Guntrum, D. v. Citicorp Trust Bank

J-A20039-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
DOUGLAS L. GUNTRUM, : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
v. :
:
CITICORP TRUST BANK : No. 1714 WDA 2015
Appeal from the Order September 28, 2015
in the Court of Common Pleas of Clarion County,
Civil Division, No(s): 484 C.D. 2009
BEFORE: BOWES, STABILE and MUSMANNO, JJ.
MEMORANDUM BY MUSMANNO, J.: FILED OCTOBER 19, 2016
Douglas L. Guntrum (“Guntrum”) appeals from the Order granting the
Motion for summary judgment (“the Summary Judgment Order”) filed by
Citicorp Trust Bank (“Citicorp”), following the trial court’s May 20, 2010
Order (“the Order to Open”), which opened the default judgment previously
entered in favor of Guntrum and against Citicorp. We reverse the Summary
Judgment Order and the Order to Open, and remand for the re-entry of the
default judgment in favor of Guntrum.
The trial court set forth the relevant history underlying this appeal as
follows:
[Guntrum] filed a Complaint … [against Citicorp] on April 6,
2009. In his Complaint, [Guntrum] alleged [that Citicorp] did
not honor a credit disability insurance policy [(hereinafter “the
insurance policy”)]. According to [Guntrum], he purchased the
insurance policy from [Citicorp] at the same time he secured a
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mortgage from [Citicorp] in January of 2003.[1] The insurance
policy was meant to [provide a temporary waiver of Guntrum’s
required] mortgage payments if he became disabled. [Guntrum]
alleged in his [C]omplaint that [Citicorp] did not honor th[e
insurance] policy when he … bec[a]me disabled in November of
2005[, after he was diagnosed with epilepsy and other
neurological disorders]. As a result of [Citicorp’s] refusal to
honor the insurance policy, [the Property] was foreclosed upon,
[and Guntrum therefore lost all of his equity in the Property.]
[Citicorp subsequently] purchased the [Property] at [a] sheriff’s
sale. [In his Complaint, Guntrum] claimed relief for breach of
contract, unfair trade practice[s], and bad faith refusal of insurer
to pay [(hereinafter, “the bad faith count”)].
[Guntrum] attempted to serve the Complaint on [Citicorp]
at 3001 Meacham Boulevard, Suite 200, PO Box 2548, Fort
Worth, Texas 76113.[2] However, service was returned as not
found. A deputy sheriff of Tarrant County, Texas indicated that
[Citicorp] was not located at that address as of April 15, 2009,
and [the sheriff] did not have access to [Citicorp]. The return of
service was filed with th[e trial] court [in the instant matter] on
April 20, 2009.
[Guntrum] filed an Amended Complaint on July 10, 2009.
The Amended Complaint alleged the same facts as the initial
[C]omplaint. It was served upon [Citicorp on July 28, 2009, by
personal service of an employee of Citicorp,] at 4500 New Linden
Hill Road, 3rd Floor, Wilmington, Delaware 19808 [(hereinafter
“Citicorp’s Delaware Office”)]. [Significantly, Citicorp] did not
respond to the Amended Complaint. [Guntrum filed a] Ten-Day
Notice of Default Judgment … on October 21, 2009 [(hereinafter
“First Ten-Day Notice”)], and served [it] upon [Citicorp at
Citicorp’s] … Delaware [Office, by certified mail]. A second Ten-
Day Notice of Default Judgment [(hereinafter “Second Ten-Day
Notice”)] was filed on November 3, 2009, and served upon
1
The mortgage, in the amount of $47,478.80, was secured by Guntrum’s
residence, located in New Bethlehem (hereinafter “the Property”). Guntrum
used the mortgage funds to make improvements to the Property. After the
improvements, the Property was appraised at $115,000.
2
It appears that Guntrum obtained this address from correspondence that
he had previously received from Citicorp concerning the insurance policy.
See Brief in Opposition to Petition to Open, 3/23/10, Exhibit A.
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[Citicorp] at [Citicorp’s] … Delaware [Office, by certified mail].
