Scalla v. KWS, Inc., No. 2003 EDA 2019

• Decision Date: 11 August 2020
• Docket Number: No. 2003 EDA 2019
• Citation: 240 A.3d 131
• Parties: Eric SCALLA v. KWS, INC., A Member of the Thiele Group Appellant
• Court: Pennsylvania Superior Court

240 A.3d 131

Eric SCALLA

v.KWS, INC., A Member of the Thiele Group Appellant

No. 2003 EDA 2019

Superior Court of Pennsylvania.

Submitted May 19, 2020

Filed August 11, 2020

Reargument Denied October 14, 2020

Michael C. Falk, Philadelphia, Arnd N. vonWaldow, Pittsburgh, for appellant.

Daniel L. Hessel, Philadelphia, for appellee.

BEFORE: BENDER, P.J.E., LAZARUS, J., and STRASSBURGER, J.^*

OPINION BY LAZARUS, J.:

KWS, Inc. (KWS), appeals from the order, entered in the Court of Common Pleas of Philadelphia County, denying its petition to open a default judgment. After careful review, we affirm.

On March 30, 2016, Eric Scalla worked as a laborer for Rockland Manufacturing. On that day, Scalla was assisting other employees to use an overhead crane to move an excavation ripper. The excavation ripper was attached to the overhead crane with a chain hook, which was manufactured by KWS. At one point, the excavation ripper detached from the chain hook and crushed Scalla's leg, which required a below-the-knee amputation.

On December 19, 2017, Scalla filed a products liability case against KWS in Philadelphia County, seeking damages for his injuries. Scalla served his complaint on KWS via USPS certified mail, return receipt requested, and via regular mail, to KWS’ Tulsa, Oklahoma office—its only United States office. On January 23, 2018, Elizabeth Roberts, Vice President of Operations and registered agent for KWS according to the Secretary of State of Oklahoma, signed for the USPS return receipt. Roberts, KWS’ lone United States employee, set the package containing Scalla's complaint aside because she did not recognize the sender. Setting mail and packages aside, unopened, was Roberts’ usual practice for KWS’ mail received from senders that Roberts did not recognize. Roberts’ superiors at KWS were familiar with her mail-opening practices.

On March 13, 2018, Scalla served KWS with a 10-day notice of intention to enter default judgment, pursuant to Pa.R.Civ.P. 237.1. Roberts received and signed for this notice as well—she signed both the FedEx package receipt and the USPS return receipt card, but, again, did not open the package. On March 26, 2018, Scalla filed a praecipe to enter default judgment, which was then entered in Scalla's favor and against KWS that same day.

On March 27, 2018, Scalla's counsel sent an email to KWS’ company email address (sales@kwschain.com) notifying KWS that it was in default for failure to respond to Scalla's complaint. Roberts, who also monitored this email account, opened the email and alerted her superiors to its contents. The next day, KWS’ counsel responded to the email stating that they were retained for the matter and would respond to the complaint the following day. On March 29, 2018, KWS removed the action to federal court on the basis of diversity of citizenship jurisdiction, pursuant to 28 U.S.C. § 1332(a), and, on April 5, 2018, KWS filed an answer to Scalla's complaint in federal court. On April 19, 2018, Scalla filed a motion to remand the case back to state court, pursuant to 28 U.S.C. § 1446(b), on the grounds that more than thirty days had elapsed between KWS’ receipt of notice of the complaint, which was effectuated on January 23, 2018. Because more than thirty days had elapsed, Scalla argued, the federal court no longer had jurisdiction to hear the case. On May 30, 2018, the federal court ordered that the parties engage in additional discovery on the issue of the sufficiency of the service of process, and ordered that the parties file supplemental briefs on that issue.

In an opinion filed November 30, 2018, the federal court agreed with Scalla and remanded the case back to state court, finding that: (1) under relevant Pennsylvania and Oklahoma law, Roberts was KWS’ registered agent, at least between September 8, 2009 and May 31, 2018; (2) Roberts accepted service of process on behalf of KWS on January 23, 2018, under Pennsylvania law; (3) KWS’ time for removal began when it was served with Scalla's complaint, on January 23, 2018; and (4) KWS’ notice of removal to federal court was untimely filed because it was filed sixty-five days after Roberts accepted the complaint on behalf of KWS. Scalla v. KWS , 2018 WL 6271646 (filed November 30, 2018). On December 20, 2018, the federal court remanded the record to state court.

