate of Joanne Bradley (“Appellee”) initiated this civil action on
October 13, 2020, with the filing of a complaint against Appellant and A.B.E.
Group, a Pennsylvania General Partnership (“the Partnership”), after disputes
arose between Appellant and Appellee concerning the assets of the
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Partnership.1 The complaint included causes of action for judicial dissolution,
access to partnership documents, breach of contract, breach of fiduciary duty,
and unjust enrichment. Complaint, 10/12/21, at ¶¶ 24-52. Notably, Appellee
sought, inter alia, an order directing Appellant to pay “the counsel fees and
costs of the instant litigation….” Id. at ¶¶ 29(d), 37(e), 40(f), 46(f), 52(g).
A default judgment was entered in favor of Appellee on August 4, 2021. Trial
Court Opinion (“TCO”), 12/13/21, at 1.2
On August 6, 2021, Appellant filed preliminary objections to Appellee’s
complaint seeking a demurrer as to the request for attorneys’ fees only. See
id.; Petition to Open Judgment, 8/10/21, at Exhibit D (“Preliminary
Objections” at ¶ 11) (“There is no statute or contract which allows an award
of counsel fees in the instant case.”). Thereafter, on August 10, 2021,
Appellant filed a petition to open the default judgment pursuant to Pa.R.Civ.P.
237.3(b)(2), and he attached to his petition a copy of the preliminary
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1 Appellant, Joanne Bradley (“Bradley”), and Edward Knorr (“Knorr”) formed
the Partnership in 1989 for the purpose of purchasing commercial real estate.
See Complaint, 10/12/20, at ¶ 8. Knorr died in July of 2011, leaving Appellant
and Bradley as 50-50 partners in the Partnership. Id. at ¶ 11. In November
of 2015, Bradley died, which left Appellant as the sole surviving partner. Id.
at ¶ 13. Appellant sought to dissolve the Partnership and offered Appellee
$48,999.00 for Bradley’s 50% interest in the Partnership. Id. at ¶ 20. A
dispute arose over the disposition of the Partnership assets and the calculation
of Bradley’s share. Id. at ¶¶ 21-23.
2 The trial court noted in its opinion that the complaint was reinstated on
January 5, 2021, February 9, 2021, March 24, 2021, and June 3, 2021. On
July 16, 2021, after no answer was filed, Appellee filed a notice of intent to
enter a judgment by default. TCO at 1 n.1.
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objections in compliance with Rule 237.3(b)(1).3 Appellee filed a timely
response to the petition, and a hearing was scheduled for November 9, 2021.
Following the hearing on the petition, the trial court entered an order denying
Appellant’s petition to open the default judgment. Order, 11/9/21 (single
page). On November 30, 2021, Appellant filed a timely appeal, followed by a
timely, court-ordered Pa.R.A.P. 1925(b) concise statement of matters
complained of on appeal. The trial court issued its Rule 1925(a) opinion on
December 13, 2021.
Herein, Appellant presents the following questions for our review:
1. Should [Appellant’s] petition to open default judgment have
been granted where the petition was filed within ten (10)
[days] of the entry of the default judgment, and [Appellant]
alleged a preliminary objection that stated a meritorious
defense, pursuant to Pa.R.Civ.P. 237(b)(2)?
2. Was a meritorious preliminary objection to the complaint
proposed where the complaint sought attorneys’ fees without
citation to any contractual agreement or statute?
3. Did the trial court err and abuse its discretion in requiring
evidence relating to the reason for [Appellant’s] lack of timely
response to the complaint where a petition to open default
judgment had been filed within ten (10) days of the entry of a
default and a preliminary objection stating a meritorious
defense had been attached to the petition?
Appellant’s Brief at 4 (unnecessary capitalization omitted).
We review Appellant’s claims mindful of the following well-settled
principles:
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3 The text of Rule 237.3 is set forth in full infra.
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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.
Smith v. Morrell Beer Distributors, Inc., 29 A.3d 23, 25 (Pa. Super. 2011).
Generally speaking, a default judgment may be opened if the
moving party has (1) promptly filed a petition to open the default
judgment, (2) provided a reasonable excuse or explanation for
failing to file a responsive pleading, and (3) pleaded a meritorious
defense to the allegations contained in the complaint.
