Opinion
J-S11043-16 No. 2075 EDA 2015 No. 2377 EDA 2015
04-29-2016
HOTEL FURNITURE LIQUIDATORS OF PHILADELPHIA, INC. v. CASTOR AVENUE PROPERTIES, LLC, Appellant
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order entered on May 27, 2015 in the Court of Common Pleas of Philadelphia County, Civil Division, No(s): December Term, 2014, No. 00855 Appeal from the Judgment entered on June 26, 2015 in the Court of Common Pleas of Philadelphia County, Civil Division, No(s): December Term, 2014, No. 00855 BEFORE: FORD ELLIOTT, P.J.E., OTT and MUSMANNO, JJ. MEMORANDUM BY MUSMANNO, J.:
Castor Avenue Properties, LLC ("Castor") appeals from the Order denying its Petition to Open Default Judgment. In this consolidated appeal, Castor also appeals from the Judgment entered against it and in favor of Hotel Furniture Liquidators of Philadelphia, Inc. ("Hotel Furniture"), in the amount of $375,388.24. We affirm.
The trial court set forth the relevant underlying factual and procedural history as follows:
The instant action arises from a lease dispute between the parties. The tenant is plaintiff Hotel Furniture .... The landlord is defendant Castor .... On December 31, 2010, [Hotel Furniture] and [Castor] entered into a lease agreement for 50,000 square feet of rental space located at 2222-2230 Castor Avenue, Philadelphia, Pa. 19134. The property consisted of three separate rental units[:] the leased property and two other rental units. Paragraph 1 of the lease provided that [Hotel Furniture] is permitted to use the leased premises for the purpose of warehouse storage and selling furniture and fixtures to other businesses and the public. Paragraph 2 of the lease provided as follows:
Compliance with Law. Each party, its officers, employees, agents and servants, shall comply fully and promptly with all applicable laws....
The lease was for a period of five (5) years, commencing on August 15, 2010[,] and expiring on October 31, 2015[,] with a five year option. On October 15, 2012, the City of Philadelphia commenced a lawsuit against [Castor] in the Court of Common Pleas of Philadelphia County under docket number October Term 2012 No. 1842 in code enforcement. The court found [Castor] in violation of the City of Philadelphia [Building] Code and Fire Code[,] and stated the following:
The subject premises with existing Fire Code and other violations, poses a serious fire hazard, safety threat, and immediate serious danger to any occupants of the subject premises. The structure is therefore in a seriously dangerous condition due to inadequate maintenance, and may result in potential serious injury to persons occupying the subject building.
On March 17, 2014, the City of Philadelphia Department of Licenses and Inspections directed [Hotel Furniture] to vacate the leased premises on four hours' notice. [Hotel Furniture] was ordered to remove all furniture and other items warehoused at the leased premises. [Hotel Furniture] leased vehicles to remove its inventory from the leased premises, employed
personnel to remove the inventory and employed fire watch personnel from an outside professional security company trained in and devoted to fire watch services. [Hotel Furniture] vacated the premises with as much inventory as could be removed on short notice.
On May 1, 2014, [Hotel Furniture] leased a facility[,] which was much smaller than the leased property. The new space at 4343 Widacor Avenue in Philadelphia was 25,000 square feet. As a result, [Hotel Furniture] was forced to leave some of its inventory at the leased premises, discard some and donate some. Sixty percent of its inventory was dumped, donated or recycled. Forty percent was transported to the new space. The new space was not as visible or accessible as the leased property to the public and walk[-]in traffic declined significantly.
On September 15, 2014, counsel for [Hotel Furniture] notified [Castor] that it was in default of the lease for failing to comply with Philadelphia Code Ordinances. [Hotel Furniture] inquired into the status of its expected compliance with the ordinances [and] informed [Castor] that [Hotel Furniture] suffered damages for which it would seek reimbursement. On December 3, 2014, [Hotel Furniture] filed the instant [C]omplaint against [Castor] alleging breach of lease, breach of implied covenant of quiet enjoyment and constructive eviction. According to the Affidavit of Service filed with the court, [Castor] was served with the [C]omplaint on December 24, 2014[,] by personal service at 203 Meserole Avenue, Brooklyn, New York. [Castor] did not file an answer to the [C]omplaint or otherwise plead. On January 13, 2015, [Hotel Furniture] served a ten[-]day letter of [N]otice to take a default for failing to answer or otherwise plead to the [C]omplaint to the same address where the [C]omplaint was served. [Castor] once again did not answer or file a response. On February 24, 2015, [Hotel Furniture] filed a [P]raecipe to enter default judgment against [Castor] for failure to answer the [C]omplaint and a default judgment was entered against [Castor]. In the meantime, the court scheduled an assessment of damages hearing. [Castor's] General Counsel received notice of the assessment and at that time contacted local counsel to file a [P]etition to open the default judgment.
