Direct Capital Corp. v. Claypoole

• Docket Number: 1470 EDA 2021,J-S04016-22
• Decision Date: 07 February 2022
• Parties: DIRECT CAPITAL CORPORATION v. ROBERT CLAYPOOLE, DMD, PC AND ROBERT CLAYPOOLE, DMD Appellants
• Court: Pennsylvania Superior Court

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DIRECT CAPITAL CORPORATION v. ROBERT CLAYPOOLE, DMD, PC AND ROBERT CLAYPOOLE, DMD Appellants

No. 1470 EDA 2021

J-S04016-22

Superior Court of Pennsylvania

February 7, 2022

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

Appeal from the Order Entered January 22, 2020 In the Court of Common Pleas of Montgomery County Civil Division at 2019-00532

BEFORE: BENDER, P.J.E., MURRAY, J., and STEVENS, P.J.E. ^[*]

MEMORANDUM

MURRAY, J.

Robert Claypoole, DMD, PC, and Robert Claypoole, DMD (Claypoole) (collectively, Appellants), appeal from the order denying their petition to strike or open the $29, 739.09 default judgment entered against them and in favor of Direct Capital Corporation (Direct Capital), in this case involving breach of a financing agreement. After careful review, we affirm.

The trial court explained:

In June 2016, the parties to this matter entered into [an agreement (Agreement)] under which [Direct Capital] provided financing for Appellants' purchase of a piece of dental equipment known as a CEREC machine from CAD/CAM Hero reportedly a reseller of CEREC machines. The piece of dental equipment is described as a one-day visit crown inlay machine, according to [] Claypoole []. CAD/CAM Hero has offices located in Fort Worth Texas, and Appellants' dental practice is operated in Hatboro Township, Montgomery County.

Trial Court Opinion, 7/27/20, at 1-2. Direct Capital is a New Hampshire corporation engaged in the business of "lending, equipment leasing and corporate financing," and has its primary place of business in Portsmouth, New Hampshire. Complaint, 1/10/19, H 1.

Direct Capital filed a civil complaint in Montgomery County, Pennsylvania, on January 10, 2019. Direct Capital averred Appellants "stopped making the payments under the terms of the Agreement, with a principal amount still owed in the amount of $26, 037.68." Id. H 10. Direct Capital represented, "Pursuant to the Agreement, [Appellants] are responsible to pay all costs incurred by [Direct Capital] in connection with the enforcement of the terms of the Agreement, including collection and attorney's fees." Id. H 12. As a result of Appellants' breach, Direct Capital sought $29, 739.09 in damages, interest and fees. Id. H 13.

Direct Capital served Appellants with the complaint on January 28, 2019. On February 22, 2019, Direct Capital filed notice of its intention to seek default judgment pursuant to Pa.R.C.P. 1037. On March 13, 2019, the trial court entered the $29, 739.09 default judgment against Appellants.

Appellants filed a petition to strike or open the default judgment on July 22, 2019. Thereafter,

Appellants moved for a stay of execution which was granted by order of the court dated August 27, 2019. The August 27, 2019, order directed the parties to complete any discovery they intended to conduct concerning the issues raised in Appellants' petition to strike or open the default judgment, by September 20, 2019.

On September 26, 2019, [the trial court] issued its order denying Appellants' petition to strike or open the default judgment. On October 9, 2019, Appellants filed a Motion to Vacate Order and Reinstate Stay of Execution. The motion had several exhibits attached to it, including copies of the September 20, 2019, deposition transcripts of Judith Claypoole [(Judith)] and [] Claypoole. These depositions were part of the discovery conducted in connection with Appellants' petition to open or strike the default judgment entered on March 13, 2019. On October 11, 2019, [the trial court] granted Appellants' motion by vacating its September 26, 2019, order and reinstating the stay of execution.

On December 11, 2019, [Direct Capital] moved to vacate the stay order of October 11, 2019, and requested a decision on Appellants' petition to open or strike off the default judgment. Argument was conducted on January 22, 2020, and an order was issued that same day lifting the stay and denying Appellants' petition to strike or open the default judgment.

Trial Court Opinion, 7/27/20, at 2-3.

Appellants timely filed a notice of appeal. On February 25, 2020, the trial court entered an order requiring Appellants to file a Pa.R.A.P. 1925(b) statement, "not more than twenty-one (21) days after the entry of this order on the docket[.]" Order, 2/25/20. The court cautioned that the failure to timely file a concise statement would result in waiver of all issues. See id. Twenty-two days later, on March 18, 2020, Appellants filed their Rule 1925(b) concise statement.

