UNIVERSAL PROPERTY & CASUALTY INSURANCE COMPANY v. GUILLAUME DIMANCHE

• Court: District Court of Appeal of Florida
• Decided: April 20, 2022
• Docket: 21-1658
• Status: Published

Opinion

Third District Court of Appeal State of Florida

Opinion filed April 20, 2022. Not final until disposition of timely filed motion for rehearing.

________________

Nos. 3D21-1805, 3D21-1658 Lower Tribunal No. 20-16326 ________________

Universal Property & Casualty Insurance Company, Appellant,

vs.

Guillaume Dimanche, et al., Appellees.

Appeals from the Circuit Court for Miami-Dade County, David C. Miller, Judge.

Russo Appellate Firm, P.A., and Elizabeth K. Russo, for appellant.

No appearance for appellees. 1

Before FERNANDEZ, C.J., and LINDSEY and LOBREE, JJ.

FERNANDEZ, C.J.

1 Appellees were precluded from filing an answer brief after failing to heed this Court’s order directing them to file same within a specified period of time. Universal Property & Casualty Insurance Company (“Universal

Property”) appeals the trial court’s Agreed Amended Final Declaratory

Judgment in favor of Guillaume Dimanche and Marie Dimanche a/k/a Mari

Dimanche (“the Dimanches”). Because Universal Property met the Florida

law requirements for setting aside a default and for vacating a final default

judgment, we reverse the Agreed Amended Final Declaratory Judgment and

remand to the trial court so that the case can proceed on the merits.

I. BACKGROUND

This suit concerns a typical homeowners’ insurance policy issued by

Universal Property to the Dimanches. The Dimanches filed suit against

Universal Property after the Dimanches filed a claim, and Universal Property

did not issue payment. The Dimanches sought a declaration of coverage, a

decision on “the scope of coverage and the Replacement Cost Value of the

subject insurance claim”, and attorneys’ fees and costs. The Dimanches

attached an estimate to their complaint indicating a projected replacement

cost value of $65,910.87 in proposed repairs to their home.

After service of process, neither party took any action in the suit. On

May 12, 2021, the trial court entered an “Order to Take Action Based on

Eligibility for Default After Personal/Substitute Service,” stating that Universal

Property was eligible for entry of a judicial default. The trial court directed

2 that within ten days of its order, the Dimanches were to file a motion for

judicial default, show good cause why a default should not be entered, or

else the case would be dismissed. The Dimanches did not file anything in

the ten-day period.

On May 12, 2021, the same day the trial court entered its order to take

action, Universal Property filed a motion to dismiss the Dimanches’

complaint for declaratory relief. On May 24, 2021, the trial court entered an

order denying Universal Property’s motion to dismiss and stating that a

default would be entered against Universal Property without a hearing if

Universal Property did not file its Answer within seven days (by May 31,

2021). Specifically, the trial court’s order stated: “This deadline may not be

extended by agreement and the mere filing of a motion to extend this

deadline will not toll the time to file the Answer. The failure to timely file

the Answer will result in the entry of a Court Default without further

notice or hearing.” (Emphasis in original). Universal Property argued that

its legal assistant mistakenly did not calendar the deadline for the answer to

the Dimanches’ complaint, and thus Universal missed the deadline. The trial

court did not hold a hearing, and on June 7, 2021, it entered a default against

Universal Property. The trial court’s order stated:

JUDICIAL DEFAULT AGAINST THE DEFENDANT

3 This cause came up for review and the Court noting the Defendant is in violation of this Court order requiring the Defendant to file an Answer on or before 5/31/21, which has not happened, it is therefore;

Ordered and Adjudged that a Judicial Default is hereby entered against Universal Property and Casualty Insurance Company.

DONE and ORDERED in Chambers at Miami-Dade County, Florida on this 7th day of June, 2021.

The next day, on June 8, 2021, Universal Property filed its Answer and

Affirmative Defenses denying that the Dimanches had sustained a covered

loss. Universal Property contended in its first affirmative defense that the

subject policy was an H08 “named peril” policy and not an “all risk” policy.

