Stanislav Kotlyar v. Metropolitan Casualty Insurance Company, as subrogee of Cheryl Dambrosio

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
STANISLAV KOTLYAR,
Appellant,
v.
METROPOLITAN CASUALTY INSURANCE COMPANY, as subrogee of
CHERYL DAMBROSIO,
Appellee.
Nos. 4D14-1878 and 4D14-4377
[May 18, 2016]
Consolidated appeals from the Circuit Court for the Fifteenth Judicial
Circuit, Palm Beach County; Catherine M. Brunson, Judge; L.T. Case No.
2014CA001228XXXXMB.
George P. Ord of Murphy Reid, LLP, Palm Beach Gardens, for appellant.
Sarah Clark, St. Petersburg, for appellee.
CONNER, J.
In this subrogation action, Stanislav Kotlyar appeals the final default
judgment in favor of Metropolitan Casualty Insurance Company and the
denial of his motion to vacate the default and judgment. Kotlyar argues
that the trial court erred in (1) determining the damages to be liquidated,
and in turn, entering final judgment for damages without an evidentiary
hearing, and (2) in denying his motion to set aside the default and
judgment, where allowing a default judgment to stand against him, absent
an adjudication regarding the liability of his wife, could lead to an absurd
and unjust result. We agree, and reverse and remand for further
proceedings.
Factual Background and Trial Court Proceedings
Metropolitan, as subrogee of Cheryl Dambrosio (“the Insured”), filed a
complaint against Kotlyar and his wife concerning a motor vehicle collision
involving the Insured. The complaint alleged that on the date of the
incident, Kotlyar and his wife owned a vehicle which was negligently and
carelessly operated by Kotlyar’s wife.
Count 1 of the complaint asserted an uninsured motorist claim in
which Metropolitan alleged that, as a direct and proximate result of the
negligence of Kotlyar and his wife, the Insured suffered:
personal injury, disability, discomfort, pain and suffering,
mental anguish, loss of capacity for the enjoyment of life, loss
of wages and loss of wage-earning capacity, and aggravation
of pre-existing conditions all of which conditions are
continuing or are permanent in nature; and further, for the
care and treatment of these injuries.
Metropolitan alleged that as a result of these injuries, it paid the Insured
the sum of $50,000.00 and was entitled to subrogation in that amount, as
well as prejudgment interest and costs of the action.
Count 2 of the complaint asserted a property damage claim in which
Metropolitan alleged that, as a direct and proximate result of the
negligence of Kotlyar and his wife, the Insured’s motor vehicle was
damaged and depreciated in value. Metropolitan alleged that as a result
of these damages, it paid the Insured the sum of $3,389.85 and the
Insured incurred a deductible of $1,400.00 and was entitled to
subrogation in that amount. Thus, Metropolitan sought a judgment
against Kotlyar and his wife for the amount of $4,789.85, together with
prejudgment interest and costs, for a total due under both Counts 1 and
2 of $54,789.85, together with prejudgment interest and costs of the
action.
Kotlyar’s wife filed a pro se answer to the complaint on her own behalf,
wherein she denied liability and responsibility for damages. Kotlyar did
not file an answer to the complaint and a default was entered against him.
Thereafter, Metropolitan filed a motion for entry of final default judgment
against Kotlyar, asserting that by his default, he had admitted liability.
Additionally, Metropolitan asserted that the damages in this case were
“liquidated” in nature, and that Metropolitan was therefore entitled to a
final default judgment without a hearing as to damages. The trial court
entered a final default judgment as to Kotlyar, based on his default and
Metropolitan’s supporting affidavits which attested to the amounts paid to
the Insured as listed in the complaint.
Afterward, Kotlyar filed a motion to vacate the default and judgment,
arguing that the judgment was void because the complaint sought
unliquidated damages, and that a defaulting party is entitled to notice and
an opportunity to be heard when the amount of damages is unliquidated.
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Additionally, Kotlyar’s motion asserted that his failure to respond to the
complaint was due to excusable neglect, that he had a meritorious defense
to the action, and that he acted with due diligence in moving to set aside
the default.
After a hearing, the trial court denied Kotlyar’s motion, finding that
Kotlyar failed to establish excusable neglect. The trial court specifically
found that Kotlyar was personally served with the summons and the
complaint, and that Kotlyar failed to read the documents, seek the advice
of an attorney, file an answer or any paper with the court, or take any
action to protect his interest. Additionally, the trial court found that
Kotlyar was charged with notice of the contents served upon him,
including the specific amount of damages sought by Metropolitan, which
the trial court found to be “liquidated.” Accordingly, the trial court found
that Kotlyar’s liability and damages were admitted by his default.
Thereafter, Kotlyar gave notice of appeal.
Appellate Analysis
Kotlyar argues that the trial court erred in (1) determining the nature
of the damages, and in turn, entering a final default judgment for damages
without an evidentiary hearing, and (2) in denying his motion to vacate the
default and judgment, where allowing a default judgment to stand against
him, without an adjudication as to the liability of his wife, could lead to an
absurd and unjust result.
