Provident Credit Corp. v. Young

CAVANAUGH, Judge,

dissenting:

I dissent because, in my view, the majority has ignored the applicable law. The only issue before this court is *132 whether the court below abused its discretion in refusing to open a judgment entered by default. The grant of a petition to open judgment is a matter of judicial discretion and an appeal to the court’s equitable powers. The discretion is to be exercised only when three factors coalesce: (1) The petition has been promptly filed; (2) a meritious defense can be shown and (3) the failure to appear can be excused. Balk v. Ford Motor Company, 446 Pa. 137 , 258 A.2d 128 (1971). Further, a lower court’s refusal to open a judgment will not be reversed unless there has been an abuse of discretion. Kraynick v. Hertz, 443 Pa. 105 , 277 A.2d 144 (1971). What constitutes an abuse of discretion was clearly stated in Mielcuszny v. Rosol, 317 Pa. 91, 93, 94 , 176 A. 236 (1934):

An abuse of discretion is not merely an error of judgment, but if in reaching a conclusion the law is overridden or misapplied, or the judgment exercised is manifestly unreasonable, or the result of partiality, prejudice, bias or ill-will, as shown by the evidence or the record, discretion is abused.

It is not sufficient to persuade an appellate court that it might have reached a different conclusion if it, in the first place, had been charged with the duty imposed on the court below. Garrett’s Estate, 335 Pa. 287 , 6 A.2d 858 (1939).

In Day v. Wilkie Buick Company, 239 Pa.Super. 71 , 361 A.2d 823 (1976) this court reversed the order of the lower court refusing to open a default judgment, as the petition to open was promptly filed (approximately sixteen days after the entry of default) and the petition presented a “sufficient case of excuse.” Judge Hoffman filed a dissenting opinion in which Judge Spaeth joined, stating at 239 Pa.Super. 75, 76 , 361 A.2d 825 , 826:

It is irrelevant that we would decide differently were we charged with the duty to decide the case in the first instance. (Emphasis added).

In the instant case the majority has decided that the court below abused its discretion in determining that the petition to open had not been promptly filed. The majority has simply substituted its own judgment for that of the court below and the law does not permit this.

*133 In order to fully understand this case we must briefly consider the factual and procedural background. The narrative in this ease which had the unhappy result of the appellant losing her house, begins on or about December 20, 1971, when the appellant accompanied her brother and his wife to the Peter James Buick Agency in Ardmore, Pennsylvania. Mrs. Davis’ brother, Charles Young, wanted to buy an automobile and asked her to go along to co-sign for the car. At the time Mrs. Davis was on her way to Washington D. C. to visit her sick brother and she did not have much time to remain at the automobile agency. She testified that an employee of the agency asked her to sign some papers in blank. Apparently, the agency considered Mrs. Davis to be a suitable co-signer as she was buying a house and an automobile herself. She testified that an employee of the automobile agency told her that they wanted a co-signer who did not move about the city and who had good credit references. She thought that by becoming a co-signer it meant that if her brother could not be located that she would be contacted and would in turn contact her brother and he would make payments on the car.

Mr. Young fell behind in his car payments and a complaint in assumpsit was served on Mr. and Mrs. Young on August 1, 1972, and a default judgment was taken as to them on August 25, 1972. A complaint against the appellant, Mrs. Davis, was served at her residence on September 9, 1972. Mrs. Davis was not home and the complaint was served on an adult at her house. The appellant does not challenge the validity of the service of the copy of the complaint. On October 3, 1972 a default judgment was taken against the appellant. Damages were assessed in the total amount of $4,838.90 representing the unpaid balance of $4,100.90 and collection charges of eighteen per cent or $738.00. On January 3, 1974 a writ of execution was filed for the purpose of selling Mrs. Davis’ home at 6134 Lebanon Avenue, Philadelphia, Pennsylvania. The writ of execution claimed a balance due in the amount of $3,959.84. Appellant’s home was sold on February 4, 1974, at the sheriff’s sale to the *134 attorney for the plaintiff on the writ. In August, 1974, an action in ejectment was commenced against Mrs. Davis and in September, 1974, a sheriff’s deed was given to Carl Inker for Mrs. Davis’ home.