[Guntrum] filed a[] Praecipe for Entry of a Default Judgment on
November 16, 2009 [(hereinafter “the Praecipe for Default
Judgment”), and served it upon a Citicorp employee at Citicorp’s
Delaware Office, Roselyn Benson (“Ms. Benson”)3].
Trial Court Opinion and Order, 5/21/10, at 1-2 (footnotes added).
Citicorp filed no response to either of the Ten-Day Notices or the
Praecipe for Default Judgement. By an Order entered on November 23,
2009 (hereinafter “the Default Judgment Order”), the trial court directed the
Prothonotary to enter a default judgment against Citicorp, and scheduled a
non-jury trial, solely on the issue of damages, for February 5, 2010. The
trial court ordered Guntrum to again serve Citicorp with a copy of the
Praecipe for Default Judgment, as well as the Default Judgment Order
(hereinafter collectively referred to as “the Default Filings”), by personal
service or certified mail. On December 8, 2009, Guntrum filed an Affidavit
of Service, stating that he had served the Default Filings upon a Citicorp
employee at Citicorp’s Delaware Office, via certified mail.4 Thereafter, on
January 15, 2010, Guntrum filed a second Affidavit of Service, stating that
3
The record does not reveal what position Ms. Benson holds at Citicorp.
4
Though Guntrum did not attach a certified mail receipt to this Affidavit of
Service, he attached it to a subsequent filing, showing that Ms. Benson had
accepted service of the Default Filings, at Citicorp’s Delaware Office, on
December 11, 2009. See Brief in Opposition to Petition to Open, 3/23/10,
Exhibit E; see also Trial Court Opinion and Order, 5/21/10, at 5, ¶ 17.
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the Default Filings had been personally served upon Ms. Benson, at Citicorp’s
Delaware Office, on January 11, 2010.5
At the damages trial on February 5, 2010, neither Citicorp nor its
counsel was present. By an Order entered on March 12, 2010, the trial
court awarded Guntrum compensatory damages in the amount of
$125,558.6
In the interim, on February 26, 2010, Citicorp’s local counsel in
Pennsylvania filed a Praecipe for Entry of Appearance. On March 4, 2010,
Citicorp filed a Petition to Open Default Judgment (hereinafter “Petition to
Open”). Therein, Citicorp conceded that one of its employees had accepted
service of the Amended Complaint at Citicorp’s Delaware Office. Petition to
Open, 3/4/10, ¶ 4. Importantly, Citicorp asserted that, pursuant to its
regular policies and procedures, the Amended Complaint should have then
been forwarded, via overnight mail, to Citicorp’s legal department, which
was located in Irving, Texas (hereinafter “the Legal Department”). Id. at
¶ 7. However, Citicorp averred that the Legal Department had no record of
ever receiving the Amended Complaint. Id. at ¶¶ 6, 9. Additionally,
Citicorp acknowledged Guntrum’s service of the Second Ten-Day Notice at
Citicorp’s Delaware Office, but asserted that the Legal Department again had
no record of ever receiving this document. Id. at ¶¶ 10-11. Citicorp further
5
Guntrum attached thereto a notarized affidavit by the process server.
6
The trial court declined to award Guntrum requested punitive damages,
treble damages, or attorneys’ fees.
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acknowledged Guntrum’s service of the Default Filings, upon Citicorp
employees at Citicorp’s Delaware Office. Id. at ¶¶ 12-17. According to
Citicorp, however, the Legal Department did not become aware of the action
against it, or any of the above-mentioned filings, until February 10, 2010,
“due to a clerical error/oversight[,] and despite proper procedures in place
regarding the routing and service of all court filings ….” Id. at ¶ 28
(emphasis added); see also id. at ¶ 18. Finally, Citicorp pointed out that it
filed the Petition to Open 22 days after the Legal Department had become
aware of the action on February 10, 2010. Id. at ¶ 20.
