Mfrs. & Traders Trust Co. v. Greenville Gastroenterology

• Decision Date: 22 January 2015
• Docket Number: No. 708 MDA 2014,708 MDA 2014
• Citation: 2015 PA Super 15,108 A.3d 913
• Parties: MANUFACTURERS AND TRADERS TRUST CO., Appellee, v. GREENVILLE GASTROENTEROLOGY, SC, Peter S. Kim, and Angela R. Kim, Appellants.
• Court: Pennsylvania Superior Court

108 A.3d 913

2015 PA Super 15

MANUFACTURERS AND TRADERS TRUST CO., Appellee

v.GREENVILLE GASTROENTEROLOGY, SC, Peter S. Kim, and Angela R. Kim, Appellants.

No. 708 MDA 2014

Superior Court of Pennsylvania.

Argued Oct. 29, 2014.

Filed Jan. 22, 2015.

John G. Milakovic, Harrisburg, for appellants.

Peter E. Meltzer, Philadelphia, for appellee.

BEFORE: BOWES, OTT, and STABILE, JJ.

Opinion

OPINION BY STABILE, J.:

In 2011, the trial court in this case granted reconsideration of a final order even though more than 30 days had passed since the order's entry. That final order sustained the preliminary objections of Appellants, Greenville Gastroenterology, SC, Peter S. Kim, and Angela R. Kim, and dismissed this case for lack of personal jurisdiction. A court lacks authority to grant reconsideration of a final order more than 30 days after its entry. Therefore, the trial court's granting of reconsideration and all subsequent proceedings in this case are void, including the entry of judgment in favor of Appellee, Manufacturers and Traders Trust Co. (M & T Bank), after a non-jury trial. We vacate and remand for entry of judgment in Appellants' favor.

This case is a dispute over the lease of a laser hair-removal machine to Appellants. The Kims are Illinois residents, and Greenville Gastroenterology is an Illinois business. In 2007, Appellants agreed to lease the machine from De Lage Landen Financial Services (M & T Bank's predecessor in interest). M & T Bank sued Appellants, alleging they defaulted on the lease.

Appellants filed preliminary objections for lack of personal jurisdiction. As Illinois residents, they claimed they lacked specific or general contacts with Pennsylvania. Also, they argued that any consent-to-jurisdiction clause in the lease (the copy attached to the complaint was illegible) was unenforceable. M & T Bank filed an amended complaint with a legible lease copy, and Appellants renewed their preliminary objections. After receiving briefs and hearing argument, the trial court sustained Appellants' preliminary objections and dismissed this suit for lack of personal jurisdiction on May 23, 2011.

Twenty-nine days later, M & T Bank simultaneously filed a motion to reconsider and a notice of appeal.¹ On July 7, 2011, the trial court issued a statement instead of a Rule 1925(a) opinion:

This court, after re-examining the record, believes that Reconsideration is appropriate. However, because this [c]ourt did not receive the Motion for Reconsideration until after the thirty days allotted by 42 Pa.C.S.A. § 5505 expired, we were unable to grant said Motion. This court requests that the Superior Court grant it the opportunity to reconsider the decision.

Trial Court Statement, 7/7/11. On July 27, 2011, M & T Bank discontinued its appeal in this Court. On August 16, 2011—85 days after it dismissed this action —the trial court granted M & T Bank's motion to reconsider, vacated the May 23, 2011 order, and overruled Appellants' preliminary objections.

Appellants moved to vacate the August 16, 2011 order as void ab initio. The trial court denied the motion,² compelling Appellants to file an answer with new matter, in which they again challenged the trial court's authority to reconsider the May 23, 2011 order. Afterwards, the case proceeded to a non-jury trial. The trial court entered a $191,098.22 decision in M & T Bank's favor. On April 15, 2014, the trial court denied Appellants' post-trial motions. Appellants appealed to this Court.

Appellants raise three issues for review:

1. Whether a trial court loses subject matter jurisdiction over a civil action if it does not grant reconsideration of its order dismissing the case until more than 80 days after the dismissal order and the only stated reason for granting reconsideration is to reverse what it believes to have been an erroneous holding?

2. Whether a written contract is unenforceable as illegible where the plaintiff suing on said contract (a) judicially admits in its complaint that the illegible contract attached to the complaint, supposedly contained the material terms as to jurisdiction, breach, and remedies, is a “true and correct copy”; and (b) introduces insufficient evidence at trial to carry its burden of proof as to legibility?

3. Whether the proper measure of damages for a lessee's breach of a finance lease is the discounted present value of unpaid executory rental payments at the time of breach, less the fair market value of the equipment, where that is the measure of damages set forth in the lease and/or where that measure is reasonable under the circumstances?

Appellants' Brief at 3.

