Rishabh Software Private v. Cogent Infotech

J-A14028-20
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
RISHABH SOFTWARE PRIVATE LTD : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
COGENT INFOTECH CORPORATION :
:
Appellant : No. 1346 WDA 2019
Appeal from the Order Entered July 30, 2019
In the Court of Common Pleas of Allegheny County Civil Division at
No(s): GD-18-015965
RISHABH SOFTWARE PRIVATE LTD : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
COGENT INFOTECH CORPORATION :
:
Appellant : No. 1347 WDA 2019
Appeal from the Order Entered July 30, 2019
In the Court of Common Pleas of Allegheny County Civil Division at
No(s): No. GD-18-015965
BEFORE: SHOGAN, J., McLAUGHLIN, J., and MUSMANNO, J.
MEMORANDUM BY McLAUGHLIN, J.: FILED NOVEMBER 06, 2020
Cogent Infotech Corporation (“Cogent”) appeals from the order denying
its petition to open or strike a default judgment. We affirm.
Rishabh Software Private LTD (“Rishabh”) “is a business with offices in
Gujarat, India.” Complaint, filed 12/5/18 at ¶ 1. Cogent is a corporation with
its place of business in Pittsburgh, Pennsylvania. Id. at ¶ 2. Rishabh filed and
served a Complaint against Cogent in December 2018, alleging that Cogent
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failed to pay for services provided by Rishabh. Id. at ¶ 7, 10. Cogent did not
file any responsive pleading to the Complaint. Rishabh filed a Praecipe for
Default Judgment in March 2019, which included a certification that it had
mailed Cogent a notice of default judgment at Cogent’s corporate address on
February 21, 2019. The Prothonotary entered the default judgment on March
5, 2019, and sent notice of the docket entry to Cogent the following day,
March 6, 2019. The judgment included attorney’s fees.
Nearly five months later, on July 30, 2019, after Rishabh served writs
of execution against First National Bank and Wells Fargo Bank, Cogent filed
an Emergency Petition to Strike/Open Default Judgment, to Dismiss Complaint
and for Relief from Execution Proceedings. Cogent argued that the court
should strike or open the judgment because Rishabh was a foreign entity that
had conducted business in Pennsylvania without having registered to do so,
and it therefore lacked capacity to bring suit in Pennsylvania. See Emergency
Petition at 2-4 (unnumbered), ¶¶ 3-7 (citing 15 Pa.C.S.A. § 411(b)).
Cogent further argued that the court should open the default judgment
for three additional reasons. First, it contended that the breach of contract
claim was based on an unsigned proposal that allegedly made Cogent’s
signature a condition precedent to acceptance. Second, it argued that if there
was a contract, it required the claim to go to alternative dispute resolution.
Third, it maintained that the contract did not provide for attorney’s fees. See
Emergency Petition, at ¶¶ 8-10. Cogent also alleged that its counsel had no
notice of the default judgment until a week prior to its filing of the Petition,
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when Rishabh attempted to execute the judgment. Id. at 5 (unpaginated).
After Rishabh filed a response, the court denied the petition. See Orders, filed
7/30/19. Cogent filed this timely appeal. It raises three issues:
I. Does 15 Pa.C.S. § 411(b)’s prohibition against
[Rishabh’s] maintenance of any action or proceeding
in this Commonwealth, unless such nonregistered
foreign association has registered to do business in
this Commonwealth, also prohibit [Rishabh] from
obtaining affirmative judgments against [Cogent] and
its bank by praecipe, such that the lower court lacked
the power or authority to enter those judgments,
without any showing by [Rishabh] that it is registered
to do business in this Commonwealth?
II. Does the controlling precedent of our unanimous
Supreme Court in Franklin Interiors v. Wall of
Fame Management Company, Inc., 510 Pa. 597,
511 A.2d 761 (1986), holding that a purported claim
for contract damages, such as the sole claim at issue,
based on an unsigned written proposal document
requiring signed acceptance is, without more,
incapable of sustaining a judgment thus requiring that
the judgment therein be stricken, also require that the
judgments herein be stricken?
III. Did [Rishabh’s] counsel fail to provide adequate
advance notice due under Pa.R.C.P. 237.1(a)(2)(ii)
and the Due Process Clause of the 14th Amendment
to the United States Constitution, where the record is
devoid of any evidence that anyone ever received any
advance notice on behalf of the incorporeal corporate
[Cogent], advising that [Rishabh’s] counsel intended
to enter default judgment against [Cogent] such that
the judgments at issue herein are void ab initio,
requiring that they be stricken?
Cogent’s Br. at 9-10.