On May 10, 2010, the trial court conducted a hearing on the Petition to
Open and an Answer thereto filed by Guntrum. On May 21, 2010, the trial
court entered the Order to Open, along with an accompanying Opinion,
finding that Citicorp had established all of the requirements for opening a
default judgment.7 Accordingly, the trial court vacated the non-jury award
in favor of Guntrum and permitted Citicorp to file an Answer and New Matter
in response to Guntrum’s Amended Complaint. Citicorp filed its Answer and
New Matter on May 28, 2010.
In September 2010, Citicorp filed a partial Motion for judgment on the
pleadings, seeking dismissal of the bad faith count in Guntrum’s Amended
Complaint, asserting, inter alia, that it was barred by the two-year statute of
7
On June 17, 2010, Guntrum timely filed a Notice of Appeal from the Order
to Open. However, this Court subsequently discontinued the appeal, in
response to Guntrum’s filing a “Praecipe to Strike Appeal.”
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limitations. By an Opinion and Order entered on November 30, 2010, the
trial court granted Citicorp’s Motion and dismissed the bad faith count.
In the ensuing five years, the parties extensively litigated the
remaining two counts in the Amended Complaint: breach of contract and
unfair trade practices. On July 6, 2015, Citicorp filed a Motion for summary
judgment, seeking the dismissal of Guntrum’s remaining claims. By the
Summary Judgment Order entered on September 28, 2015, the trial court
granted the summary judgment Motion, following a hearing. The court
determined, in sum, that Citicorp had not breached the insurance policy and
did not defraud or deceive Guntrum. Guntrum timely filed a Notice of
Appeal.8 Guntrum thereafter filed a court-ordered Pa.R.A.P. 1925(b)
Concise Statement, wherein he alleged trial court error in previously opening
the default judgment. In response, the trial court issued a Pa.R.A.P.
1925(a) Opinion, relying upon its rationale set forth in the May 21, 2010
Opinion and Order in rejecting Guntrum’s challenges to the Order to Open.
Guntrum now presents the following issues for our review:
[1.] Did the trial court show a manifest abuse of discretion
and/or error of law when it considered notification of [the]
[L]egal [D]epartment when determining promptness for
[Citicorp’s] Petition to Open []?
[2.] Did the trial court show a manifest abuse of discretion
and/or error of law when it excused [Citicorp’s] failure to file a
8
Pursuant to Pa.R.A.P. 311(a)(1), an appeal from an order opening a default
judgment may not be filed until the trial court disposes of all claims for
relief. Here, the trial court resolved all of Guntrum’s claims for relief via the
Summary Judgment Order.
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responsive pleading after six notifications of legal proceedings
against it?
Brief for Appellant at 7 (issues numbered).9 We will address Guntrum’s
issues together, as they are related.
When reviewing whether a trial court erred or abused its discretion in
granting a petition to open a default judgment, we have explained as
follows:
[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 [that] is manifestly unreasonable, or the
result of partiality, prejudice, bias or ill will.
Myers v. Wells Fargo Bank, N.A., 986 A.2d 171, 175 (Pa. Super. 2009)
(citation omitted).
[A] default judgment may be opened if the moving party has (1)
promptly filed a petition to open the default judgment
[(hereinafter “the first prong”)], (2) provided a reasonable
excuse or explanation for failing to file a responsive pleading
[(hereinafter “the second prong”)], and (3) pleaded a
meritorious defense to the allegations contained in the
complaint. Moreover, … [a] 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.
Id. at 175-76 (internal citations and footnote omitted). All “three factors [of
the above-mentioned test] … must coalesce before a default judgment can
9
We observe that Guntrum phrased these issues somewhat differently in his
court-ordered Rule 1925(b) Concise Statement. Nevertheless, we determine
that the issues are properly preserved for our review.
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be opened.” McCoy v. Pub. Acceptance Corp., 305 A.2d 698, 700 (Pa.
1973).
We will simultaneously address the first and second prongs, mindful of
the following:
The timeliness of a petition to open a judgment [under the first
prong] is measured from the date that notice of the entry of the
default judgment is received. The law does not establish a
specific time period within which a petition to open a judgment
must be filed to qualify as timel[y]. Instead, the court must
consider the length of time between discovery of the entry of the
default judgment and the reason for [the] delay.
