Court Opinion

ID: 2772410
Source: CourtListenerOpinion
Date Created: 2015-01-22 22:05:38.580639+00
Date Added: 2024-06-11T11:27:46.584598
License: Public Domain

J-A31044-14

                                   2015 PA Super 15

MANUFACTURERS AND TRADERS TRUST                     IN THE SUPERIOR COURT OF
CO.,                                                      PENNSYLVANIA

                            Appellee

                       v.

GREENVILLE GASTROENTEROLOGY, SC,
PETER S. KIM, AND ANGELA R. KIM,

                            Appellants                    No. 708 MDA 2014

                Appeal from the Judgment entered May 7, 2014
               In the Court of Common Pleas of Dauphin County
                    Civil Division at No: 2010-CV-154254-CV

BEFORE: BOWES, OTT, and STABILE, JJ.

OPINION BY STABILE, J.:                                 FILED JANUARY 22, 2015

       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.
J-A31044-14

        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
____________________________________________

1
    The appeal was docketed in this Court at No. 1091 MDA 2011.

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          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
____________________________________________

2
 On Appellants’ request, the trial court certified its order under 42 Pa.C.S.A.
§ 702(b) and Pa.R.A.P. 1311. This Court denied Appellants’ petition for
permission to appeal at No. 86 MDM 2011.

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         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

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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.,

____________________________________________

3
  Section 5505 applies only to final orders. Hutchison ex rel. Hutchison
v. Luddy, 611 A.2d 1280, 1288 (Pa. Super. 1992), appeal dismissed as
moot, 649 A.2d 435 (Pa. 1994). The May 23, 2011 order dismissed this
action entirely and, therefore, no party disputes its finality. See Pa.R.A.P.
341(b)(1) (A final order is, inter alia, any order that “disposes of all claims
and of all parties[.]”).
4
  Terms of court were “those times or seasons of the year, which [were] set
apart for the despatch of business in the superior courts of common law.”
Horton v. Miller, 38 Pa. 270, 271 (1861). English courts had four annual
terms of court (Hilary, Easter, Trinity, and Michaelmas) corresponding to the
ecclesiastical calendar.    Id.    In Pennsylvania, the General Assembly
established terms of court by statute. See, e.g., Act of May 22, 1722, 1
Sm. L. 131, §§ 2, 11, 21 (setting terms of court for provincial Pennsylvania’s
supreme and inferior courts). Terms of court are historical anachronisms
that the Judicial Code abolished in 1978. 42 Pa.C.S.A. § 324. Section 5505
is a substantial reenactment of a 1959 act, and the reference to “term of
court” is vestigial.

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Inc., 326 A.2d 517, 518-19 (Pa. Super. 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., 504 A.2d 335, 337 (Pa. Super. 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

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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 A.3d 170, 172 (Pa. Super. 2013).

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      A court may open at any time a judgment procured by fraud.          For

example, in First Union Mortgage Corp. v. Frempong, 744 A.2d 327,

334-35 (Pa. Super. 1999), we held that a trial court had the authority to

modify a final in rem judgment five years after its entry.    Because of the

defendant’s use of aliases and corporate alter egos, fraudulent court filings,

frivolous bankruptcy and removal petitions, and dilatory tactics, the original

judgment amount no longer reflected what he owed to the plaintiffs. Id.

      “Extraordinary cause” refers to “an oversight or action on the part of

the court or the judicial process which operates to deny the losing party

knowledge of the entry of final judgment so that the commencement of the

running of the appeal time is not known to the losing party.” Orie v. Stone,

601 A.2d 1268, 1271 (Pa. Super. 1992) (quotation omitted) (emphasis

removed), appeal dismissed as improvidently granted, 622 A.2d 286 (Pa.

1993). For example, in Estate of Gasbarini v. Medical Center of Beaver

County, Inc., 409 A.2d 343, 344-45 (Pa. 1979), unbeknownst to the

plaintiff, her attorney had been suspended from the practice of law when the

defendants successfully argued for dismissal of the case on their preliminary

objections.   Our Supreme Court held the trial court could reopen the

otherwise final judgment, because “it would be harsh, indeed, to hold that

[the plaintiff’s] possible cause of action be lost forever because of the

conduct of an attorney this court has deemed unfit for the practice of law in

this Commonwealth.” Id. at 345.

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      Similarly, in Great American Credit, this Court approved the

untimely opening of a judgment where court oversight deprived the

defendants of notice of the commencement of the appeal period. There, the

court or its staff misplaced the defendant’s request for an extension of time

to respond to the plaintiff’s summary judgment motion. Great Am. Credit

Corp., 326 A.2d at 518-19. The defendants believed their request had been

granted, but the court instead granted the plaintiff’s motion as unopposed.

