IN THE CIRCUIT COURT OF THE ELEVENTH JUDICIAL CIRCUIT
IN AND FOR MIAMI-DADE COUNTY, FLORIDA
LITIGATION COMPLEX BUSINESS SECTION
CASE NO.: 06-8827-CA-40
FLORIDA DEPARTMENT OF FINANCIAL SERVICES
Plaintiff,
vs.
MARCOS FRAYND, et al
Defendants.
_____________________________________________/
NOTICE OF APPEAL
NOTICE IS GIVEN that Marcos Fraynd, Paul Fraynd, Fanny Fraynd, and Saul Fraynd, Defendants, Appellants appeal to the District Court of Appeal for the Third District, State of Florida, the orders of this Court rendered on April 13, 2011 and June 7, 2011. The nature of the orders are a final judgment and subsequent order denying rehearing. Attached hereto is a conformed copy of the order.
I HEREBY CERTIFY that a true and correct copy of the foregoing was mailed this 6th day of July, 2011 to Edgar Cale, Barclay Cale P. A., 169 E Flagler St , Ste 1200, Miami, Florida 33131-1205.
THE LAW OFFICES OF ALAN P. DAGEN, P.A.
746 Heritage Drive
Weston, Fl 33326
(954) 389-8605
Fax: (954) 337-3250
By: __________________________________________
ALAN P. DAGEN, P.A.
Florida Bar No.: 456535
Defendants/Appellants,
vs.
FLORIDA DEPARTMENT OF FINANCIAL SERVICES,
Plaintiff/Appellee,
__________________________________________
APPELLANTS’ INITIAL BRIEF ON APPEAL FROM A FINAL ORDER OF THE
CIRCUIT COURT OF BROWARD COUNTY, FLORIDA
CASE NO.: 07-14904 CACE 21
THE LAW OFFICES OF ALAN DAGEN, P.A.
Attorneys for Appellant
746 Heritage Drive
Weston, Florida 33326
Telephone: (954) 389-8605
Fax: (954) 337-3250
By: ALAN P. DAGEN, Esquire
Florida Bar No.: 0456535
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TABLE OF CONTENTS
TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... . . . . . . . . . . . . i
TABLE OF CITATIONS AND AUTHORITIES . . . . . . . . . . . . ......... . . . . . . . . ii
STATEMENT OF THE CASE AND FACTS . . . . . . . . . . . . . . . . . . ....... . . . . . 1
1. Nature of the Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...................... 1
2. The Course of the Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . .......................1
3. Disposition in the Lower Tribunal. . . . . . . . . . . . . . . . . . . . . . ........................... 3
SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 4
ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 5
THE TRIAL COURT ERRED IN GRANTING A DEFAULT
WHERE THERE WAS NO INTENTIONAL
DISOBEDIENCE OF A COURT ORDER..........................................................5
THE TRIAL COURT ERRED IN GRANTING DEFAULT
WHEN LESS SEVERE SANCTIONS WERE A VIABLE
ALTERNATIVE.................................................................................................12
THE SUCCESSOR TRIAL COURT DENIED THE MOTION
FOR REHEARING BASED UPON THE ERRONEOUS
BELIEF THAT IT COULD NOT REVISIT THE PRIOR
TRIAL COURT’S DECISION...........................................................................14
THE TRIAL COURT ABUSED ITS DISCRETION IN
ENTERING A DEFAULT JUDGMENT FOR
UNLIQUIDATED DAMAGES..........................................................................16
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . 21
CERTIFICATE OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... . 22
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TABLE OF CITATIONS AND AUTHORITIES
Arango v. Alvarez, 585 So. 2d 1131 (Fla. 3rd DCA 1981)................................10
Beauchamp v. Collins, 500 So. 2d 294 (Fla. 3d DCA 1986) (rev. denied,
511 So.2d 297 (Fla. 1987)................................................................................11
Binger v. Pest Control, 401 So. 2d 1310 (Fla. 1981)..........................................11
Bodygear Activewear, Inc. v. CounterIntelligence Services, 946 So.2d 1148,
1150 (Fla. 4 DCA 2006)................................................................................th 17
Bowman v. Kingsland Development, Inc. 432 So. 2d 660, 662 (Fla. 5th DCA
1983).................................................................................................................18
Cadwell v. Cadwell, 549 So. 2d 1133 (Fla. 3rd DCA 1989) .............................10
Cellular Warehouse, Inc. v. GH Cellular, LLC, 957 So.2d 662,666 (Fla. 3rd
DCA 2007)........................................................................................................17
Choice Hotels International, Inc. v. Goodwin & Boone, 11 F.3d 469 (4th Cir.
1993).................................................................................................................10
Commonwealth Federal Savings & Loan v. Tubero, 569 So. 2d 1271 (Fla.
1990)..................................................................................................................9
Crowder v. Orowest Foods Company, 447 So. 2d 1038, 1040 (Fla. 2d DCA
1994).................................................................................................................10
Deauville Hotel Management, LLC v. Atlantic Broadband (Miami) LLC,
31 So. 3d 204 (Fla. 3rd DCA 2010)..................................................................17
Dunkley Stucco Inc. v. Progressive Amer. Ins. Co., 751 So. 2d 723 (Fla. 5th
DCA 2000).......................................................................................................18
DYC Fishing, Ltd. v. Martinez, 994 So. 2d 461 (Fla. 3d DCA 2008).................17
Ham v. Dunmire, 891 So. 2d 492, (Fla. 2004)....................................................13
Hanft v. Church, 671 So.2d 249, 250 (Fla. 3rd DCA 1996)...............................20
Hartford Fire Ins. Co. v. Controltec, Inc., 561 So. 2d 1334, 1335 (Fla. 5th DCA
1990).................................................................................................................18
Hull & Company v. Thomas, 834 So. 2d 904 (Fla. 4th DCA 2003).............16
J.B. Muros Corp. v. International Mall, Inc., 534 So. 2d 818 (Fla. 3rd DCA
1988)...................................................................................................................9
Momenah v. Ammache, 616 So. 2d 121 (Fla. 2d DCA 1983).......................11,12
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Mourning v. Ballast Nedam Const. Inc., 964 So.2d 889,892 (Fla. 4th DCA
2007)................................................................................................................17
Neal v. Neal, 636 So. 2d 810 (Fla. 1st DCA 1994).........................................11, 9
Reep v. Reep, 565 So. 2d 814 (Fla. 3d DCA 1990)........................................11,9
Rich v. Spivey, 922 So.2d 326, 328 (Fla. 1st DCA 2006)................................18
Security Bank, N.A. v. BellSouth Adver. & Pub. Corp., 679 So. 2d 795, 800
(Fla. 3rd DCA 1996)..........................................................................................17
Smalley v. Lane, 428 So. 2d 298 (Fla. 3d DCA 1983)....................................11,9
SPS Development v. DS Enterprises, 970 So. 2d 495, (Fla. 4th DCA 2007)....13
Talucci v. Matthews, 960 So. 2d 9 (Fla. 4th DCA 2007)...................................16
Watson v. Internet Billing Co., Ltd, 882 So.2d 533 (Fla. 4th DCA 2004).........18
World on Wheels of Miami, Inc. v. International Auto Workers, Inc., 569 So.
2d 836 (Fla. 3rd DCA 1990) ...............................................................................9
Fla.R.Civ.P. 1.440 c...........................................................................................17
STATEMENT OF THE CASE AND FACTS
1. Nature of the Case.
This is an appeal from a final order rendered by the trial Court on
January 19, 2011 entering a final judgment after entry of defaults against the
named appellants for their failure to answer each interrogatory completely.
