Gibson Trust, Inc. v. Office of the Atty. Gen.

• Court: Florida District Court of Appeals
• Writing for the Court: PER CURIAM.
• Citation: Gibson Trust, Inc. v. Office of the Atty. Gen., 883 So.2d 379 (Fla. App. 2004)
• Decision Date: 29 September 2004
• Docket Number: No. 4D03-2540.,4D03-2540.
• Parties: GIBSON TRUST, INC., Goldstar Financial Systems, Inc., Patrick J. O'Toole, Donna Canty O'Toole and Martha V. Allen, Appellants, v. OFFICE OF THE ATTORNEY GENERAL, Department of Legal Affairs State of Florida, Appellee.

883 So.2d 379

GIBSON TRUST, INC., Goldstar Financial Systems, Inc., Patrick J. O'Toole, Donna Canty O'Toole and Martha V. Allen, Appellants, v. OFFICE OF THE ATTORNEY GENERAL, Department of Legal Affairs State of Florida, Appellee.

No. 4D03-2540.

District Court of Appeal of Florida, Fourth District.

September 29, 2004.

Thomas H. Wright, III of Silver, Wright & Siegel, LLP, Boca Raton, for appellants.

Charles J. Crist, Jr., Attorney General, Tallahassee, and Charles M. Fahlbusch, Senior Assistant Attorney General, Fort Lauderdale, for appellee.

PER CURIAM.

This appeal challenges entry of a default final judgment. We reverse because the defendants met their burden for setting aside the default. On November 27, 2002, the Florida Attorney General's office sued the defendants in a single-count complaint for permanent injunction, restitution, civil penalties, and other relief, pursuant to the Florida Deceptive and Unfair Trade Practices Act. Essentially, the complaint alleged that the defendants were running a credit repair scam.

Clerk's defaults were entered against each defendant. On March 25, 2003, the defendants moved to vacate the defaults. The motion was supported by the affidavit of Defendant, Patrick O'Toole, who stated that he was served on December 2, 2002, and retained the law firm of Silver, Wright & Siegel, LLP. According to the affidavit, soon after service, O'Toole's attorney spoke with an attorney in the Attorney General's office, who agreed that no answer would be immediately due until the increasing number of claims from alleged victims had leveled off. The motion to vacate also alleged that the defendants had meritorious defenses. On April 7, 2003, the defendants filed their Answer.

The Attorney General moved for default judgment against the defendants. On April 10, 2003, the trial court denied the defendants' motion to vacate the clerk's default and entered final judgment, which included a permanent injunction and $1.34 million civil penalty.

On April 17, 2003, the defendants moved for rehearing, again arguing that the final default judgment should be set aside due to excusable neglect and meritorious defenses. In support of the motion for rehearing, they attached an affidavit of Thomas H. Wright, Esq., a law partner in Silver, Wright & Siegel, LLP. Wright stated that his firm was retained to represent the defendants on December 5, 2002. He further alleged:

4. Immediately thereafter, I contacted Marta Moakley, counsel for the Plaintiff, to advise that I have been retained by the Defendants and to discuss the issues of the case.

5. At that time we discussed the possibility of a large number of potential complaints as a result of the number of former clients of the Defendant corporations.

6. It was further discussed that based upon the growing number of complaints an answer would not be due until incoming complaints leveled off.

7. At the end of the discussions I provided Marta Moakley with all my relevant contact information and was left with the impression that an extension of time had been granted until further notice and that defaults would not be entered against my clients.

8. Between December 2002, and March 13, 2003 I received no further contact from Marta Moakley as to whether the number of complaints had in fact leveled off.

The affidavit further described a letter that Wright sent Moakley on March 13, 2003, wherein he "referenced our agreement to temporarily hold off on filing a responsive pleading," and her response denying that any such agreement existed. That correspondence was attached to the motion for rehearing.

Finally, Wright's affidavit referenced a Proposed Amended Answer. The proposed answer includes sixteen affirmative defenses asserting that the defendants' actions were not deceptive, misleading, unfair or unconscionable, that the public interest was not served by the lawsuit, that the defendants had no intent to defraud, and that they did not know that their representations were false.

In response to the defendants' assertions regarding an agreement to extend the time for filing responsive pleadings, the Office of the Attorney General, through an Assistant Attorney General, filed a Memorandum in Opposition. Though the memorandum denied that any extension agreement had been made, the denial was neither sworn to nor made under oath. The trial court denied the motion for rehearing without a hearing.

An order denying a motion to vacate a default is reviewed under an "abuse of discretion" standard of review. See Lloyd's Underwriter's at London v. Ruby, Inc., 801 So.2d 138, 139 (Fla. 4th DCA 2001); George v. Radcliffe, 753 So.2d 573, 575 (Fla. 4th DCA 1999).

Florida courts have a liberal policy of vacating defaults so that cases can be decided on the merits. See N. Shore Hosp., Inc. v. Barber, 143 So.2d 849, 853 (Fla.1962); Coquina Beach Club Condo. Ass'n v. Wagner, 813 So.2d 1061, 1063 (Fla. 2d DCA 2002). In the case of an interlocutory order of default, any reasonable doubt should be resolved in favor of vacating it. Id. at 1064. To be relieved of a default, a party must show excusable neglect, a meritorious defense, and due diligence. Id. at 1063.

In Somero v. Hendry General Hospital, 467 So.2d 1103 (Fla. 4th DCA 1985), we stated:

[W]here inaction results from clerical or secretarial error, reasonable misunderstanding, a system gone awry or any other of the foibles to which human nature is heir, then upon timely application accompanied by a reasonable and credible explanation the matter should be permitted to be heard on the merits. It is a gross abuse of discretion for the trial court to rule otherwise.

Id. at 1106 (emphasis supplied).

In Evans v. Hydeman, 168 So.2d 183, 189-90 (Fla. 2d DCA 1964), the second district held that the plaintiffs were entitled to have the default order and final judgment on the individual defendant's...