Direct Capital subsequently filed with this Court an application to dismiss the appeal, based on Appellants' failure to timely file their Rule 1925(b) concise statement.^[1] Application to Dismiss, 8/20/21, HH 30-41. Direct Capital claimed that by untimely filing their concise statement, Appellants preserved no issues for appellate review. Id. H 40. Direct Capital also argued Appellants violated "Pa.R.A.P. 2:5-2," by failing to "deposit with the clerk of the appellate court $300 to answer the costs of the appeal," or providing notice they paid the deposit. Id. HH 44, 46. As a result, Direct Capital requests the dismissal of Appellants' appeal. See id. (prayer for relief).

Appellants' response was that "all of March 2020 and the months following proved to be a dizzying, confusing time riddled with government officials ... scrambling to handle the COVID-19 pandemic." Answer in Opposition to Application to Dismiss, 8/3/21, at 2. Appellants asked this Court to take judicial notice of the various orders issued as a result of the COVID-19 pandemic. Id.

We recognize that on March 16, 2020, the Pennsylvania Supreme Court declared "a general, statewide judicial emergency until April 14, 2020, on account of COVID-19." Supreme Court of Pennsylvania No. 531 Judicial Administration Docket, Order, 3/16/20, at 1. The order authorized president judges in the individual judicial districts to, in part, "suspend time calculations for the purposes of time computation relevant to court cases ... as well as time deadlines[.]" Id. at 2. The Supreme Court extended and expanded the scope of the judicial emergency in several supplemental orders but directed that the emergency cease on June 1, 2020. Supreme Court of Pennsylvania Nos. 531 & 532 Judicial Administration Docket, Order, 5/27/20.

On March 16, 2020, the president judge of the Montgomery County Court of Common Pleas entered an order declaring a judicial emergency, providing:

All statewide procedural and administrative rules involving time calculations within the 38th Judicial District for the filing of documents with the court or taking of judicially mandated action are suspended for the period of time covered by the emergency declaration. Beginning date March 12, 2020, ending date to be determined.

38th Judicial District Administrative Order (AD00001-2020), 3/16/20 (emphasis added). On March 31, 2020, the President Judge filed an administrative order extending the judicial emergency to April 30, 2020. Pursuant to the above orders, we deem Appellants' concise statement (due March 17, 2020, and filed March 18, 2020), to be timely filed. See id.

We next address Direct Capital's assertion that this appeal should be dismissed based on Appellants' failure to pay the appeal deposit pursuant to "Pa.R.A.P. 2:5-2." Application to Dismiss, 8/20/21, at HH 42-47. There is no Pennsylvania Rule of Appellate Procedure "2:5-2." In addition, Direct Capital cites no legal authority in support of this request. We therefore deny Direct Capital's application to dismiss the appeal. See Pa.R.A.P. 2119(a) (the Rules of Appellate Procedure require the argument section of an appellate brief to include "citation of authorities as are deemed pertinent.").

Appellants present the following issues for our review:

1. Should the trial court have required [Direct Capital] to file an amended complaint before entering judgment by default where the complaint omits pages containing material allegations such that it cannot be answered by a responsive pleading?

2. Did not the trial court commit an error by its refusal to strike or open a default judgment where the dominant party to a contract of adhesion disregards provisions requiring all litigation to be conducted in its chosen forum applying its choice of law?

3. Should the trial court have stricken or opened the default judgment entered by the plaintiff equipment lessor against the lessee contrary to material terms of the contract regarding choice of forum and choice of law?

Appellants' Brief at 8 (issues renumbered for disposition).

Appellants first challenge the trial court's refusal to strike or open the default judgment. Id. at 13, 16. Appellants claim Direct Capital did not serve Appellants with its entire complaint, as several pages were missing. See id. at 17. According to Appellants, it is "prejudice" to allow Direct Capital to "get away without serving a full complaint on [Appellants] ... and then move for judgments (and corresponding damages), without ever providing notice of the claims." Id. Upon careful review, we disagree.

Preliminarily, we note that striking a default judgment and opening a default judgment are "distinct remedies and generally not interchangeable." Green Acres Rehab, and Nursing Ctr. v. Sullivan, 113 A.3d 1261, 1270 (Pa. Super. 2015) (quoting Stauffer v. Hevener, 881 A.2d 868, 870 (Pa. Super. 2005)). We first address the denial of Appellants' petition to strike the default judgment.

An appeal from the denial of "[a] petition to strike a default judgment presents us with a question of law; consequently, our standard of review is de novo and our scope of review is plenary." U.S. Bank Nat'l Ass'n for Pennsylvania Hous. Fin. Agency v. Watters, 163 A.3d 1019, 1028 n.9 (Pa. Super. 2017).

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