CLEAR 2 CLOSE TITLE LLC v. ZAP CAPITAL, INC.

Third District Court of Appeal
State of Florida
Opinion filed February 22, 2023.
Not final until disposition of timely filed motion for rehearing.
________________
No. 3D22-17
Lower Tribunal No. 18-34310
________________
Clear 2 Close Title, LLC,
Appellant,
vs.
Zap Capital, Inc., et al.,
Appellees.
An Appeal from the Circuit Court for Miami-Dade County, Carlos
Guzman, Judge.
Law Offices of Carlos Cruanes, P.A., and Carlos Cruanes, for
appellant.
Lamchick Law Group, P.A., and Ronald Pereira, for appellees.
Before EMAS, SCALES and HENDON, JJ.
HENDON, J.
Clear 2 Close Title, LLC (“C2C”) appeals from a final order denying its
emergency verified motion to vacate default final judgment and to quash
service of the writ of garnishment, and denying its verified motion for
rehearing after an evidentiary hearing. We affirm in part, and reverse in part.
Facts
Zap Capital, Inc. and Z. Zapata Investments, LLC (collectively, “Zap”)
invested in certain high-end residential real estate properties marketed by
InvestQuest entities, a real estate acquisition and sales business. The
defendants below, the InvestQuest entities and Jose Parilla (“Parilla”),
InvestQuest’s president, allegedly breached the contracts and Zap sued.1
Zap obtained default final judgments 2 against the defendants, including
Parilla.
On September 7, 2021, Zap obtained an order of continuing writ of
garnishment against C2C, a real estate closing company, which Zap
maintained allegedly employed Parilla, demanding C2C answer the writ.
C2C was ordered to serve an answer to the writ within twenty days of its
1
Defendants below include Jose Parilla, InvestQuest Partners, Inc.,
InvestQuest Partners North, InvestQuest Partners Holdings, Inc., and
InvestQuest Partners South, Inc.
2
An amended default final judgment was entered solely to add an omitted
defendant, IQP Properties (a party not relevant to this appeal), in October
2020.
2
service, and to state whether C2C, as garnishee, is Parilla’s employer and
owes him any money. The continuing writ of garnishment was served on
C2C.3 When C2C failed to answer the writ within the twenty-day period, Zap
moved for default final judgment against C2C. A final default judgment was
entered against C2C for $1,531,514.40 plus $6,120 in fees and $717.62 in
costs.
Upon learning of the default judgment, on October 28, 2021, C2C filed
an emergency motion to vacate the default, quash service of process, and
quash the writ of garnishment. At the November 8, 2021 virtual hearing on
C2C’s emergency motion, C2C alleged that the service of process was
defective as it was improperly served on an “assistant” who was no longer
employed by C2C, who was not the registered agent or authorized to accept
service for the corporation, and who did not forward the service of process
to C2C’s owner and manager, Nancy Acosta. C2C contended it only
became aware of the case when the default final judgment was entered
against it, at which point it acted with due diligence to quash the default.
Further, C2C contested Zap’s allegation that Parilla was employed by C2C,
3
The service of process of the writ of garnishment against C2C stated it was
served at C2C’s address (no suite number) to “Anaya Aragon assistant,” “an
authorized agent, who stated they were authorized to accept for the witness
[Parilla] in their absence.”
3
arguing it never employed Parilla and it owes Parilla no money. C2C also
asserted that the funds garnished were in an escrow account and therefore
the funds belonged to C2C clients, not to C2C. The trial court denied the
motion, and C2C moved for rehearing. 4
On April 25, 2022, the trial court held an evidentiary hearing on C2C’s
motion for rehearing. C2C argued that service was defective because the
writ was served on a receptionist who worked for three companies, and she
never delivered the writ to C2C. Because C2C never received the writ, it was
unable to timely retain counsel to file a response indicating that Parilla was
not an employee.
Zap’s counsel, Mr. Pereira, argued in rebuttal that C2C’s former
counsel, Mr. Gittle, conceded the service of process issue in the hearing on
C2C’s original emergency motion to quash service, vacate the default final
judgment, and quash the writ of garnishment. The following exchange took
place between C2C’s former counsel, Mr. Gittle, and the court at the
November 8, 2021 hearing on C2C’s 1.540 motion to vacate default, quash
service, and quash writ of garnishment:
THE COURT: If Clear [C2C] wants to go forward on both
[motions] and take testimony and introduce exhibits, then, you
know, we'll have a full-blown evidentiary hearing on the quashing
4
C2C also filed a notice of appeal, and this Court temporarily relinquished
jurisdiction so that the trial court could hear the motion for rehearing.
4
of service. I do think that on the FJ part it is a little bit more
argument in nature, and less evidentiary in nature. You know, but
I welcome you guys to jump in here on that.
MR. GITTLE [C2C’s counsel]: Your Honor, we can -- so, we can
move forward just upon the vacating of final judgment. We feel
the rest of the matter will take care of itself thereafter. The
garnishee [debtor Parilla] was never an employee. He was an
independent contractor and is no longer contracted by the
company. So, the rest of the matters should work itself out
naturally on its own.
....
THE COURT: Okay. Mr. Gittle? And I'm not trying to put you on
the spot here. Maybe you know all this. Maybe you don't know
any of it. So, I wanted to give you a chance to respond.
