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HomeMy WebLinkAbout98-6071 CivilTRUST OF C.A. and FLO B. WHITE, Plaintiff Vo LEONARD F. BINDER, individually, and LEONARD F. BINDER, P.A., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 98-6071 CIVIL TERM IN RE: PETITION OF DEFENDANT LEONARD F. BINDER, P.A., TO OPEN DEFAULT JUDGMENT BEFORE OLER, J. ORDER OF COURT AND NOW, this 27th day of September, 2000, upon consideration of the petition to open default judgment filed by Defendant Leonard F. Binder, P.A., and for the reasons stated in the accompanying opinion, the petition to open is granted and petitioner is afforded 20 days within which to file a responsive pleading to Plaintiff's complaint. BY THE COURT, ~JWesley Ole ,~.~-J. Jonathan J. Bart, Esq. SILVERMAN, FRIMMER, BERNHEIM & McDONNELL1 Suite 910 Two Penn Center Plaza Philadelphia, PA 19102 Attorney for Plaintiff Charles W. Rubendall, II, Esq. Donald M. Lewis, III, Esq. 210 Walnut Street P.O. Box 11963 Harrisburg, PA 17108-1963 Attorneys for Defendants TRUST OF C.A. and FLO B. WHITE, Plaintiff Vo LEONARD F. BINDER, individually, and LEONARD F. BINDER, P.A., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 98-6071 CIVIL TERM IN RE: PETITION OF DEFENDANT LEONARD F. BINDER, P.A., TO OPEN DEFAULT JUDGMENT BEFORE OLER, J. OPINION and ORDER OF COURT OLER, September 27, 2000. In this civil case, Plaintiff, a testamentary trust, has sued an attorney and the professional association with which he is affiliated for professional negligence, breach of contract, fraud, and breach of fiduciary duty. The claims arise out of Defendants' representation of the trust in a matter in the orphans' court division of the Court of Common Pleas of Juniata County, Pennsylvania. A default judgment herein, in the amount of $2,000,000.00, was entered upon praecipe against the professional association for failure to file an answer to Plaintiff's complaint. For disposition at this time is a petition to open the judgment filed by the professional association. In lieu of depositions, the parties have submitted a stipulation of counsel for purposes of creating a factual record upon which the petition to open can be decided. For the reasons stated in this opinion, the petition to open will be granted. STATEMENT OF FACTS Plaintiff Trust of C.A. and Flo B. White commenced the present action by praecipe for writ of summons on October 23, 1998, against Defendants Leonard F. Binder and Leonard F. Binder, P.A. A complaint was filed on September 30, 1999. Plaintiff's complaint, which contained counts sounding in professional negligence, breach of contract, fraud and breach of fiduciary duty, was filed on September 30, 1999. The gist of the complaint was summarized in a prefatory paragraph as follows: This is a legal malpractice action brought by the Trust against its former attorney, Leonard F. Binder, Esquire, doing business as Leonard F. Binder, P.A. Mr. Binder was retained by the Trust to represent the Trust in crucial proceedings before an auditor appointed by the Orphans' Court of Juniata County to resolve various disputes among the beneficiaries of the Trust and to review and approve the administration of the Trust by its Trustees as well as in matters before the Orphan's Court. Rather than perform his fiduciary duty to the Trust to perform this task to the best of his professional ability, Mr. Binder simply saw the Trust as an opportunity to "feed at the trough" of a deep pocket client. Within the first four months of his engagement, Mr. Binder billed a remarkable 373 hours of time, virtually all of which was billed in round number increments for tasks such as "analysis of cases" and "lengthy telephone calls". During his employ by the Trust, Mr. Binder missed many crucial deadlines established by the Court and, rather than advising the Trust of his potential malpractice liability and suggesting that it obtain other counsel, knowingly and falsely advised the Trust that there had been a stay of proceedings. He further advised the Trust to file expensive and frivolous mandamus actions against the Orphans Court Judge in the Pennsylvania Supreme Court and when that action was swiftly denied, he moved for reconsideration, which also was swiftly denied. He then filed a mandamus action in the United States Court of Appeals for the Third Circuit (which lacked jurisdiction over the matter) and later sought certiorari in the United States Supreme Court (which also lacked jurisdiction). Mr. Binder's failure to meet three separate deadlines established by the Orphan's Court resulted in the denial of all of the Trust's motions to surcharge the opposing group of beneficiaries and the loss of any opportunity to file exceptions to the auditor's report which had been issued. His malpractice also resulted in the loss of the Trustees' individual claims. 