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
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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
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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.,
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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
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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
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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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