Determination of the Nature of the Damages
“Whether damages alleged are liquidated or unliquidated is a question
of law subject to de novo review.” Talbot v. Rosenbaum, 142 So. 3d 965,
967 (Fla. 4th DCA 2014). We have held that “‘the setting of unliquidated
damages without the required notice and without proof is regarded as
fundamental error.’” Id. (quoting Cellular Warehouse, Inc. v. GH Cellular,
LLC, 957 So. 2d 662, 666 (Fla. 3d DCA 2007)).
“When a default is entered, the defaulting party admits all well-pled
factual allegations of the complaint.” Phadael v. Deutsche Bank Trust Co.
Ams., 83 So. 3d 893, 895 (Fla. 4th DCA 2012) (citing Donohue v.
Brightman, 939 So. 2d 1162, 1164 (Fla. 4th DCA 2006)). “Likewise, a
default terminates the defending party’s right to further defend, except to
contest the amount of unliquidated damages.” Id. (emphasis added) (citing
Donohue, 939 So. 2d at 1164). We have consistently held that, “‘[a] default
admits a plaintiff's entitlement to liquidated damages under a well-pled
cause of action, but not to unliquidated damages.’” Talbot, 142 So. 3d at
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967 (emphasis added) (quoting BOYI, LLC v. Premiere Am. Bank, N.A., 127
So. 3d 850, 851 (Fla. 4th DCA 2013); Minkoff v. Caterpillar Fin. Servs.
Corp., 103 So. 3d 1049, 1051 (Fla. 4th DCA 2013)); Bodygear Activewear,
Inc. v. Counter Intelligence Servs., 946 So. 2d 1148, 1150 (Fla. 4th DCA
2006). Furthermore, “[i]t is well-settled that ‘[a] defaulting party has a due
process entitlement to notice and an opportunity to be heard as to the
presentation and evaluation of evidence necessary to a judicial
interpretation of the amount of unliquidated damages.’” Bodygear, 946
So. 2d at 1150 (quoting Asian Imports, Inc. v. Pepe, 633 So. 2d 551, 552
(Fla. 1st DCA 1994)). In other words, while entry of a default terminates
the defendant’s right to contest liability or the plaintiff’s entitlement to
liquidated damages, entry of a default does not deprive the defendant of
the right to a hearing to determine damages which are unliquidated.
It is undisputed in this case that a hearing was not held for the
determination of the amount of damages prior to the trial court’s entry of
the final judgment against Kotlyar for the amount of damages sought in
the complaint.
We have previously explained that “‘[d]amages are liquidated when the
proper amount to be awarded can be determined with exactness from the
cause of action as pleaded, i.e., from a pleaded agreement between the
parties, by an arithmetical calculation or by application of definite rules of
law.’” Id. (emphasis added) (quoting Pierce v. Anglin, 721 So. 2d 781, 783
(Fla. 1st DCA 1998)). For example, “liquidated damages may exist in a
contractual setting ‘when a specific sum of money has been expressly
stipulated or agreed to by the parties for recovery by either party following
a breach of the contract by the other.’” Id. (quoting Hartford Fire Ins. Co.
v. Controltec, Inc., 561 So. 2d 1334 (Fla. 5th DCA 1990)). “However,
damages are not liquidated if a court must consider testimony or evidence
‘to ascertain facts upon which to base a value judgment.’” Id. (quoting
Bowman v. Kingsland Dev., Inc., 432 So. 2d 660, 662 (Fla. 5th DCA 1983));
see also Hartford Fire, 561 So. 2d at 1335 (rejecting plaintiff's assertion
that its damages were liquidated simply because a fixed sum was
demanded by the complaint; thus, alleging a fixed sum in the complaint
does not render unliquidated damages, liquidated).
Here, Kotlyar argues that the damages sought in the complaint alleging
a fixed sum, were in fact unliquidated damages. We agree. Count I of the
complaint sought damages for personal injury, disability, discomfort, pain
and suffering, mental anguish, loss of capacity for the enjoyment of life,
loss of wages and earning capacity. Count 2 sought recovery for property
damage to the Insured’s vehicle. These damages are the very types of
unliquidated damages for which a hearing must be held to determine the
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proper amount to be awarded. Neither the damages sought for the
personal injuries alleged in Count 1, nor the property damage alleged in
Count 2, can be determined from an agreement between the parties, by
arithmetical calculation, or by application of any definite rule of law. As
such, we hold that the nature of the damages alleged in this case are
unliquidated, and although Kotlyar admitted to liability by defaulting, he
would nevertheless be entitled to a hearing regarding the amount of
unliquidated damages before such can be awarded.
Metropolitan argues the trial court correctly determined the damages
in this case were liquidated, citing Dunkley Stucco, Inc. v. Progressive
American Insurance Co., 751 So. 2d 723 (Fla. 5th DCA 2000). We agree
that the facts in Dunkley are very similar to the facts in this case, where
an insurer brought a claim, as subrogee, to recover the amount it paid as
an insurer to its insured, after the insured was injured in a car accident
caused by the defendant. Id. at 724. There, as in this case, a default final
judgment was entered against the defendant and the defendant appealed
the trial court’s denial of his motion to vacate the judgment on the
argument that the damages were unliquidated, and the defendant was
entitled to an evidentiary hearing on damages. Id. The Fifth District held
that because the complaint stated specific amounts for damages, the
default against the defendant “converts what would have been an
unliquidated amount into a liquidated one.” Id. The Fifth District went
on to say:
If defendant admits that the amount claimed is due, whether
by a general admission or by default, he has, by not disputing
the claim, “determined” it and is not thereafter entitled to a
hearing to require plaintiff to again establish that amount to
which defendant agrees he is liable.