On December 31, 2018, the Court of Common Pleas of Philadelphia County acknowledged return of the record. On January 25, 2019, KWS filed a petition to open the default judgment. The parties then filed a series of counseled replies and sur-replies, amounting to ten briefs in total, which caused the trial court "to endure a death by a thousand cuts from eight separate sur-reply briefs." Trial Court Opinion, 9/30/19, at 12.

In an order dated April 10, 2019, the trial court denied with prejudice KWS’ petition to open the default judgment, and issued a thirty-six-page opinion in support thereof, finding that: (1) the federal court's rulings have collateral estoppel effect, which prevents KWS from re-litigating the issues of Roberts’ authority and the validity of service of Scalla's complaint; (2) KWS’ petition was not verified, and four of five of KWS’ reply briefs were unverified, which required that the court could not consider the claims made within those filings, pursuant to Pa.R.C.P. 206.3 ; (3) KWS filed an inappropriate number of reply briefs; and (4) on the merits, KWS failed each of the prongs of the three-part test for opening a default judgment. See Trial Court Opinion, 4/10/19. KWS appealed, and KWS and the trial court timely complied with Pa.R.A.P. 1925. On September 30, 2019, the trial court issued a thirteen-page opinion, and, in so doing, incorporated and adopted its initial thirty-six-page opinion dated April 10, 2019.

On appeal, KWS presents the following issues for our review:

(1) Did KWS establish its right to open the default judgment against it by proving each of the three prongs for opening under controlling Pennsylvania law?

(2) Does Pennsylvania law obligate courts to balance the equities in considering petitions to open default judgments?

(3) Did KWS establish its right to open the default judgment against it by proving that a balancing of the equities favored opening under controlling Pennsylvania law?

Appellant's Brief, at 6.

Our standard of review for a trial court's ruling on a petition to open a default judgment is well-settled:

A petition to open a default judgment is addressed to the equitable powers of the court and the trial court has discretion to grant or deny such a petition. The party seeking to open the default judgment must establish three elements: (1) the petition to open or strike was promptly filed; (2) the default can be reasonably explained or excused; and (3) there is a meritorious defense to the underlying claim. The court's refusal to open a default judgment will not be reversed on appeal unless the trial court abused its discretion or committed an error of law. An abuse of discretion is not merely an error in judgment; rather it occurs when the law is overridden or misapplied, or when the judgment exercised is manifestly unreasonable or the result of partiality, prejudice, bias or ill-will. Moreover, this Court must determine whether there are equitable considerations that weigh in favor of opening the default judgment and allowing the defendant to defend the case on the merits. Where the equities warrant opening a default judgment, this Court will not hesitate to find an abuse of discretion.

Stabley v. A & P , 89 A.3d 715, 719 (Pa. Super. 2014) (quoting Castings Condominium Ass'n, Inc. v. Klein , 444 Pa.Super. 68, 663 A.2d 220, 222-23 (1995) ) (internal brackets omitted).

KWS first claims that the trial court abused its discretion in finding that it failed to satisfy each of the three prongs for opening a default judgment. With regard to the first prong, KWS claims that, "the undisputed record shows that it promptly filed its [p]etition once the [t]rial [c]ourt regained jurisdiction following the [f]ederal [c]ourt's remand ruling." See Appellant's Brief, at 23-24. KWS cites to our Court's decision in Kelly v. Siuma , 34 A.3d 86 (Pa. Super. 2011), and our Supreme Court's decision in Queen City Elec. Supply Co., Inc. v. Soltis Elec. Co., Inc. , 491 Pa. 354, 421 A.2d 174 (1980), for the argument that,

Pennsylvania courts have not established a specific time period within which a petition to open a default judgment must be filed to qualify as timely. Instead, the court must consider the length of time between discovery of the entry of the default judgment and the reason for delay. 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.

Appellant's Brief, at 24 (internal citations, quotation marks, brackets, and original emphasis omitted). KWS claims that because it was actively litigating the case in federal court, there was good reason to delay filing its petition to open, since it was exercising "its ‘important [ ] right’ to remove the case to federal court on the basis of the parties’ uncontested diversity of citizenship." See id. at 25 (internal citation and footnote omitted).

In Kelly , supra , we discussed the timeliness requirement of the first prong of the three-part test when considering a petition to open a default judgment:

[w]ith regard to the first prong, whether the petition to open was timely filed, we note:

The timeliness of a petition to open a judgment is measured from the date that notice of the entry of the default judgment is received.

* * *

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. See Duckson v. Wee Wheelers, Inc. , 620 A.2d 1206 (Pa. Super. 1993) (one day is timely); Alba v. Urology Associates of Kingston , 598 A.2d 57 (Pa. Super. 19

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