2. The Course of the Proceedings.
This case began with a complaint filed by the Florida Department
of Financial Services (“Department”) against all defendants, including the
appellants herein. The gist of the complaint concerns the allegations of a
fraudulent conveyance/conversion of a loan owed by Towers of Coral Springs,
Ltd. To Onyx Underwriters, Inc.
All defendants have defended the action. The gist of defendants’
claims are best summarized in their motion for summary judgment. (App-9 ).
The discovery issues began on January 25, 2008 when the trial
Court entered an order compelling answers to interrogatories and requests for
production. This was an ex parte order as a result of an ex parte motion filed
by plaintiff. (App-1).
Subsequently, plaintiff filed a motion for sanctions and on March 7,
2008, defendants filed a motion to stay discovery and for protective order. The
gist of this motion was that discovery should be stayed pending the trial court’s
ruling on defendants’ pending motion to dismiss. This motion was followed by
Page 1
a similar motion directed at third party discovery served March 20, 2008. (App-
2).
At the hearing on these motions, both parties withdrew their respective
motions and agreed to answer the complaint and discovery by June 2, 2008.
(App-3).
Defendants did answer the complaint timely and filed a motion for
protective order on the discovery requests. The fundamental premise of the
motion for protective order was substantive, but not directed at the specific
questions. Defendants argued that their motion for summary judgment should
be heard first inasmuch as it was dispositive and that private financial
discovery is inappropriate as a pre-judgment discovery technique.
At the hearing on this motion for protective order, the trial Court denied
the fundamental premise argued, i.e. that no discovery should be necessary
until the Court heard defendants’ dispositive motion for summary judgment.
(App-4). In that order, defendants were ordered to respond to the
interrogatories within 5 business days and denied the Department’s motion for
sanctions.
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Subsequently, defendants filed their responses to the discovery by
detailing their objections to specific requests based upon the specific requests
for production and interrogatories. The Department filed its amended and
renewed motion for sanctions and the defendants filed their response thereto.
(App-5). At the hearing on these latest discovery issues, the trial Court granted
much of defendants’ requests for relief. The trial Court ordered that
defendants were not then required to produce any documents and that certain
financial information would be protected and they did not have to answer those
questions. (App-6).
Subsequently, the defendants answered the interrogatories. (App-7)
As a result of the claim for a lack of complete answers, plaintiff sought
the ultimate sanction of a court default. Without affording the opportunity of
any lesser sanctions, the trial court granted the motion. (App-8)
Subsequently, appellants moved for rehearing arguing that the trial court
did not afford the opportunity or even consider any lesser sanctions. (App-11).
In particular, the defendants had prepared and were prepared to serve
supplemental answers which were present at the hearing. A successor trial
court heard the motion for rehearing, but denied it without addressing any of
the issues raised in the motion. Rather, the trial court decided that it did not
have the authority to revisit a prior trial court’s decisions. (App-12).
3. Disposition in the Lower Tribunal.
On June 8, 2009, the trial court entered its order granting default
against the named appellants. An appeal was taken of this order (4D09-459)
and that appeal was dismissed as being premature. Subsequently, the trial court
denied the motion for rehearing and entered a final judgment. A notice of
appeal was timely filed and this appeal ensued.
SUMMARY OF ARGUMENT
It is axiomatic that sanctions are appropriately entered under a fairly well
defined set of circumstances. The first circumstance is the need to find that the
offending party knowingly violated court orders in such a way that would rise
to the level of contumacious conduct. Here, the defendants filed repeated
motions outlining their position that the discovery requests were inappropriate
for various legal reasons. The trial court agreed with some of those arguments,
going so far as to relieve them of any obligation to produce any documents.
The trial court disagreed with some of those arguments and ordered defendants
to answer some of those interrogatories. Defendants did answer the
interrogatories. The Department sought sanctions for defendants’ failure to
completely answer all of the interrogatories and the trial court erred in entering
a default under the factual circumstances herein.
Moreover, the trial court ignored any possibility of lesser sanctions
before entering the default.
The successor trial court denied the motion for rehearing, but only based
upon the erroneous belief that it was unable to rehear the matter already ruled
upon by its predecessor trial court.
Finally, the trial court entered a final judgment without conducting an
evidentiary hearing or trial on damages. A trial court must conduct an
evidentiary hearing or trial when a party seeks unliquidated damages.
ARGUMENT
I.
THE TRIAL COURT ERRED IN GRANTING A
DEFAULT WHERE THERE WAS NO
INTENTIONAL DISOBEDIENCE OF A COURT
ORDER
The chronology of this case may be best summarized by stating that
defendants have consistently tried to protect the release of private financial
information which they believe is a completely inappropriate subject of
discovery in this case. The bases for this belief are well articulated in various
motions that were filed below. These include a motion to stay, a motion for
protective order, a motion for summary judgment (App-9) and exceptions to
one of the reports of the general magistrate. (App-10). Although the substance
of those motions is not directly critical to this appeal, it is instructive to review
these motions in the light of the procedural history of this case. Upon a careful
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understanding and review of these motions and the way this matter progressed,
it is clear that the defendants’ actions were not wilful.
Initially, on January 25, 2008, this Court entered an order compelling
answers to interrogatories and requests for production. This was an ex parte
order as a result of an ex parte motion filed by plaintiff. (App-1)
Subsequently, plaintiff filed a motion for sanctions and defendants filed
a motion to stay discovery. At the hearing on these motions, both parties
withdrew their respective motions and agreed to answer the complaint and
discovery by June 2, 2008. Defendants did answer the complaint timely and
filed a motion for protective order on the discovery requests. The fundamental
premise of the motion for protective order was substantive, but not directed at
the specific questions. Defendants argued that their motion for summary
judgment should be heard first inasmuch as it was dispositive and that private
financial discovery is inappropriate as a pre-judgment discovery technique.
Given these arguments, it was appropriate for defendants to believe as of this
time in the case, there was no violations of any court orders. They argued that
there should be no disclosure of any information pending a dispositive motion
and this motion was timely served.
At the hearing on this motion for protective order, the trial Court denied
the fundamental premise argued, i.e. that no discovery should be necessary
until the Court heard defendants’ dispositive motion for summary judgment.
As a result of losing the general proposition that all discovery should be
stayed, subsequently, defendants filed objections to specific requests based
upon the specific requests for production and interrogatories. At this hearing,
the trial Court granted much of defendants’ request for relief. The trial Court
ordered that defendants were not then required to produce documents and that
certain financial information would be protected and they did not have to
answer those questions.
Subsequently, the defendants answered the interrogatories. Plaintiff
sought better answers to the interrogatories, but in lieu of moving for better
answers, plaintiff filed a motion for sanctions, including default.
At the hearing on the motion for sanctions, the trial Court repeatedly did
not permit argument on the requests for production, indicating that this was not
a gestalt analysis and the only issue before the Court were the answers to
interrogatories. However, in order to find wilfullness or lack thereof, a trial
Court must consider the totality of the discovery circumstances. From the
defendants’ perspective, they were trying to protect their private financial
information. From what they learned from this case’s evolution, the court was
sympathetic to their arguments. They were not obligated to produce
documents. They were not obligated to answer interrogatories dealing with tax
I.D. numbers and bank account numbers. The premise of this was to prevent
private information being given to plaintiff.
Upon answering the actual interrogatories, they did an able job of
answering virtually all of them to the best of their ability. Pursuant to the
affidavits attached to their motion for rehearing, they were basically on their
own and had to interpret the interrogatories by themselves and determine the
best way to harmonize in their minds what they understood the court’s
decisions were in protecting their private banking information and some of the
remaining interrogatories. Accordingly, most of the interrogatories were
answered and some were either not answered correctly or completely.