Id. at 519.   We held that it would be inequitable to make the defendants

pay for the court’s oversight. Id.; see also Jackson ex rel. Sanders v.

Hendrick, 746 A.2d 574, 577-78 (Pa. 2000) (Opinion Announcing the

Judgment of the Court) (ruling it would be inequitable for litigant to forfeit

its appellate rights where trial court orally granted reconsideration within

appeal period but failed to file a written order memorializing its action).

      As noted above, “extraordinary cause” is limited in nature. So, for

example, mistakes or ordinary neglect by counsel do not constitute

extraordinary circumstances. Stockton v. Stockton, 698 A.2d 1334, 1338

(Pa. Super. 1997); see Estate of Gasbarini, 409 A.2d at 345; Simpson,

504 A.2d at 337-38 (“An oversight by counsel in failing to appeal does not

constitute ‘extraordinary cause’ which permits a trial court to grant relief

from a final judgment entered in a contested action.”).

      We have also held that extraordinary cause does not exist where a

party has notice of the entry of a final order. For example in, Luckenbaugh

v. Shearer, 523 A.2d 399, 400 (Pa. Super. 1987) (en banc), the trial court

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untimely reconsidered its decision to dismiss an action for the plaintiffs’

discovery violation (their failure to respond to interrogatories). Id. at 401.

We held the trial court’s reason for granting reconsideration, a potential

“postal mishap” that prevented the plaintiffs from timely delivering their

discovery responses, was not extraordinary cause. Id.; see also Orie, 601

A.2d at 1272 (holding that no extraordinary cause existed where the

garnishee was aware of final order’s entry, evinced by his timely filed—but

not timely granted—reconsideration motion); Simpson, 504 A.2d at 338

(finding error in untimely opening contested judgment without any showing

of extraordinary circumstances).

     We reject M&T Bank’s claim that the trial court induced it to

discontinue its prior appeal. Any reliance by M&T Bank on the trial court’s

statement is not reasonable. The trial court requested this Court to grant it

the ability to reconsider a final order out of time. Contrary to M&T Bank’s

assertion, the statement contained neither a “directive” nor a “request” for

M&T Bank to discontinue its appeal.     To the extent M&T Bank mistakenly

relied on the trial court’s statement, such mistakes are not “extraordinary

cause.” See Stockton, 698 A.2d at 1338; Simpson, 504 A.2d at 337-38.

     M&T Bank provides no support for its assertion that this Court would

have reversed the trial court’s May 23, 2011 order had M&T Bank not

discontinued its appeal.   That contention misses the point.     M&T Bank’s

appeal was the only way to reverse the May 23, 2011 order after the time to

grant reconsideration expired. Any legal mistake by the trial court cannot be

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the basis for permitting untimely reconsideration. If it were, then appeals

would never be necessary, and the finality of judgments would be

meaningless.

       As often remarked, relief on the basis of mistake is not a
       substitute for an appeal. Affording such relief instead of
       relegating the aggrieved party to an appeal has the effect of
       extending the time when a judgment’s finality is uncertain, for
       the time within which such a relief may be sought is longer than
       the time permitted to take an appeal. Providing such relief
       would also confuse the role of the trial court with that of an
       appellate court.

Restatement (Second) of Judgments § 71 cmt. f;5 cf. Clark v. Troutman,

469 A.2d 328, 330 (Pa. Cmwlth. 1983) (en banc) (“That the judgment was a

result of a misinterpretation of law does not alter its finality.”), rev’d on

other grounds, 502 A.2d 137 (Pa. 1985); Federated Dep’t Stores, Inc. v.

Moitie, 452 U.S. 394, 398 (1981) (“A judgment merely voidable because [it

is] based upon an erroneous view of the law is not open to collateral attack,

but can be corrected only by a direct review and not by bringing another

action upon the same cause [of action].”) (quotation omitted).

       M&T    Bank’s    reliance    on   Jackson   is   misplaced,   because   it   is

distinguishable and, as a plurality opinion,6 nonbinding precedent. In
____________________________________________

5
  Restatement (Second) of Judgments § 71(2)(b)’s reference to a mistake
“certain to result in reversal” on appeal refers to the narrow situation of a
supervening change in the law occurring after the time to file post-trial
motions expires, but before the time to appeal expires.
6
  The lead opinion represents the views of three justices. Three different
justices concurred, and would have resolved the appeal using the Rules of
(Footnote Continued Next Page)

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Jackson, the trial court expressly, albeit only orally, granted reconsideration

within the appeal period. Jackson, 746 A.2d at 575-77. In contrast, here

the trial court explicitly recognized that the expiration of the appeal period

divested it of jurisdiction to grant reconsideration.    Trial Court Statement,

7/7/11 (citing 42 Pa.C.S.A. § 5505).