Myers, 986 A.2d at 176 (citation omitted). “In evaluating whether the
petition has been promptly filed, the Court does not employ a bright line test
….” Allegheny Hydro No. 1 v. Am. Line Builders, 722 A.2d 189, 193 (Pa.
Super. 1998) (citation, brackets and internal quotation marks omitted)).
In cases where the appellate courts have found a “prompt” and
timely filing of the petition to open a default judgment, the
period of delay has normally been less than one month. See
Duckson v. Wee Wheelers, Inc., 423 Pa.Super. 251, 620 A.2d
1206 (Pa. Super. 1993) (one day is timely); Alba v. Urology
Associates of Kingston, 409 Pa.Super. 406, 598 A.2d 57(Pa.Super. 1991) (fourteen days is timely); Fink v. General
Accident Ins. Co., 406 Pa.Super. 294, 594 A.2d 345 (Pa.
Super. 1991) (period of five days is timely).
Myers, 986 A.2d at 176; see also Pappas v. Stefan, 304 A.2d 143, 146
(Pa. 1973) (holding that 55-day delay is not prompt); U.S. Bank N.A. v.
Mallory, 982 A.2d 986, 995 (Pa. Super. 2009) (holding that 82-day delay is
not prompt); Dumoff v. Spencer, 754 A.2d 1280, 1282-83 (Pa. Super.
2000) (holding that four-month delay is not prompt); Flynn v. Amer. W.
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Airlines, 742 A.2d 695, 698 (Pa. Super. 1999) (noting that delays of fewer
than three weeks may be deemed insufficiently prompt); Allegheny Hydro
No. 1, 722 A.2d at 194 (holding that 41-day delay is not prompt); B.C.Y.,
Inc. Equipment Leasing Assocs. v. Bukovich, 390 A.2d 276, 279 (Pa.
Super. 1978) (holding that 21-day delay is not prompt); Quatrochi v.
Gaiters, 380 A.2d 404, 408-09 (Pa. Super. 1977) (holding that 63-day
delay is not prompt).
With regard to the second prong, “[w]hether an excuse is legitimate is
not easily answered and depends upon the specific circumstances of the
case. The appellate courts have usually addressed the question of legitimate
excuse in the context of an excuse for failure to respond to the original
complaint in a timely fashion.” Myers, 986 A.2d at 176 (citation omitted).
“Excusable negligence must establish an oversight rather than a deliberate
decision not to defend.” Seeger v. First Union Nat. Bank, 836 A.2d 163,
167 (Pa. Super. 2003) (citation omitted); see also Flynn, 742 A.2d at 699(stating that “where 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.” (citation omitted)).
However, “[w]hile some mistakes will be excused, mere carelessness will not
be.” Bahr v. Pasky, 439 A.2d 174, 177 (Pa. Super. 1981) (internal citation
omitted).
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Before addressing Guntrum’s claims, we set forth the trial court’s
reasoning in its Opinion wherein in determined that the first and second
prongs were met:
[Citicorp] took twenty-two days to file the Petition [to Open]
after receiving notice of the default judgment. The [D]efault
[J]udgment [Order] was signed on November 19, 2009[,] and
filed with the Prothonotary’s Office on November 23, 2009.
[Guntrum] mailed a copy of the [Default Judgment O]rder to
[Citicorp, at Citicorp’s Delaware Office,] on December 7, 2009.
[Ms.] Benson signed for the service of the [Default Judgment
O]rder on December 11, 2009. [Guntrum] re-served the
[Default Judgment O]rder by process server, which served Ms.
Benson[, at Citicorp’s Delaware Office,] on January 11, 2010.
