IN THE DISTRICT COURT OF APPEAL FOR THE
FOURTH DISTRICT OF FLORIDA
Case No: 4D11-550
MARCOS FRAYND, et al
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
TABLE OF CONTENTS
PAGE NO.:
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........ 3
ARGUMENT........ 3
THE TRIAL COURT ERRED IN GRANTING A DEFAULT WHERE THERE WAS NO INTENTIONAL DISOBEDIENCE OF A COURT ORDER.................................3
THE TRIAL COURT ERRED IN GRANTING DEFAULT WHEN LESS SEVERE SANCTIONS WERE A VIABLE ALTERNATIVE...........................................................................9
CONCLUSION........ 10
CERTIFICATE OF SERVICE........ 11
TABLE OF CITATIONS AND AUTHORITIES
PAGE NO.:
Arango v. Alvarez, 585 So. 2d 1131 (Fla. 3rd DCA 1981)..........................7
Beauchamp v. Collins, 500 So. 2d 294 (Fla. 3d DCA 1986) (rev. denied, 511 So.2d 297 (Fla. 1987)............................................................................7,8
Binger v. Pest Control, 401 So. 2d 1310 (Fla. 1981)..................................7
Cadwell v. Cadwell, 549 So. 2d 1133 (Fla. 3rd DCA 1989) .......................7
Choice Hotels International, Inc. v. Goodwin & Boone, 11 F.3d 469 (4th Cir. 1993)...............................................................................................................7
Commonwealth Federal Savings & Loan v. Tubero, 569 So. 2d 1271 (Fla. 1990)...............................................................................................................7
Crowder v. Orowest Foods Company, 447 So. 2d 1038, 1040 (Fla. 2d DCA 1994)...............................................................................................................7
Ham v. Dunmire, 891 So. 2d 492, (Fla. 2004)...............................................9
J.B. Muros Corp. v. International Mall, Inc., 534 So. 2d 818 (Fla. 3rd DCA 1988)...............................................................................................................6
Momenah v. Ammache, 616 So. 2d 121 (Fla. 2d DCA 1983)
Neal v. Neal, 636 So. 2d 810 (Fla. 1st DCA 1994)....................................6, 7-8
Reep v. Reep, 565 So. 2d 814 (Fla. 3d DCA 1990).........................................7,8
Smalley v. Lane, 428 So. 2d 298 (Fla. 3d DCA 1983)....................................7,8
SPS Development v. DS Enterprises, 970 So. 2d 495, (Fla. 4th DCA 2007)....9
World on Wheels of Miami, Inc. v. International Auto Workers, Inc., 569 So. 2d 836 (Fla. 3rd DCA 1990) ............................................................................6
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 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.
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. 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.
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 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 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)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)Commonwealth Federal Savings & Loan v. Tubero,
569 So. 2d 1271 (Fla. 1990)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)Cadwell v. Cadwell,
549 So. 2d 1133 (Fla. 3rd DCA 1989)Arango v. Alvarez,
585 So. 2d 1131 (Fla. 3rd DCA 1981)Fla. R. Civ. P. 1.350(b)Neal v. Neal, 636 So. 2d 810 (Fla. 1st DCA 1994). Although a document production may be Reep v. Reep, 565 So. 2d 814 (Fla. 3d DCA 1990).
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) (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. 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.,Beauchamp v. Collins,
569 So. 2d 836 (Fla. 3rd DCA 1990)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)Commonwealth Federal Savings & Loan v. Tubero,
569 So. 2d 1271 (Fla. 1990)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)Cadwell v. Cadwell,
549 So. 2d 1133 (Fla. 3rd DCA 1989)Arango v. Alvarez,
585 So. 2d 1131 (Fla. 3rd DCA 1981)Fla. R. Civ. P. 1.350(b)Neal v. Neal, 636 So. 2d 810 (Fla. 1st DCA 1994). Although a document production may be Reep v. Reep, 565 So. 2d 814 (Fla. 3d DCA 1990).
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) (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. 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.,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)