Myers v. Wells Fargo Bank, N.A., 986 A.2d 171, 175-76 (Pa. Super. 2009)
(citing McFarland v. Whitham, 544 A.2d 929 (Pa. 1988); Seeger v. First
Union National Bank, 836 A.2d 163 (Pa. Super. 2003) (footnote omitted)).
“If a petition to open a default judgment fails to fulfill any one prong of this
test, then the petition must be denied.” U.S. Bank Nat’l Ass’n for
Pennsylvania Hous. Fin. Agency v. Watters, 163 A.3d 1019, 1028 (Pa.
Super. 2017) (citations omitted).
Additionally, Pennsylvania Rule of Civil Procedure 237.3, which governs
relief from the entry of a default judgment, provides:
(a) A petition for relief from a judgment of non pros or by
default entered pursuant to Rule 237.1 shall have attached
thereto a copy of the complaint, preliminary objections, and/or
answer which the petitioner seeks leave to file. All grounds for
relief shall be raised in a single petition.
(b)(1) If the petition is filed within ten days after the entry of a
judgment of non pros on the docket, the court shall open the
judgment if the proposed complaint states a meritorious cause of
action.
(2) If the petition is filed within ten days after the entry of a
default judgment on the docket, the court shall open the judgment
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if one or more of the proposed preliminary objections has merit or
the proposed answer states a meritorious defense.
Pa.R.Civ.P. 237.3. The note to Rule 237.3 clarifies that these provisions do
not supplant the traditional, three-part test for opening a default judgment,
but merely ease the burden of a party against whom judgment has been
entered and who moves promptly for relief from that judgment. See id. at
Note (“Rule 237.3 does not change the law of opening judgments. Rather,
the rule supplies two of the three requisites for opening such judgments by
presupposing that a petition filed as provided by the rule is timely and with
reasonable explanation or legitimate excuse for the inactivity or delay
resulting in the entry of the judgment.”).
In the instant matter, the trial court applied the three-prong test as
outlined in Myers, supra, in its consideration of Appellant’s petition to open.
See TCO at 2-4. It determined that the first prong of the test was met, since
Appellant’s petition was filed within ten days of the entry of judgment. Id. at
3. Thus, the court proceeded to evaluate the second prong and determined
that Appellant failed to provide “any excuse whatsoever … as to why he did
not file an answer” to the complaint. Id. at 4. Based on its finding that
Appellant failed to satisfy the second prong, the trial court concluded that
there was “no reason to proceed to the third prong of the test,” i.e., whether
a meritorious defense was pleaded, and it denied Appellant’s petition. Id. at
4-5.
Appellant claims that the trial court’s denial of his petition to open the
default judgment based on its analysis of the Myers three-prong test
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constituted an error of law.4 See Appellant’s Brief at 11. Essentially, he
argues that because his petition was filed within ten days of the entry of
judgment, Rule 237.3 clearly applies and, thus, the trial court erred in
requiring Appellant to explain the reason for his delay in filing a responsive
pleading. Id. See also Pa.R.Civ.P. 237.3 at Note (explaining that the Rule
presupposes a “reasonable explanation or legitimate excuse for the inactivity
or delay resulting in the entry of the judgment”). Appellant suggests, rather,
that his petition to open should have been granted pursuant to Rule 237.3(b),
so long as the court determined that one or more of his preliminary objections
had merit. Id. We agree.
As our Supreme Court explained, those litigants who file petitions to
open a default judgment within ten days of its entry are excused from having
to supply an independent “reasonable explanation” for the underlying default:
Although Rule 237.3 does not alter the law of opening
judgments…, it presupposes that a petition to open filed within the
ten-day period is timely or prompt and that a reasonable
explanation or excuse for the delay exists. In so doing, the rule
serves the salutary purpose of avoiding “snap judgment” and
easing the procedural burdens of a party who promptly moves to
open the judgment. Indeed, relaxing the burden of proof by
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4 Appellant notes that some of the cases relied on by the trial court in its Rule
1925(a) opinion to support its application of the three-prong test are
inapplicable here, as those cases involve petitions to open that were filed more
than ten days after the entry of judgment. See Appellant’s Brief at 14 (citing,
e.g., Myers, 986 A.2d at 175-76; Seeger, 836 A.2d at 163). We further
observe that the trial court also relied on cases which predate the December
1994 adoption of Rule 237.3. See TCO at 3-4 (citing McFarland, 544 A.2d
at 929; Romeo v. Looks, 535 A.2d 1101 (Pa. Super. 1987)).
