179 So. 3d 437
Fla. Dist. Ct. App.2015Background
- Coastal Title Insurance officers (Ira and Marjorie Hatch) misappropriated escrow deposits; the Hatches later pled no contest to racketeering and were convicted.
- Andrew and Susan Matthew sued developer Lake Buena Vista Vacation Resort, L.C. (LBV), Coastal, and the Hatches; LBV filed a cross-claim against Coastal alleging intentional fraud/defalcation, not negligent supervision.
- Coastal did not defend or file papers; LBV obtained a default final judgment against Coastal for roughly $15.6 million plus pre-judgment interest. The original default judgment contained no findings of negligence against Coastal.
- Eighteen months later LBV moved under Fla. R. Civ. P. 1.540 to amend the default judgment, submitting an amended judgment that added substantive factual findings (including negligent supervision) not alleged or decided earlier; the trial court adopted LBV’s proposed amended judgment verbatim.
- Gotham Insurance (Appellant), Coastal’s insurer that had denied coverage, moved to vacate the amended default judgment as a nonparty, arguing lack of jurisdiction, untimeliness, and fraud/misrepresentation; the trial court denied that motion. The appellate court considered standing and whether the trial court had authority to enter the substantive amendments and vacated the amended judgment.
Issues
| Issue | Plaintiff's Argument (LBV) | Defendant's Argument (Gotham/Appellant) | Held |
|---|---|---|---|
| Whether a nonparty (Gotham) has standing under Fla. R. Civ. P. 1.540(b) to move to vacate an amended default judgment | Rule 1.540 relief is for parties or their legal representatives; nonparty lacks standing | Nonparty whose rights are directly and injuriously affected by a judgment obtained by fraud or collusion may move to vacate under rule 1.540(b) | Nonparty standing exists where the motion alleges fraud/collusion and shows the judgment adversely affects movant’s rights (Gotham had standing) |
| Whether the trial court could amend the default final judgment under rule 1.540(a) (clerical error) | Amendments were clerical corrections to reflect the true record | Amendments were substantive (added new findings outside original allegations) and exceed clerical scope | Amendment was substantive and not allowable under rule 1.540(a); rule (a) only fixes clerical slips |
| Whether amendment could be justified under rule 1.540(b)(5) (no longer equitable to apply judgment prospectively) | LBV argued amendments were permissible under rule 1.540(b)(5) | No new post-judgment circumstances were alleged that would make enforcement inequitable; rule (b)(5) does not permit retrying merits or adding previously unlitigated findings | LBV did not allege new circumstances arising after judgment; (b)(5) inapplicable; court narrowly construes (b)(5) |
| Whether the amended judgment should be vacated for lack of subject-matter jurisdiction to make substantive changes | Trial court had authority to correct/amend | Trial court lacked jurisdiction to make substantive amendments 18 months after final judgment; default judgment had become final and unassailable except as allowed by rule 1.540 | Trial court lacked jurisdiction to substantively amend the default final judgment; amended judgment vacated |
Key Cases Cited
- Pearlman v. Pearlman, 405 So.2d 764 (Fla. 3d DCA 1981) (nonparty may move under rule 1.540(b) when rights are directly and injuriously affected by a fraudulently obtained judgment)
- Davis v. M & M Aircraft Acquisitions, Inc., 76 So.3d 1066 (Fla. 4th DCA 2011) (nonparty may have standing under rule 1.540(b))
- Centerstate Bank Cent. Fla., N.A. v. Krause, 87 So.3d 25 (Fla. 5th DCA 2012) (standing reviewed de novo)
- Cunningham v. Standard Guar. Ins. Co., 680 So.2d 179 (Fla. 1996) (subject-matter jurisdiction defense may be raised at any time)
- Bane v. Bane, 775 So.2d 938 (Fla. 2000) (rule 1.540 is the limited exception to finality of judgments)
- Miller v. Fortune Ins. Co., 484 So.2d 1221 (Fla. 1986) (discussing narrow scope of post-judgment relief)
- Byers v. Callahan, 848 So.2d 1180 (Fla. 2d DCA 2003) (rule 1.540(a) limited to clerical errors)
- Holm v. Demetree, 681 So.2d 868 (Fla. 5th DCA 1996) (final judgments become unassailable absent proper 1.540 grounds)