Thus, coverage was only provided for certain perils. It then outlined Section

I of the subject policy which provided the list of perils. Universal Property

stated that based on documentation received from the Dimanches, their

report, and Universal Property’s inspection of the alleged loss, there was no

coverage for the subject loss because the damages were the result of a

plumbing leak and not a “named peril.”

On the same day, Universal Property filed a Verified Motion to Set

Aside Judicial Default. It outlined its legal assistant’s error in failing to put the

due date for its Answer on the calendar and cited Florida case law regarding

clerical/secretarial errors being deemed excusable neglect when setting

aside defaults. It also argued that a meritorious defense was presented in its

4 Answer and Affirmative Defenses. Finally, Universal Property contended that

it had showed due diligence in taking action to respond to the judicial default

by filing its Verified Motion to Set Aside Default with supporting exhibits and

its Answer and Affirmative Defenses the very next day after the trial court’s

order was entered.

Thereafter, on May 13, 2021, the parties scheduled an agreed hearing

date of July 6, 2021 for Universal Property’s motion to dismiss plaintiffs’

complaint for declaratory relief. When the trial court denied Universal

Property’s motion to dismiss on May 24, 2021 and entered a judicial default

on June 7, 2021, Universal Property then set its Verified Motion to Set Aside

Default for hearing on July 6, 2021, the date that had been previously set for

its motion to dismiss. On July 3, 2021, the trial court entered an “Order

Denying Motion to Set Aside Default.” Universal Property filed a motion for

reconsideration on July 9, 2021, which has not been ruled on by the trial

court.

On July 15, 2021, the Dimanches filed their “Motion for Entry of Default

Final Declaratory Judgment and to Determine Entitlement to Attorney’s Fees

and Costs.” They alleged that their claim was a covered loss under the

subject policy, the Replacement Cost Value of their claim was $65,910.87,

and they are entitled to an award of reasonable attorney’s fees and costs.

5 No hearing was held on the motion. On July 19, 2021, the trial court entered

a Final Declaratory Judgment in favor of the Dimanches and against

Universal Property. In paragraph four (4) of the Final Declaratory Judgment,

the trial court required Universal Property to pay the Dimanches $65,910.87.

The trial court also ruled that the Dimanches were entitled to reasonable

attorney’s fees and costs and reserved jurisdiction to determine the amount.

On July 23, 2021, Universal Property filed a “Motion for Relief From

and/or to Vacate Final Default Judgment” pursuant to Florida Rule of Civil

Procedure 1.540(b). Universal Property contended that the default should

have been set aside because Universal Property showed excusable neglect

in not filing by the deadline, a meritorious defense as set out in its Answer

and Affirmative Defenses, and due diligence in seeking relief from the default

by filing the motion to set aside the default the day after it was entered,

accompanied by the Answer and Affirmative Defenses. It further argued that

it was not afforded due process because the trial court never held a hearing

before granting the Dimanches’ default motion and never held a hearing on

Universal Property’s motion to set aside the default. Universal Property

contended that if the trial court entered the default as a sanction against

Universal Property because it failed to comply with the trial court’s order

directing that an Answer be filed within seven days, then the trial court was

6 required to make a finding that Universal Property’s non-compliance was

willful and in bad faith, which the trial court did not do. Finally, Universal

Property argued that the trial court erred in ordering Universal Property to

pay the Dimanches $65,910.87 when their complaint only sought declaratory

relief, and damages were unliquidated. The Dimanches filed their response

to the motion, then Universal Property filed the affidavit of its legal assistant

in support of Universal Property’s motion for relief and/or to vacate the final

default judgment.