On April 10, 2015, [Castor] filed its [P]etition to [O]pen the [D] efault [J]udgment. On May 27, 2015, the court denied the [P]etition to [O]pen the [D]efault [J]udgment. On June 11,
2015, an assessment of damages hearing was held wherein testimony was presented and exhibits introduced. On June 25, 2015, the court entered a [Judgment] assessing damages against [Castor] and in favor of [Hotel Furniture] in the amount of $375,388.24. [Castor] appealed. On June 25, 2015, [Castor] filed an appeal of [the trial] court's [O]rder ... denying the [P]etition to [O]pen the [D]efault [J]udgment. On July 24, 2015, [Castor] filed an appeal of [the trial] court's finding assessing damages against [Castor] in the amount of $375,388.24[.]Trial Court Opinion, 8/28/15, at 1-4.
This Court consolidated the two appeals.
On appeal, Castor raises the following questions for our review:
I. Whether the court of common pleas erred as a matter of law in denying [Castor's] Petition to Open Default Judgment where all three parts of the three[-]part test [for opening a default judgment] were not considered?Brief for Appellant at 5 (some capitalization omitted).
II. Whether the court of common pleas erred as a matter of law in concluding that [its] assessment of damages against [Castor] was proper and supported by the record?
III. Whether the court of common pleas erred as a matter of law in concluding that the June 11, 2015 assessment of damages hearing was a trial[,] and [Castor] waived its right to appeal?
In its first claim, Castor contends that the trial court erred in denying its Petition to Open Default Judgment without considering all of the prongs of the three-part test to open a default judgment. Id. at 17, 18, 19-20. Castor argues that Castor's New York attorney did not timely file an answer to Hotel Furniture's Complaint due to confusion and oversight. Id. at 18, 20-21, 26-27, 29-31. Castor claims that its "young" New York attorney was unaware of the existence of the Pennsylvania business, which was the only business owned by its members outside of New York state, and the attorney mistakenly sent the Complaint to Castor's other business. Id. at 20-21, 23-24, 25, 26-27, 30-31. Castor also asserts that while it filed a Petition to Open Default Judgment forty-five days after the entry of default judgment, the Petition was filed just four days after receiving Notice of the entry of judgment. Id. at 18, 21, 22, 24, 26. Castor claims that upon receiving the notice of default judgment, it hired counsel in Pennsylvania and took all necessary steps to open the judgment. Id. at 21, 25, 27-28; see also id. at 28 (arguing that it is the date Castor received Notice of the default judgment that is relevant to determining promptness of filing a petition to open). Castor further argues that it has a meritorious defense to Hotel Furniture's Complaint. Id. at 18, 32-36. Castor contends that most of the licenses and inspections violations were caused by Hotel Furniture's own acts, and that under the lease, Hotel Furniture would be responsible for all costs resulting from modifications to meet any applicable legal standards. Id. at 34-35.
Our standard of review is as follows:
A petition to open a default judgment is an appeal to the equitable powers of the court. The decision to grant or deny a petition to open a default judgment is within the sound discretion of the trial court, and we will not overturn that decision absent a manifest abuse of discretion or error of law.
However, we will not hesitate to find an abuse of discretion if, after our own review of the case, we find that the equities clearly favored opening the judgment.Smith v. Morrell Beer Distributors , Inc., 29 A.3d 23, 25 (Pa. Super. 2011) (citation and brackets omitted).
An abuse of discretion is not a mere 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.
Pennsylvania Rule of Civil Procedure 237.3(b) provides that "[i]f the petition [challenging the default judgment] is filed within ten days after the entry of the judgment on the docket, the court shall open the judgment if the proposed complaint or answer states a meritorious cause of action or defense." Pa.R.C.P. 237.3(b). However, where a petition to open a default judgment is not filed within ten days of its entry, "a default judgment may be opened if the moving party has (1) promptly filed a petition to open the default judgment, (2) provided a reasonable excuse or explanation for failing to file a responsive pleading, and (3) pleaded a meritorious defense to the allegations contained in the complaint." US Bank N.A. v. Mallory , 982 A.2d 986, 994-95 (Pa. Super. 2009). The moving party must meet all of these requirements to open a default judgment. Id. at 995.
