Wednesday, October 05, 2011

Default judgment stricken - faulty notice of intent to take default

City of Philadelphia v. Lane Advertising, Inc. - Cmwlth. Court - October 4, 2011 (en banc) (5-2)



http://www.pacourts.us/OpPosting/Cwealth/out/1449CD10_10-4-11.pdf



Default judgment stricken, because the notice of intention to take a default judgment did not comply with the relevant rules of civil procedure. A default judgment entered where there has not been strict compliance with the rules of civil procedure is void." Franklin Interiors, Inc. v. Browns Lane, Inc., 323 A.2d 226, 228 (Pa. Super. 1974).



Default judgments are generally not favored. . . In considering a motion to strike a default judgment the court is limited to the facts of record at the time the judgment was entered. . . .A petition to strike is not a chance to review the merits of the allegations of a complaint. Rather, it is aimed at defects that affect the validity of the judgment and that entitle the petitioner, as a matter of law, to relief.. . .



"A record that reflects a failure to comply with Rule 237.1 [of the Pennsylvania Rules of Civil Procedure] is facially defective and cannot support a default judgment." . . . Generally, if the record affirmatively shows a failure to comply with Pa. R.C.P. 237.1, the record is defective and will not support the entry of a default judgment.. . . Rule 237.1(a)(2) requires the plaintiff to provide notice to the defendant of its intent to seek a default judgment. Rule 237.5 requires that the notice "substantially" be in the form established by the Pennsylvania Supreme Court and set forth in the rule. Thus, if the notice provided is not "substantially" in the form adopted by the Pennsylvania Supreme Court, then the plaintiff has not complied with Rule 237.1 and the default judgment cannot stand.



Rule 237.5 requires that the 10-Day Notice "be substantially in the following form":





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. No. 237.5 (emphasis added).



The Plaintiff's 10-Day Notice to Defendant provided:





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, a Judgment may be entered against you without a hearing and you may lose your property or other important rights. . . . (emphasis added).)



The Plaintiff's notice is not identical to the Rule 237.5 form. Rather than instructing Defendant specifically of what he failed to do that led the Plaintiff to issue the notice, as the Rule 237.5 form provides, the Plaintiff's's notice only informed Defendant that he was in default because he "failed to take action required of [him] in this case."



In light of this apparent inconsistency on the face of the record, our analysis must proceed as follows: (a) did the Plaintiff's notice comply with Rule 237.5 because, though not identical, it was "substantially" in the form required by the rule, and, if not, (b) is it a fatal defect such that the default judgment must be set aside.



Held,



a) The notice was not "substantially in the form" required by the rules of procedure - Under the prior version of Rule 237.5, the notice only had to inform defendant that it he was in default, notify the defendant that the plaintiff intends to seek a default judgment if action is not taken within ten (10) days, and include some indicia of notice to legal counsel for the defendant, if represented. But with the 2004 amendment, Rule 237.5 now imposes an additional notice requirement on a plaintiff who wishes to obtain a judgment by default—i.e., the plaintiff must now include in the 10-Day Notice specific reasons why the defendant is in default. It is this additional notice that is absent in any form from the Plaintiff's's 10-Day Notice. Without this additional notice component, required by the Pennsylvania Rules of Civil Procedure for over five (5) years before the Plaintiff filed its complaint, we cannot consider the City’s notice to be "substantially" in the form required by Rule 237.5. The City, therefore, failed to comply with Rule 237.5 and, consequently, Rule 237.1(a)(2) of the Pennsylvania Rules of Civil Procedure.



b) The defect was fatal to the case, in which the judgment must be stricken - A default judgment entered where there has not been strict compliance with the rules of civil procedure is void." Franklin Interiors, Inc. v. Browns Lane, Inc., 323 A.2d 226, 228 (Pa. Super. 1974). Rules allowing a party to obtain a judgment by filing a praecipe, whether for non pros or by default for failure to plead, must be strictly construed. The 10-Day Notice required by Rule 237.1 in this case was defective on its face, as it was not "substantially" in the form required by Rule 237.5. Rather, the notice was based on the Old Form Notice, which the Pennsylvania Supreme Court amended to include the very language that the City omitted from its notice in this case—language that the Supreme Court added for a specific reason. Erie Ins. Co. v. Bullard, 839 A.2d 383, 387 (Pa. Super. 2003). Failure to include this key language was, therefore, a fatal defect. Regardless of the level of actual notice Defendant had, he did not have the type and extent of notice that the Pennsylvania Supreme Court required the City to provide before obtaining a default judgment.

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