Arjoon, K. v. Vilches, R.

J-A26036-20
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
KEITH ARJOON AND K.G.C. : IN THE SUPERIOR COURT OF
COMPANY LIMITED : PENNSYLVANIA
:
:
v. :
:
:
ROBERTO VILCHES AND ROBERTO'S :
MACHINE SHOP : No. 339 EDA 2020
:
Appellants :
Appeal from the Judgment Entered December 3, 2019
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): No. 180603246
BEFORE: BENDER, P.J.E., LAZARUS, J., and STEVENS, P.J.E.*
MEMORANDUM BY STEVENS, P.J.E.: FILED: JANUARY 29, 2021
Defendants/Appellants, Roberto Vilches and Roberto’s Machine Shop
appeal from the default judgment entered in favor of Plaintiffs/Appellees,
Keith Arjoon and K.G.C. Company Limited, by the Court of Common Pleas of
Philadelphia County, which assessed breach of contract damages incurred by
Plaintiffs/Appellees to be in the amount of $45,000. After careful review, we
are constrained to vacate judgment and remand for further proceedings.
The relevant facts and procedural history are taken from both Appellees’
October 22, 2018 Complaint and the Notes of Testimony from the December
3, 2019, Assessment of Damages Hearing. Specifically, the present matter
relates to a sales contract entered into by the parties in June, 2014. Appellee
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* Former Justice specially assigned to the Superior Court.
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Keith Arjoon and his son flew from their home country of Trinidad and Tobago
to Philadelphia for the purpose of purchasing a 1985 Mazda RX-7 racecar
owned by Appellants. The parties agreed to a purchase price of $50,000, and
Mr. Arjoon placed a cash down payment on the vehicle.1 The agreement
further provided that Appellants, for an additional fee to be paid by Appellees,
were to dismantle the vehicle and place its parts in two 20 foot-long containers
that would then be exported to Trinidad, where Mr. Vilches’ associate would
reassemble the racecar.
On June 27, 2014, Mr. Arjoon executed a wire transfer from a Trinidad
bank to Mr. Vilches in the amount of $40,000, which he claimed represented
the remainder of the purchase price. Despite acceptance and retention of the
payment, Mr. Vilches remained in possession of the racecar.
On June 26, 2018, Mr. Arjoon filed a Writ of Summons and served it
upon Appellants at their North Philadelphia place of business. The Writ bore
a court-generated arbitration date. Subsequently, on October 22, 2018, Mr.
Arjoon filed a Complaint raising claims of breach of contract and unjust
enrichment. The Complaint was served by United States mail on October 23,
2018, pursuant to Pa.R.C.P. 440(a)(2(i), as it was not in original process.
____________________________________________
1 The amount of the down payment was disputed at the Assessment of
Damages Hearing, with Mr. Arjoon claiming to have paid $10,000 cash and
Mr. Vilches claiming to have received only $5,000. Mr. Arjoon testified that
Mr. Vilches handed him a receipt for the payment but that he lost it at some
point in the years that have since passed.
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On December 10, 2018, Appellees filed a Praecipe to Enter Default
Judgment against Appellants, after Appellants failed to file a responsive
pleading to the Complaint. On March 27, 2019, Appellees mailed the court-
filed copy of the Praecipe to Appellants.
On April 2, 2019, Appellants filed a Motion to Strike Default Judgment.
Two days later, however, the arbitration of the present matter was resolved
in favor of Appellees Mr. Arjoon and his company in the amount of $40,000.00.
Appellants appealed the arbitration decision. On May 1, 2019, the Honorable
Edward Wright entered an order finding the arbitration award had rendered
moot Appellants’ Motion to Strike Default Judgment. Appellant filed a second
such motion, which, by order of Judge Wright, was also found moot.