Appellants' first question raises an issue of jurisdiction. They contend the trial court lacked jurisdiction to reconsider the May 23, 2011 order after more than 30 days passed. For ease of discussion, we will divide M & T Bank's counterargument into three propositions. First, M & T Bank argues that the plain language of 42 Pa.C.S.A. § 5505 granted the trial court the ability to reconsider the May 23, 2011 order, because M & T Bank filed and discontinued its appeal of that order. Second, M & T Bank contends the trial court's untimely granting of reconsideration was a valid exercise of its equitable powers. Third, M & T Bank argues that the trial court had inherent authority to correct its mistake in sustaining Appellants' preliminary objections.

“The time within which a trial court may grant reconsideration of its orders is a matter of law....” Estate of Haiko v. McGinley, 799 A.2d 155, 158 (Pa.Super.2002). Similarly, we review a trial court's decision following a non-jury trial for, inter alia, an error of law. McEwing v. Lititz Mut. Ins. Co., 77 A.3d 639, 646 (Pa.Super.2013) (quotation omitted). For questions of law, our standard of review is de novo, and our scope of review is plenary. See Mazurek v. Russell, 96 A.3d 372, 378 (Pa.Super.2014).

The Judicial Code states the general rule regarding a court's authority to modify final orders:

Except as otherwise provided or prescribed by law, a court upon notice to the parties may modify or rescind any order within 30 days after its entry, notwithstanding the prior termination of any term of court, if no appeal from such order has been taken or allowed.

42 Pa.C.S.A. § 5505.³ We must read § 5505 in context with its common law underpinning. At common law, a court lost the power to open or modify a final judgment in a contested matter when the term of court of the judgment's entry ended.⁴ Great Am. Credit Corp. v. Thomas Mini–Mkts., Inc.,

230 Pa.Super. 210, 326 A.2d 517, 518–19 (1974). Section 5505 ameliorates the common law rule by extending a court's authority to modify a final order to 30 days following its entry, even where a term of court has expired.

Unlike a judgment entered by confession or by default, which remains within the control of the court indefinitely and may be opened or vacated at any time upon proper cause shown, a judgment entered in an adverse proceeding ordinarily cannot be disturbed after [it has become final]. A judgment entered in adverse proceedings becomes final if no appeal therefrom is filed within thirty days. Thereafter, the judgment cannot normally be modified, rescinded or vacated. Similarly, it cannot be “opened.”

This doctrine, respecting judgments entered [in adverse proceedings], has a very definite function, namely, to establish a point at which litigants, counsel and courts ordinarily may regard contested lawsuits as being at an end. A contested action yields a judgment in which the value of finality is greatest. There has been a decision following an examination of the critical issues through bilateral participation of the parties.... For all the reasons that finality of judgments is important, such a judgment should be invulnerable except upon a showing of extraordinary miscarriage.

Simpson v. Allstate Ins. Co., 350 Pa.Super. 239, 504 A.2d 335, 337 (1986) (en banc) (internal quotations and citations omitted) (emphasis added) (alteration in original).

If no appeal is filed, a court may, under § 5505, rescind or modify a final order if it gives notice to the parties. Even if an appeal is timely filed, a court may grant a party's motion to reconsider a final order, but only if (1) a motion to reconsider is filed within the appeal period; and (2) the court expressly grants reconsideration within the appeal period. Pa.R.A.P. 1701(b)(3). If a court fails to act on a timely reconsideration motion within the appeal period, it loses jurisdiction to do so. Simpson, 504 A.2d at 337. That happened in this case, where the trial court did not expressly grant M & T Bank's 29th-day reconsideration motion within the one remaining day that it had jurisdiction to do so.

In defense of the trial court's actions, M & T Bank first argues that its appeal removed § 5505's 30–day limitation on the trial court's authority to act.See Appellee's Brief at 12–13 (“Under a plain reading of the [statute], the taking of a timely appeal should by itself remove the 30 day limitation.”). M & T Bank cites no authority in support, and we reject this argument as absurd. If M & T Bank were correct, merely filing an appeal would give a trial court authority to modify final orders ad infinitum. The argument ignores the plain meaning of § 5505, which merely restates the principle that an appeal divests a lower court of jurisdiction, except as otherwise provided by law. See also Pa.R.A.P. 1701 (restating the rule that an appeal divests a lower court of jurisdiction, and setting forth limited exceptions).

A court's inability to modify or rescind final orders outside of 30 days, however, is not absolute. Our cases have referred to several circumstances under which a trial court may modify a final order after more than 30 days have passed: “extrinsic fraud, lack of jurisdiction over the subject matter, a fatal defect apparent on the face of the record or some other evidence of ‘extraordinary cause justifying intervention by the court.’ ” ISN Bank v. Rajaratnam, 83...