However, the trial Court’s finding that the reason for this was wilful was based
upon, in part, the trial Court not taking a gestalt analysis and not considering
some of this background and not considering the totality of the circumstances.
In some of the interrogatories, the issue was the names and addresses of
owners of the various entities. Although the answers do not reflect this,
defendants asserted at the hearing that they did produce documents to plaintiff
which answered these very interrogatories. Again, without counsel to guide
them into serving a formal supplemental answer, they believed that they had
complied with those questions. Their ignorant but sincere attempts to answer
the interrogatories, may not have complied with the formal requisites of the
Rules of Civil Procedure, but neither do they merit a finding of wilful
disobedience.
The trial Court’s decision to issue the ultimate sanction of a default is
simply unwarranted. It is axiomatic that such a penalty should be assessed
only under the most extreme conditions. See, e.g., World on Wheels of Miami,
Inc. v. International Auto Workers, Inc., 569 So. 2d 836 (Fla. 3rd DCA 1990)
(failure to file pre-trial stipulation, appear at calendar call and appear at trial
not enough to warrant dismissal with prejudice); J.B. Muros Corp. v.
International Mall, Inc., 534 So. 2d 818 (Fla. 3rd DCA 1988); Neal v. Neal,
636 So. 2d 810 (Fla. 1st DCA 1994) ("The striking of pleadings . . . or noncompliance
with an order compelling discovery is the most severe of all
sanctions, and should be employed only in extreme circumstances." [string cite
omitted].
The Florida Supreme Court has made clear that a necessary condition
precedent to punishing a party by a default or dismissal requires a finding that
the party has willfully disobeyed the court's order despite having the ability to
so obey the order. Commonwealth Federal Savings & Loan v. Tubero, 569 So.
2d 1271 (Fla. 1990). In order to establish willful disobedience, one needs to
show that the party was notified that a court order was entered and that the
noticed party intentionally disobeyed that order. Indeed, in the absence of the
party's actually receiving such notice, sanctions such as imposed here may
violate constitutional due process. See, e.g., Choice Hotels International, Inc.
v. Goodwin & Boone, 11 F.3d 469 (4th Cir. 1993); Crowder v. Orowest Foods
Company, 447 So. 2d 1038, 1040 (Fla. 2d DCA 1994).
Sanctions are reversed when even the slightest ambiguity in the notice to
a party existed. Cadwell v. Cadwell, 549 So. 2d 1133 (Fla. 3rd DCA 1989)
(where a court's order was ambiguous, this court held that while the party's
conduct was inexcusable, striking pleadings and entering of a default were not
warranted based upon the ambiguity).
Additionally, in order to prove willful disobedience, a party must be
shown to have had the intent to disobey as opposed to mistake or mere neglect.
Given the elusive nature of this requirement, courts look for a pattern of noncompliance.
Arango v. Alvarez, 585 So. 2d 1131 (Fla. 3rd DCA 1981). In this
case, it is patently clear that none of these elements existed.
Defendants offered to hand supplemental answers already prepared at the
hearing; they answered other interrogatories by virtue of producing documents.
This is clear evidence of a lack of willful disobedience required to be
established to support these sanctions. Reep v. Reep, 565 So. 2d 814 (Fla. 3d
DCA 1990); Binger v. Pest Control, 401 So. 2d 1310 (Fla. 1981); Beauchamp
v. Collins, 500 So. 2d 294 (Fla. 3d DCA 1986) (rev. denied, 511 So.2d 297
(Fla. 1987); Smalley v. Lane, 428 So. 2d 298 (Fla. 3d DCA 1983); Neal v.
Neal, 636 So. 2d 810 (Fla. 1st DCA 1994); Momenah v. Ammache, 616 So. 2d
121 (Fla. 2d DCA 1983).
It is axiomatic that the severity of the sanction must be commensurate
with the violation. Beauchamp v. Collins, 500 So. 2d 294 (Fla. 3d DCA 1986)
rev. denied, 511 So. 2d 297 (Fla.1987) (". . . the record is devoid of any
indication that there was bad faith non-compliance with discovery or court
orders which would warrant a finding of willful and flagrant disobedience. . .
plaintiffs have essentially complied with all of defendant's many discovery
requests. . . plaintiffs supplied answers to. . . interrogatories, albeit tardy and
not as complete as defendants' might have liked"); Smalley v. Lane, 428 So. 2d
298 (Fla. 3d DCA 1983) (the punishment for disregard of a court order should
fit the crime . . .). Thus, for example, the court should not enter the ultimate
sanction where a party produces some but not all court ordered records. Neal
v. Neal, 636 So. 2d 810 (Fla. 1st DCA 1994); Reep v. Reep, 565 So. 2d 814
(Fla. 3d DCA 1990). In addition, where a party fails to attend a court ordered
deposition, but has a good faith excuse, the ultimate sanction would be
improper. See, e.g., Momenah v. Ammache, 616 So. 2d 121 (Fla. 2d DCA
1983). In this case, all elements apply and this Court should not have imposed
the ultimate sanction.
As in the above cases, defendants here answered the bulk of the
interrogatories, answered them further by virtue of producing documents, and
answered the remainder of them by virtue of having supplemental answers at
the hearing. Clearly, the defendants believed that they had complied, but to the
extent that there was still missing information, they were prepared to fill in the
gaps and answer all remaining interrogatories.
WHEREFORE, this Court should reverse the imposition of a default and
remand this case to the trial court for further proceedings.
II.
THE TRIAL COURT ERRED IN GRANTING DEFAULT WHEN
LESS SEVERE SANCTIONS WERE A VIABLE ALTERNATIVE
Although appellants believe that they did all they could to interpret
without benefit of counsel the discovery obligations and respond accordingly,
even if the trial court correctly read this as a contumacious disregard for court
orders, there were still multiple less severe sanctions which were viable
alternatives. The simplest ones that come to mind would have been the entry of
an order to submit better and more complete answers within a certain amount
of days and to pay a reasonable amount of attorneys fees. The trial court did
not give appellants that chance and refused to even entertain the notion of less
severe sanction. Appellants tried to argue this before the trial court, but the
trial court did not entertain any further argument. Further, when presented
fully in the motion for rehearing, the original trial court did not review or rule
on said motion (see below argument dealing with successor trial court).
The Florida Supreme Court along with this District have made clear that
a trial court must utilize a less severe sanction if such a sanction would be a
viable alternative. Ham v. Dunmire, 891 So. 2d 492, (Fla. 2004); SPS
Development v. DS Enterprises, 970 So. 2d 495, (Fla. 4th DCA 2007) (“...if a
sanction less severe than dismissal with prejudice appears to be a viable
alternative, the trial court should employ such an alternative.”)
Here, defendants exhibited their willingness to continually supplement
answers as necessary. If the court meant to compel compliance, there were
numerous viable alternatives, especially since defendants indicated, even at the
hearing, that they were willing to supplement their answers. All this Court did
was punish the defendants without even considering any less severe sanctions.
WHEREFORE, given the existence of viable alternatives, this Court
should reverse the order granting the motion for sanctions, and remand to the
trial court with instructions to entertain lesser sanctions.
III.
THE SUCCESSOR TRIAL COURT DENIED THE MOTION FOR
REHEARING BASED UPON THE ERRONEOUS BELIEF THAT IT
COULD NOT REVISIT THE PRIOR TRIAL COURT’S DECISION
Initially, defendants moved for rehearing and to vacate the default order.
(App.-11). As a result of the initial trial court’s misplacing the motion and
being on vacation, defendants, in an abundance of caution and to protect their
appellate rights, appealed the default order in an interlocutory appeal. This
Court dismissed that appeal as being premature in Case no. 4D09-459.
