QUEST DIAGNOSTICS, INC. v. CHERI HAYNIE

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
QUEST DIAGNOSTICS, INC.,
Appellant,
v.
CHERI HAYNIE,
Appellee.
No. 4D21-240
[April 28, 2021]
Appeal from the County Court for the Fifteenth Judicial Circuit, Palm
Beach County; Paige Hardy Gillman, Judge; L.T. Case Nos. 50-2019-SC-
019779-XXXX-MB and 50-2020-AP-000042-CAXX-MB.
Dale T. Golden and Charles J. McHale of Golden Scaz Gagain, PLLC,
Tampa, for appellant.
Evan M. Rosen of the Law Offices of Evan M. Rosen, P.A., Hollywood,
for appellee.
WARNER, J.
Appellant Quest Diagnostics, Inc. appeals from a final judgment in
favor of appellee Cheri Haynie, based upon a default entered against
appellant. Because we conclude that the trial court erred in denying a
motion to vacate the default, we reverse the final judgment.
Appellee, an injured employee covered under Florida’s Workers’
Compensation Law, received medical services that were managed by a
workers’ compensation carrier. Appellant provided medical laboratory
testing services to appellee. It attempted to collect payment from appellee
for those services by sending two collection letters. Under the worker’s
compensation law, appellant was a health care provider and, as such, was
governed by section 440.13(13)(a), Florida Statutes (2019), which provides
that “[a] health care provider may not collect or receive a fee from an
injured employee within this state[.]”
After receiving the collection letters, appellee filed suit in small claims
court alleging a violation of section 559.72(9), Florida Statutes (2019), of
the Florida Consumer Collection Practices Act (“FCCPA”). She alleged that
appellant knew she was a worker’s compensation claimant, because it
knew that her insurer was a worker’s compensation insurance carrier.
She contended that appellant thus violated the statute by trying to collect
the debt from her personally. She demanded $1,000.00 in statutory
damages pursuant to section 559.77(2), Florida Statutes (2019); injunctive
relief to prevent appellant from further violations; removal of any negative
marks on appellee’s credit history; and attorney’s fees and costs.
Although the record in this appeal from county court does not show
service upon appellant, an affidavit filed by appellant’s employee stated
that service was made on November 27, 2019. The standard summons
and notice to appear in a small claims court proceeding requires the
defendant to appear at a pretrial conference before the judge on a specified
date. As noted in the standard summons:
The purpose of the pretrial conference is to record your
appearance, to determine if you admit all or part of the claim,
to enable the court to determine the nature of the case, and
to set the case for trial if the case cannot be resolved at the
pretrial conference.
Fla. Sm. Cl. Form 7.322. The summons also notifies the defendant that
the defendant must appear in person or through an attorney to avoid a
default.
The pretrial conference in this case was scheduled for January 16,
2020. Appellant, the defendant, did not appear. The progress docket does
not show that a default was actually filed on the docket. On January 23,
2020, counsel filed a notice of appearance for appellant. Counsel moved
to vacate the default on February 3, 2020. In its motion, appellant
reported that, at the end of 2019, its retained litigation specialist had
retired, and its transition of litigation cases to a new person undertaking
those duties had not been fully implemented at the time appellant was
served with the appellee’s claim. Those facts, plus the holidays and
employee vacation leave, had resulted in the summons and complaint
being overlooked. For this reason, appellant had failed to timely respond
to the complaint and/or appear at the small claims pretrial conference,
thus triggering the default. Appellant maintained that it had a meritorious
defense to the claim, alleging that it did not know appellee was covered by
workers’ compensation at the time appellant attempted to collect the debt
from appellee. And, appellant claimed to have been reasonably diligent in
seeking to vacate the default after it was discovered. In support of its
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motion, appellant attached the sworn affidavit of its staff paralegal
attesting to the foregoing facts.
The court held a hearing on appellant’s motion. The court entered an
order stating that appellant remained defaulted. 1 Appellee moved for the
court to enter final judgment, and on March 2, 2020, the lower court
entered a final judgment order in favor of appellee, awarding $1,000.00 in
statutory damages, pursuant to section 559.77(2), Florida Statues (2019),
and other taxable costs, for a total amount of $1,256.48 plus interest, and
reserving jurisdiction for an award of attorneys’ fees. In addition, the court
ordered appellant to stop attempting to collect pending debt from appellee
and to remove any negative marks pertaining to debt from appellee’s credit
history. Appellant filed its notice of appeal from the final judgment.
In order to set aside a default, a defendant must show that the default
resulted from excusable neglect; that the defendant had a meritorious
defense; and that the defendant used due diligence in seeking relief from
the default. Moore v. Powell, 480 So. 2d 137, 139 (Fla. 4th DCA 1985). An
appellate court reviews the denial of a motion to vacate a default under the
abuse of discretion standard of review. H & F Tires, L.P. v. D. Gladis Co.,
Inc., 981 So. 2d 647, 649 (Fla. 4th DCA 2008).