However, according to [Citicorp], neither of these [] [O]rders
reached [the] [L]egal [D]epartment in Texas until February 10,
2010. The [] Petition [to Open] was filed on March 4, 2010.
Therefore, the earliest possible notice [Citicorp] received of the
default judgment would have been on December 11, 2009, after
which eighty-three days passed before the [] Petition [to Open]
was filed. The [L]egal [D]epartment did not receive notice until
February 10, 2010, after which twenty-two days passed before
the [] Petition [to Open] was filed. Th[e trial] court finds that
the twenty-two day period from February 10, 2010[,] to March
4, 2010 is the relevant period of delay. [Pennsylvania case law]
require[s] the court to consider the[] “length of the delay
between discovery of the entry of a default judgment and filing
the petition to open judgment.” Allegheny Hydro No. 1, [722
A.2d at 193 (emphasis added by trial court)]. [Citicorp] did not
discover the entry of default judgment until [the L]egal
[D]epartment in Texas received notice. Once [the] [L]egal
[D]epartment was made aware of the present civil action on
February 10, 2010, [Citicorp] had to file something as quickly as
possible. [Citicorp] cannot be expected to file a petition prior to
becoming aware of the lawsuit.
[Citicorp] promptly filed the Petition to Open []. The delay
of only twenty-two days was not caused by [Citicorp’s] neglect
or lack of due diligence. [The Legal Department’s] [i]n[-]house
counsel in Irving, Texas was notified of the lawsuit on February
10, 2010. [Citicorp’s local] counsel was then contacted.
[Citicorp’s local] counsel received a copy of the Amended
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Complaint on February 17, 2010[,] from [Guntrum’s] attorney.
Therefore, [Citicorp] hired outside counsel to represent its
interest in Clarion County, Pennsylvania within ten days of
receiving notice of the suit in Texas. [Citicorp’s local] counsel
filed with [the trial] court a Praecipe for Entry of Appearance on
February 26, 2010, dated by counsel as February 23, 2010.
[Citicorp] faxed a letter to th[e trial] court on February 25,
2010[,] indicating its intent to file a Petition to Open Default
Judgment within the next few days. [Citicorp’s local] counsel
also sent letters to [Guntrum’s] counsel requesting information
pertinent to this action on February 23 and 26, 2010. [Citicorp]
received a copy of the record from the Clarion County
Prothonotary’s Office on February 23, 2010. [Citicorp]
conducted an internal investigation from February 10, 2010[,] to
March 3, 2010[,] to determine the reason it had not been made
aware of the present action. The [] Petition [to Open] was filed
on March 4, 2010. …
Considering the information included in [the] Petition [to
Open] and [Citicorp’s] brief, the short period of time which it had
to examine the filings in this case, and the speed with which it
hired local counsel, th[e trial] court finds [that Citicorp] promptly
filed the [] Petition [to Open] by filing it within twenty[-]two
days of becoming aware of the default judgment.
***
In the present case, [Citicorp] was not aware of the action
until February 10, 2010[,] due to a clerical error. [Citicorp’s]
policy is to receive legal documents from [Citicorp’s] Delaware
[O]ffice by overnight mail to the [L]egal [D]epartment in Irving,
Texas. The mail is then sorted and sent to the appropriate in-
house counsel. However, the [L]egal [D]epartment … has no
record of ever receiving the Amended Complaint, either [] the
[First] Ten[-]Day Notice[] [or the Second Ten-Day Notice] …, or
any Affidavits of Service. The only document received by the …
[L]egal [D]epartment was the Praecipe to Enter Default
Judgment and corresponding [Default Judgment] Order …, which
was received on February 10, 2010. Upon an internal
investigation [that Citicorp] conducted …, it was found that the
delay in assigning the lawsuit that resulted in the default
judgment was caused by a clerical error or oversight. [Citicorp]
did not deliberately delay this case by failing to respond to the
pleadings. …
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***
[Citicorp] has presented a reasonable explanation for not
filing responsive pleadings in the present case. [Citicorp] was
oblivious to the lawsuit due to a failure in [Citicorp’s] Delaware
[O]ffice to forward the filings in this case to [the Legal
Department in Texas]. Such clerical error or oversight was not
intentional or strategic in any way, but simply an unfortunate
happening. Such mistakes are excusable under Pennsylvania
case law. [Citicorp] has satisfied its burden under [the second]
prong … by establishing a reasonable excuse for its lack of a
response to [Guntrum’s] Amended Complaint.