Upon remand, a successor trial court heard argument on the motion for
rehearing. However, upon ruling, all the trial court determined was its
erroneous belief that it would be improper to revisit the prior trial court’s
decisions. (App-11). The trial court’s order lists several reasons for its denial,
but it seems clear that the main reason is the trial court’s unwillingness to
“change its mind as to a matter which has already received the careful attention
of the judge...” The reason for this belief is the very argument, namely, that the
original trial court never even entertained argument on a lesser sanction.
Accordingly, it is impossible that the defendants were only trying to change the
trial court’s mind on a matter that had been carefully attended to by the prior
trial court. On the contrary, the argument was that the original trial court did
not attend at all to this particular point. Since none of the other bases is
supported by the facts, this has to be the primary or even sole reason for the
denial.
It is axiomatic that prior to the entry of a final judgment, a successor trial
court has the authority to vacate of modify a prior trial court’s interlocutory
rulings. Hull & Company v. Thomas, 834 So. 2d 904 (Fla. 4th DCA 2003). In
Hull, the interlocutory order was an order on a motion for summary judgment.
WHEREFORE, this Court should reverse the trial court’s order denying
rehearing and to vacate and remand this matter to the trial court with
instructions to vacate the prior default and entertain lesser sanctions if
warranted.
IV
THE TRIAL COURT ABUSED ITS DISCRETION IN ENTERING A
DEFAULT JUDGMENT FOR UNLIQUIDATED DAMAGES
“For more than a century it has been the law in Florida that a defaulted
defendant has the right to contest the amount of unliquidated damages and may
offer evidence in mitigation thereo.” Talucci v. Matthews, 960 So. 2d 9 (Fla.
4th DCA 2007 (citation omitted). Even when a defendant engages in discovery
misconduct and violates court orders, a default admits only a defendant’s
liability for liquidated damages, and it does not affect the right to jury
determination of unliquidated damages. See Deauville Hotel Management,
LLC v. Atlantic Broadband (Miami) LLC, 31 So. 3d 204 (Fla. 3rd DCA 2010);
DYC Fishing, Ltd. v. Martinez, 994 So. 2d 461 (Fla. 3d DCA 2008).
Florida Rule of Civil Procedure 1.440 provides in pertinent part : “In
actions in which the damages are not liquidated, the order setting an action for
trial shall be served on parties who are in default in accordance with rule 1.080
(a).” Fla.R.Civ.P. 1.440 c. “The underlying principle inherent in rule 1.440 is
one of due process.” Mourning v. Ballast Nedam Const. Inc., 964 So.2d
889,892 (Fla. 4th DCA 2007). A defaulted defendant has a due process right to
notice and an opportunity to be heard and present and evaluate evidence
necessary to establish the amount of unliquidated damages. See Cellular
Warehouse, Inc. v. GH Cellular, LLC, 957 So.2d 662,666 (Fla. 3rd DCA 2007);
Bodygear Activewear, Inc. v. CounterIntelligence Services, 946 So.2d 1148,
1150 (Fla. 4th DCA 2006); Security Bank, N.A. v. BellSouth Adver. & Pub.
Corp., 679 So. 2d 795, 800 (Fla. 3rd DCA 1996) (An award of unliquidated
damages that does not fulfill the requirements of notice and an opportunity to
be heard is regarded as fundamental error).
“Damages 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.” Bowman v. Kingsland Development, Inc.
432 So. 2d 660, 662 (Fla. 5th DCA 1983). Liquidated damages must be precise
and specific sums of money that are immediately apparent from the express
terms of the contract, or determinable by mathematical calculation or a specific
rule of law. Watson v. Internet Billing Co., Ltd, 882 So.2d 533 (Fla. 4th DCA
2004). Conversely, damages are unliquidated if they require factual
determinations from which to find a basis for proper value. Bowman, 432
So.2d at 663. When the complaint alleges only general damages and no
specific amount is claimed, the damages remain unliquidated. Watson, 882
So.2d at 533; Dunkley Stucco Inc. v. Progressive Amer. Ins. Co., 751 So. 2d
723 (Fla. 5th DCA 2000). Moreover, damages are not liquidated “simply
because a fixed sum [is] demanded by the complaint.” Hartford Fire Ins. Co. v.
Controltec, Inc., 561 So. 2d 1334, 1335 (Fla. 5th DCA 1990); see also Rich v.
Spivey, 922 So.2d 326, 328 (Fla. 1st DCA 2006)(“If the court determines that
defendant is in default, the factual allegations of the complaint, except those
relating to the amount of damages, will be taken as true....a default does not
concede the amount demanded.”)(citation omitted).
In this case, the alleged damages were based upon four counts. The first
count was an alleged civil conspiracy to fraudulently convert loans payables.
The second count was a constructive trust on the same theory. The third count
was for equitable accounting on the theory that certain defendants received
distributions since the alleged conversion. The fourth count was for injunctive
relief. A quick review of each count makes clear that none of the alleged
damages was liquidated.
Analyzing the counts in reverse order, the count for injunctive relief
alleged that the defendants were in the process of refinancing the Towers
properties and are having appraisals made and that the receiver would sustain
irreparable injury absent an immediate injunction. Further, “No adequate
remedy at law exists.” (Paragraph 60). Obviously, this count does not lend
itself to liquidated damages.
The request for equitable accounting alleges that the Receiver “does not
know the exact amount of the distributions....” (Paragraph 56). Again,
obviously, not liquidated damages.
The first two counts arise on the allegations that there had been a
fraudulent conversion. However, the basis for the allegations are that
defendants reclassified or renamed a loan while being subject to a turnover
order. The amounts alleged to be renamed are subject to books and records as
alleged to be reclassified by accountants. Indeed, plaintiff’s motion for default
judgment argues that the dollar amount was determined as a result of testimony
given by its forensic accountant, James Robinson. Pursuant to his affidavit
attached to the motion for default judgment, Mr. Robinson conclusorily opines
that the alleged sum “constitutes a liquidated amount”. However, the basis for
this conclusion involves alleged reclassifying accounting entries.
Based upon Florida’s strong preference favoring adjudicating lawsuits
on their merits, 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.” Hanft v. Church, 671 So.2d 249, 250 (Fla.
3rd DCA 1996 (citation omitted). The damages sought in this case are
unliquidated and cannot be validly awarded in a default judgment.
The trial court’s action constitute a gross abuse of discretion and should
be reversed and remanded for a trial on damages.
CONCLUSION
Given the lack of contumacious conduct herein, the entry of the ultimate
sanctions of striking of the pleadings and default was error. Further, since less
severe sanctions were both viable and available, it was error to enter the most
severe sanctions. Wherefore, appellants request that this Court reverse the trial
Court’s striking of pleadings, the entry of default and the order granting the
motion for sanctions and remand this matter back to the trial Court with
instructions to vacate the final judgment and the order granting default and
entertain less severe sanctions as appropriate.
Alternatively, and at a minimum, appellants request that the final
judgment be reversed and this case be remanded to the trial court with
instructions to conduct a trial on the issue of damages.
Respectfully submitted this 31st day of May, 2011
THE LAW OFFICES OF ALAN DAGEN, P.A.
Attorneys for Appellant
746 Heritage Drive
Weston, Florida 33326
Telephone: (954) 389-8605
Fax: (954) 337-3250
By: _____________________________________
ALAN P. DAGEN, Esquire
Florida Bar No.: 0456535
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing
amended initial brief was mailed this 31st day of May, 20111 upon Edgar
Cale, Barclay Cale P. A., 169 E Flagler St , Ste 1200, Miami, Florida 33131-
1205.
