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Default Judgments and the Not-So-Final Countdown

Default Judgments and the Not-So-Final Countdown

In Century-National Insurance Company v. Frantz, Florida’s Second District Court of Appeal held that trial courts have authority to consider a party’s opposition to entry of final judgement even after entry of an order of default.[i]

 

The Underlying Suits   

In February 2015, Jacob D. Frantz (“insured”) was involved in a car accident with a couple, the Mauricios, in Pennsylvania.[ii] The Mauricios filed suit and eventually obtained a final default judgment against the insured.[iii]

In May 2017, Century National Insurance Company (“insurer”), filed a complaint against the insured seeking a declaration of no bodily injury coverage and no duty to defend thereunder.[iv] The insurer obtained a clerk’s default and an order for default judgment in June of 2017. [v]

Two years later, the insured and the Mauricios jointly sued the insurer, alleging bad faith and seeking relief from the order granting final default judgment.[vi] The insurer removed the case to federal court.[vii] The federal court dismissed the action without prejudice but also ruled that the 2017 order for default was not a final judgment because it lacked “language of finality.”[viii]

Now aware that the order for default judgment was not final, the insurer moved for entry of final default judgment in the state court case. This time, the insured appeared and opposed the motion.[ix] He also sought judgment on the pleadings, claiming the Mauricios were indispensable parties.[x] The trial court granted the insured’s motion, and the insurer appealed.[xi]

 

The Appeal

On appeal, the second district court of appeal (“court”) held that the trial court clearly had authority to consider the defaulted insured’s opposition to entry of final default judgment, but the trial court erred in ruling the Mauricios were indispensable parties. [xii]

 

  1. Florida Rule of Civil Procedure 1.500(e) expressly authorizes trial courts to consider potential problems with final judgments even after default.

The court found the trial court was allowed to consider the insured’s opposition to entry of final judgment because Florida Rule of Civil Procedure 1.500(e) gives trial courts broad authority to investigate potential problems with entering or effectuating a final judgment.[xiii]

The court analyzed Florida Rule of Civil Procedure 1.500, which governs defaults and final judgments. [xiv] The court noted that the subsection (e) of the rule specifically states, “if it is necessary . . . to make an investigation of any other matter to enable the court to enter judgment or to effectuate it, the court may receive affidavits, make references, or conduct hearings as it deems necessary.”[xv]

Accordingly, the court held: “[the] trial court was clearly permitted to consider the insured’s opposition to entry of final judgment” because “rule 1.500(e) expressly gives the trial court broad authority after a default to investigate potential problems with entering or effectuating a final judgment.”[xvi]

  1. Third-party tort claimants are not indispensable parties to declaratory judgment actions.

The court also held the trial court erred in ruling the Mauricios are indispensable parties.[xvii] The court found the trial had court disregarded the plain language of Florida Statute 86.091, which states, “when declaratory relief is sought, all persons may be made parties who have or claim any interest which would be affected by the declaration.”[xviii]

The court reasoned the statute’s use of the word “may” when describing proper parties is permissive, not mandatory.[xix] Thus, the statute permits but does not require all persons having or claiming an interest in the declaration to be parties.[xx] The court recognized the Mauricios, as tort claimants, had claims to the insured’s proceeds under the insurance policy. As such, the court found they may be made parties but are not indispensable parties.[xxi]

 

The Remand

The court ultimately remanded the case to the trial court. [xxii] Although the court reversed the trial court’s ruling on indispensable parties, it affirmed the trial court’s authority to consider the insured’s opposition to entry of default final judgment.[xxiii] The trial court never considered the insured’s defenses to the motion for entry of final default judgment. Thus, the court remanded the case to the trial court to hear the insurer’s defenses in the first instance.[xxiv]

 

Takeaways

Insurance defense attorneys should pay close attention to orders granting default judgments. In this case, the insurer could have prevented years of costly litigation by including “language of finality” in the order granting default judgment. When drafting an order of final judgment, attorneys make sure to include the following language of finality: “the plaintiff take nothing by his suit, and the defendant go hence without delay.”[xxv]

 

 

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Sources


 

[i] Century-Nat’l Ins. Co. v. Frantz, 48 Fla. L. Weekly D1596, at *3 (Fla. 2d DCA Aug. 11, 2023)

[ii] Id. at *1

[iii] Id.

[iv] Id.

[v] Id.

[vi] Id.

[vii] Id.

[viii] Id.

[ix] Id.

[x] Id.

[xi] Id.

[xii] Id. at *3

[xiii] Id.

[xiv] Fla. R. Civ. P. 1.500

[xv] Id.

[xvi] Century-Nat’l Ins. Co. v. Frantz, 48 Fla. L. Weekly D1596, at *3 (Fla. 2d DCA Aug. 11, 2023)

[xvii] Id. at *4

[xviii] Id.

[xix] Id.

[xx] Id.

[xxi] Id.

[xxii] Id. at *5

[xxiii] Id.

[xxiv] Id.

[xxv] See Catchings v. Fla.- McCracken Concrete Pipe Co., 135 So. 561, 562 (Fla. 1931)(holding that the language “judgment hereby rendered herein for the defendant” did not constitute a final judgment because this language was not equivalent to the words “the plaintiff ‘take nothing by his suit, and that the defendant go hence without [del]ay’ ”); Baker v. Colley, 104 So. 2d 473, 473 (Fla. 2d DCA 1958)(holding that the language “Ordered, and Adjudged that said Motion to Dismiss and said Motion to Strike be, and the same are hereby granted” was not a final judgment); Allstate Ins. Co. v. Collier, 405 So. 2d 311, 312 (Fla. 4th DCA 1981)(holding the language “Defendant’s motion for final summary judgment is hereby granted that the plaintiff take nothing by this suit and go hence without [del]ay” was a final judgment because it contained “magic words demonstrating finality.”)