2 Ultimately, Mr. Binder advised the Trust to take an appeal from the entry of the auditor's report with the Orphan's Court and submitted a brief of extremely poor quality that was deemed by the Superior Court to be "wholly frivolous" because the Trust had failed to file exceptions to the auditors report. During the time period in which Mr. Binder caused the Trust to engage in fruitless mandamus litigation, while missing every vital deadline established by the Orphans' Court, Mr. Binder billed the Trust in excess of $600,000 in fees and costs, approximately $500,000 of which was paid. Some of these fees were billed for preparation of documents that were never filed, such as exceptions to the auditor's report and a purported civil rights complaint. Mr. Binder's abject negligence in missing deadlines, in pursuing frivolous and meritless legal theories, and filing frivolous briefs have damaged the Trust and the Trustees in an amount in excess of $1 million dollars, in addition to the fees paid to Binder for services which either were not performed or which were performed negligently. ~ Attorney's fees in an unspecified amount, interest and punitive damages were also demanded in the complaint.2 On November 8, 1999, a Motion for Stay of Proceedings herein was filed on behalf of Defendants by Defendant Leonard F. Binder. The motion sought a stay based upon the pendency of an action in Juniata County filed by Defendants herein against Plaintiff herein and others, involving "the same parties and issues as herein .... ,3 The motion for a stay included as an exhibit a copy of an amended complaint filed in the Juniata County action, the gist of which was that Defendants herein had undertaken to represent the trust, had been frustrated in the representation by lack of trustee cooperation, had performed competently and had not been fully paid.4 Plaintiff's complaint, paragraph 1. See Plaintiff's complaint, ad damnum clauses. Defendants' Motion for Stay of Proceedings, at 1 (filed November 8, 2000). Defendants' Motion for Stay of Proceedings, Exhibit C. 3 On November 15, 1999, the motion for stay was quashed as it pertained to Defendant professional association, pursuant to the holding of Walacavage v. Excell 2000, Inc., 331 Pa. Super. 137, 488 A.2d 281 (1984) (requirement that corporate defendant be represented in court by attorney).5 On November 22, 1999, Plaintiff filed a praecipe to enter default judgment against Defendant professional association due to its failure to file an answer to the complaint. The praecipe recited service of the complaint on October 7, 1999,6 and service of the notice of intention to take default on November 3, 1999.7 The notice, according to the praecipe, advised Defendant professional association (in conformity with Pennsylvania Rule of Civil Procedure 237.5) as follows: YOU ARE IN DEFAULT BECAUSE YOU HAVE FAILED TO TAKE ACTION REQUIRED FROM YOU IN THIS CASE. UNLESS YOU ACT WITHIN TEN (10) DAYS FROM THE DATE OF THIS NOTICE AS SET FORTH ABOVE, A JUDGMENT MAY BE ENTERED AGAINST YOU WITHOUT A HEARING AND YOU MAY LOSE YOUR PROPERTY OR OTHER IMPORTANT RIGHTS. YOU SHOULD TAKE THIS NOTICE TO A LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE FOLLOWING OFFICE TO FIND OUT WHETHER YOU CAN GET LEGAL HELP....s The praecipe concluded with a direction to the prothonotary to "enter judgment against defendant [professional association] and assess damages in the amount of Two Million Dollars ($2,000,000.00).''9 In response to the praecipe, the prothonotary directed a notice, prepared by Plaintiff pursuant to Pennsylvania 5 Order of Court, November 15, 2000. Defendant Binder was not a licensed attorney in Pennsylvania. Stipulation of counsel, paragraph 4(f), filed April 4, 2000. The quashal was without prejudice. However, when subsequently visited as it pertained to Defendant Binder, and in refiled form as it pertained to the professional association, it was determined to have been without merit under Pennsylvania Rule of Civil Procedure 213.1 (motion for coordination of actions in separate counties to be filed in county where first complaint filed). See Order of Court, January 31, 2000. 6 Plaintiff's Praecipe To Enter Default Judgment, paragraph 2. 7 Plaintiff's Praecipe To Enter Default Judgment, paragraph 3. 8 Plaintiff's Praecipe To Enter Default Judgment, Exhibit C. 9 Plaintiff's Praecipe To Enter Default Judgment, paragraph 5. 4 Rule of Civil Procedure 236, to the professional association that judgment had been entered against it.l° Defendant professional association filed a "Refiled Motion for Stay of Proceedings and Petition To Open Default Judgment" on December 17, 1999, through proper legal counsel.