_____________________________________
ALAN P. DAGEN
CERTIFICATE OF COMPLYING WITH FLA. R. APP. P. 9.100(l)
AND FLA. R. APP. P. 9.210 (a)(2)
I hereby certify that I have checked the computer settings for font and
spacing of this brief and that pursuant to those settings, this brief complies with
the above rule for font and spacing requirements.
By: _________________________________________
Alan P. Dagen
C:\Users\alan\Documents\fraynd,broward,appeal,initial brief as filed the second time.wpd
WEDNESDAY, JULY 20, 2011
APPELLANTS’ INITIAL BRIEF ON APPEAL FROM A FINAL ORDER OF THE CIRCUIT COURT OF BROWARD COUNTY, FLORIDA
IN THE DISTRICT COURT OF APPEAL FOR THE
FOURTH DISTRICT OF FLORIDA
Case No: 4D11-550
MARCOS FRAYND, et alDefendants/Appellants,
vs.
FLORIDA DEPARTMENT OF FINANCIAL SERVICES,
Plaintiff/Appellee,
__________________________________________
APPELLANTS’ INITIAL BRIEF ON APPEAL FROM A FINAL ORDER OF THE
CIRCUIT COURT OF BROWARD COUNTY, FLORIDA
CASE NO.: 07-14904 CACE 21
THE LAW OFFICES OF ALAN DAGEN, P.A.
Attorneys for Appellant
746 Heritage Drive
Weston, Florida 33326
Telephone: (954) 389-8605
Fax: (954) 337-3250
By: ALAN P. DAGEN, Esquire
Florida Bar No.: 0456535
- i -
TABLE OF CONTENTS
TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... . . . . . . . . . . . . i
TABLE OF CITATIONS AND AUTHORITIES . . . . . . . . . . . . ......... . . . . . . . . ii
STATEMENT OF THE CASE AND FACTS . . . . . . . . . . . . . . . . . . ....... . . . . . 1
1. Nature of the Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...................... 1
2. The Course of the Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . .......................1
3. Disposition in the Lower Tribunal. . . . . . . . . . . . . . . . . . . . . . ........................... 3
SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 4
ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 5
THE TRIAL COURT ERRED IN GRANTING A DEFAULT
WHERE THERE WAS NO INTENTIONAL
DISOBEDIENCE OF A COURT ORDER..........................................................5
THE TRIAL COURT ERRED IN GRANTING DEFAULT
WHEN LESS SEVERE SANCTIONS WERE A VIABLE
ALTERNATIVE.................................................................................................12
THE SUCCESSOR TRIAL COURT DENIED THE MOTION
FOR REHEARING BASED UPON THE ERRONEOUS
BELIEF THAT IT COULD NOT REVISIT THE PRIOR
TRIAL COURT’S DECISION...........................................................................14
THE TRIAL COURT ABUSED ITS DISCRETION IN
ENTERING A DEFAULT JUDGMENT FOR
UNLIQUIDATED DAMAGES..........................................................................16
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . 21
CERTIFICATE OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... . 22
- ii -
TABLE OF CITATIONS AND AUTHORITIES
Arango v. Alvarez, 585 So. 2d 1131 (Fla. 3rd DCA 1981)................................10
Beauchamp v. Collins, 500 So. 2d 294 (Fla. 3d DCA 1986) (rev. denied,
511 So.2d 297 (Fla. 1987)................................................................................11
Binger v. Pest Control, 401 So. 2d 1310 (Fla. 1981)..........................................11
Bodygear Activewear, Inc. v. CounterIntelligence Services, 946 So.2d 1148,
1150 (Fla. 4 DCA 2006)................................................................................th 17
Bowman v. Kingsland Development, Inc. 432 So. 2d 660, 662 (Fla. 5th DCA
1983).................................................................................................................18
Cadwell v. Cadwell, 549 So. 2d 1133 (Fla. 3rd DCA 1989) .............................10
Cellular Warehouse, Inc. v. GH Cellular, LLC, 957 So.2d 662,666 (Fla. 3rd
DCA 2007)........................................................................................................17
Choice Hotels International, Inc. v. Goodwin & Boone, 11 F.3d 469 (4th Cir.
1993).................................................................................................................10
Commonwealth Federal Savings & Loan v. Tubero, 569 So. 2d 1271 (Fla.
1990)..................................................................................................................9
Crowder v. Orowest Foods Company, 447 So. 2d 1038, 1040 (Fla. 2d DCA
1994).................................................................................................................10
Deauville Hotel Management, LLC v. Atlantic Broadband (Miami) LLC,
31 So. 3d 204 (Fla. 3rd DCA 2010)..................................................................17
Dunkley Stucco Inc. v. Progressive Amer. Ins. Co., 751 So. 2d 723 (Fla. 5th
DCA 2000).......................................................................................................18
DYC Fishing, Ltd. v. Martinez, 994 So. 2d 461 (Fla. 3d DCA 2008).................17
Ham v. Dunmire, 891 So. 2d 492, (Fla. 2004)....................................................13
Hanft v. Church, 671 So.2d 249, 250 (Fla. 3rd DCA 1996)...............................20
Hartford Fire Ins. Co. v. Controltec, Inc., 561 So. 2d 1334, 1335 (Fla. 5th DCA
1990).................................................................................................................18
Hull & Company v. Thomas, 834 So. 2d 904 (Fla. 4th DCA 2003).............16
J.B. Muros Corp. v. International Mall, Inc., 534 So. 2d 818 (Fla. 3rd DCA
1988)...................................................................................................................9
Momenah v. Ammache, 616 So. 2d 121 (Fla. 2d DCA 1983).......................11,12
-iii-
Mourning v. Ballast Nedam Const. Inc., 964 So.2d 889,892 (Fla. 4th DCA
2007)................................................................................................................17
Neal v. Neal, 636 So. 2d 810 (Fla. 1st DCA 1994).........................................11, 9
Reep v. Reep, 565 So. 2d 814 (Fla. 3d DCA 1990)........................................11,9
Rich v. Spivey, 922 So.2d 326, 328 (Fla. 1st DCA 2006)................................18
Security Bank, N.A. v. BellSouth Adver. & Pub. Corp., 679 So. 2d 795, 800
(Fla. 3rd DCA 1996)..........................................................................................17
Smalley v. Lane, 428 So. 2d 298 (Fla. 3d DCA 1983)....................................11,9
SPS Development v. DS Enterprises, 970 So. 2d 495, (Fla. 4th DCA 2007)....13
Talucci v. Matthews, 960 So. 2d 9 (Fla. 4th DCA 2007)...................................16
Watson v. Internet Billing Co., Ltd, 882 So.2d 533 (Fla. 4th DCA 2004).........18
World on Wheels of Miami, Inc. v. International Auto Workers, Inc., 569 So.
2d 836 (Fla. 3rd DCA 1990) ...............................................................................9
Fla.R.Civ.P. 1.440 c...........................................................................................17
STATEMENT OF THE CASE AND FACTS
1. Nature of the Case.
This is an appeal from a final order rendered by the trial Court on
January 19, 2011 entering a final judgment after entry of defaults against the
named appellants for their failure to answer each interrogatory completely.
2. The Course of the Proceedings.
This case began with a complaint filed by the Florida Department
of Financial Services (“Department”) against all defendants, including the
appellants herein. The gist of the complaint concerns the allegations of a
fraudulent conveyance/conversion of a loan owed by Towers of Coral Springs,
Ltd. To Onyx Underwriters, Inc.
All defendants have defended the action. The gist of defendants’
claims are best summarized in their motion for summary judgment. (App-9 ).
The discovery issues began on January 25, 2008 when the trial
Court entered an order compelling answers to interrogatories and requests for
production. This was an ex parte order as a result of an ex parte motion filed
by plaintiff. (App-1).