MR. GITTLE: Your Honor, we're here today simply to vacate the
default. We vacate the default, we can handle those matters,
whether he [Parilla] was an employee, independent contractor
another day. We're here to vacate –
THE COURT: Yeah, but I don't know that you can separate the
default from service, because if you don't have service, the
default is a moot point.
MR. GITTLE: Yes, your Honor, but in the interests of time, we
can move forward just with the default then.
THE COURT: So, you're conceding service?
MR. GITTLE: We . . .
THE COURT: And in fairness to you, Ms. Acosta [C2C’S owner,
Gittle’s client] is nodding a no. So, I, you know, I don't know that
you can reconcile the two. I don't know that you can say: We're
contesting service, but, you know, let's go forward on the default.
MR. GITTLE: Your Honor, the most important thing for my client
is to have the default vacated. So, if we have to concede –
5
THE COURT: Well, I would say the most important part for her is
to vacate the judgment. Sure. I get that.
MR. GITTLE: At this point we can move forward simply on the
motion to vacate judgment. And so long as that's done, I think
that's fair. My client, I believe, would even accept service if as
soon as it was quashed. The issue really is that judgment that's
ongoing, and there is currently a garnishment outstanding
against my client. They have already garnished a few of my
client's bank accounts, including an escrow account.
So, that's the nature of the emergency today, and why we're
willing to forego the service issue, and simply focus on the vacate
-- vacation of the default –
...
MR. GITTLE: and allowing my client to present a defense.
MR. PEREIRA [Zap’s counsel]: Respectfully, your Honor, had
they, you know, done what they had to do and answer, you know,
they wouldn't be in this position. But if they're going -- if they're
going to concede on service, fine. Let's talk about the motion to
vacate.
(Emphasis added). After hearing both parties’ remaining arguments, the trial
court did not explicitly rule on the service of process issue, but stated it would
focus on the requirements for vacating the default judgment. The court
ultimately denied C2C’s motion on rehearing. This appeal followed.
Of the six issues raised by C2C in this appeal, we address only two:
the trial court’s denial of C2C’s motion to quash service of process, and the
trial court’s denial of C2C’s motion to vacate the default final judgment. The
remaining issues on appeal hinge on the outcome of these issues.
6
Our standard of review of a motion for relief from judgment is whether
the trial court abused its discretion. “Because a trial court is accorded broad
discretion in determining rule 1.540(b) motions, the standard of review of an
order on a rule 1.540(b) motion for relief from judgment is whether there has
been an abuse of the trial court's discretion.” Rinconcito Latino Cafeteria,
Inc. v. Ocampos, 276 So. 3d 525, 527 (Fla. 3d DCA 2019) (quoting
Tikhomirov v. Bank of New York Mellon, 223 So. 3d 1112, 1116 (Fla. 3d DCA
2017) (quoting Freemon v. Deutsche Bank Tr. Co. Ams., 46 So. 3d 1202,
1204 (Fla. 4th DCA 2010)). A trial court's ruling on a motion to quash service
of process, to the extent it involves questions of law, is subject to de novo
review. Mecca Multimedia, Inc. v. Kurzbard, 954 So. 2d 1179, 1181 (Fla. 3d
DCA 2007).
Discussion
C2C argued at the initial hearing on its motions to vacate the default
and quash service of process that service of process was allegedly made on
a front office receptionist that worked for three companies operating out of
that suite. Testimony from C2C’s president, and C2C’s title agent, indicates
that the papers languished in a desk drawer for several weeks before C2C
personnel discovered them and immediately sought to vacate the default.
Zap’s counsel, however, argued that C2C’s original counsel conceded the
7
service of process issue. The transcript of C2C’s former counsel’s argument
at the initial emergency motion to quash hearing indicates that C2C waived
the defective service of process issue in favor of arguing to vacate the default
final judgment. Although the trial court made no explicit ruling on the service
of process issue, it did indicate by its comments at the end of the hearing
that it was focusing on the rule 1.540 requirements of due diligence and
meritorious defenses to the default final judgment. Our review of the record
leads us to conclude that C2C waived the defective service of process issue.
However, the record shows that C2C acted with due diligence in
pursuing a rule 1.540 motion to vacate the final default judgment upon its
discovery of the mishandled documents. Zap did not rebut those facts.
Further, the trial court did not make any findings in the evidentiary hearing
or in its summary orders regarding C2C’s motion to vacate the default
judgment. As this Court has explained,
Florida has a long-standing policy in favor of deciding lawsuits
on their merits. Thus, “if there be 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.” North Shore Hosp., Inc. v. Barber, 143 So. 2d 849, 852–
53 (Fla.1962). The Fourth District has explained: [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. Somero v.
8
Hendry General Hosp., 467 So. 2d 1103, 1106 (Fla. 4th DCA
1985).
Edwards v. Najjar, 748 So. 2d 1101, 1103 (Fla. 3d DCA 2000) (citations
omitted).
Accordingly, we reverse that part of the order denying C2C’s motion to
vacate the final default judgment and remand to allow the court to rule on the
merits of the case. We affirm that part of the order denying C2C’s motion to
quash service of process. Our decisions render C2C’s remaining arguments
on appeal moot.
Affirmed in part; reversed in part and remanded.
9