On December 3, 2019, the Honorable D. Webster Keough presided over
the Assessment of Damages Hearing, at which the court considered the
testimonies of both the parties and several other witnesses who were present
at the Philadelphia meeting between Messers Arjoon and Vilches. The
testimonies comprised assertions of fact and legal argumentation pertaining
to both liability and damages.
At the conclusion of the hearing, the court made findings of fact that the
parties had entered into a binding contract, Mr. Arjoon had performed on the
contract by paying Mr. Vilches $45,000.00, and Mr. Vilches had retained both
the payment and possession of the vehicle while otherwise frustrating the
completion of the contract. Accordingly, the court found Mr. Arjoon had borne
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his burden of proof and entered judgment in favor of Plaintiffs/Appellees in
the amount of $45,000.00.
After the denial of their post-trial motions, Appellants filed the present
appeal and complied with the lower court’s order to file a timely Pa.R.A.P.
1925(b) statement. In the concise statement, Appellants raised issues
relating to both the pre-hearing phase of the litigation and the hearing, itself.
As to the issues claiming pre-hearing error, the lower court opined:
All pre-trial issues raised by Appellants were decided by a judge
of coordinate jurisdiction. The law of the case doctrine embodies
the concept that a court involved in later phases of a litigated
matter should not reopen questions decided by another judge of
the same court, or by a higher court, in earlier phases of the
matter. True R.R. Assocs., L.P. v. Ames True Temper, Inc.,
152 A.3d 324 (Pa.Super. 2016). Within this doctrine lies the
directive that judges sitting on the same court in the same case
should not overrule each other’s decisions, otherwise known as
the coordinate jurisdiction rule. Mariner Chestnut Partners,
L.P. v. Lenfest, 152 A.3d 265 (Pa.Super. 2016). Therefore, only
Appellants’ complaints related to the assessment of damages
hearing before [the lower] court will be addressed.
Lower Court’s Pa.R.A.P. 1925(a) Opinion, 2/11/20, at 2.
Accordingly, the court did not review the two pre-hearing issues
Appellant has briefed for our review, which are, as follows:
1. Are the motions to strike judgment moot in light of the
intervening appealed compulsory arbitration award?
2. Did [the Office of Judicial Records] have authority to enter
judgment by default . . . [where the] default judgment relies
upon a defective form of notice of intent to enter judgment.
Appellant’s brief, at 11.
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We first address Appellant’s second issue, which assails the adequacy of
Appellees’ Notice of intent affixed to its Petition for Default Judgment, as we
find it dispositive. Our standard of review of is well-settled:
An appeal regarding a petition to strike a default judgment
implicates the Pennsylvania Rules of Civil Procedure. Issues
regarding the operation of procedural rules of court present us
with questions of law. Therefore, our standard of review is de
novo and our scope of review is plenary.
A petition to strike a judgment is a common law proceeding which
operates as a demurrer to the record. A petition to strike a
judgment may be granted only for a fatal defect or irregularity
appearing on the face of the record. A petition to strike is not a
chance to review the merits of the allegations of a complaint.
Rather, a petition 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. A fatal defect on the face of the record denies
the prothonotary the authority to enter judgment. When a
prothonotary enters judgment without authority, that judgment is
void ab initio. When deciding if there are fatal defects on the face
of the record for the purposes of a petition to strike a default
judgment, a court may only look at what was in the record when
the judgment was entered.
AmeriChoice Fed. Credit Union v. Ross, 135 A.3d 1018, 1023 (Pa. Super.
Ct. 2015) (quoting Green Acres Rehab. & Nursing Ctr. v. Sullivan, 113
A.3d 1261, 1267–68) (Pa.Super. 2015)) (internal citations, quotation marks,
brackets, and italicization omitted).