Subsequently, plaintiff filed a motion for sanctions and on March 7,
2008, defendants filed a motion to stay discovery and for protective order. The
gist of this motion was that discovery should be stayed pending the trial court’s
ruling on defendants’ pending motion to dismiss. This motion was followed by
Page 1
a similar motion directed at third party discovery served March 20, 2008. (App-
2).
At the hearing on these motions, both parties withdrew their respective
motions and agreed to answer the complaint and discovery by June 2, 2008.
(App-3).
Defendants did answer the complaint timely and filed a motion for
protective order on the discovery requests. The fundamental premise of the
motion for protective order was substantive, but not directed at the specific
questions. Defendants argued that their motion for summary judgment should
be heard first inasmuch as it was dispositive and that private financial
discovery is inappropriate as a pre-judgment discovery technique.
At the hearing on this motion for protective order, the trial Court denied
the fundamental premise argued, i.e. that no discovery should be necessary
until the Court heard defendants’ dispositive motion for summary judgment.
(App-4). In that order, defendants were ordered to respond to the
interrogatories within 5 business days and denied the Department’s motion for
sanctions.
-Page 2 -
Subsequently, defendants filed their responses to the discovery by
detailing their objections to specific requests based upon the specific requests
for production and interrogatories. The Department filed its amended and
renewed motion for sanctions and the defendants filed their response thereto.
(App-5). At the hearing on these latest discovery issues, the trial Court granted
much of defendants’ requests for relief. The trial Court ordered that
defendants were not then required to produce any documents and that certain
financial information would be protected and they did not have to answer those
questions. (App-6).
Subsequently, the defendants answered the interrogatories. (App-7)
As a result of the claim for a lack of complete answers, plaintiff sought
the ultimate sanction of a court default. Without affording the opportunity of
any lesser sanctions, the trial court granted the motion. (App-8)
Subsequently, appellants moved for rehearing arguing that the trial court
did not afford the opportunity or even consider any lesser sanctions. (App-11).
In particular, the defendants had prepared and were prepared to serve
supplemental answers which were present at the hearing. A successor trial
court heard the motion for rehearing, but denied it without addressing any of
the issues raised in the motion. Rather, the trial court decided that it did not
have the authority to revisit a prior trial court’s decisions. (App-12).
3. Disposition in the Lower Tribunal.
On June 8, 2009, the trial court entered its order granting default
against the named appellants. An appeal was taken of this order (4D09-459)
and that appeal was dismissed as being premature. Subsequently, the trial court
denied the motion for rehearing and entered a final judgment. A notice of
appeal was timely filed and this appeal ensued.
SUMMARY OF ARGUMENT
It is axiomatic that sanctions are appropriately entered under a fairly well
defined set of circumstances. The first circumstance is the need to find that the
offending party knowingly violated court orders in such a way that would rise
to the level of contumacious conduct. Here, the defendants filed repeated
motions outlining their position that the discovery requests were inappropriate
for various legal reasons. The trial court agreed with some of those arguments,
going so far as to relieve them of any obligation to produce any documents.
The trial court disagreed with some of those arguments and ordered defendants
to answer some of those interrogatories. Defendants did answer the
interrogatories. The Department sought sanctions for defendants’ failure to
completely answer all of the interrogatories and the trial court erred in entering
a default under the factual circumstances herein.
Moreover, the trial court ignored any possibility of lesser sanctions
before entering the default.
The successor trial court denied the motion for rehearing, but only based
upon the erroneous belief that it was unable to rehear the matter already ruled
upon by its predecessor trial court.
Finally, the trial court entered a final judgment without conducting an
evidentiary hearing or trial on damages. A trial court must conduct an
evidentiary hearing or trial when a party seeks unliquidated damages.
ARGUMENT
I.
THE TRIAL COURT ERRED IN GRANTING A
DEFAULT WHERE THERE WAS NO
INTENTIONAL DISOBEDIENCE OF A COURT
ORDER
The chronology of this case may be best summarized by stating that
defendants have consistently tried to protect the release of private financial
information which they believe is a completely inappropriate subject of
discovery in this case. The bases for this belief are well articulated in various
motions that were filed below. These include a motion to stay, a motion for
protective order, a motion for summary judgment (App-9) and exceptions to
one of the reports of the general magistrate. (App-10). Although the substance
of those motions is not directly critical to this appeal, it is instructive to review
these motions in the light of the procedural history of this case. Upon a careful
-Page 2 -
understanding and review of these motions and the way this matter progressed,
it is clear that the defendants’ actions were not wilful.
Initially, on January 25, 2008, this Court entered an order compelling
answers to interrogatories and requests for production. This was an ex parte
order as a result of an ex parte motion filed by plaintiff. (App-1)
Subsequently, plaintiff filed a motion for sanctions and defendants filed
a motion to stay discovery. At the hearing on these motions, both parties
withdrew their respective motions and agreed to answer the complaint and
discovery by June 2, 2008. Defendants did answer the complaint timely and
filed a motion for protective order on the discovery requests. The fundamental
premise of the motion for protective order was substantive, but not directed at
the specific questions. Defendants argued that their motion for summary
judgment should be heard first inasmuch as it was dispositive and that private
financial discovery is inappropriate as a pre-judgment discovery technique.
Given these arguments, it was appropriate for defendants to believe as of this
time in the case, there was no violations of any court orders. They argued that
there should be no disclosure of any information pending a dispositive motion
and this motion was timely served.
At the hearing on this motion for protective order, the trial Court denied
the fundamental premise argued, i.e. that no discovery should be necessary
until the Court heard defendants’ dispositive motion for summary judgment.
As a result of losing the general proposition that all discovery should be
stayed, subsequently, defendants filed objections to specific requests based
upon the specific requests for production and interrogatories. At this hearing,
the trial Court granted much of defendants’ request for relief. The trial Court
ordered that defendants were not then required to produce documents and that
certain financial information would be protected and they did not have to
answer those questions.
Subsequently, the defendants answered the interrogatories. Plaintiff
sought better answers to the interrogatories, but in lieu of moving for better
answers, plaintiff filed a motion for sanctions, including default.
At the hearing on the motion for sanctions, the trial Court repeatedly did
not permit argument on the requests for production, indicating that this was not
a gestalt analysis and the only issue before the Court were the answers to
interrogatories. However, in order to find wilfullness or lack thereof, a trial
Court must consider the totality of the discovery circumstances. From the
defendants’ perspective, they were trying to protect their private financial
information. From what they learned from this case’s evolution, the court was
sympathetic to their arguments. They were not obligated to produce
documents. They were not obligated to answer interrogatories dealing with tax
I.D. numbers and bank account numbers. The premise of this was to prevent
private information being given to plaintiff.
Upon answering the actual interrogatories, they did an able job of
answering virtually all of them to the best of their ability. Pursuant to the
affidavits attached to their motion for rehearing, they were basically on their
own and had to interpret the interrogatories by themselves and determine the
best way to harmonize in their minds what they understood the court’s
decisions were in protecting their private banking information and some of the
remaining interrogatories. Accordingly, most of the interrogatories were
answered and some were either not answered correctly or completely.
However, the trial Court’s finding that the reason for this was wilful was based
upon, in part, the trial Court not taking a gestalt analysis and not considering
some of this background and not considering the totality of the circumstances.
In some of the interrogatories, the issue was the names and addresses of
owners of the various entities. Although the answers do not reflect this,
defendants asserted at the hearing that they did produce documents to plaintiff
which answered these very interrogatories. Again, without counsel to guide
them into serving a formal supplemental answer, they believed that they had
complied with those questions. Their ignorant but sincere attempts to answer
the interrogatories, may not have complied with the formal requisites of the
Rules of Civil Procedure, but neither do they merit a finding of wilful
disobedience.