On September 8, 1975 Mrs. Davis filed a petition to open and/or strike the default judgment. On July 5, 1977, Mrs. Davis filed interrogatories to the Provident Credit Corporation, appellee. On September 16,1977, Mrs. Davis’ deposition was taken and this constitutes the only testimony before the court below. Appellee filed a motion for protective order with regard to the interrogatories filed on July 5, 1977, and the motion for protective order was granted without hearing by Judge Greenberg on November 16,1977. On May 16, 1978 Judge Jenkins denied Mrs. Davis’ petition to open and/or strike the default judgment and from these two orders the appellant has appealed to this court.

Judge Jenkins in his opinion in the court below denied the petition to open judgment on the grounds that it was not promptly filed and that the default was not reasonably explained. On appeal to this Court, a panel consisting of Wieand, Robinson and Louik, JJ. sustained the action of the lower court in an opinion by Robinson, J., concurring statement by Wieand, J. and dissenting opinion by Louik, J. Appellant’s petition for reargument was granted and the case was argued before the court en banc.

The law attaches genuine significance to the requirement that a petition to open a default judgment must be filed promptly after the petitioner learns of the default. Nevertheless, “[t]he law does not establish a certain number of days which constitutes a cutoff point between a prompt filing of a petition to open and one which is not timely filed.” King v. Evans, 281 Pa.Super. 219, 224 , 421 A.2d 1228, 1230 (1980). In some cases it is evident that the petition to open has been promptly filed. In DiNenno v. Great Atlantic and Pacific Tea Company, 245 Pa. Super. 498 , 369 A.2d 738 (1976) the petition to open was filed fifteen days after the entry of a default judgment, and this court held that “clearly the petition to open was promptly filed.” 245 Pa.Super. *135 at 500 , 369 A.2d at 739 . See also Quaker Transit Company, Inc. v. Jack W. Blumenfeld and Company, 277 Pa.Super. 393 , 419 A.2d 1202 (1980) in which this court held that a petition to open filed fourteen days after the default judgment had been entered was timely filed. Similarly, in Cruse v. Woods, 279 Pa.Super. 242 , 420 A.2d 1123 (1980) a petition to open filed six days after the judgment was entered was promptly filed.

In the case of Ruczynski v. Jesray Construction Corporation, 457 Pa. 510 , 326 A.2d 326 (1974) the Supreme Court held that the court below abused its discretion in opening a default judgment where the petitioner delayed less than five months after learning that a default judgment had been entered against him. During this time the attorneys for the parties were attempting to negotiate a settlement. The court also noted in Ruczynski, supra that timeliness is measured from the time one receives notice of the entry of the default judgment and not from the actual entry. See also Hutchison v. Hutchison, 492 Pa. 118 , 422 A.2d 501 (1980). In order to determine what is a prompt filing of a petition to open the circumstances of each individual case must be considered. In Jost v. Phoenixville Area School District, 237 Pa.Super. 153 , 346 A.2d 333 (1975) the court determined that a petition to open was not promptly filed where it was filed five months after the default judgment had been entered. The petition alleged a meritorious defense. In Reliance Insurance Company v. Festa, 233 Pa.Super. 61 , 335 A.2d 400 (1975) the petition to open was filed some four months after the entry of the default judgment. The petitioner alleged that letters notifying the appellant that a default judgment was entered were apparently filed away and not seen by counsel for several weeks. The court stated at 233 Pa.Super. 64 , 335 A.2d 401 :

We need not consider whether such inadvertence may be considered in a determination of whether the insurance company acted promptly, because we find that counsel’s additional delay of 71 days from September 27, 1973, when it admits actual notice of the judgment, until December 7, *136 1973, when the petition was finally filed, is too excessive to meet the requirement of promptness.

