KB Home Fort Myers LLC v. Taishan Gypsum Co.
| Citation | 336 So.3d 841 |
| Decision Date | 13 April 2022 |
| Docket Number | 2D21-384 |
| Parties | KB HOME FORT MYERS LLC, a Delaware Limited Liability Company, Appellant, v. TAISHAN GYPSUM CO., LTD., f/k/a Shandong Taihe Dongxin Co., Ltd., and Tai'an Taishan Plasterboard Co., Ltd., Appellees. |
| Court | Court of Appeal of Florida (US) |
Chris W. Altenbernd of Banker Lopez Gassler P.A., Tampa; Eleanor Sills of Banker Lopez Gassler P.A., Tallahassee; and Joseph H. Lang, Jr. of Carlton Fields, P.A., Tampa, for Appellant.
Enjoliqué Aytch Lett of Greenberg Traurig, P.A., Miami; and Christina Hull Eikhoff, Matthew D. Lawson, and David Venderbush of Alston & Bird, Atlanta, Georgia, for Appellee.
Plaintiff KB Homes Fort Myers, LLC (KB), appeals an order granting a motion to vacate an $18 million default judgment. The trial court concluded that KB improperly obtained clerk's defaults against Defendants Taishan Gypsum Co. and Tai'an Taishan Plasterboard Co. (collectively "Taishan") and that the resulting final judgment was void. We reverse because the judgment was not void—at worst, it was voidable—and Taishan waited over seven years to seek relief from it.
More than a decade ago, lawsuits over hundreds of millions of square feet of defective Chinese drywall besieged federal and state courts. See In re Chinese Manufactured Drywall Prods. Liab. Litig. , 894 F. Supp. 2d 819, 829–30 (E.D. La. 2012).1
This is one of those lawsuits. In 2011, KB sued Taishan, alleging that Taishan sold defective Chinese drywall to KB which KB used to construct homes in Florida; KB sought to recover the costs it incurred repairing homes where it had installed Taishan's defective drywall. KB obtained service of process on Taishan pursuant to the Hague Convention, but Taishan refused to accept the documents. Taishan did not file or serve any document in the action, and in late 2012, KB moved for clerk's defaults. Shortly after those defaults issued, KB moved for a final default judgment. KB served the motions for clerk's defaults and for final judgment on Taishan by mail.
The trial court referred KB's motion for final judgment to a magistrate; the referral order—which the court mailed to Taishan—contained detailed provisions on objecting to the referral and other matters pertinent to the litigation, such as the magistrate's authority to conduct evidentiary proceedings. Pursuant to the referral order and a notice of hearing that KB mailed to Taishan, the magistrate held a hearing in June 2013. Taishan didn't file or serve any documents and didn't appear for the hearing. In July 2013, the magistrate issued a report and recommendation, finding that KB was entitled to judgment against Taishan for approximately $18 million in damages. In October 2013, the trial court issued an order adopting the magistrate's findings and recommendations; that order, like the magistrate's report and recommendation, was mailed to Taishan.
Nearly seven years later, in August 2020, Taishan appeared in the action and filed a "motion to vacate default orders." Arguing that the clerk's defaults, the magistrate's report and recommendation, and the order adopting the report and recommendation (the "adoption order") were "void," Taishan sought vacatur of all the foregoing orders. Taishan primarily asserted that the trial court lacked personal jurisdiction over it because service of process was deficient. Alternately, Taishan contended that the clerk's defaults were entered in violation of its due process rights because KB didn't serve Taishan's "known counsel" (Hogan Lovells)2 with notice of its applications for the defaults. Taishan also argued that the adoption order was "void" because it was "entered without notice" to Hogan Lovells and therefore should be vacated under Florida Rule of Civil Procedure 1.540(b)(4).
KB submitted a memorandum opposing Taishan's motion on all fronts. KB argued that Taishan was properly served with initial process and subsequently properly served with notice of the default proceedings. KB also argued that it was not required to notify Hogan Lovells of the default proceedings because Hogan Lovells ignored KB's multiple attempts to communicate about this suit, so there was no reason to believe that Hogan Lovells would defend Taishan in this suit.