The trial Court’s decision to issue the ultimate sanction of a default is
simply unwarranted. It is axiomatic that such a penalty should be assessed
only under the most extreme conditions. See, e.g., World on Wheels of Miami,
Inc. v. International Auto Workers, Inc., 569 So. 2d 836 (Fla. 3rd DCA 1990)
(failure to file pre-trial stipulation, appear at calendar call and appear at trial
not enough to warrant dismissal with prejudice); J.B. Muros Corp. v.
International Mall, Inc., 534 So. 2d 818 (Fla. 3rd DCA 1988); Neal v. Neal,
636 So. 2d 810 (Fla. 1st DCA 1994) ("The striking of pleadings . . . or noncompliance
with an order compelling discovery is the most severe of all
sanctions, and should be employed only in extreme circumstances." [string cite
omitted].
The Florida Supreme Court has made clear that a necessary condition
precedent to punishing a party by a default or dismissal requires a finding that
the party has willfully disobeyed the court's order despite having the ability to
so obey the order. Commonwealth Federal Savings & Loan v. Tubero, 569 So.
2d 1271 (Fla. 1990). In order to establish willful disobedience, one needs to
show that the party was notified that a court order was entered and that the
noticed party intentionally disobeyed that order. Indeed, in the absence of the
party's actually receiving such notice, sanctions such as imposed here may
violate constitutional due process. See, e.g., Choice Hotels International, Inc.
v. Goodwin & Boone, 11 F.3d 469 (4th Cir. 1993); Crowder v. Orowest Foods
Company, 447 So. 2d 1038, 1040 (Fla. 2d DCA 1994).
Sanctions are reversed when even the slightest ambiguity in the notice to
a party existed. Cadwell v. Cadwell, 549 So. 2d 1133 (Fla. 3rd DCA 1989)
(where a court's order was ambiguous, this court held that while the party's
conduct was inexcusable, striking pleadings and entering of a default were not
warranted based upon the ambiguity).
Additionally, in order to prove willful disobedience, a party must be
shown to have had the intent to disobey as opposed to mistake or mere neglect.
Given the elusive nature of this requirement, courts look for a pattern of noncompliance.
Arango v. Alvarez, 585 So. 2d 1131 (Fla. 3rd DCA 1981). In this
case, it is patently clear that none of these elements existed.
Defendants offered to hand supplemental answers already prepared at the
hearing; they answered other interrogatories by virtue of producing documents.
This is clear evidence of a lack of willful disobedience required to be
established to support these sanctions. Reep v. Reep, 565 So. 2d 814 (Fla. 3d
DCA 1990); Binger v. Pest Control, 401 So. 2d 1310 (Fla. 1981); Beauchamp
v. Collins, 500 So. 2d 294 (Fla. 3d DCA 1986) (rev. denied, 511 So.2d 297
(Fla. 1987); Smalley v. Lane, 428 So. 2d 298 (Fla. 3d DCA 1983); Neal v.
Neal, 636 So. 2d 810 (Fla. 1st DCA 1994); Momenah v. Ammache, 616 So. 2d
121 (Fla. 2d DCA 1983).
It is axiomatic that the severity of the sanction must be commensurate
with the violation. Beauchamp v. Collins, 500 So. 2d 294 (Fla. 3d DCA 1986)
rev. denied, 511 So. 2d 297 (Fla.1987) (". . . the record is devoid of any
indication that there was bad faith non-compliance with discovery or court
orders which would warrant a finding of willful and flagrant disobedience. . .
plaintiffs have essentially complied with all of defendant's many discovery
requests. . . plaintiffs supplied answers to. . . interrogatories, albeit tardy and
not as complete as defendants' might have liked"); Smalley v. Lane, 428 So. 2d
298 (Fla. 3d DCA 1983) (the punishment for disregard of a court order should
fit the crime . . .). Thus, for example, the court should not enter the ultimate
sanction where a party produces some but not all court ordered records. Neal
v. Neal, 636 So. 2d 810 (Fla. 1st DCA 1994); Reep v. Reep, 565 So. 2d 814
(Fla. 3d DCA 1990). In addition, where a party fails to attend a court ordered
deposition, but has a good faith excuse, the ultimate sanction would be
improper. See, e.g., Momenah v. Ammache, 616 So. 2d 121 (Fla. 2d DCA
1983). In this case, all elements apply and this Court should not have imposed
the ultimate sanction.
As in the above cases, defendants here answered the bulk of the
interrogatories, answered them further by virtue of producing documents, and
answered the remainder of them by virtue of having supplemental answers at
the hearing. Clearly, the defendants believed that they had complied, but to the
extent that there was still missing information, they were prepared to fill in the
gaps and answer all remaining interrogatories.
WHEREFORE, this Court should reverse the imposition of a default and
remand this case to the trial court for further proceedings.
II.
THE TRIAL COURT ERRED IN GRANTING DEFAULT WHEN
LESS SEVERE SANCTIONS WERE A VIABLE ALTERNATIVE
Although appellants believe that they did all they could to interpret
without benefit of counsel the discovery obligations and respond accordingly,
even if the trial court correctly read this as a contumacious disregard for court
orders, there were still multiple less severe sanctions which were viable
alternatives. The simplest ones that come to mind would have been the entry of
an order to submit better and more complete answers within a certain amount
of days and to pay a reasonable amount of attorneys fees. The trial court did
not give appellants that chance and refused to even entertain the notion of less
severe sanction. Appellants tried to argue this before the trial court, but the
trial court did not entertain any further argument. Further, when presented
fully in the motion for rehearing, the original trial court did not review or rule
on said motion (see below argument dealing with successor trial court).
The Florida Supreme Court along with this District have made clear that
a trial court must utilize a less severe sanction if such a sanction would be a
viable alternative. Ham v. Dunmire, 891 So. 2d 492, (Fla. 2004); SPS
Development v. DS Enterprises, 970 So. 2d 495, (Fla. 4th DCA 2007) (“...if a
sanction less severe than dismissal with prejudice appears to be a viable
alternative, the trial court should employ such an alternative.”)
Here, defendants exhibited their willingness to continually supplement
answers as necessary. If the court meant to compel compliance, there were
numerous viable alternatives, especially since defendants indicated, even at the
hearing, that they were willing to supplement their answers. All this Court did
was punish the defendants without even considering any less severe sanctions.
WHEREFORE, given the existence of viable alternatives, this Court
should reverse the order granting the motion for sanctions, and remand to the
trial court with instructions to entertain lesser sanctions.
III.
THE SUCCESSOR TRIAL COURT DENIED THE MOTION FOR
REHEARING BASED UPON THE ERRONEOUS BELIEF THAT IT
COULD NOT REVISIT THE PRIOR TRIAL COURT’S DECISION
Initially, defendants moved for rehearing and to vacate the default order.
(App.-11). As a result of the initial trial court’s misplacing the motion and
being on vacation, defendants, in an abundance of caution and to protect their
appellate rights, appealed the default order in an interlocutory appeal. This
Court dismissed that appeal as being premature in Case no. 4D09-459.
Upon remand, a successor trial court heard argument on the motion for
rehearing. However, upon ruling, all the trial court determined was its
erroneous belief that it would be improper to revisit the prior trial court’s
decisions. (App-11). The trial court’s order lists several reasons for its denial,
but it seems clear that the main reason is the trial court’s unwillingness to
“change its mind as to a matter which has already received the careful attention
of the judge...” The reason for this belief is the very argument, namely, that the
original trial court never even entertained argument on a lesser sanction.