As a general rule, Florida courts prefer to decide cases on the merits of
the claims rather than on a technicality. J.J.K. Int’l, Inc. v. Shivbaran, 985
So. 2d 66, 69 (Fla. 4th DCA 2008). Consequently, there is a “principle of
liberality in setting aside defaults so that lawsuits may be decided on their
merits.” Lindell Motors, Inc. v. Morgan, 727 So. 2d 1112, 1113 (Fla. 2d
DCA 1999) (citing Bland v. Viking Fire Prot., Inc. of the S.E., 454 So. 2d 763(Fla. 2d DCA 1984)). “[I]f there b[e] 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. v. Barber, 143 So. 2d 849, 853 (Fla. 1962) (third alteration in
original). In this case, the principle of liberality should have prevailed, as
appellant established excusable neglect, a meritorious defense, and due
diligence in attempting to set aside the default.
1 The appellate record does not contain a transcript of the proceedings. However,
since this was a non-evidentiary hearing and the trial court’s final judgment order
is devoid of any consideration of the factors to be considered when addressing a
motion to vacate a default, we conclude that the lack of transcript does not
preclude our review. See, e.g., Alsina v. Gonzalez, 83 So. 3d 962, 965 (Fla. 4th
DCA 2012).
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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). As this Court
explained:
The pattern which emerges from these and the myriad of cases
not cited here is best stated negatively: a default will not be
set aside where the defaulted party or his attorney (1) simply
forgot or (2) intentionally ignored the necessity to take
appropriate action; that is to say, where the conduct could
reasonably be characterized as partaking of gross negligence
or as constituting a willful and intentional refusal to act.
Id. at 1105–06. “Excusable neglect must be proven by sworn statements
or affidavits.” Geer v. Jacobsen, 880 So. 2d 717, 720 (Fla. 2d DCA 2004)
(quoting DiSarrio v. Mills, 711 So. 2d 1355, 1356 (Fla. 2d DCA 1998)).
Based upon the affidavit of the paralegal, appellant showed excusable
neglect in failing to appear at the pretrial conference. The litigation
specialist who would have normally handled the case was retiring, and the
replacement was not yet in place, particularly with the December holidays
and employee vacation leave intervening. This is akin to a “system gone
awry” as expressed in Somero. Id. at 1106; see also Edwards v. City of
Fort Walton Beach, 271 So. 2d 136, 137 (Fla. 1972) (district court did not
err in dismissing plaintiff’s appeal from trial court’s vacation of default
against defendant City, where City had sent complaint to insurance carrier
who was in process of changing claims processing procedures, and
complaint was buried on responsible attorney’s desk). Here, there was no
willful negligence or refusal to act on the part of appellant. At the very
minimum, there is “reasonable doubt” about the propriety of the default,
which should be resolved in favor of its vacation and a trial on the merits.
A meritorious defense may be established by ultimate facts alleged in a
proposed answer or by affidavit. See Hall v. Byington, 421 So. 2d 817, 817
(Fla. 4th DCA 1982). A general denial in an affidavit filed before a final
judgment is entered on a default suffices to support vacation of a default.
See Gibson Tr., Inc. v. Office of the Att’y Gen., 883 So. 2d 379, 382–83 (Fla.
4th DCA 2004); N. Shore Hosp., Inc., 143 So. 2d at 852.
While the motion to vacate the default noted that a general denial would
suffice under the foregoing authorities, the motion and affidavit further
alleged a meritorious defense. In the sworn statement by appellant’s
paralegal, she stated from her personal knowledge and review of
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appellant’s business records that appellant did not know that appellee was
insured by a worker’s compensation insurance carrier. Appellant did not
learn of that fact until after the letters seeking to collect the debt had
already been sent.
Appellee based its claim on section 559.72(9) of the FCCPA, which
states, in relevant part:
Prohibited practices generally:
In collecting consumer debts, no person shall:
....
(9) Claim, attempt, or threaten to enforce a debt when such person
knows that the debt is not legitimate, or assert the existence of some
other legal right when such person knows that the right does not
exist.
Appellant alleges that pursuant to the statute, it had to have actual
knowledge that appellee’s debt was covered by workers’ compensation
when appellant attempted to collect on it. If proved, this is a defense to
the cause of action. See Schauer v. Morse Operations, Inc., 5 So. 3d 2, 6
(Fla. 4th DCA 2009). Appellee’s only response to this claim of meritorious
defense is to attack the paralegal’s affidavit as hearsay on the issue of the
appellant’s knowledge. However, because a general denial would suffice
to contest whether appellant knew that appellee was covered by workers’
compensation, and the issue is a legal one concerning the interpretation
of the statute, appellant stated a meritorious defense.
Finally, appellant acted with due diligence, filing its motion to set aside
the default within three weeks of its entry. “In considering whether a party
has made a ‘timely application’ to set aside a default, courts must evaluate
both the extent of the delay as well as the reasons for the delay.” Fla.
Eurocars, Inc. v. Pecorak, 110 So. 3d 513, 515–16 (Fla. 4th DCA 2013)
(citing Roberts v. Safeway Ins. Co., 610 So. 2d 700, 701 (Fla. 3d DCA
1992)). We have already discussed the reasons for appellant’s failure to
attend the pretrial hearing and found them to be excusable. Appellee does
not contest the fact that appellant made timely application to set aside the
default.
As each of the requirements to set aside a default were present, and the
Florida judicial policy is to favor determinations on the merits over those
made on technicalities, the trial court abused its discretion in denying the
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motion to vacate. We therefore reverse the final default judgment, order
the vacation of the default, and remand for further proceedings on the
merits.
DAMOORGIAN and FORST, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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