Pennsylvania Rule of Civil Procedure 237.1(a)(2) prohibits the trial court
prothonotary from entering default judgment against a party “unless the
praecipe for entry includes a certification that a written notice of intention to
file the praecipe was mailed or delivered ... after the failure to plead to a
complaint and at least ten days prior to the date of the filing of the praecipe
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to the party against whom judgment is to be entered and to the party's
attorney of record, if any.” Pa.R.C.P. 237.1(a)(2)(ii). Rule 237.5 requires the
237.1(a)(2) notice to “substantially” comply with a prescribed format, which
includes the following language regarding the written notice:
IMPORTANT NOTICE
YOU ARE IN DEFAULT BECAUSE YOU HAVE FAILED TO ENTER A
WRITTEN APPEARANCE PERSONALLY OR BY ATTORNEY AND FILE
IN WRITING WITH THE COURT YOUR DEFENSES OR OBJECTIONS
TO THE CLAIMS SET FORTH AGAINST YOU. UNLESS YOU ACT
WITHIN TEN DAYS FROM THE DATE OF THIS NOTICE, A
JUDGMENT MAY BE ENTERED AGAINST YOU WITHOUT A HEARING
AND YOU MAY LOSE YOUR PROPERTY OR OTHER IMPORTANT
RIGHTS.
....
Pa.R.C.P. 237.5.
On March 27, 2019, Appellees attached a written “Notice of Intention to
Take Default” by filing a praecipe for default judgment (“the Notice”).
Appellees’ Notice, however, incorporated language from a prior iteration of
Rule and thereby deviated from the prescriptions of current Rule 237.5. Such
deviation is indicated in italics:
IMPORTANT NOTICE
YOU ARE IN DEFAULT BECAUSE YOU HAVE FAILED TO TAKE
ACTION REQUIRED OF YOU IN THIS CASE. UNLESS YOU ACT
WITHIN TEN (10) DAYS FROM THE DATE OF THIS NOTICE, AS SET
FORTH ABOVE, A JUDGMENT MAY BE ENTERED AGAINST YOU
WITHOUT A HEARING AND YOU MAY LOSE YOUR PROPERTY OR
OTHER IMPORTANT RIGHTS. YOU SHOULD TAKE THIS NOTICE
TO A LAWYER AT ONCE.
....
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Appellees’ Notice of Intention to Take Default, 3/27/19.
Three days after receiving this notice, Appellants filed their Petition to
Strike in which they raised, inter alia, the very objection to the written Notice
of Intent raised here on appeal. We thereby find this issue preserved for our
review.
In positing that Appellees’ Notice failed to “substantially comply” with
current Rule 237.5, Appellants point to its lack of specificity in describing what
Appellants failed to do that led to the issuance of the Notice. Appellants cite
several decisions, which involved virtually identical circumstances to the case
sub judice, that have held substantial compliance was absent where the Notice
used language from a rescinded version of Rule 237.5 without notifying the
defendant specifically what it failed to do. See Oswald v. WB Public Square
Associates, LLC, 80 A.3d 790, 796 (Pa.Super. 2013); City of Philadelphia
v. David J. Lande Advertising, Inc., 33 A.3d 674 (Pa. Cmwlth. 2011);
AmeriChoice, supra.
Appellees concede their Notice departs from the precise language of
Rule 237.5, but they argue it nevertheless “substantially complies” with the
prescribed format, as required by the Rule, when read in conjunction with the
cover letter accompanying it. See Appellees’ Brief, at 4. Specifically,
Appellees’ cover letter provided, in pertinent part:
Enclosed please find Plaintiffs’ Notice if Intention to Take Default
against you with regard to the above-referenced matter.
Plaintiffs’ Complaint was served at your place of business on June
28, 2018. Under the Civil Rules of Procedure, you had until July
18, 2018 to answer Plaintiffs’ Complaint. You failed to do so.
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As of today’s date, no answer has been filed. Therefore, you are
in default because you have failed to take action required in this
case. . . .
Appellees’ Cover Letter, 11/20/18.