The trial court held a hearing on August 12, 2021 on Universal

Property’s motion. After hearing the parties’ arguments, the trial court

reaffirmed its ruling that the final declaratory judgment against Universal

Property would stand as to the default on liability. The trial court then ordered

that paragraph four (4), directing Universal Property to pay $65,910.87 to the

Dimanches, be removed and instead, jurisdiction would be reserved for a

trial on the amount of attorney’s fees only. Universal Property then appealed

the original Final Declaratory Judgment to this Court, and thereafter

appealed the Amended Final Declaratory Judgment the trial court entered to

reflect its updated ruling. 2

2 Universal Property filed a motion with the trial court for it to enter an Amended Final Declaratory Judgment to reflect the trial court’s amended ruling. This Court relinquished jurisdiction for the trial court to amend the final

7 II. ANALYSIS

We review the denial of a motion to vacate a default under an abuse

of discretion standard. Robles v. Fed. Nat’l Mortg. Ass’n, 255 So. 3d 986,

988 (Fla. 3d DCA 2018).

Universal Property contends that the trial court should not have

entered the default against it because the default could not be based on

Florida Rule of Civil Procedure 1.500(c), and neither was the default justified

under the trial court’s self-executing order. Universal Property further argues

that the trial court should have set the default aside, and thus the default final

declaratory judgment should be vacated. We agree. See Fla. R. Civ. P.

1.500(c). In addition, the entry of default is improper when a party has filed

a responsive pleading or otherwise defended before entry of default. Carder

v. Pelican Cove W. Homeowners Ass'n, Inc., 595 So. 2d 174, 175 (Fla. 5th

DCA 1992).

Here, the trial court entered its order on May 12, 2021 stating that the

Dimanches had to file a motion for entry of default within ten days of the trial

court’s order. They did not file anything. Also on May 12, 2021, Universal

declaratory judgment, which the trial court did on September 2, 2021. On September 3, 2021, Universal Property filed its notice of appeal from the Amended Final Declaratory Judgment. This Court then consolidated the two appeals to proceed under Case No.: 3D21-1805.

8 Property filed its motion to dismiss the Dimanches’ complaint. Thus, the

default entered against Universal Property was improper under Rule

1.500(c).

Accordingly, as Universal Property contends, the basis for the trial

court’s default order could only be the trial court’s May 24, 2021 order where

it ordered Universal Property to file its answer within seven days (on or

before May 31, 2022). Universal Property’s legal assistant did not calendar

the May 31, 2021 deadline. Thus, Universal Property did not file by the

required date. The trial court then entered a default on June 7, 2021.

Universal Property contends that this was a sanction by the trial court for

Universal Property’s failure to comply with the trial court’s order which was

an abuse of discretion by the trial court because Universal Property was

entitled to notice of the application for default. In addition, it argues that the

trial court’s warning in bold and underlining in the May 24, 2021 order was

insufficient notice. Universal Property is correct.

In International Energy Corporation v. Hackett, 687 So. 2d 941 (Fla. 3d

DCA 1997), this Court stated:

It is fundamental and well-established under Rule 1.500(b) that when a party against whom affirmative relief is sought has appeared in the action by filing or serving any papers, no default may be entered against such party without prior notice of the application for default. Moreover, any default entered in violation of the due process notice requirement of Rule 1.500 must be set

9 aside without any regard as to whether a meritorious defense is presented or excusable neglect is established. . . .

The appellees do not contest the fact that International was entitled to receive notice, but assert essentially that the court's admonition in its Uniform Order that any noncompliance might result in the imposition of sanctions, including dismissal, satisfied the notice requirement under Rule 1.500(b). We disagree. Even if the Uniform Order had specifically listed default as a possible sanction for noncompliance, notice and opportunity to be heard must still be given to the defending party for a determination of whether the noncompliance was willful or in bad faith. Neder [v. Greyhound Financial Corp., 592 So. 2d 1218 (Fla. 1st DCA 1992)], at 1218 (“Although the order which appellant failed to comply with threatened dismissal for noncompliance, notice must still be given.”); . . . .

