SANACT, INC. v. US PIPELING LLC
2:18-mc-00214
E.D. Pa.Dec 30, 2019Background
- Sanact registered three Hawaii judgments against US Pipelining in the Eastern District of Pennsylvania and sought to satisfy them by garnishing payments owed to US Pipelining.
- Sanact served a writ of execution, a writ notice, and interrogatories on garnishee PSI Pumping Solutions, which warned PSI to contact counsel and said failure to respond could lead to judgment.
- PSI answered the interrogatories (signed by company officers), admitting it owed US Pipelining $522,791 and attaching the writ and related papers; Sanact then sought entry of judgment against PSI for $197,133.82.
- The Court held a telephone conference to resolve a clerical discrepancy over the judgment amount; PSI participated without counsel and the Court entered judgment against PSI for $197,133.82.
- PSI, then represented, moved under Fed. R. Civ. P. 60(b) claiming (1) the judgment was void for lack of notice/opportunity to be heard, and (2) relief was warranted for mistake/excusable neglect because PSI answered interrogatories uncounseled and should be allowed to assert a Joint Check Agreement setoff in new answers.
- The Court denied relief: PSI received actual notice and waived service defects by answering; Pennsylvania garnishment practice permits entry of judgment on a garnishee's admission; excusable neglect/mistake factors did not favor vacatur; and even accounting for the asserted setoff PSI still owed more than the judgment amount.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the judgment is void under Rule 60(b)(4) for lack of notice/opportunity to be heard | Sanact: PSI received proper notice (writ, notice, interrogatories) and had an opportunity to contest within the 20-day response period | PSI: Was not given meaningful notice or a real opportunity to be heard before judgment was entered; telephone conference did not substitute for full hearing | Denied — PSI received actual notice; answering the interrogatories and attaching the writs waived service objections; entry complied with PA garnishment procedure |
| Whether Rule 60(b)(1) (mistake/excusable neglect) warrants vacatur because PSI answered uncounseled and failed to present defenses | Sanact: PSI’s admissions were deliberate; ignorance of legal consequences is not excusable; vacatur would prejudice Sanact and force collateral litigation | PSI: Its uncounseled answers were a mistake; it should be allowed to file corrected answers asserting the Joint Check Agreement setoff | Denied — factors (prejudice to Sanact, reason for mistake, impact on proceedings) weigh against relief; PSI in exclusive control of the mistake and delay was short but would cause undue collateral litigation |
| Whether uncounseled corporate answers to garnishment interrogatories are void because corporations must appear only through counsel | Sanact: Garnishee admissions in interrogatories are permissible and common even when signed by officers; treating them as void would undermine garnishment practice | PSI: Corporate entity cannot appear through nonlawyers; uncounseled answers are invalid pleadings | Denied — court declined to treat uncounseled garnishee interrogatory answers as per se void; practical garnishment practice permits officer-signed answers |
Key Cases Cited
- U.S. Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (due process requires notice reasonably calculated to apprise interested parties; actual notice satisfies due process)
- Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306 (notice standard: reasonably calculated to apprise interested parties)
- Feliciano v. Reliant Tooling Co., 691 F.2d 653 (garnishment procedure under Pennsylvania law; serving interrogatories on garnishee)
- Boback v. Ross, 114 A.3d 1042 (Pa. Super. Ct.) (garnishee admissions in interrogatories can support entry of judgment)
- Pioneer Inv. Servs. Co. v. Brunswick Assocs., 507 U.S. 380 (factors for evaluating excusable neglect)
- In re Cendant Corp. PRIDES Litig., 234 F.3d 166 (district court's duty to explain excusable neglect analysis)
- Mullin v. Balicki, 875 F.3d 140 (parties generally responsible for their own and their attorneys' mistakes)
- Rowland v. Cal. Men's Colony, 506 U.S. 194 (corporations generally must be represented by counsel in federal court)