With regard to the first prong, "[t]he law does not establish a specific time period within which a petition to open a judgment must be filed to qualify as timely." Kelly v. Siuma , 34 A.3d 86, 92 (Pa. Super. 2011) (citation 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." Id. (citation omitted).
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 Bahr v. Pasky , 439 A.2d 174, 177 (Pa. Super. 1981) (stating that "[w]hile some mistakes will be excused, ... mere carelessness will not be....").
With regard to the third prong, asserting a meritorious defense, the petitioner must aver facts that if proved at trial, would justify relief. Duckson v. Wee Wheelers , Inc., 620 A.2d 1206, 1209 (Pa. Super. 1993).
Here, the trial court found that, with regard to the first prong, the Petition to Open Default Judgment, filed forty-five days after the entry of default judgment, was not prompt. See Trial Court Opinion, 8/28/15, at 5-6; see also Pappas v. Stefan , 304 A.2d 143, 146 (Pa. 1973) (concluding that a fifty-five day delay was not prompt); US Bank N.A., 982 A.2d at 995 (concluding that an eighty-two day delay was not prompt); Schutte v. Valley Bargain Center , Inc., 375 A.2d 368, 371 (Pa. Super. 1977) (concluding that a forty-seven day delay in filing a petition to open was not prompt).
We note that Castor cites to Alba v. Urology Assocs. of Kingston , 598 A.2d 57, 58 (Pa. Super. 1991), for the proposition that when determining whether an appellant promptly filed a petition to open the default judgment, courts must look to the date that the party received notice of the entry of default judgment. Brief for Appellant at 28. Castor argues that it did not receive Notice of the default judgment until April 6, 2015, which made its April 10, 2015 Petition to Open Default Judgment timely. Id. However, the trial court found Castor's claim that it did not receive the Notice of default judgment until April 6, 2015, to be not credible. See Trial Court Opinion, 8/28/15, at 5-6. The trial court specifically found that Castor received Notice of the default judgment in February 2015. See id. at 6; see also Alba , 598 A.2d at 58 (concluding that the appellant received notice of the default judgment at the time the judgment was entered). We conclude that the trial court did not abuse its discretion in finding that Castor received Notice of the default judgment in February 2015. See Smith , 29 A.3d at 25.
Further, the trial court found that, with regard to the second prong, Castor did not provide a reasonable excuse for its failure to file a responsive pleading. See Trial Court Opinion, 8/28/15, at 6-7; see also Myers , 986 A.2d at 177-78 (concluding that a miscommunication of a duty to defend by the in-house counsel, where counsel was unaware of the registered owner of the property in question, did not constitute a reasonable excuse for defendant's failure to file a responsive pleading, warranting the opening of default judgment); US Bank N.A., 982 A.2d at 996 (stating that appellant did not provide a reasonable excuse for failing to file a responsive pleading where, despite numerous notices, appellant made a deliberate decision not to defend).
After a thorough review of the record, the briefs of the parties, and the applicable law, we agree with the sound reasoning of the trial court, as set forth in its Opinion, and affirm on this basis. See Trial Court Opinion, 8/28/15, at 5-7.
Upon our review, the cases cited by Castor to support its argument are unavailing based upon the fact that Castor, despite being a limited liability company with legal representation, took no action on Hotel Furniture's Complaint, and waited forty-five days to file the Petition to Open Default Judgment, without providing a reasonable excuse.
As an addendum, we note that in light of its conclusion that Castor failed to meet the first two prongs of the test, the trial court did not specifically consider whether Castor had satisfied the third prong by pleading a meritorious defense to the allegations in Hotel Furniture's Complaint. We conclude that, even assuming Castor had pleaded a meritorious defense, the trial court properly denied its Petition to Open Default Judgment based upon Castor's failure to meet its burden as to the first two prongs. See Myers , 986 A.2d at 178 (concluding that even if the moving party presented a meritorious defense, the trial court did not abuse its discretion in denying the petition to open default judgment where the moving party failed to meet its burden as to the first two prongs); US Bank , 982 A.2d at 996-97 (affirming denial of petition to open default judgment where the trial court failed to analyze the meritorious defense prong based on the fact that the other prongs were not met). Thus, based upon the foregoing, the trial court did not abuse its discretion in denying Castor's Petition to Open Default Judgment.