KB submitted extensive evidence, including several affidavits, one of which was from Lannie Hough, a Carlton Fields lawyer. Mr. Hough's affidavit reflected that—before filing this action—he sent the Hogan Lovells attorneys who were Taishan's counsel of record in the MDL a letter (via facsimile and certified mail/return receipt requested) notifying them of the claims KB ultimately asserted in this suit. Mr. Hough's affidavit attached the verification of fax transmission and the certified mail receipt. Mr. Hough attested that no Hogan Lovells lawyer ever responded to his letter or to his several subsequent attempts to communicate with Hogan Lovells lawyers about KB's claims against Taishan. Mr. Hough's affidavit also reflected that Carlton Fields sent over a hundred presuit notices concerning KB's claims to Taishan's Chinese headquarters, but Taishan refused delivery of most of those letters and responded to none of them.
Taishan submitted no evidence to support its motion and no evidence to counter KB's submissions. Following a hearing, the trial court entered an order in which it (1) denied Taishan's request to quash service of process and concluded that Taishan had been properly served and (2) vacated the then eight-year-old clerk's defaults, the magistrate's report and recommendation, and the adoption order.
The court reasoned that KB was required to notify Hogan Lovells of the default proceedings against Taishan because (1) KB and Taishan were both defendants in the "related" MDL and (2) Hogan Lovells was Taishan's counsel of record in the MDL. The trial court found that KB "demonstrated" its "actual knowledge" that Hogan Lovells represented Taishan "in drywall litigation" by sending Hogan Lovells the presuit letter.
Despite Mr. Hough's uncontroverted testimony that Hogan Lovells ignored the letter and his subsequent attempts to communicate with them about KB's claims, the court determined that a "duty of civility and professionalism" required KB to notify Hogan Lovells of its applications for clerk's defaults. Because KB didn't do so, the court concluded that the defaults were "improperly entered" and ruled that their "invalid entry" rendered the adoption order "void." The court also declared the adoption order void because (1) KB didn't notify Hogan Lovells of the default damages proceedings before the magistrate and (2) the damages amount wasn't fixed by a jury although KB's complaint included a jury trial demand.
This appeal ensued.
We have jurisdiction pursuant to Florida Rule of Appellate Procedure 9.030(b)(1)(B), which authorizes district courts to review "nonfinal orders of circuit courts as prescribed by rule 9.130"—including "[o]rders entered on an authorized and timely motion for relief from judgment." Fla. R. App. P. 9.130(a)(5). In this case, the order on review vacated the adoption order, which had explicitly adopted the magistrate's recommendation to issue an $18 million judgment in KB's favor.
Taishan challenges this court's jurisdiction, arguing (1) that the adoption order is not a "judgment" within the meaning of rule 9.130(a)(5) and (2) that the trial court's judicial labor hadn't concluded because proceedings were ongoing with respect to another defendant (Ocean Construction, Inc.). We disagree.
First, the adoption order is a final judgment. It "ratified and approved" the magistrate's report and recommendation, and it adopted "each and every finding and recommendation" in the report "as the [o]rders of this [c]ourt, as if fully set forth herein and made a part hereof." By "specifically designating the report and recommendation[ ] as its own order ," the trial court "effectively entered an order in accordance with the [magistrate's] recommendation[ ]." Norris v. Norris , 28 So. 3d 953, 955 (Fla. 2d DCA 2010) (emphasis added).3 Furthermore, the magistrate's report and recommendation contains sufficient language of finality to constitute a final judgment. See Getman v. Tracey Constr., Inc. , 62 So. 3d 1289, 1291 (Fla. 2d DCA 2011) (). Specifically, the magistrate's report stated that "KB ... shall recover from [Taishan] ... the sum of $11,361,325.23" and "the sum of $7,315,628.18, for which sum let execution issue forthwith ." (Emphasis added.) This is clear and unequivocal language of finality. See id. ; Willis v. Red Reef, Inc. , 921 So. 2d 681, 684–85 (Fla. 4th DCA 2006) .
Second, Taishan's argument with respect to Ocean Construction is meritless. Because the adoption order fully resolved all of KB's claims against Taishan, it ended judicial labor with respect to those claims. See Getman , 62 So. 3d at 1291. That the case continued for some time before KB dismissed its claim against Ocean Construction does not affect finality of the adoption order as to Taishan. See Gator Boring & Trenching, Inc. v. Westra Constr. Corp. , 210 So. 3d 175, 180 (Fla. 2d DCA 2016) (); see also Fla. R. App. P. 9.110(k) ().
In sum, the adoption order was a final judgment against Taishan, and we have jurisdiction to review the order vacating it pursuant to rules 9.030(b)(1)(B) and 9.130(a)(5).
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