M.W. v. SPCP Grp. V, LLC

• Decision Date: 04 February 2015
• Docket Number: No. 3D14–832.,3D14–832.
• Parties: M.W., a minor, etc., et al., Appellants, v. SPCP GROUP V, LLC, etc., et al., Appellees.
• Court: Florida District Court of Appeals

163 So.3d 518

M.W., a minor, etc., et al., Appellants

v.SPCP GROUP V, LLC, etc., et al., Appellees.

No. 3D14–832.

District Court of Appeal of Florida, Third District.

Feb. 4, 2015.

Rehearing Denied May 1, 2015.

Gerson & Schwartz, P.A., Edward S. Schwartz and Philip M. Gerson, Miami, for appellants.

Fowler White Burnett, P.A., and June G. Hoffman and Helaine S. Goodner, Fort Lauderdale, for appellees.

Before SHEPHERD, C.J., and EMAS and LOGUE, JJ.

Opinion

LOGUE, J.

M.W., a minor, (the “plaintiff”) appeals the decision of the trial court to set aside a clerk's default and final judgment against SPCP Group V, LLC (the “defendant”). The plaintiff obtained the ex parte default even though he knew from pre-suit contacts with opposing counsel that the opposing party was represented by counsel and intended to defend on the merits. The issue before us is whether the trial court committed reversible error in vacating the ex parte default.

The governing standard of review allows for reversal only upon a finding of a “gross abuse of discretion.” This court has previously ruled that a trial court committed reversible error by failing to vacate a default in identical circumstances, namely where the plaintiff obtained an ex parte default even though it knew from pre-suit contacts that the defendant was represented by counsel and intended to defend on the merits. Because we cannot say the trial court committed a gross abuse of discretion in light of the case law that bound the trial court's decision, we affirm.

FACTS AND PROCEDURAL HISTORY

The plaintiff was injured at an apartment building owned by the defendant. Before the lawsuit was filed, the plaintiff's attorney wrote the defendant two letters and demanded the policy limits. He received a letter in reply from the defendant's attorney. Besides this correspondence, the plaintiff's attorney and the defendant's attorney also engaged in a conference by telephone. From these contacts, the plaintiff's attorney learned that the defendant was represented by counsel and intended to defend the suit on the merits.¹ During the telephone conversation, however, the plaintiff's attorney found the defendant's attorney to be uncooperative. As he explained, “given [the defendant's attorney's] lack of cooperation, I did not attempt to contact him again.”

The plaintiff proceeded to file a complaint and serve the defendant. The defendant failed to answer. At that point, even though the plaintiff's attorney knew that the defendant was represented by counsel and intended to defend on the merits, the plaintiff obtained a clerk's default without providing notice to the defendant or to the defendant's attorney.

After the plaintiff had obtained the ex parte default and as the plaintiff's attorney was preparing to try the damages portion of the case uncontested, the defense attorney called his office to inquire about the status of the case and to ascertain whether the defendant's insurance carrier was defending the lawsuit. Based upon his own affidavit filed in this case, the plaintiff's attorney instructed his assistant to “tell [the defendant's attorney] to contact his insurance company. We don't know what they are doing or not.” The plaintiff then proceeded to try the uncontested damages case to the jury. The plaintiff won a jury verdict of $1,250,000.

When the defendant learned of the verdict, it moved to vacate the judgment that had been entered on the jury verdict on the basis that the default was void for lack of notice under Florida Rule of Civil Procedure 1.540(b)(4).² The trial court vacated the judgment because the default was void for lack of notice. The plaintiff timely appealed.

ANALYSIS

A. Standard of Review: “Gross Abuse of Discretion ”

The plaintiff faces a high, almost insurmountable standard of review. When it comes to vacating defaults, Florida has a long and proud tradition of favoring adjudicating cases on the merits and setting aside defaults. As part of this tradition, Florida law holds that a trial judge's decision to vacate a default can be overturned only upon a showing of a “gross abuse of discretion.”

Over a half a century ago, the Florida Supreme Court explained the standard of review in these cases as follows: “this court held that a showing of gross abuse of a trial court's discretion is necessary on appeal to justify reversal of the lower court's ruling on a motion to vacate.” N. Shore Hosp., Inc. v. Barber, 143 So.2d 849, 852 (Fla.1962) (emphasis added) (reversing a district court's holding that “a mere abuse of the trial judge's discretion is a sufficient basis for reversal of his ruling on the motion to vacate”).