Trial Court Opinion and Order, 5/21/10, at 9-12, 14 (emphasis added, some
citations omitted).
Guntrum argues that the trial court erred and/or abused its discretion
in determining that Citicorp met the first prong, as the Petition to Open was
not promptly filed. Brief for Appellant at 12. According to Guntrum, the trial
court overlooked that, on December 11, 2009, and January 11, 2010,
Citicorp was twice served with the Default Filings, at Citicorp’s Delaware
Office, but Citicorp did not file the Petition to Open until 83 days after
December 11, 2009. Id. Guntrum argues that the trial court improperly
adopt[ed] the position of [Citicorp] that it is not service upon
[Citicorp] that counts for purposes of computing the date of
discovery of the default judgment, but rather[,] the date [that
the L]egal [D]epartment [] [wa]s made aware of the default
judgment. This manufactures a time frame of twenty-two days
…. The trial court’s exception is wholly without statutory or case
law support. [Citicorp’s] [] assertion that [the] Petition to Open
… was prompt in relation to when [the L]egal [D]epartment
received it has no authority to bolster it. If this proposition were
permitted to stand, it would carve out an exception that would
grossly favor corporations large enough to have a legal division.
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Id. (paragraph break and citation omitted); see also id. at 10 (asserting
that “[n]o statute or case law supports the proposition that a specific entity
other than the named party to a lawsuit needs [to be] notified to satisfy
service requirements.”).
Concerning the second prong, Guntrum asserts that the trial court
erred in finding that Citicorp met this prong by advancing a legitimate
excuse for its delay in responding to the Amended Complaint. See id. at
13-16. Guntrum emphasizes that it is undisputed that Citicorp was served
with Guntrum’s following filings (hereinafter collectively referred to as “the
Served Filings”) at Citicorp’s Delaware Office: (1) the Amended Complaint;
(2) the First Ten-Day Notice; (3) the Second Ten-Day Notice; (4) the
Praecipe for Default Judgment; and (5) the Default Filings, on two separate
occasions. Id. at 14. Guntrum contests the trial court’s acceptance of
Citicorp’s excuse for its failure to respond to any of the Served Filings (until
the Legal Department became aware of the action on February 10, 2010),
i.e., that the delay was attributable to a “clerical error.” Id. at 15 (citing
Trial Court Opinion and Order, 5/21/10, at 11); see also Petition to Open,
3/4/10, ¶ 28. According to Guntrum, this excuse is not legitimate, as “[i]t is
an impossibility for one clerical error to answer for [Citicorp’s failure to
respond to] six separate notifications of legal proceedings[,] spread out over
six [] months.” Brief for Appellant at 15.
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Concerning the first prong, we conclude that the trial court erred in its
determination that Citicorp’s delay in filing the Petition to Open was only 22
days. It is undisputed that Citicorp received all of the Served Filings at
Citicorp’s Delaware Office, and that it first received notice of the default
judgment entered against it on December 11, 2009 (i.e., 83 days prior to
Citicorp’s filing of the Petition to Open). Though the trial court found that
the relevant date for purposes of calculating the delay was when the Legal
Department first became aware of the default judgment, i.e., February 10,
2010, we discern no support for such a proposition. We are persuaded by
Guntrum’s argument that, were we to hold otherwise, this would unjustly
create an exception for corporate defendants large enough to have a
separate legal department. We conclude that Citicorp’s 83-day delay in
filing the Petition to Open was not prompt, and the trial court erred in finding
to the contrary and calculating the delay as being only 22 days. See, e.g.,
U.S. Bank N.A., supra (holding that 82-day delay is not prompt); Pappas,
supra (holding that 55-day delay is not prompt).