In the Reliance case the court held that the lower court erred in opening the default judgment. A delay of eight weeks between the time of notice of the default judgment and the petition to open was found too long in Pappas v. Stefan, 451 Pa. 354 , 304 A.2d 143 (1973). As an illustration of how promptly a party must move to open a default judgment, the court held in Texas and Block House Fish and Game Club v. Bonnell Run Hunting and Fishing Corporation, 388 Pa. 198 , 130 A.2d 508 (1957) that the court below was correct in finding that no satisfactory explanation had been given for delay of twenty-seven days from the time of notice of the entry of default judgment until the petition to open judgment was filed and the court held that the petition was not timely filed. In Schutte v. Valley Bargain Center, Inc., 248 Pa.Super. 532 , 375 A.2d 368 (1977) the lower court found that a petition to open was promptly filed notwithstanding a delay of forty-seven days between the time that confusion was resolved by the defendant as to an action against it, and the filing of the petition to open the default judgment. This Court found that the court below abused its discretion in finding that the petition to open was promptly filed. Similarly, in Quatrochi v. Gaiters, 251 Pa.Super. 115 , 380 A.2d 404 (1977), this Court found that the lower court abused its discretion in granting a petition to open a default judgment filed sixty-three days after the defendant received notice of the entry of the default judgment. That our courts are very sensitive to a prompt filing of a petition to open is illustrated by Smith v. Tonon, 231 Pa.Super. 539 , 331 A.2d 662 (1974) in which this Court held that the court below abused its discretion in opening a default judgment where counsel for the defaulting party had three weeks in which to file a petition to open before he left for a three months tour of duty in the army reserve.

In the recent case of Duffy v. Gerst, 286 Pa.Super. 523 , 429 A.2d 645 (1981) this court again recognized the importance of a prompt filing of a petition to open a default *137 judgment. Default judgment was entered on October 19, 1978 and the petition to open was filed on March 22, 1979. The petition to open was denied by the court below which did not discuss the requirement of promptness. This court remanded for further proceedings. It stated at 286 Pa.Super. 537 , 429 A.2d 653 :

Assuming, therefore, that appellants should be regarded as having filed their petition three months after the final decree instead of four months, the question becomes whether this delay was so long as to require that the petition be denied as not timely, even though, if its allegations are true, it shows a reasonable explanation for appellants’ failure to answer the complaint, and a meritorious defense to the complaint. (Emphasis added)

The circumstances of each case determine the question of promptness. For example, in Raymond J. Brusco Funeral Home v. Sicilia, 277 Pa.Super. 115 , 419 A.2d 688 (1980) a default judgment was filed on September 8, 1976 and the defendant first learned of it on December 7, 1976. The petition to open judgment was filed on July 6,1977, and this Court, reversing the court below, found it to be timely filed. An arrangement had been worked out between the plaintiffs attorney and the defendant’s attorney concerning the payment of a funeral bill whereby the plaintiff agreed to waive the prompt filing requirement if monthly payments were made on the judgment. On April 30, 1977, the defendant was told that as the payments were not being made that he should proceed to open the judgment. The court held that in the circumstances the petition to open was promptly filed. It noted that “it is undoubtedly true that in numerous cases we have found petitions that were filed in less than the time elapsed in the instant case to be not timely filed.. . In short, there is simply no ‘magic’ number which will determine whether a petition is timely or not.” 277 Pa.Super. at 119, 120, 419 A.2d at 690. In some circumstances, what might appear at first glance to be an obvious untimely filing of a petition to open, the court has found the petition to be timely filed. In the recent case of Queen City Electri *138 cal Supply Company, Inc. v. Soltis Electric Company, 491 Pa. 354 , 421 A.2d 174 (1980) (Roberts J. filed a dissenting opinion in which Larsen, J. joined) the Supreme Court found that the trial court had abused its discretion in denying a petition to open. The court stated at 491 Pa. 356 , 421 A.2d 175 :

The issue here presented is whether a court should open a snap default judgment entered without notice against a garnishee one day after the time allowed for filing answers to interrogatories had expired where (1) the garnishee is a stranger to the underlying transaction, (2) the default was excusable, (3) the answers to interrogatories were filed one day after the default judgment was taken, (4) the garnishor would reap a windfall in excess of $20,000.00, and (5) although the petition to open was not filed for twenty months, the garnishor sustained no prejudice from the delay.