Hackett, 687 So. 2d at 942-943 (emphasis added; footnotes omitted; some

internal citations omitted). Here, there was no motion for default filed by the

Dimanches. The trial court had ordered them to file one, but they did not.

Even though the trial court stated in its May 24, 2021 order that it would enter

a default if Universal Property did not comply with the deadline of May 31,

2021, Universal Property is correct that it was nonetheless entitled to notice

and a determination by the trial court on whether Universal Property’s failure

to comply with the order was willful or done in bad faith. “When a default

judgment is entered against a party for failure to obey a court order, the order

of default must contain specific findings of the noncomplying party’s willful or

deliberate refusal to obey the court order.” Deer Valley Realty, Inc. v. Beck

& Lee, P.A., 260 So. 3d 413, 415 (Fla. 3d DCA 2018). The trial court did not

10 make any of these required findings. And as Universal Property correctly

contends, the trial court could not have made these findings because no

hearing was held on the issue, so there was no record or evidence for the

trial court to consider. Thus, the default against Universal Property was

incorrectly entered.

In addition, Universal Property is correct that the default against it

should have been set aside, and the default declaratory judgment should be

vacated. Florida Rule of Civil Procedure 1.500(d), “Setting aside Default,”

states: “The court may set aside a default, and if a final judgment consequent

thereon has been entered, the court may set it aside in accordance with rule

1.540(b).” Rule 1.540(b), provides, in part:

On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, decree, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; ...

Fla. R. Civ. P. 1.540(b)(1). Furthermore, it is well-settled in Florida that “[a]

party moving to set aside a default must show excusable neglect, a

meritorious defense, and due diligence in moving to set aside the default.”

Lanza v. Allied Trucking of Fla., Inc., 930 So. 2d 633, 634 (Fla. 3d DCA

2006).

11 This Court has found excusable neglect “where inaction results from

clerical or secretarial error, reasonable misunderstanding, a system gone

awry or any other of the foibles to which human nature is heir.” Noel v. James

B. Nutter & Co., 232 So. 3d 1112, 1115-16 (Fla. 3d DCA 2017) (internal

citations omitted); see also Somero v. Hendry Gen. Hosp., 467 So. 2d 1103,

1106 (Fla. 4th DCA 1985). The calendaring error made by Universal

Property’s legal assistant is an error commonly recognized as warranting

relief under rule 1.540(b). Barrett v. Busser, 310 So. 3d 1016, 1017 (Fla. 2d

DCA 2020); Acosta v. Deutsche Bank Nat. Trust Co., 88 So. 3d 415, 416-

417 (Fla. 4th DCA 2012). Excusable neglect must be proven by an affidavit

or other sworn statement. Gibraltar Serv. Corp., v. Lone & Assocs., Inc., 488

So. 2d 582, 584 (Fla. 4th DCA 1986). Here, the calendaring error was

supported by Universal Property’s legal assistant’s affidavit. Thus, Universal

Property met the excusable neglect requirement.

Furthermore, Universal Property also showed that it had a meritorious

defense and that it acted with due diligence in moving to set aside the default.

The due diligence requirement was met because on June 8, 2021, the very

next day after the trial court entered the default against Universal Property

on June 7, 2021, Universal Property filed its Answer and Affirmative

Defenses and its motion to set aside the default. Universal denied the

12 Dimanches’ allegations that they had sustained a covered loss. It also raised

six affirmative defenses, including that the Dimanches’ claim for an

accidental discharge of water was not a listed peril in their HO8 “named

perils” policy. Thus, Universal Property met the meritorious defense

requirement. Gibraltar Service Corp., 488 So. 2d at 584 (“[A] meritorious

defense may be shown by an unverified pleading or an affidavit.”).

Accordingly, the record shows that Universal Property met the three

requirements for setting aside a default. Lanza, 930 So. 2d at 634.

For these reasons, we reverse the Amended Final Declaratory

Judgment and remand to the trial court with instructions that the trial court

set aside the judicial default against Universal Property so the case can

proceed on the merits.

Reversed and remanded with instructions.