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presuming that a legitimate excuse for the delay exists is
appropriate in this context, since the delay is not lengthy.
Simmons v. Luallen, 763 A.2d 810, 812 (Pa. 2000) (internal citations
omitted). See also Horwath v. DiGrazio, 142 A.3d 877, 882 (Pa. Super.
2016 (same); Boatin v. Miller, 955 A.2d 424, 427 (Pa. Super. 2008)
(“[U]nder Rule 237.3(b), a trial court must open a default judgment, if the
petitioner files a petition to open within ten days of its entry and states a
meritorious defense.”) (emphasis added).
Here, Appellant filed his petition to open within the applicable ten-day
period and attached a copy of his preliminary objections, satisfying the
procedural requirements of Rule 237.3. Hence, pursuant to Rule 237.3(b)(2),
the trial court should have presumed that the petition was timely filed and
that a reasonable explanation for the delay in filing a responsive pleading
existed. See Simmons, 763 A.2d at 812; Horwath, 142 A.3d at 882;
Boatin, 955 A.2d at 427. The only relevant point of inquiry for the trial court
at this juncture was whether Appellant had alleged a meritorious defense in
his preliminary objections. See Pa.R.Civ.P. 237.3(b)(2). The trial court failed,
however, to examine the merit of the preliminary objections, due to its
disposition regarding the petition to open. See TCO at 4 (concluding that
Appellant did not meet the second prong of the three-prong test and therefore
there was no reason to proceed to the third prong).5
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5 The trial court also seems to suggest that it may have disregarded
Appellant’s preliminary objections simply because they were not filed prior to
(Footnote Continued Next Page)
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Thus, having determined that Rule 237.3 applies, we consider whether
Appellant’s preliminary objections have merit. In doing so, we are guided by
the following:
“Preliminary objections in the nature of a demurrer test the legal
sufficiency of the complaint.” Liberty Mut. Ins. Co. v. Domtar
Paper Co., 77 A.3d 1282, 1285 (Pa. Super. 2013) (citation
omitted). We review the trial court’s decision for an error of law.
Id. As this presents a purely legal question, the standard of our
review is de novo. Bruno v. Erie Ins. Co., … 106 A.3d 48, 56
([Pa.] 2014).
“Pennsylvania is a fact-pleading state[.]” Foster v. UPMC S.
Side Hosp., 2 A.3d 655, 666 (Pa. Super. 2010) (citation omitted).
To be legally sufficient, “a complaint must not only give the
defendant notice of what the plaintiff’s claim is and the grounds
upon which it rests, but the complaint must also formulate the
issues by summarizing those facts essential to support the claim.”
Feingold v. Hendrzak, 15 A.3d 937, 942 (Pa. Super. 2011)
(citation omitted).
“Preliminary objections which seek the dismissal of a cause of
action should be sustained only in cases in which it is clear and
free from doubt that the pleader will be unable to prove facts
legally sufficient to establish the right to relief.” Id. at 941(citation omitted).
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the entry of the default judgment. See TCO at 4 (“Appellant seeks to allege
that he raised a meritorious defense to the complaint in his preliminary
objections…; however, this court notes that his preliminary objections were …
untimely filed and were filed after the default judgment was entered….”)
(cleaned up). We emphasize, “the only date that is relevant for determining
whether [a] petition to open was timely filed is the date on which the judgment
was entered on the docket.” Attix v. Lehman, 925 A.2d 864, 867 (Pa. Super.
2007). Here, Appellant’s petition was timely, and Rule 237.3(a) permits a
litigant to submit preliminary objections as an attachment to a petition to
open. See Pa.R.C.P. 237.3(a). Thus, Appellant’s failure to file the instant
preliminary objections prior to the entry of a default is immaterial, since
Appellant submitted the filing in his petition to open.
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In reviewing the propriety of the court’s grant of preliminary
objections in the nature of a demurrer, we apply the same
standard as the trial court, which must resolve the objections
“solely on the basis of the pleadings[.]” Hill v. Ofalt, 85 A.3d
540, 547 (Pa. Super. 2014) (citation omitted). “All material facts
set forth in the pleading[s] and all inferences reasonably deducible
therefrom must be admitted as true.” Id. (citation omitted).
“[N]o … evidence outside the complaint may be adduced and the
court may not address the merits of matters represented in the
complaint.” In re Adoption of S.P.T., 783 A.2d 779, 782 (Pa.