Despite the fact that the garnishee waited twenty months to petition to open, the Supreme Court, affirming the Superior Court, found the petition to be timely filed. It was pointed out that the courts have expressed a greater willingness to relieve a defaulting garnishee than a defaulting defendant. The court also noted that the delay in filing, the petition to open resulted substantially from the legal confusion produced by the conflicting demands made upon the bank (garnishee) by the garnishor and the trustee in bankruptcy. The court also found that the garnishor suffered no prejudice by the delay. The court stated at 491 Pa. 361 , 421 A.2d 177 :

The sole remaining issue, then, is whether the petition to open was promptly filed. This is always an equitable determination which must be made in light óf what is reasonable under the circumstances. Indeed, it is- well established that where equitable circumstances exist, a default judgment may be opened regardless of the time that may have elapsed between entry of the judgment and filing of the petition to open. See Baranofski v. Malone, 371 Pa. 479, 482 , 91 A.2d 908, 909 (1952).

*139 It should be noted that Baranofski v. Malone, 371 Pa. 479 , 91 A.2d 908 (1952) involved a petition to open judgment that was filed almost ten months after its entry and less than seven months after the petitioner received notice of the entry by registered mail. The court found the petition to be untimely filed, and stated at 371 Pa. 482 , 91 A.2d 909 :

Moreover, and apart from all other considerations, defendant lost any possible right to equitable relief because of his delay in seeking it. It is true that a court has the power to open a judgment by default (as distinguished from a judgment adversely rendered) even after the expiration of the term in which it was entered; Breden v. Gilliland, Executor, 67 Pa. 34 ; King v. Brooks, 72 Pa. 363 ; Roth v. Pechin, 260 Pa. 450, 454 , 103 A. 894, 896 ; Richey v. Gibboney, 154 Pa.Super. 1, 7 , 34 A.2d 913, 915 . But the application for that purpose must be made without unreasonable delay or else the relief sought is barred by laches.

The question is immediately raised whether the language of the Supreme Court in Queen City Electrical Company Inc. v. Soltis Electric Company, supra, that “where equitable circumstances exist, a default judgment may be opened regardless of the time that may have lapsed between entry of the judgment and filing the petition to open” means that the Supreme Court has suddenly abandoned the requirement that the petition to open must be promptly filed. We think not. We believe that the Court is merely stating the requirement that the determination of what is prompt depends on the circumstances of the case. In fact, the Superior Court in Queen City Electrical Supply Company v. Soltis Electric Company, 258 Pa.Super. 305, 309 , 392 A.2d 806, 807 (1978) succinctly stated the problem as follows: “Instantly, there is no serious dispute that the default was excusable and that a meritorious defense has been shown. The issue is whether the twenty-month delay in filing the petition to open can be considered ‘prompt’ under the circumstances of this case.”

In Maurice Goldstein Co., Inc. v. Margolin, Inc., 285 Pa.Super. 161 , 427 A.2d 162 (1980) this Court stated that the *140 Pennsylvania Supreme Court set forth the test for determining whether a petition to open judgment has been promptly filed in the Queen City Electrical Supply Company case, supra, and concluded that “no equitable circumstances exist here to justify opening the judgment against appellee at that late date.” 285 Pa.Super. 166 , 427 A.2d 164 (1980). While this language might indicate that the promptness requirement has been superseded by “equitable circumstances” this doubt is put aside as the court stated at 285 Pa.Super. 164 , 427 A.2d 163 “[w]e find that Mr. Margolin [who filed the petition to open the default judgment] failed to satisfy the requirement of a prompt filing of the petition.” (Emphasis added). In the Goldstein Co. Inc. case default judgment was filed on February 23, 1973 and the petition to open was filed on May 30, 1975, two years and three months later. This Court held that the court below had abused its discretion in opening the judgment. Apparently several attempts had been made to notify the petitioner of the suit and the default judgment against him although he claimed that he first learned of the default judgment in April, 1975, which was only about a month before he filed his petition to open.