In its second claim, Castor contends that the trial court erred as a matter of law in assessing damages against it. Brief for Appellant at 36. Castor argues that the award of damages is based upon speculation and is not supported by the record. Id. at 36, 37. Castor asserts that Hotel Furniture could not collect damages for being evicted from the premises as Hotel Furniture still maintains possession of the premises and continues to store inventory at the location. Id. at 37, 38-39, 42. Castor claims that the calculation of damages was based upon assumptions as to Hotel Furniture's income and expenses, which were not supported by the record. Id. at 37, 39-41. Castor further claims that the record evidence does not support an award of damages related to Hotel Furniture's move from the premises, the losses of inventory, the trash removal, and labor and fire watch. Id. at 42-46. Castor also contends that Hotel Furniture did not mitigate its losses by failing to move its business to a main thoroughfare or advertise the new location. Id. at 46-47.
Our standard of review is as follows:
The duty of assessing damages is within the province of the fact-finder and should not be interfered with by the court, unless it clearly appears that the amount awarded resulted from caprice, prejudice, partiality, corruption or some other improper influence. In reviewing the award of damages, the appellate courts should give deference to the decisions of the trier of fact
who is usually in a superior position to appraise and weigh the evidence. If the verdict bears a reasonable resemblance to the damages proven, we will not upset it merely because we might have awarded different damages.Newman Dev. Grp. of Pottstown , LLC v. Genuardi's Family Mkt., Inc., 98 A.3d 645, 659-60 (Pa. Super. 2014) (citations, brackets, and quotation marks omitted); see also Pollock v. Morelli , 369 A.2d 458, 462 (Pa. Super. 1976) (stating that "where the tenant is deprived of the beneficial enjoyment of the premises, it has been held that damages can be awarded for losses which can be proved. ... [T]he lessee may recover ... for all losses which he can prove he has actually sustained[, and] damages has been liberally extended to include even well[-]established profits of the business[.]") (citations omitted).
The fact-finder must assess the worth of the testimony, by weighing the evidence and determining its credibility and by accepting or rejecting the estimates of the damages given by the witnesses.
Here, the trial court set forth the credible evidence presented at the damages hearing and found that Hotel Furniture sustained $375,388.24 in damages. See Trial Court Opinion, 8/28/15, at 8-9; see also Hatwood v. Hosp. of the Univ. of Pennsylvania , 55 A.3d 1229, 1240 (Pa. Super. 2012) (stating that the calculation of damages is a question of fact); Empire Properties , Inc. v. Equireal , Inc., 674 A.2d 297, 304 (Pa. Super. 1996) (stating that in a breach of contract action, "[t]he purpose of damages is to put the plaintiff in the position he or she would have been in but for the breach."). While Castor argues that the award of damages was speculative, the trial court did not abuse its discretion, as its findings are supported by the evidence of record. See Newman Dev. Grp. of Pottstown , LLC , 98 A.3d at 659. We will not reweigh the evidence and, thus, affirm the award of damages based upon the reasoning set forth in the trial court's Opinion. See Trial Court Opinion, 8/28/15, at 8-9.
With regard to Castor's claim that Hotel Furniture had not been constructively evicted from the premises and thus was not entitled to damages, we note that such a claim is a liability issue, which had been resolved by the default judgment. Moreover, Castor's claim that Hotel Furniture failed to mitigate its losses is without merit. The fact that the new location, which was found on short notice, was smaller than the premises in question and was not on a main throughway did not evidence a failure to mitigate.
In its third claim, Castor contends that the trial court erroneously found that Castor had waived its damages claims based upon a failure to file a motion for post-trial relief pursuant to Pennsylvania Rule of Civil Procedure 227.1. Brief for Appellant at 47-53. As we addressed Castor's damages claims above, we deny its third claim as moot.
We note that the issues raised by Castor on appeal are the same ones it argued during the damages hearing, i.e., the damages requested by Hotel Furniture were speculative and not supported by evidence, that Hotel Furniture was still in possession of the premises, and that Hotel Furniture did not mitigate its damages. See N.T., 6/11/15, at 138-42; see generally Warfield v. Shermer , 910 A.2d 734, 737 (Pa. Super. 2006) (stating that "[t]he purpose for Rule 227.1 is to provide the trial court with an opportunity to correct errors in its ruling and avert the need for appellate review.") (citation omitted). --------
Order and Judgment affirmed.
President Judge Emeritus Ford Elliott joins the memorandum.
Judge Ott files a concurring and dissenting statement. Judgment Entered. /s/_________
Joseph D. Seletyn, Esq.
Prothonotary Date: 4/29/2016
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