FI CAPITAL INVESTMENT 19, LLC v. OPTIMAL HEALTH PHARMACY, LLC and SOUTH FLORIDA TITLE ASSOCIATES, LLC ( 2023 )

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
FI CAPITAL INVESTMENT 19, LLC,
Appellant,
v.
SOUTH FLORIDA TITLE ASSOCIATES, LLC, et al.,
Appellees.
No. 4D22-698
[January 4, 2023]
Appeal of nonfinal order from the Circuit Court for the Seventeenth
Judicial Circuit, Broward County; Carlos A. Rodriguez, Judge; L.T. Case
No. CACE21-21140.
Jonathan A. Heller of Law Offices of Jonathan A. Heller, P.A., Coral
Gables, for appellant.
Duane E. Baum of The Law Offices of Duane E. Baum, P.A., Plantation,
for appellee South Florida Title Associates, LLC.
GERBER, J.
The plaintiff seller in an unconsummated real estate transaction
appeals from the circuit court’s order granting the defendant escrow
agent’s amended motion to vacate both the clerk’s default and the circuit
court’s default judgment against the escrow agent in the sum of the
escrowed deposit. According to the seller, the circuit court erred in
entering the order for two reasons: (1) the circuit court failed to expressly
determine the three elements necessary to vacate a default and default
judgment—due diligence, excusable neglect, and a meritorious defense—
because the circuit court’s order merely stated that the escrow agent’s
amended motion to vacate was “Granted,” without any factual findings;
and (2) on the merits, the escrow agent failed to demonstrate the three
elements necessary to vacate a default and default judgment.
We conclude the seller’s arguments lack merit. Thus, we affirm.
However, we write to clarify a statement contained in a recent case upon
which the seller relied to support its first argument. In that case, Locke v.
Whitehead, 321 So. 3d 278 (Fla. 4th DCA 2021), we stated in footnote 2:
The trial court also failed to make oral or written findings in
support of its decision to vacate the final default judgment.
This further supports reversal. See Rivera v. Dep’t of Revenue
ex rel. Rivera, 899 So. 2d 1265, 1267 (Fla. 2d DCA 2005) (“[W]e
hold that the court committed a gross abuse of discretion
when it entered an order without any facts to support its
decision.”).
Id. at 282 n.2 (emphasis added).
The seller has interpreted Locke’s footnote 2 as meaning that a trial
court’s failure to make oral or written findings in support of an order
vacating a default judgment requires reversal. However, neither Florida
Rule of Civil Procedure 1.540(b), nor our supreme court, nor our court in
Locke, has imposed any requirement that a trial court must make oral or
written findings to support an order vacating a default judgment.
Rivera—the case which Locke’s footnote 2 cited—did not impose such a
requirement either.
In Rivera, after the circuit court gave a father leave to amend his
petition for modification of child support, the circuit court ordered the
Department of Revenue to file an answer on the mother’s behalf. 899 So.
2d at 1266. The Department filed no answer or response and did not
appear at a hearing on the father’s motion for default. Id. Accordingly,
the circuit court entered a supplemental final judgment modifying the
father’s child support. Id.Six months later, the mother’s private counsel filed a motion to set
aside the supplemental final judgment pursuant to Florida Rule of Civil
Procedure 1.540(b)(1). Id. Rule 1.540(b)(1) provides: “On motion and
upon such terms as are just, the court may relieve a party or a party’s
legal representative from a final judgment, decree, order, or proceeding for
the following reasons … mistake, inadvertence, surprise, or excusable
neglect[.]”
At a hearing on the motion, however, the mother’s counsel offered no
facts to support a finding of excusable neglect for the Department’s failure
to comply with the rules. Id. at 1267. Instead, the mother’s counsel
admitted that the Department’s failure to file an answer or appear at the
default hearing was “inexplicable.” Id. When the circuit court questioned
the mother’s counsel about a meritorious defense, the mother’s counsel
merely agreed with the circuit court’s statement that it “assume[d] [the
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mother] … ha[d] an answer and a response and some defense to the
request for modification.” Id. The circuit court then set aside the
supplemental final judgment upon its finding of excusable neglect and a
meritorious defense. Id. at 1266.
On the father’s appeal, the Second District reversed with directions to
reinstate the supplemental judgment modifying the father’s child support.
Id. at 1266-67. The Second District reasoned:
A review of the record reveals that the circuit court’s order
setting aside the modification was unsupported by relevant
legal facts. …
Although a trial court may set aside a final judgment
entered as a result of excusable neglect under rule 1.540(b)(1),
to justify vacating a default judgment, “a party must
demonstrate (1) a legal excuse for not complying with the civil
procedure rules and (2) a meritorious defense.” …
Unfortunately for [the mother], the Department’s
unexplained failure to provide her with any representation
regarding the [father’s] supplemental petition for modification
cannot constitute excusable neglect.
Second, [the mother] bore the burden of establishing that
she could present a meritorious defense before the judgment
entered upon default could be set aside. In an attempt to
present such a defense, her attorney merely agreed with the
court when it “assume[d] she’s also indicated or specifically
said that she certainly ha[d] an answer and a response and
some defense to the request for modification.” In spite of
Florida’s longstanding policy favoring liberal vacation of
defaults to consider cases on their merits, counsel’s unverified
assertions cannot establish a meritorious defense. Rather,
counsel must tender either a defensive pleading or a sworn
affidavit.