“Gross abuse of discretion” has remained the standard down through the decades to today. For example, this court has held that, based upon “Florida's public policy of adjudicating cases on the merits ... a trial court's vacatur of a default judgment should be reversed only if the vacatur constitutes a gross abuse of discretion.” Gables Club Marina, LLC v. Gables Condo. & Club Ass'n, Inc., 948 So.2d 21, 23 (Fla. 3d DCA 2006).

Indeed, the Florida Supreme Court has emphasized that if there is “any reasonable doubt in the matter [of vacating a default], it should be resolved in favor of granting the application and allowing a trial upon the merits of the case.” N. Shore Hosp., Inc., 143 So.2d at 853 ; see also Ole, Inc. v. Yariv, 566 So.2d 812, 815 (Fla. 3d DCA 1990). The Fourth District has taken the position that appellate courts “should be as deferential to a trial judge's decision vacating a default as [we] can possibly be, upsetting it very rarely and only with undeniable provocation.” NIVCAB, Inc. v. Accord Ins. Network of Am., Inc., 24 So.3d 1204, 1204–05 (Fla. 4th DCA 2009) (quoting Bethesda Mem'l Hosp., Inc. v. Laska, 977 So.2d 804, 806 (Fla. 4th DCA 2008) ). When this case is examined in light of the governing standard of review, it is clear the trial court did not commit a reversible error in setting aside the default.

B. Ex Parte Defaults Are Prohibited Where a Party Knows Opposing Party is Represented by Counsel and Intends to Defend.

The trial court was correct to set aside the ex parte default in this case. The default was obtained without notice to the opposing side, even though the plaintiff knew that the defendant was represented by counsel and intended to defend. This violates a well-established rule in Florida law that “default is not appropriate in cases where the plaintiff knows that a defendant is represented by counsel who intends to assert matters in defense of the cause of action.” Gulf Maint. & Supply, Inc. v. Barnett Bank of Tallahassee, 543 So.2d 813, 816 (Fla. 1st DCA 1989).

On all fours with the instant case is Apple Premium Finance Service Co. v. Teachers Insurance & Annuity Association of America, 727 So.2d 1089 (Fla. 3d DCA 1999). In Apple Premium, the plaintiff knew the defendant was represented by counsel and intended to defend on the merits. Exactly as occurred in this case, the plaintiff knew these facts only from pre-suit contacts with the defendant. Nevertheless, when the defendant did not timely answer the complaint, the plaintiff in Apple Premium obtained an ex parte default. This court reversed the trial court for refusing to set aside the default under those circumstances. In doing so, it focused on the fact that the plaintiff knew the defendant had counsel and intended to defend. Reversal was required, this court held, because “notice of an application for default should always be served when the plaintiff is aware that a defendant is being represented by counsel who has expressed an intention to defend on the merits.”

Id. at 1090 (quoting Ole, Inc., 566 So.2d at 815 ).

The plaintiff in the instant case unsuccessfully attempts to distinguish Apple Premium by contending that the decision in Apple Premium was based, not on the plaintiff's knowledge, but rather on the extent of the pre-suit contacts that gave plaintiff the crucial knowledge. First, Apple Premium spends only one sentence summarizing the pre-suit contacts: “This [pre-suit contact] included correspondence between counsel and a pre-suit settlement conference between counsel and representatives of the respective clients.” From this passing reference we can only glean that the contacts consisted of correspondence and a conference. We cannot tell if the correspondence consisted of one letter, two letters, three letters (as occurred in the instant case), or more. Also, we cannot tell if the sole conference was in person, or by telephone (as occurred in the instant case). Because of the lack of detail concerning the nature of the pre-suit contacts in Apple Premium, we cannot determine whether the correspondence and conference in Apple Premium had more or less quality, extent, substance, or duration than the correspondence and conference in the instant case. Apple Premium cannot be distinguished from the instant case in the manner suggested by the plaintiff.

More importantly, this argument completely misconstrues Apple Premium. Apple Premium did not focus on the extent of the pre-suit contacts. Apple Premium turned on the plaintiff's knowledge that the defendant was represented and intended to defend. It was that knowledge conveyed by the pre-suit contacts—not the nature of the pre-suit contacts—that was dispositive in Apple Premium. On this dispositive point, the plaintiff in the instant case stands exactly in the shoes of the plaintiff in Apple Premium: from pre-suit contacts, he knew the defendant had counsel and intended to defend. Under the holding of Apple Premium, the plaintiff was required to give notice of the application for default. The trial court's decision in the instant case fully accords with the letter and spirit of Apple Premium.

Apple Premium stands as part of a sustained tradition of cases holding that notice of an application for default should always be served when the plaintiff is aware that a defendant is being represented by counsel who has expressed an

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