Id.
Our research reveals no other appellate district that has agreed with
the Fifth District’s position in this factual scenario.
We cannot agree with the Fifth District’s position because it ignores the
legal status of a subrogee. A subrogee stands in the shoes of the subrogor.
Fla. Patient’s Comp. Fund v. St. Paul Fire and Marine Ins. Co., 559 So. 2d
195, 197 (Fla. 1990) (“[A]n insurer cannot have a greater right than the
insured through the remedy of subrogation.”). Thus, if the same suit had
been filed by the insured, rather than the insurer, there is no doubt that
the claims for damages would be unliquidated. Rich v. Spivey, 922 So. 2d
326, 327 (Fla. 1st DCA 2006) (“[A] claim for a sum certain in a complaint
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does not render such alleged damages liquidated.”); see also U.S. Fire Ins.
Co. v. C & C Beauty Sales, Inc., 674 So. 2d 169, 172 (Fla. 3d DCA 1996)
(“The fact that [plaintiff] alleged in its complaint that the value of the stolen
inventory was a certain amount does not make the claim liquidated.”).
Thus, we disagree that filing a claim by a subrogee, citing specific amounts
of damages, “converts” the damages from unliquidated to liquidated, and
we certify conflict with the Fifth District on that issue.
Denial of Kotlyar’s Motion to Set Aside Default and Default Judgment
While we do not determine that the trial court erred in finding that
Kotlyar failed to establish excusable neglect, we agree with Kotlyar’s
contention that allowing a default judgment to stand against him, without
an adjudication as to the liability of his wife, could lead to an absurd and
unjust result.
In Days Inns Acquisition Corp. v. Hutchinson, 707 So. 2d 747, 749 (Fla.
4th DCA 1997), we confronted the issue of “whether there are any
limitations on the trial court’s discretion to enter a default judgment where
the liability of the non-defaulting co-defendant has not yet been
determined.” In that case, we rejected the notion that a trial court is
required “to defer entry of a default judgment in all cases where there are
non-defaulting defendants.” Id. at 751 (emphasis added). However, we
also rejected the notion that “a plaintiff is always entitled to a default
judgment against a defaulting defendant prior to the adjudication of the
merits against non-defaulting co-defendants.” Id. (emphasis added). In
this regard, we explained:
In exercising its discretion, the trial court should evaluate
whether the entry of the default judgment could lead to an
absurd, unjust, or logically inconsistent result. Where, as
here, relief against one defendant is completely dependent
upon the liability of a co-defendant, it would be improper to
allow the final judgment to be entered until the liability of the
co-defendant has been decided.
Id. (emphasis added).
Likewise, in this case, allowing a default judgment to stand against
Kotlyar, without an adjudication as to the liability of his wife, could lead
to an absurd and unjust result if Metropolitan is able to obtain damages
against Kotlyar based solely on his ownership of the vehicle, prior to an
adjudication that his wife negligently operated that vehicle. Review of the
complaint reflects that it alleged no particular independent wrongdoing by
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Kotlyar; instead, it appears that his liability as the owner of the vehicle
rests entirely upon the theory that his wife was negligent in operating the
vehicle that they owned together. Therefore, because Kotlyar’s liability is
completely dependent upon his wife’s liability, it would be improper to
allow the final default judgment to be entered until the liability of Kotlyar’s
wife has been determined.
Accordingly, we reverse the final default judgment. If Metropolitan’s
claim against Kotlyar’s wife as to her negligence in the accident is
concluded in Metropolitan’s favor, the final default judgment against
Kotlyar may be re-entered after a hearing is held for the determination of
the amount of damages. See id. at 752. However, we do not contend that
Kotlyar may participate as a party or otherwise defend against
Metropolitan’s claim against his wife. See id. at 752 n.6.
Reversed and remanded.
STEVENSON, J., concurs.
DAMOORGIAN, J., dissents in part and concurs in part.
DAMOORGIAN, J., dissenting in part and concurring in part.
I dissent on the issue of the determination of the nature of damages
and would adopt the Fifth District’s reasoning in Dunkley. As the court in
Dunkley noted, “[t]he effect of a default is that the defaulting party admits
all well pleaded allegations of the complaint.” Dunkley, 751 So. 2d at 724.
In this case, the exact amount of damages being sought were pled in the
complaint. The pleading, therefore, left no question as to what amounts
were being sought or what amounts could be awarded upon entry of
default. By definition, the damages became liquidated upon default. See
id. I concur with the majority on the status of the default pending a
resolution of the negligence claim against Kotlyar’s wife.
* * *
Not final until disposition of timely filed motion for rehearing.
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