Court Opinion

ID: 9942595
Source: CourtListenerOpinion
Date Created: 2024-02-21 16:06:12.180332+00
Date Added: 2024-06-11T13:48:16.462400
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                              FOURTH DISTRICT

                                RSBD, LLC,
                                 Appellant,

                                     v.

               VELOCITY #1 LLC, VELOCITY 3 LLC and
                    VELOCITY SERVICES, INC.,
                            Appellees.

                             No. 4D2022-2957

                            [February 21, 2024]

   Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; John B. Bowman, Judge; L.T. Case No. CACE19-012748.

  Matthew Carcano and Moises A. Saltiel of the Saltiel Law Group, Coral
Gables, for appellant.

   Stephen J. Padula and Joshua S. Widlansky of Padula Bennardo
Levine, LLP, Boca Raton, for appellees.

WARNER, J.

    Appellant RSBD, LLC (“RSBD”), appeals a final judgment for damages
based upon a breach of contract and fraudulent lien in connection with
construction work that RSBD performed for appellees, Velocity #1, LLC,
Velocity 3, LLC, and Velocity Services, Inc. (collectively “Velocity”). Prior
to the trial on damages, the court struck all of RSBD’s pleadings for its
failure to attend a case management conference after the court had
allowed RSBD’s counsel to withdraw. The court entered the order without
a hearing. We reverse, as RSBD was denied due process to challenge the
sanction.

   In June 2019, RSBD initiated the underlying lawsuit against Velocity
for foreclosure, unjust enrichment, and quantum meruit on multiple
contracts. The claims arose out of construction work that Velocity had
hired RSBD to perform on the various properties, but Velocity terminated
the contracts before RSBD had finished the work.
    After unsuccessfully moving to dismiss, Velocity filed an answer and
affirmative defenses, and counterclaims for breach of contract and for
fraudulent lien regarding the different properties. The first counterclaim
alleged that RSBD had breached several renovation contracts that RSBD
had with Velocity. The second counterclaim alleged that RSBD also had
filed liens on the subject properties for amounts RSBD alleged that Velocity
contractually owed, and the lien amounts had been exaggerated. RSBD
filed an answer and affirmative defenses to Velocity’s counterclaims.

   In May 2020, RSBD’s counsel filed a motion to withdraw as counsel
based upon irreconcilable differences. On June 4, 2020, the trial court
granted the motion to withdraw and ordered RSBD to retain new counsel
within thirty days. The withdrawal order provided that “[n]o hearing or
conference shall be scheduled to occur during the next thirty (30) days.”
The order also provided that “[a]ll further pleadings, motions, notices,
correspondence, and other documents shall be served directly on [RSBD],
care of Ricardo Sanchez.” This order was not served on Sanchez.

   The trial court signed an order on June 1, 2020, setting a case
management conference (“CMC”) for July 7, 2020. The order does not
contain any filing date with the clerk’s office, and does not appear in the
clerk’s progress docket for June of 2020. The order had the names and
addresses of counsel and of Sanchez handwritten in the margins. On June
5, 2020, Velocity’s attorney sent a notice of a virtual case management
hearing for July 7, including information to connect to the Zoom call. This
notice was served on the RSBD’s withdrawn attorney but not on Sanchez.

    Apparently, the Zoom CMC occurred on July 7, 2020, but no one
representing RSBD was present. On August 11, 2020, Velocity filed a
motion for court’s default, to strike RSBD’s pleadings, and to discharge
the underlying liens. The default motion was served on Sanchez. The
motion argued that default should be entered against RSBD because
RSBD had not attended the CMC and had not secured counsel within
thirty days of prior counsel’s withdrawal. Three days after the default
motion was filed, and without affording RSBD a hearing, the trial court
granted the motion and struck RSBD’s pleadings as well as discharged the
liens which RSBD had placed against Velocity’s properties. On that same
day, Velocity filed a verified motion for summary judgment after default,
seeking summary judgment on its counterclaims. Velocity’s motion for
summary judgment was served on Ricardo Sanchez on August 14, 2020.

  A month later, an attorney filed a notice of appearance for RSBD and
moved to vacate the sanction order. RSBD claimed excusable neglect,

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because it had difficulty obtaining new counsel on the court’s timeline due
to the COVID-19 pandemic. The court denied the motion.

   The case proceeded to a trial on damages on Velocity’s counterclaim,
resulting in a judgment against RSBD for $1,484,171.47, plus
prejudgment interest. From this judgment, RSBD takes this appeal.