~ The document incorporated by reference the exhibits (including the Juniata County amended complaint) which had been contained in Defendants' earlier motion for stay. The motion/petition averred (a) that Defendants herein had filed an amended complaint in Juniata County on March 17, 1999, for recovery of attorney's fees,12 (b) that the issues in the Juniata County action and the action herein "[were] identical,''13 (c) that Plaintiff herein had filed preliminary objections to the Juniata County complaint, which remained pending,14 (d) that Defendant had received Plaintiff's complaint herein on October 12, 1999,~5 (e) that a dispute existed as to whether Juniata County or Cumberland County was the proper forum for adjudication of the issues in question,16 and (f) that Defendant Binder had been unaware of the Walacavage decision when he filed the motion for a stay of the proceedings herein.17 Defendant contended that the initial motion for l0 Notice of judgment. ~ Defendant Leonard F. Binder, P.A.'s Refiled Motion for Stay of Proceedings and Petition To Open Default Judgment. ~2 Defendant Leonard F. Binder, P.A.'s Refiled Motion for Stay of Proceedings and Petition To Open Default Judgment, paragraph 2. ~3 Defendant Leonard F. Binder, P.A.'s Motion for Stay of Proceedings and Petition To Open Default Judgment, paragraph 6. ~4 Defendant Leonard F. Binder, P.A.'s Refiled Motion for Stay of Proceedings and Petition To Open Default Judgment, paragraphs 3-4. ~5 Defendant Leonard F. Binder, P.A.'s Refiled Motion for Stay of Proceedings and Petition To Open Default Judgment, paragraph 9. ~6 Defendant Leonard F. Binder, P.A.'s Refiled Motion for Stay of Proceedings and Petition To Open Default Judgment, paragraph 16(c). t? Defendant Leonard F. Binder, P.A.'s Refiled Motion for Stay of Proceedings and Petition To Open Default Judgment, paragraph 16(b). 5 a stay should be regarded as a timely response to Plaintiff's complaint herein, warranting an opening of the default judgment. ~8 The refiled motion for a stay filed by Defendant professional association, and the motion for a stay filed by Defendant Binder, were denied on procedural grounds.~9 With respect to the petition to open filed by Defendant professional association, the court issued an order directing that depositions be taken by the parties for the purpose of creating a record upon which the petition could be In lieu of depositions, counsel submitted a stipulation, reading as decided? follows: STIPULATION OF COUNSEL IN LIEU OF DEPOSITIONS IN CONNECTION WITH DEFENDANT LEONARD F. BINDER, P.A.'S PETITION TO OPEN DEFAULT JUDGMENT IT IS HEREBY STIPULATED AND AGREED by and between counsel for plaintiff and defendant Leonard F. Binder, P.A. (hereinafter "defendant association"), as follows: 1. Through an order dated January 31, 2000, the Court declared that the petition to open default judgment filed by defendant association shall be decided under Pa. R. Civ. P. 206.7 and that depositions pertinent to that petition should be completed within forty- two (42) days. 2. Counsel have determined, however, that depositions will not be necessary because the factual record needed to resolve the petition is concise and straightforward. 3. With the Court's kind concurrence, the undersigned counsel offer the following stipulations in lieu of sworn deposition testimony. 4. It is defendant association's position that: a. The complaint in this matter, although filed on or about September 30, 1999, was sent by certified and first class mail to defendant on October 7, 1999. b. The copy of the complaint sent to defendant association was not received at its offices in Florida until October 12, 1999. c. Plaintiff's notice of intention to take a default judgment was sent by certified and first class mail to defendant on November 3, 1999. ~8 Defendant Leonard F. Binder, P.A.'s Refiled Motion for Stay of Proceedings and Petition To Open Default Judgment, paragraph 15. ~9 See note 5 supra. 20 Order of Court, January 31, 2000. 6 d. The case upon which the Court based its decision to quash defendant association's original motion for a stay (filed on or about November 11, 1999), viz., Walacavage v. Excell2000, Inc., 331 Pa. Super. 137, 480 A.2d 281 (1984), was unknown to defendant association's sole shareholder and employee, Leonard F. Binder, Esquire, before the Court's order of November 15, 1999, reached him. e. More specifically, until the November 15 order reached Mr. Binder's hands, he was unaware that Pennsylvania law prohibited defendant association, a corporation, from appearing in court pro se. f. Mr. Binder is an attorney licensed to practice in New York and Florida, not Pennsylvania. He was admitted pro hac vice to practice here only in connection with other litigation involving plaintiff trust. g. When defendant association filed its original motion to stay (jointly with defendant Binder), it believed that it could properly appear pro se through its sole shareholder and employee, Leonard F. Binder, Esquire. 5. Plaintiff does not admit the truth of subparagraphs 4a-g above, but acknowledges that Mr. Binder would give sworn deposition testimony to that effect. 6. It is plaintiff's position that: a. Mr. Binder was admitted pro hac vice to practice in Pennsylvania on two separate occasions, in connection with litigation involving the White Trust, and billed the trust in excess of $500,000 for his services. b. Mr. Binder was admitted pro hac vice to practice in Pennsylvania for at least five (5) years before his withdrawal as the Trustee's counsel in 1999. 7. Defendant acknowledges that subparagraphs 6a-b above are accurate statements. 