Opinion ID: 656201
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 2 On June 6, 1986, Florida Physician's Insurance Company, Inc. (FPIC) filed suit against David O. Ehlers and Ehlers & Co., Inc. (collectively Ehlers) 1 and Oppenheimer & Co., Inc. (Oppenheimer). Ehlers had been an investment advisor to FPIC, and FPIC sued Ehlers to recover money lost in numerous investments. FPIC's complaint was twice dismissed in part before a second amended complaint was filed in August 1987. At approximately the same time, the district court ordered FPIC to arbitrate its claim against Oppenheimer, and Ehlers's first attorney was replaced by Milton E. Grusmark. In October and December 1987, FPIC filed motions to compel discovery from Ehlers. The district court granted the motions, but Ehlers never complied. In fact, Grusmark did not attend a hearing scheduled for the purpose of granting sanctions on these motions in January 1988. 3 On August 1, 1989, nearly one and one half years later, the district court ordered FPIC to show cause why the case should not be dismissed for failure to file a status report. On August 4, 1989, FPIC responded to the order and informed the court that in July 1989, prior to arbitration, it had settled with Oppenheimer. FPIC also informed the court that it had attempted to settle with Ehlers, but that Ehlers had moved to Hawaii and that Ehlers's counsel, Grusmark, had been suspended from the Florida Bar. 2 FPIC also noted that Ehlers had apparently hired other counsel in Hawaii, Bruss Keppeler, and that it was attempting to negotiate with Ehlers through Keppeler to settle the case. 4 In addition to the response, FPIC also filed a report on the status of the case. In the report, FPIC informed the court that it had settled with Oppenheimer and that it was ready to proceed against Ehlers. FPIC sent notice of this report to Oppenheimer's counsel and to Keppeler, but not to Grusmark. Keppeler acknowledges receipt of this report. 5 The next entry on the docket was March 1, 1990. However, FPIC and Keppeler communicated twice during this period, once in August 1989 and once in April 1990. FPIC offered at both times to settle the case for $25,000. The April letter to Keppeler also informed Keppeler that, if Ehlers did not accept the offer, it was ready to proceed to trial. FPIC alleged that, between August 1989 and April 1990, it attempted to contact Keppeler approximately twenty times. 6 On March 1, 1990, the district court entered an order limiting the time for discovery and setting the date of the pretrial conference. The district court sent notice of its order to counsel of record including Grusmark, but did not send notice to Keppeler. 7 On July 2, 1990, FPIC filed a motion for default judgment alleging that Ehlers had failed to file a response to its second amended complaint, filed August 21, 1987, and had failed to comply with the district court's orders compelling discovery. Notice of this motion was sent to Keppeler, Grusmark, and Ehlers. On the same date, FPIC sent letters to Keppeler, Grusmark, and Ehlers informing them that it was necessary for FPIC to meet with Ehlers in accordance with the district court's pretrial order and that FPIC had filed a motion for default judgment. In its letter to Ehlers, FPIC stated that it was writing directly to Ehlers because it could not find a lawyer that was representing Ehlers in this suit. 8 On July 17, 1990, FPIC filed its pretrial stipulation with the district court. FPIC represented that it had attempted to contact Grusmark, Keppeler, and Ehlers by both letter and telephone, but that they had received no responses. FPIC noted that it had filed a motion for default judgment based on Ehlers's failure to respond to the complaint and further moved for default for failure to file a pretrial stipulation. 9 The pretrial conference took place on July 24, 1990. FPIC was the only party present. The court granted FPIC's motion for default judgment on liability and ordered FPIC to file proof of damages within ten days. At the July 24, 1990, hearing, FPIC again informed the court that Grusmark had been suspended from the Florida bar. The court ordered that notice be sent to Grusmark and Ehlers. 10 FPIC filed an affidavit on damages with the district court. Ehlers failed to respond, and the court awarded FPIC damages of $22,603,470. Final judgment was entered on September 5, 1990. 11 On August 6, 1991, Ehlers filed a motion to set aside the default judgment. Ehlers represented that neither Grusmark, Keppeler, nor he received notice of FPIC's motion for default judgment. Ehlers also alleged that Grusmark did not receive notice because Grusmark moved offices during the pendency of the case and failed to inform the court of his move. More importantly, Ehlers filed papers showing that Grusmark was suspended from the Florida bar effective June 30, 1990. 3 The district court denied the motion and Ehlers's subsequent motion to reconsider. Ehlers now appeals the district court's refusal to set aside the default judgment.