We must review the circumstances of this case to determine if the appellant acted promptly having once learned that a default judgment was entered against her. A default judgment in a sense is a red flag that signals danger. “The concept of a default judgment is based on a litigant’s failure to do something that he should have done to protect his interests. Once a party learns that a default judgment has been entered against him, indifferent conduct must be replaced with that consistent with the exigency of the situation.” King v. Evans, 281 Pa.Super. 219 , 421 A.2d 1228, 1230 (1980). In this case there was a period of almost three years between the filing of the default judgment and the filing of the petition to open and such a delay appears to be in inordinate unless in the circumstances we find that the appellant acted promptly. The appellant does not question the validity of the service of the complaint on her. The *141 default judgment was taken on October 3, 1972. Appellant learned of the entry of the judgment shortly thereafter when she spoke to a representative of the Provident Credit Corporation on the telephone and was told the judgment had been entered against her and that she ran the risk of losing her house since her brother had not made payments on his car. In November, 1972, about a month after judgment was entered the appellant was very concerned about the fact that she might lose her home. She contacted an attorney, Allan Getson, who said he could not represent her as he represented her brother, Charles Young, in another matter. Mrs. Davis then contacted another attorney, Cassandra Birnie, with respect to the default judgment and the possible loss of her house. Mrs. Birnie apparently advised appellant to seek to have the judgment removed but told her that it would be expensive to do this. Mrs. Davis chose not to pay the cost of legal proceedings. It is not clear from the record what Mrs. Davis or her attorney did concerning the matter from the fall of 1972 until November, 1973. In November, 1973, Mrs. Davis received a copy of a letter dated November 6, 1973 from the Provident Credit Corporation to Mr. Young stating that in the “event that you have not been out of work you are responsible for all delinquent installments which total $1,528.92. In August, 1974, Mrs. Davis received a complaint in ejectment as her house had been sold at sheriff’s sale on February 4, 1974. She contacted an attorney, Mr. Smukler, who advised her of the necessity of proceedings to have the default judgment against her removed. He also told her the proceedings would be costly. Mrs. Davis then left Mr. Smukler and in early 1975 contacted the Community Legal Services, her present counsel. Counsel for Community Legal Services contends on appeal that her new counsel began the detailed process of mustering the facts and researching the issues when Mrs. Davis became marginally ineligible for Community Legal Service aid because of an increase in her Veterans Administration and Social Security benefits. The case then apparently was referred to Lawyers Reference Service which attempted unsuccessfully to refer the case to several private attorneys. *142 Counsel for appellant further alleges in his brief that because of special circumstances the Community Legal Services was reauthorized in August, 1975, to again represent appellant and the petition to reopen was filed in September, 1975.

The dominant fact in this case is that as early as November, 1972, the appellant was aware that a default judgment was entered against her. She further understood that she ran the risk of losing her house, which she ultimately did, because of the default judgment. She was advised by at least two attorneys that proceedings could be taken to petition to open the judgment but she did not want to proceed because of the cost involved. Finally, in the early part of 1975 the appellant sought help at Community Legal Services where free services were available for those eligible to receive them. It is alleged that after she was first represented by Community Legal Services she lost her eligibility for free services because of increased income. Even though the appellant was again entitled to free legal services in September of 1975 she made no use of the services during the period January, 1976, until the spring of 1977.

Although appellant argues that she did the best she could to obtain proper legal representation, it appears that she was unwilling to pay counsel to proceed to petition to have the judgment against her opened, although it was the default judgment that ultimately resulted in the loss of her house. It is one of the first maxims of equity jurisprudence that equity aids the vigilant and not those who slumber on their rights. Witmer v. Exxon Corporation, 260 Pa.Super. 537 , 394 A.2d 1276 (1978).

Certainly, we sympathize with the appellant who is a widow with limited means and who has lost her house because of the fact that she co-signed on an obligation so that her brother could purchase an automobile. While the circumstances dictate what constitutes prompt action in every case dealing with a petition to open a default judgment, we believe that this court has misapplied the law in determining that the court below abused its discretion.

Accordingly I dissent.