8. No additional stipulations or deposition testimony will be submitted in connection with defendant association's petition to open default judgment.2~ Briefs were submitted on behalf of the parties, and argument was heard on April 10, 2000. Plaintiff contends that Defendant professional association has established neither a reasonable explanation or excuse for its default nor a meritorious defense to the underlying claim against it.22 2~ Stipulation of counsel, filed April 4, 2000. 22 Plaintiff['s] Brief in Opposition to Defendant, Leonard F. Binder, P.A.'s Petition To Open Default Judgment, submitted April 4, 2000. 7 DISCUSSION A petition to open a default judgment is addressed to the equitable powers of the court and a ruling on such a petition is within the sound discretion of the trial court. Fink v. General Accident Insurance Co., 406 Pa. Super. 294, 296-98, 594 A.2d 345, 346 (1991). In general, the party seeking to open a default judgment must establish (1) that the petition to open was promptly filed, (2) that the default can be reasonably explained or excused, and (3) that a meritorious defense exists to the underlying claim. Schultz v. Erie Insurance Exchange, 505 Pa. 90, 93, 477 A.2d 471, 472 (1984); Fink v. General Accident Insurance Co., 406 Pa. Super. 294, 296-97, 595 A.2d 345,346 (1991).23 It is the obligation of a court to which a petition to open is addressed to determine whether there are equitable considerations which weigh in favor of opening the default judgment and allowing the defendant to defend the case on the merits. Duckson v. Wee Wheelers, Inc., 423 Pa. Super. 251, 253-55, 620 A.2d 1206, 1208 (1993); Chervenak, Keane & Co., Inc. v. Hotel Tittenhouse Associate, Inc., 328 Pa. Super. 365, 371,477 A.2d 487, 490 (1984). In the present case, Plaintiff does not argue that Defendant's petition to open was not promptly filed. With respect to the existence of a reasonable explanation or excuse for Defendant's failure to file and serve a proper response to Plaintiff's complaint, the facts appear to be that (a) Defendant received Plaintiff's complaint on October 12, 1999, and filed a good-faith motion for a stay of proceedings on November 8, 1999, (b) that at some point after November 3, 1999, Defendant received Plaintiff's notice of intention to take a default for failure to take required action, (c) that the default notice and Defendant's motion for a stay were pending simultaneously for a period of time, (d) that the procedural 23 Where a petition to open which evidences a meritorious defense is filed within ten days of the entry of a default judgment taken under Pennsylvania Rule of Civil Procedure 237.1, the elements of timeliness and reasonable explanation or excuse for the default are presupposed to have been met by the petitioner. Pa. R.C.P. 237.3. In the present case, however, Defendant's petition to open was filed slightly beyond the ten-day period. 8 irregularity in Defendant's motion for a stay of proceedings was not known to Defendant until some time after November 15, 1999, (d) that the holding in Walacavage, while certainly well established, was not quite comparable to the Rule in Shelley's Case in terms of notoriety, and (e) that the praecipe for default judgment was filed (on November 22, 1999) almost immediately after Defendant could have realized its mistake as to the viability of its motion for a stay. Under these circumstances, and bearing in mind the equitable nature of the present proceeding, the court will find that Defendant has provided a reasonable explanation or excuse for the default which occasioned the entry of judgment against it. With respect to the alleged failure of Defendant to proffer a meritorious defense in connection with its refiled motion for stay/petition to open judgment, it is noted that the document incorporated by reference the exhibits contained in Defendant's earlier motion. One of these exhibits was Defendants' amended complaint against Plaintiff et al. in the Juniata County action. The averments of the amended complaint, if believed, would constitute a defense, at least in part, to Plaintiff's present action.24 For the foregoing reasons, the following order of court will be entered: ORDER OF COURT AND NOW, this 27th day of September, 2000, upon consideration of the petition to open default judgment filed by Defendant Leonard F. Binder, P.A., and for the reasons stated in the accompanying opinion, the petition to open is granted and petitioner is afforded 20 days within which to file a responsive pleading to Plaintiff's complaint. 24 Pennsylvania Rule of Civil Procedure 126 provides as follows: The rules shall be liberally construed to secure the just, speedy and inexpensive determination of every action or proceeding to which they are applicable. The court at every stage of any such action or proceeding may disregard any error or defect of procedure which does not affect the substantial rights of the parties. 9 BY THE COURT, Jonathan J. Bart, Esq. SILVERMAN, FRIMMER, BERNHEIM & McDONNELL1 Suite 910 Two Penn Center Plaza Philadelphia, PA 19102 Attorney for Plaintiff Charles W. Rubendall, II, Esq. Donald M. Lewis, III, Esq. 210 Walnut Street P.O. Box 11963 Harrisburg, PA 17108-1963 Attorneys for Defendants /s/J. Wesley Oler. Jr. J. Wesley Oler, Jr., J. 10