Cogent first argues that the court should have stricken the default
judgment because 15 Pa.C.S.A. § 411(b) bars an unregistered foreign
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company from “obtaining any judgment in its favor in this Commonwealth
. . . .” Cogent’s Br. at 34 (emphasis in original); see also id. at 31, 43. It
maintains that Rishabh’s failure to register deprived the court of subject
matter jurisdiction. See id. at 31, 35, 36, 39, 41.
Our standard of review of an order granting or denying a petition to
strike a default judgment is de novo. U.S. Bank Nat’l Ass’n for Pa. Hous.
Fin. Agency v. Watters, 163 A.3d 1019, 1028 (Pa.Super. 2017). A petition
to strike a default judgment requires the petitioner to demonstrate a fatal
defect appearing on the face of the record. Id.; Williams v. Wade, 704 A.2d
132, 134 (Pa.Super. 1997). “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.” Cintas Corp. v. Lee's Cleaning Servs., Inc., 700 A.2d 915, 917
(Pa. 1997).
This issue is meritless. The failure of a foreign company to register to
do business is not a jurisdictional defect or a defect appearing on the face of
documents in the record when the Prothonotary entered the default judgment.
Rather, it deprives the company of the capacity to bring suit in Pennsylvania
courts. See 15 Pa.C.S.A. § 411(b); Drake Mfg. Co., Inc. v. Polyflow, Inc.,
109 A.3d 250, 257 (Pa.Super. 2015). Indeed, Cogent presented this argument
in its Emergency Petition as one going to capacity to sue, and not jurisdiction.
Unlike lack of subject matter jurisdiction, lack of capacity to sue is a waivable
defense. See id. Its resolution requires information outside the record at the
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time the court entered the default judgment, and is thus not a fatal defect
appearing on the face of the record. The trial court properly rejected this claim.
Cogent next argues that the court should have stricken the judgment
because Rishabh based its claim on a document Cogent did not sign, and the
lack of signing precluded the entry of a valid judgment. In support, it cites
Franklin Interiors v. Wall of Fame Management Co., Inc., 511 A.2d 761(Pa. 1986).
Franklin Interiors is inapposite. There, the Supreme Court held that
the trial court should have stricken a confessed judgment because no contract
had formed such that the clause authorizing the confessed judgment had
never become effective. Id. at 763. The Court cited language in the agreement
that the agreement did “not become a contract until approved by an officer
of” the plaintiff. Id. The Court concluded that that clause rendered signing by
the plaintiff a condition precedent to enforcing any part of the agreement,
including the confession of judgment clause. Id.
Here, we are not dealing with a confessed judgment, but rather an
ordinary default judgment. In such a case, the absence of a signature in an
agreement is not a fatal defect precluding the entry of the judgment. Rather,
it is a potentially meritorious defense going to contract formation. A party’s
authority to confess judgment is contingent on the formation of a contract. In
contrast, the court’s authority to enter a default judgment is not contingent
on the parties’ contract, but derives purely from Pennsylvania law. This claim
lacks merit.
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For its final claim, Cogent maintains that Rishabh violated Pa.R.C.P.
237.1 because Cogent allegedly did not receive a proper 10-day notice of
default judgment. Cogent argues that because Rishabh sent the notice to
Cogent itself, rather than to Cogent’s counsel, the court should have stricken
the default judgment. It further claims that the failure to strike the default
judgment on account of the alleged failure comply with Rule 237.1 deprived it
of due process.
Cogent’s final issue also lacks merit. Cogent waived any due process
claim by failing to raise it below in its Emergency Petition. Although it made
mention of such a claim in its motion for reconsideration, that was insufficient
to preserve it for appeal. See Rabatin v. Allied Glove Corp., 24 A.3d 388,
391 (Pa.Super. 2011). It also waived any claim that a Rule 237.1 violation
required the trial court to strike the default judgment by failing to raise that
claim below. It presented the alleged violation to the lower court as a basis
for opening the judgment only.
Moreover, the claim of a Rule 237.1 violation lacks merit. The rule
requires a party to include in a praecipe to enter a default judgment a
certification that the party mailed “a written notice of intention to file the
praecipe” “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)(i)-(ii); Ridgid Fire
Sprinkler Serv., Inc. v. Chaiken, 482 A.2d 249, 254 (Pa.Super. 1984).
Failure to comply with this directive renders the record fatally defective. See
Erie Ins. Co. v. Bullard, 839 A.2d 383, 387 (Pa.Super. 2003). Here, the
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record shows that Cogent’s counsel did not enter his appearance until July 17,
2019, some four months after the entry of the default judgment. It follows
that he was not counsel of record when Rishabh mailed the notice. As Rule
237.1 only required Rishabh to mail the notice to Cogent, there was no
violation. Although Cogent alleges that its counsel had asked Rishabh’s
counsel on the phone to mail the notice to his attention, Rishabh’s alleged
failure to do so does not constitute a violation of Rule 237.1.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/6/2020
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