This Court, however, has declined to find a facially deficient Notice in
substantial compliance when merely accompanied by separate documents
indicating required actions by the defendant in response to a complaint. In
AmeriChoice, this Court confirmed the shortcomings of a Notice containing
the general statement that the defendant “failed to take action required of you
in this case,” even where the statement was augmented with an
accompanying court order indicating the defendant had been required to file
a responsive pleading to the plaintiff’s complaint.
Specifically, the panel majority reasoned that the Notice remained
deficient where it neither referenced nor explained the purpose of the
accompanying court order requiring defendant to file a responsive pleading to
the complaint:
In Oswald, the plaintiff initiated an action against the defendant
by filing a complaint with proper service. After the defendant
failed to respond to the complaint, the plaintiff sent the defendant
notice of her intention to file a praecipe for default judgment. The
default judgment notice provided in Oswald stated, in relevant
part, “You are in default because you have failed to take
action required of you in this case.” Id. at 796 (emphasis
added). The Oswald Court found that this language was
“deficient,” as the notice failed to state “specific reasons why the
defendant is in default.” Id. at 796 (quoting David J. Lane
Adver., Inc., 33 A.3d at 679) (emphasis in the original). The
Court concluded that failing to include specific reasons for the
defendant's default in the notice of default judgment renders the
notice “defective on its face,” as the document is “not
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‘substantially’ in the form required by Rule 237.5.” Id. In so
holding, the Oswald Court adopted the reasoning of the
Commonwealth Court in David J. Lane Advertising, wherein it
explained:
The general “failed to take action required of you in
this case” language is consistent with the version of
the form in Rule 237.5 predating a 1994 amendment
(Old Form Notice). In the 1994 amendment, which
became effective on July 1, 1995, the Supreme Court
chose to remove this general language in the Old Form
Notice and to substitute the more specific language in
the current form—“failed to enter a written
appearance personally or by attorney and file in
writing with the court your defenses or objections to
the claims set forth against you.” Indeed, it appears
from the explanatory comment to the rule that the
specific purpose of the 1994 amendment was to add
this more specific language to the form. The
explanatory comment notes that the purpose of the
modification is to track the language set forth in
Pa.R.C.P. [ ] 1018.1 for a notice to plead, which
language expressly directs the defendant to defend by
entering an appearance (either personally or by
attorney) and by filing with the court in writing
defenses or objections to the claims in the complaint.
The comment to Rule 237.5 further provides: “Since
the notice will in many cases be sent to an as yet
unrepresented defendant, repetition of the notice to
defend, in modified form helps to stimulate action and
stem the tide of petitions to open default judgments.”
In adopting the revision to the form, then, the
Pennsylvania Supreme Court determined that before
entering judgment by default (which is no insignificant
matter), it was important to notify a defendant
specifically what it failed to do (i.e., why it was in
default) by tracking the language in the earlier-issued
notice to defend. Rather than informing a defendant
that he merely “failed to take action required by you
in this case,” a more specific notice of why the
defendant was in default that tracks the earlier notice
to defend serves as a reminder to the defendant in
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many cases unrepresented at that point, of the
defendant's specific pleading obligations.
Id. at 678–79 (internal citations omitted; emphasis in
original).
The Commonwealth Court examined the above legislative
and judicial history in the context of its holding in Township
of Chester v. Steuber, 72 Pa.Cmwlth. 134, 456 A.2d 669(1983) and subsequent amendments to Rule 237.5. Id. at
678–80 [456 A.2d 669]. Ultimately, the Commonwealth
Court concluded that the amendments to Rule 237.5 “impose
an additional notice requirement on a [plaintiff] who wishes
to obtain a judgment by default ... the [plaintiff] must now
include in the [Ten]-Day Notice specific reasons why the
defendant is in default.” David J. Lane Advertising, 33 A.3d
at 679 (emphasis in original).
Oswald, 80 A.3d at 795–96 (footnote omitted, emphasis in the
original).
The Notice provided by AmeriChoice to Homeowners in the case
at bar stated, in relevant part, “You are in default because you
have failed to take action required of you in this case.”