Finally, we recognize that when a default judgment has
been set aside, the appellate court’s deference to the trial
court’s discretion must be extreme. We are not unmindful of
the strong policy of liberality in vacating defaults.
Nevertheless … we hold that the court committed a gross
abuse of discretion when it entered an order without any facts
to support its decision.
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Id. (emphasis added; internal citations omitted).
As can be seen above, the Second District’s decision did not rest upon
any conclusion that the circuit court had improperly failed to make oral
or written findings to support its order vacating the default judgment.
Instead, as the emphasized sentence above states, the Second District’s
decision rested upon the fact that the circuit court had improperly set
aside the default judgment without any facts to support that order.
However, in Locke’s footnote 2, we prefaced our accurate parenthetical
cite of Rivera with our own statement: “The trial court also failed to make
oral or written findings in support of its decision to vacate the final default
judgment. This further supports reversal.” 321 So. 3d at 282 n.2. Rivera
contains no such conclusion, either expressly or by implication.
Thus, we write to clarify our statement in Locke’s footnote 2 as follows.
A trial court’s failure to make oral or written findings in support of its
decision to vacate a default judgment supports reversal only where—as in
Rivera—the record does not contain any facts to support that decision.
In the instant case, on the merits, the circuit court had a factual
basis—based upon the escrow agent’s attorney’s sworn affidavit—to grant
the escrow agent’s amended motion to vacate both the clerk’s default and
the circuit court’s default judgment against the escrow agent.
As for due diligence, the escrow agent’s attorney attested that within
eight days of the circuit court’s entry of the default judgment, he had filed
the escrow agent’s original motion to vacate the default and default
judgment. See Elliot v. Aurora Loan Servs., LLC, 31 So. 3d 304, 308 (Fla.
4th DCA 2010) (“Due diligence must be established with evidence, which
includes a sworn affidavit. … It has been held that six-day, seven-day,
and fifteen-day time lapses between the discovery of a default and the
filing of a motion to vacate that default showed due diligence.”).
Excusable neglect is found “where 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.” Somero v. Hendry
Gen. Hosp., 467 So. 2d 1103, 1106 (Fla. 4th DCA 1985). Here, the escrow
agent’s attorney’s uncontradicted affidavit attested that during a time
period when an outbreak of Covid-19 had occurred in his office, requiring
him to work from home, he had misfiled the seller’s complaint, which
caused him to not properly calendar the time to file a response. Such an
allegation was sufficient to satisfy the excusable neglect element for the
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trial court’s order vacating the default and default judgment. Cf. Noel v.
James B. Nutter Co., 232 So. 3d 1112, 1116 (Fla. 3d DCA 2017)
(“[C]ounsel … attested that the calendaring responsibility in his office lies
solely with his assistants, and that in this instance, his assistants failed
to calendar the deadlines set forth in the relevant standing orders.
Moreover, office preparations for Hurricane Matthew contributed to the
assistants’ failure to follow normal office procedure and calendar the
deadlines.”).
As for meritorious defenses, the escrow agent’s attorney attested he
had separately filed a proposed motion to dismiss the complaint arguing
the seller had failed to state a cause of action due to alleged
inconsistencies between the terms of the attached contract and its second
addendum. The escrow agent’s attorney also attested he had identified
five proposed affirmative defenses in the escrow agent’s amended motion
to vacate. Those five proposed affirmative defenses alleged: (1) the seller
had failed to state a cause of action due to alleged consistencies between
the terms of the attached contract and its second addendum; (2) the
escrow agent’s dual fiduciary duties to the seller and the buyer prevented
the escrow agent from disbursing the escrowed deposit until a final
determination of the seller’s suit against the buyer; (3) the seller had
unclean hands because the seller allegedly had not delivered certain
documents to the buyer, in breach of the underlying contract; (4) the
seller would be unjustly enriched if the circuit court found the escrow
agent should not have disbursed the escrowed deposit to the seller; and
(5) if the seller’s actions were the sole cause of its claim, then the seller
was estopped from making any claim as alleged in the seller’s complaint.
Without reaching the substantive merits of any of these alleged
defenses, we conclude these defenses, at least facially, are “meritorious,”
i.e., colorable. See id. at 308 (“A meritorious defense is established where
a proposed answer is attached to its motion to vacate, which answer sets
out in detail a number of affirmative defenses.”) (citation, internal
quotation marks and brackets omitted).
Conclusion
Based on the foregoing, we affirm the circuit court’s order granting the
defendant escrow agent’s amended motion to vacate both the clerk’s
default and the circuit court’s default judgment against the escrow agent
in the sum of the escrowed deposit.
While appellate review of orders granting motions to vacate defaults
and default judgments undoubtedly would benefit if trial courts were to
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make oral or written findings in support of such orders, we know of no
authority requiring trial courts to make such findings, contrary to our
statement in Locke’s footnote 2 which inadvertently may have implied
such a requirement. Thus, while we strongly encourage trial courts to
make such findings, we have not imposed, and do not impose, such a
requirement upon trial courts within our jurisdiction.
Affirmed.
WARNER and KUNTZ, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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