Kelly v. Siuma et al.



Defendants Beware: Superior Court Expands Grounds To Deny A Petition To Open A Default Judgment.

We ought to know that not answering a complaint is playing with fire. A recent decision by the Pennsylvania Superior Court shows that Courts are not very forgiving of defendants that do not answer. In fact, the Superior Court has expanded the reasons to disallow a defendant from opening a default to defend a case.

In Kelly v. Siuma, et al., the Plaintiffs filed the Complaint in December 2009 asserting a dram shop claim. Two of the defendants filed answers in February 2010, but for some reason the remaining defendants did not. On August 4, 2010 Plaintiffs filed an Important Notice to Enter Default Judgment against those remaining defendants, including BBK. Having filed nothing, on August 25, 2010, the Plaintiffs filed a Praecipe to Enter a Default Judgment.

BBK filed a Petition to Open the Default Judgment on October 8, 2010 as well as an answer.

BBK argued that it had contacted a lawyer to defend it and that its attorney asked the Plaintiffs to not file a default judgment until it could obtain insurance coverage. Plaintiffs counsel agreed. That is not surprising, since Plaintiffs prefer to have claims covered by insurance. However, BBK did not answer. After waiting many months without BBK filing an Answer, the Plaintiffs filed for the default at the end of August. Ultimately an insurance carrier received notice of the claim and provided defense counsel under a reservation of rights.

After a hearing, the trial court denied the petition to open the judgment and the Superior Court affirmed. What makes this case interesting is that in doing so, the Superior Court expanded the grounds upon which a court could deny such petitions.

The basic test for deciding whether a default judgment can be opened is straightforward:

Generally speaking, 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.

In this case, there were 44 days between the time the Default Judgment was entered and the day the Defendants filed their Petition to open it. The trial court held this was reasonable. The Superior Court called that conclusion “generous.”

But the crux of the case was BBK’s failure to provide a reasonable excuse for failing to file a timely answer. It argued that it attempted to secure counsel, thought that it had, and had an undefined extension. BBK’s central argument was that it need not explain the delay from the time that the Complaint was filed and served until the time it filed the answer some 10 months later.

The Superior Court was not convinced. It noted that BBK was not without fault and that it is a corporate defendant that ought to know better. But it also squarely rejected BBK’s argument that it was not required to provide a reasonable excuse for the 10 month delay in answering the Complaint.

This decision makes quite clear that a defendant that fails to answer must not only provide a reasonable justification for not filing a timely answer after being given notice of the default judgment--but that it must justify why it answered late at all.

That is a much harder standard to meet.

Since the second prong of the test was not met, the third prong was not relevant.

The Superior Court's decision makes it very clear that failing to make a timely Answer to a Complaint can be fatal. The Court's expansion of the grounds to deny a petition to open a default judgment shows that the court requires excellent reasons for delaying an answer and the course of litigation.

– Andrew J. Kennedy. Litigation attorney with the Colkitt Law Firm, P.C. Email: Phone: (724) 463-3570.

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Reference Info:Decision | State, 3rd Circuit, Pennsylvania | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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