                                   Analysis

    Striking pleadings is the most extreme of sanctions for failure to comply
with court orders, but this sanction may be appropriate “where the
offending conduct is flagrant, willful or persistent.” Kamhi v. Waterview
Towers Condo. Ass’n, 793 So. 2d 1033, 1036 (Fla. 4th DCA 2001).
Although this sanction may be imposed for failure to secure counsel, or
for failure to attend a noticed case management conference, it “should only
be employed in extreme circumstances such as when the party exhibits a
deliberate and contumacious disregard for the court’s authority.” Global
Recreation, Ltd. v. Arco Shows, Inc., 585 So. 2d 455, 456 (Fla. 2d DCA
1991); Giemme USA, LLC v. La Sala Grp., Inc., 92 So. 3d 920, 922 (Fla. 4th
DCA 2012). In Giemme, on facts very similar to this case, we reversed the
entry of a default and striking of the party’s pleadings where the party did
not appear at a case management hearing after its counsel had withdrawn.
92 So. 3d at 922. We noted that the record did not disclose any willful
and contumacious conduct which was necessary to justify the default. Id.

    Where the court is considering imposing the sanction of striking a
party’s pleadings for disobedience to a court order or failing to appear at a
hearing, due process requires that the party be given notice and an
opportunity to be heard on the issue. See Baleanu v. Sandulescu, 78 So.
3d 98, 99 (Fla. 4th DCA 2012) (“When a defendant fails to appear for trial,
the court has two options: proceed with the trial, requiring the plaintiff to
put on its case, or enter a default due to the failure to defend. The default
may not be entered, however, until the defendant is served with notice of
the application for default and afforded an opportunity to explain.”
(citations omitted)). “A party to be sanctioned . . . must first be given notice
and an opportunity to be heard and offer mitigating or extenuating
evidence . . . .” Wildwood Props., Inc. v. Archer of Vero Beach, Inc., 621 So.
2d 691, 692 (Fla. 4th DCA 1993).

    Here, RSBD had no opportunity to be heard prior to the court issuing
its order striking RSBD’s pleadings and discharging its liens. This error
requires us to reverse.

                                       3
    While acknowledging the lack of a hearing and thus the lack of due
process, Velocity states that the record is undisputed as to RSBD’s failure
to abide by the order to secure counsel and to attend the case management
conference. Although this still would not excuse the lack of notice and
opportunity to be heard, we disagree that the record is sufficient to justify
the default.

    The striking of pleadings and entry of default should only be employed
in extreme circumstances and requires that the court find that the conduct
was willful and contumacious. Kamhi, 793 So. 2d at 1036. So important
is this limitation that our supreme court has held that the trial court must
make findings of willful noncompliance in order to enter a default. See
Commonwealth Fed. Sav. & Loan Ass’n v. Tubero, 569 So. 2d 1271, 1272–
73 (Fla. 1990). Such findings must be supported by the record. See
Giemme, 92 So. 3d at 922. The trial court did not make such findings and
only recited that it was basing its order on “having read the moving
papers,” and “having heard argument of counsel.”

    The motion to strike the pleadings alleged only that RSBD was ordered
to obtain new counsel and did not do so within the thirty-day deadline.
Thus, the only ground was noncompliance with the court order. “Mere
negligence does not suffice to justify such an extreme measure, and mere
noncompliance with a court order, standing alone, is insufficient to
indicate willfulness.” Baja Vill. Mkts., Inc. v. Baja Supermarket, Inc., 712
So. 2d 465, 466 (Fla. 3d DCA 1998); see also Giemme, 92 So. 3d at 922
(finding that failing to attend a case management conference after party’s
attorney withdrew was not evidence of a willful and contumacious
disregard of court order to justify defaulting party).

   Additionally, while RSBD failed to attend the July 2020 case
management conference, the notice for that conference was served on
RSBD’s recently withdrawn counsel. While Sanchez is listed on the order
setting the case management conference, it is unclear whether that order
was served on him, because the order does not include a certificate of
service, and his name is merely handwritten in the margin. In any event,
the order actually noticing the hearing, which included all of the pertinent
Zoom information to attend the remote hearing, was served only on
RSBD’s withdrawn counsel. Thus, from this record it cannot be concluded
that RSBD’s failure to attend that conference was willful, rather than
neglectful or inadvertent. See Tubero, 569 So. 2d at 1271.

                                     4
                               Conclusion

    The trial court failed to afford RSBD due process by denying it the
opportunity to be heard before striking all of its pleadings. The record
does not support a conclusion that such relief is warranted, as the motion
itself did not present any claim of willful or contumacious disregard of the
court’s authority such that the severe sanction of default should be
imposed, nor did the court’s order include such findings. For these
reasons, we reverse the final judgment, direct the vacation of the order
striking pleadings and entering a default, and remand for further
proceedings.

   Reversed and remanded.

DAMOORGIAN and FORST, JJ., concur.

                           *         *         *

   Not final until disposition of timely filed motion for rehearing.

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