Additionally, the trial court erred in determining that the second prong
was met, as Citicorp’s “clerical error” excuse proffered for its 219-day delay
in responding to the Amended Complaint is not legitimate. The purported
“clerical error” resulted in the Legal Department not being made aware of six
separate filings that were served upon Citicorp at Citicorp’s Delaware Office.
Rather than an individual clerical error or oversight, these repeated failures,
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which occurred over the span of several months, are more indicative of a
much larger flaw in Citicorp’s mail-forwarding system and/or internal
communication procedures.
Indeed, Citicorp, a huge international corporation with considerable
resources and experience in responding to legal actions against it, should
have in place a functional system to monitor and respond to legal claims.
See Kelly v. Siuma, 34 A.3d 86, 94 (Pa. Super. 2011) (in holding that the
defendant failed to offer a legitimate excuse for its ten-month delay in filing
an answer to the complaint, emphasizing that the defendant was “a
corporate defendant, which should have in place the means to monitor its
legal claims.”); Myers, 986 A.2d at 177 (same); Reid v. Boohar, 856 A.2d
156, 162 (Pa. Super. 2004) (distinguishing between corporations and
laypersons with regard to opening default judgments, and observing that
corporations presumably have the means to monitor legal claims lodged
against them). We cannot countenance holding a large corporation, which
chooses to have a legal department separate from its corporate offices, to a
lower standard than we would hold a layperson as concerns the failure to
respond to process.10 If we were to rule otherwise, large corporate
defendants could cause interminable delays in litigation simply by choosing
to have their legal departments separate from their corporate offices and
10
In fact, large corporations could reasonably be held to a higher standard
than a layperson. See Kelly, supra; Myers, supra.- 15 -
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utilizing a mail-forwarding system, upon which the corporation could easily
place all accountability in the event of a failure to promptly reply to process.
Additionally, even though Citicorp’s failure to timely respond to the
Amended Complaint (or any of the Served Filings) was seemingly
unintentional, this does not excuse its substantial delay under the
circumstances of this case, as described above. See Flynn, 742 A.2d at 699(holding that the defendant/company’s unintentional failure to reply to the
plaintiff’s complaint due to a defective mail receipt system, which the
defendant had allowed to remain in place for at least several months, was
not a legitimate excuse for the delay that caused entry of the default
judgment); see also Autologic Inc. v. Cristinzio Movers, 481 A.2d 1362,
1364 (Pa. Super. 1984) (where defendant/employer authorized one of its
employees to determine whether mail should be forwarded to employer, and
the employee failed to forward plaintiff’s complaint, holding that defendant
did not offer a legitimate excuse for failing to respond to the complaint, since
it gave its employee authority to make the decision).
Concerning the third and final prong of the test to open a default
judgment (pleading a meritorious defense), we need not address this prong,
or consider the equities of the case, because we conclude that Citicorp has
failed to establish the first and second prongs. See McFarland v.
Whitham, 544 A.2d 929, 930 (Pa. 1988) (reversing on the sole basis that
the trial court erred in concluding the defendant provided a justifiable excuse
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for failing to respond to complaint in a timely manner); U.S. Bank N.A., 982
A.2d at 997 (affirming denial of petition to open, even though trial court
failed to analyze the third prong of a meritorious defense, since the first and
second prongs were not met); see also McCoy, supra (stating that a
petitioner must meet all three prongs of the test before a default judgment
may properly be opened). Thus, even assuming that Citicorp pleaded a
meritorious defense, the trial court improperly granted the Petition to Open.
In sum, we conclude that the trial court abused its discretion when it
granted Citicorp’s Petition to Open on the grounds that it was promptly filed
and Citicorp had presented a legitimate excuse for its protracted delay in
responding to Guntrum’s Amended Complaint. Accordingly, we reverse the
Summary Judgment Order and the Order to Open, and remand for the re-
entry of a default judgment in favor of Guntrum in the amount of $125,558,
plus interest.
Summary Judgment Order and Order to Open reversed. Case
remanded for the re-entry of a default judgment against Citicorp and in
favor of Guntrum. Superior Court jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/19/2016
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