      Great American Credit is also distinguishable. There, the trial court’s

oversight deprived the defendant of notice that it had entered a final order,

triggering the appeal period. Great Am. Credit Corp., 326 A.2d at 519 &

n.5. Here, M&T Bank has never alleged it was unaware that the trial court

sustained Appellants’ preliminary objections.       Its filing of a timely appeal

evinces awareness of the trial court’s action. Cf. Orie, 601 A.2d at 1272 (“It

is obvious that [the garnishee] was aware of the entry of judgment on

September 11, 1990, since on September 27, 1990, well within the appeal

period, he presented the Petition to Vacate the September 11, 1990

order.”). “Extraordinary cause” means actions, other than mere neglect by

counsel, that deprive a litigant of notice of the entry of a final order and,

therefore, the commencement of the appeal period. Witherspoon v. Wal-

Mart Stores, Inc., 814 A.2d 1222, 1225 n.4 (Pa. Super. 2002);

                       _______________________
(Footnote Continued)

Appellate Procedure, not broad equitable principles. Jackson, 746 A.2d at
578 (Zappala, J., concurring).

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Luckenbaugh, 523 A.2d at 401.                  M&T Bank cannot meet that standard

here.7

       Finally, we come to a court’s inherent authority to correct mistakes.

In addition to its equitable power to reconsider an otherwise final order after

30 days, a court has inherent power “to amend its records, to correct

mistakes of the clerk or other officer of the court, inadvertencies of counsel,

or supply defects or omissions in the record” at any time.              Manack v.

Sandlin, 812 A.2d 676, 680 (Pa. Super. 2002); see Pa.R.A.P. 1701(b)(1)

(recognizing a trial court’s inherent authority to “correct formal errors” in the

record notwithstanding a pending appeal). However, “[a] major substantive

change, such as the total withdrawal of an order relative to a motion of

record does not constitute a corrective order within the inherent powers of

the trial court or the court’s statutory authority.” Manack, 812 A.2d at 682.

“Absent a specific rule or statute, the only exception is to correct obvious

technical mistakes (e.g., wrong dates) but no substantive changes can

be made.” Ettleman v. Cmwlth. Dep’t of Transp., 92 A.3d 1259, 1262

(Pa. Cmwlth. 2014) (emphasis added).                The ability to correct orders is

____________________________________________

7
  In Great American Credit, we stated that “(T)he power of the Common
Pleas (court) to open its judgments is most ample, and the policy requires
its liberal use . . . .” Great Am. Credit Corp., 326 A.2d at 519 (quoting
Hambleton v. Yocum, 108 Pa. 304, 309 (1885)) (alterations in original).
The quotation is, unfortunately, taken out of context. It refers to judgments
entered by confession or default—not judgments entered in contested
actions. See Hambleton, 108 Pa. at 309.

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limited to errors that are patent or obvious on the face of the record. ISN

Bank, 83 A.3d at 172-73. In the criminal context, our Supreme Court has

noted that if this inherent power were extended beyond obvious, patent

errors, it would swallow § 5505’s general rule.          Commonwealth v.

Holmes, 933 A.2d 57, 66 (Pa. 2007). It is the obviousness of the mistake—

not the mistake itself—which triggers the court’s inherent authority. See id.

      Here, the trial court’s granting of reconsideration cannot be placed

within its inherent authority to correct mistakes or errors.    That inherent

authority does not allow a court to make substantive changes after more

than 30 days have passed. Manack, 812 A.2d at 682; accord Ettleman,

92 A.3d at 1262. Here, the trial court’s complete reversal of its prior order

is unquestionably a substantive change.

      In sum, the trial court lacked authority to grant reconsideration of the

May 23, 2011 order dismissing this action because it did so 85 days later.

That order became a final judgment when M&T Bank discontinued its appeal

in this Court. The trial court’s subsequent granting of reconsideration and all

further proceedings in this case are void. Our resolution of Appellants’ first

issue is dispositive, and we do not need to address the remaining issues.

We vacate the judgment entered in M&T Bank’s favor.          We remand this

matter to the trial court with instructions to enter judgment in Appellants’

favor based on the May 23, 2011 final order dismissing this action.

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      Judgment vacated.   Case remanded with instructions.   Jurisdiction

relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 1/22/2015

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