Accordingly, it is impossible that the defendants were only trying to change the
trial court’s mind on a matter that had been carefully attended to by the prior
trial court. On the contrary, the argument was that the original trial court did
not attend at all to this particular point. Since none of the other bases is
supported by the facts, this has to be the primary or even sole reason for the
denial.
It is axiomatic that prior to the entry of a final judgment, a successor trial
court has the authority to vacate of modify a prior trial court’s interlocutory
rulings. Hull & Company v. Thomas, 834 So. 2d 904 (Fla. 4th DCA 2003). In
Hull, the interlocutory order was an order on a motion for summary judgment.
WHEREFORE, this Court should reverse the trial court’s order denying
rehearing and to vacate and remand this matter to the trial court with
instructions to vacate the prior default and entertain lesser sanctions if
warranted.
IV
THE TRIAL COURT ABUSED ITS DISCRETION IN ENTERING A
DEFAULT JUDGMENT FOR UNLIQUIDATED DAMAGES
“For more than a century it has been the law in Florida that a defaulted
defendant has the right to contest the amount of unliquidated damages and may
offer evidence in mitigation thereo.” Talucci v. Matthews, 960 So. 2d 9 (Fla.
4th DCA 2007 (citation omitted). Even when a defendant engages in discovery
misconduct and violates court orders, a default admits only a defendant’s
liability for liquidated damages, and it does not affect the right to jury
determination of unliquidated damages. See Deauville Hotel Management,
LLC v. Atlantic Broadband (Miami) LLC, 31 So. 3d 204 (Fla. 3rd DCA 2010);
DYC Fishing, Ltd. v. Martinez, 994 So. 2d 461 (Fla. 3d DCA 2008).
Florida Rule of Civil Procedure 1.440 provides in pertinent part : “In
actions in which the damages are not liquidated, the order setting an action for
trial shall be served on parties who are in default in accordance with rule 1.080
(a).” Fla.R.Civ.P. 1.440 c. “The underlying principle inherent in rule 1.440 is
one of due process.” Mourning v. Ballast Nedam Const. Inc., 964 So.2d
889,892 (Fla. 4th DCA 2007). A defaulted defendant has a due process right to
notice and an opportunity to be heard and present and evaluate evidence
necessary to establish the amount of unliquidated damages. See Cellular
Warehouse, Inc. v. GH Cellular, LLC, 957 So.2d 662,666 (Fla. 3rd DCA 2007);
Bodygear Activewear, Inc. v. CounterIntelligence Services, 946 So.2d 1148,
1150 (Fla. 4th DCA 2006); Security Bank, N.A. v. BellSouth Adver. & Pub.
Corp., 679 So. 2d 795, 800 (Fla. 3rd DCA 1996) (An award of unliquidated
damages that does not fulfill the requirements of notice and an opportunity to
be heard is regarded as fundamental error).
“Damages 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.” Bowman v. Kingsland Development, Inc.
432 So. 2d 660, 662 (Fla. 5th DCA 1983). Liquidated damages must be precise
and specific sums of money that are immediately apparent from the express
terms of the contract, or determinable by mathematical calculation or a specific
rule of law. Watson v. Internet Billing Co., Ltd, 882 So.2d 533 (Fla. 4th DCA
2004). Conversely, damages are unliquidated if they require factual
determinations from which to find a basis for proper value. Bowman, 432
So.2d at 663. When the complaint alleges only general damages and no
specific amount is claimed, the damages remain unliquidated. Watson, 882
So.2d at 533; Dunkley Stucco Inc. v. Progressive Amer. Ins. Co., 751 So. 2d
723 (Fla. 5th DCA 2000). Moreover, damages are not liquidated “simply
because a fixed sum [is] demanded by the complaint.” Hartford Fire Ins. Co. v.
Controltec, Inc., 561 So. 2d 1334, 1335 (Fla. 5th DCA 1990); see also Rich v.
Spivey, 922 So.2d 326, 328 (Fla. 1st DCA 2006)(“If the court determines that
defendant is in default, the factual allegations of the complaint, except those
relating to the amount of damages, will be taken as true....a default does not
concede the amount demanded.”)(citation omitted).
In this case, the alleged damages were based upon four counts. The first
count was an alleged civil conspiracy to fraudulently convert loans payables.
The second count was a constructive trust on the same theory. The third count
was for equitable accounting on the theory that certain defendants received
distributions since the alleged conversion. The fourth count was for injunctive
relief. A quick review of each count makes clear that none of the alleged
damages was liquidated.
Analyzing the counts in reverse order, the count for injunctive relief
alleged that the defendants were in the process of refinancing the Towers
properties and are having appraisals made and that the receiver would sustain
irreparable injury absent an immediate injunction. Further, “No adequate
remedy at law exists.” (Paragraph 60). Obviously, this count does not lend
itself to liquidated damages.
The request for equitable accounting alleges that the Receiver “does not
know the exact amount of the distributions....” (Paragraph 56). Again,
obviously, not liquidated damages.
The first two counts arise on the allegations that there had been a
fraudulent conversion. However, the basis for the allegations are that
defendants reclassified or renamed a loan while being subject to a turnover
order. The amounts alleged to be renamed are subject to books and records as
alleged to be reclassified by accountants. Indeed, plaintiff’s motion for default
judgment argues that the dollar amount was determined as a result of testimony
given by its forensic accountant, James Robinson. Pursuant to his affidavit
attached to the motion for default judgment, Mr. Robinson conclusorily opines
that the alleged sum “constitutes a liquidated amount”. However, the basis for
this conclusion involves alleged reclassifying accounting entries.
Based upon Florida’s strong preference favoring adjudicating lawsuits
on their merits, 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.” Hanft v. Church, 671 So.2d 249, 250 (Fla.
3rd DCA 1996 (citation omitted). The damages sought in this case are
unliquidated and cannot be validly awarded in a default judgment.
The trial court’s action constitute a gross abuse of discretion and should
be reversed and remanded for a trial on damages.
CONCLUSION
Given the lack of contumacious conduct herein, the entry of the ultimate
sanctions of striking of the pleadings and default was error. Further, since less
severe sanctions were both viable and available, it was error to enter the most
severe sanctions. Wherefore, appellants request that this Court reverse the trial
Court’s striking of pleadings, the entry of default and the order granting the
motion for sanctions and remand this matter back to the trial Court with
instructions to vacate the final judgment and the order granting default and
entertain less severe sanctions as appropriate.
Alternatively, and at a minimum, appellants request that the final
judgment be reversed and this case be remanded to the trial court with
instructions to conduct a trial on the issue of damages.
Respectfully submitted this 31st day of May, 2011
THE LAW OFFICES OF ALAN DAGEN, P.A.
Attorneys for Appellant
746 Heritage Drive
Weston, Florida 33326
Telephone: (954) 389-8605
Fax: (954) 337-3250
By: _____________________________________
ALAN P. DAGEN, Esquire
Florida Bar No.: 0456535
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing
amended initial brief was mailed this 31st day of May, 20111 upon Edgar
Cale, Barclay Cale P. A., 169 E Flagler St , Ste 1200, Miami, Florida 33131-
1205.
_____________________________________
ALAN P. DAGEN
CERTIFICATE OF COMPLYING WITH FLA. R. APP. P. 9.100(l)
AND FLA. R. APP. P. 9.210 (a)(2)
I hereby certify that I have checked the computer settings for font and
spacing of this brief and that pursuant to those settings, this brief complies with
the above rule for font and spacing requirements.
By: _________________________________________
Alan P. Dagen
C:\Users\alan\Documents\fraynd,broward,appeal,initial brief as filed the second time.wpd