AmeriChoice's Praecipe for Default Judgment, 6/4/13, at 2
(emphasis added). This is identical to the language contained in
the deficient notice of default judgment provided in Oswald. See
Oswald, 80 A.3d at 796. The record further reflects that
AmeriChoice mailed, together with the Notice, the trial
court's May 1, 2013 order requiring Homeowners to file a
responsive pleading to AmeriChoice's complaint and the
federal district court's May 23, 2013 order dismissing
Homeowners' motion to remove the underlying foreclosure
action. The default judgment notice, however, did not
reference the trial court's order in any manner or explain
why AmeriChoice also included the federal district court's
order. There were simply three separate documents
included in a single envelope.
We disagree with AmeriChoice that the mere inclusion of two court
orders in the mailing that contained the Notice differentiates this
case from the circumstances of Oswald. See AmeriChoice's Brief
at 32–33. Rule 237.5 provides the information that must be
contained in the default judgment notice itself. See
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Pa.R.C.P. 237.5. On the face of the Notice in the case at
bar, there is no explanation or reference to the basis for
entering default judgment against Homeowners. There had
been numerous filings in several different courts over the life of
this case,[] making the need for specificity in the default judgment
notice all the more necessary. Furthermore, Homeowners are
proceeding pro se in this matter, and thus, “a more specific notice
of why [Homeowners were] in default that tracks the earlier
[order]” would have served as “a reminder” of Homeowners'
“specific pleading obligations.”[] Oswald, 80 A.3d at 796 (quoting
David J. Lane Adver., Inc., 33 A.3d at 679) (emphasis in the
original).
The law is clear that generally, default judgments are disfavored.
Attix v. Lehman, 925 A.2d 864, 866 (Pa.Super.2007) (citation
omitted). AmeriChoice failed to provide any indication on the face
of the Notice of precisely why default judgment would be entered
against Homeowners. This constitutes a failure to comply with the
format contained in Pa.R.C.P. 237.5, and thus constitutes a
violation of Pa.R.C.P. 237.1(a)(2). The inclusion of two
additional orders, without reference thereto in the default
judgment notice, does not cure this defect. “It is well[ ]
established that a record which reflects a failure to comply with
Pa.R.C.P. 237.1 is facially defective and cannot support a default
judgment.” Oswald, 80 A.3d at 796 (citation omitted).
AmeriChoice, 135 A.3d 1018, 1024–26 (Pa.Super. 2015) (emphasis in bold
with underline added).
Guided by this precedent, we are constrained to conclude Appellees’
Notice failed to inform Appellants of the specific reasons why they were
receiving the Notice of the Intent to Seek Default Judgment. Under Pa.R.C.P.
237.5, Appellees were required to indicate on the “face of its Notice” precisely
why default judgment would be entered against Appellants. Their Notice
provided no such explanation.
The cover letter accompanying the Notice failed to remedy the defect,
as the Notice itself never referred to the cover letter, let alone specified that
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the cover letter informed Appellants of the specific reasons they were
receiving this Notice. See AmeriChoice, 135 A.3d at 1026 (“The inclusion of
two additional orders, without reference thereto in the default judgment
notice, does not cure this defect.”).
As was observed in AmeriChoice, such a failure to comply with the
format contained in Pa.R.C.P. 237.5 constitutes a violation of Pa.R.C.P.
237.1(a)(2), and renders the record facially defective and, thus, incapable of
supporting a default judgment. Id. at 1026 (quoting Oswald, 80 A.3d at 796(citation omitted)). “Furthermore, since the prothonotary lacks authority to
enter judgment under these circumstances, the default judgment would be
void ab initio[,]” and, as such, “must be stricken without regard to the passage
of time.” Oswald at 797 (citation and italicization omitted). We therefore
have no choice but to vacate the lower court's judgment entered in this matter
and remand the case for further proceedings.
Judgment reversed. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/29/21
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