Super. 2001).
Catanzaro v. Pennell, 238 A.3d 504, 507-08 (Pa. Super. 2020).
Additionally, we recognize:
“The 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.”
Penn Delco School v. Bell Atlantic-PA, 745 A.2d 14, 19 (Pa.
Super. 1999) (citations omitted). Merely asserting in a petition to
open default judgment that one has a meritorious defense is
insufficient. Id. The moving party must set forth its meritorious
defense. Id. If any one of the alleged defenses would provide
relief from liability, the moving party will have plead a meritorious
defense and will have satisfied the third requirement to open the
default judgment.” Id.Seeger, 836 A.2d at 166.
Instantly, Appellant claims that his preliminary objections “set forth a
viable legal defense, namely that [Appellee] asserted no legal basis for any
award of legal fees as there were [sic] no statutory or contractual right.”
Appellant’s Brief at 11. Specifically, Appellant’s preliminary objections
averred, in relevant part:
6. In the ad damnum clause in each count, [Appellee] seeks “an
Order directing that [Appellant], individually, pay the counsel fees
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and costs of the instant litigation as a result of his failure to fulfill
his fiduciary duty and his failure to act in accordance with the
Pennsylvania Uniform Partnership [Act,] … as well as the
Partnership Agreement he entered into.” See Exhibit “A[.”6]
Count I – Demurrer To Dismiss All Claims
for Attorneys’ Fees
7. [Appellant] incorporates by reference the foregoing allegations,
which are repeated and re-alleged as if set forth herein fully and
at length herein.
8. Pa.R.Civ.P. 1028(a)(4) permits a party to file preliminary
objections asserting the legal insufficiency of a pleading.
9. Under Pennsylvania law, the parties to litigation are responsible
for their own legal fees unless otherwise provided by statutory
authority, agreement of the parties, or some other recognized
exception.
10. In the Complaint, [Appellee] apparently seeks counsel fees
against [Appellant] in the “Wherefore” clauses.
11. There is no statute or contract which allows an award of
counsel fees in the instant case.
12. Accordingly, all claims for counsel fees must be dismissed,
with prejudice.
WHEREFORE, [Appellant] respectfully request[s] that all claims for
attorneys[’] fees dismissed, [sic] with prejudice.
Preliminary Objections at ¶¶ 6-12.
Appellant is correct in stating the parties are responsible for their own
legal fees absent any statutory authority, agreement by the parties, or some
other recognized exception. See Appellant’s Brief at 20 (citations omitted).
We have expressly recognized that “under the American Rule, applicable in
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6 Appellant attached a copy of the complaint to his preliminary objections as
“Exhibit ‘A.’”
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Pennsylvania, a litigant cannot recover counsel fees from an adverse party
unless there is express statutory authorization, a clear agreement of the
parties, or some other established exception.” Slomowitz v. Kessler, 268
A.3d 1081, 1107 (Pa. Super. 2021) (citing Trizechahn Gateway LLC v.
Titus, 976 A.2d 474 (Pa. 2009)).7 If proven that there is, indeed, no statute
or agreement by the parties in the instant case which provides for the recovery
of attorneys’ fees, and no other relevant exception applies, Appellant will be
entitled to relief. Accordingly, we conclude that Appellant has provided a
meritorious defense and is entitled to an opening of the default judgment
entered against him.
Accordingly, we reverse the November 19, 2021 order denying
Appellant’s petition to open the default judgment, and we remand for
proceedings consistent with this memorandum.
Order reversed. Case remanded. Jurisdiction relinquished.
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7 Our review of the record reveals that no such statute, contractual provision,
or exception was pleaded in Appellee’s complaint. We further observe that
Appellee merely states in its answer to Appellant’s petition to open that 42
Pa.C.S. § 2503(9) provides for the reasonable award of counsel fees to “[a]ny
participant who is awarded counsel fees because the conduct of another party
in commencing the action or otherwise was arbitrary, vexatious or in bad
faith.” Answer to Petition to Open, 8/30/21, at ¶ 12. However, Appellant did
not commence this action, and Appellee has not asserted any claim that
Appellant’s conduct was “arbitrary, vexatious or in bad faith.” See Complaint,
generally. See also Hill, 85 A.3d at 547 (stating that no evidence outside of
the complaint may be considered to dispose of the legal issues presented by
the demurrer).
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/16/2022
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