K. MITCHELL WIGGINS, Appellant, v. TIGRENT, INC., f/k/a Whitney Information Network, Inc., a Colorado corporation, Appellee.
Case No: 2D13-4033
IN THE DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT
July 30, 2014
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED
WALLACE, Judge.
Appeal pursuant to
Victor Kline and Dariel Abrahamy of Greenspoon Marder, P.A., Orlando, for Appellant.
Daniel J. DeLeo and Michael J. Labbee of Shumaker, Loop & Kendrick, LLP, Sarasota, for Appellee.
WALLACE, Judge.
K. Mitchell Wiggins appeals the circuit court‘s order denying his motion to vacate the final judgment entered against him in favor of Tigrent, Inc., f/k/a Whitney Information Network, Inc., a Colorado corporation (Tigrent). Mr. Wiggins also asked the circuit court to dismiss the action as to him. Because the circuit court lacked personal
I. THE FACTS AND PROCEDURAL HISTORY
Tigrent is a Colorado corporation with its headquarters in Cape Coral, Florida. Western Clearing Corp., a Nevada limited liability company (WCC), has its offices in the State of Washington, which is where Mr. Wiggins lived and worked. In 2003, Tigrent and WCC entered into a written contract whereby WCC agreed to process electronic payments made by Tigrent‘s customers and to transfer the funds to Tigrent‘s bank accounts in Florida on a regular basis. The parties’ dispute arose in March 2011, when WCC allegedly failed to forward approximately $356,000 in funds belonging to Tigrent.
In July 2011, Tigrent filed a complaint against WCC and Mr. Wiggins, who it identified as “an individual manager” of WCC. In its complaint, Tigrent alleged five claims for relief: count I, breach of contract; count II, unjust enrichment; count III, breach of the implied covenant of good faith and fair dealing; count IV, breach of fiduciary duty; and count V, conversion. The complaint‘s first four counts named only WCC as a defendant; the fifth count for conversion named both WCC and Mr. Wiggins. In its claim for conversion, Tigrent alleged that Mr. Wiggins had withheld Tigrent‘s funds and had “utilized those funds to offset a separate corporate liability of WCC.”
Mr. Wiggins was served with the summons and a copy of the complaint in the State of Washington on July 15, 2011. However, neither he nor WCC filed an appearance in the action or otherwise responded to the complaint, and they were
In March 2013, approximately fifteen months later, Mr. Wiggins filed a motion to vacate the final judgment against him in accordance with
II. THE CIRCUIT COURT‘S RULING
Although the circuit court did not explain its reasoning in the order denying Mr. Wiggins’ motion, we have the benefit of a transcript of the motion hearing. In the hearing, the circuit judge made several statements that provide insight into the rationale for his ruling. Addressing Mr. Wiggins’ attorney, the circuit judge said:
Certainly if, let‘s just say your client [Mr. Wiggins] dilly-dallied for whatever reason and had some excusable neglect, and then with all due diligence has meritorious defenses, files a proposed answer, motion to dismiss, et cetera, I don‘t think he‘s [opposing counsel] saying that your client necessarily is precluded from getting the judgment set aside and potentially challenging jurisdiction.
But you‘ve not provided the Court here today any type of issue relative to his failure to respond or anything of that sort.
You‘ve basically jumped straight to the chase saying, here‘s my factual assertion that I don‘t have any connections or ties to Florida, ergo not withstanding my default to the factual allegations, we should set aside the judgment and throw everything out.
Later, the circuit judge commented:
How do we get over the allegations, though, that they‘ve alleged that it‘s personal jurisdiction, your client was duly served and then failed to contest that prior to entry into A, the default, and then B, the final default judgment[?]
My question is, what would preclude as he‘s argued any defendant in any case to come in 19 years later and say, I defaulted to those allegations. But you know what, here‘s my affidavit. I had no connections nor had any to the State [and undo] it all 19 years after the fact?
After both parties had completed their arguments on the motion, the circuit judge announced his ruling as follows:
In review of the Complaint there do appear to be two factual assertions or allegations to claim personal jurisdiction, and there was proper service, and that was not disputed, nor was otherwise admitted here . . . today.
Having considered the relative arguments presented by the parties as well as the respective motions, the memorandums in opposition as well as the affidavits, I do find that Tigrent‘s position is well taken.
After the hearing, the circuit court entered an order denying Mr. Wiggins’ motion. This appeal followed.
III. FRAMING THE ISSUES
The circuit judge‘s comments and conclusions help us to frame the issues before us into two distinct questions. First, did the circuit court have long-arm
IV. THE STANDARD OF REVIEW
The issue of whether Mr. Wiggins waived his right to object to personal jurisdiction by failing to raise the issue until after the entry of a default judgment is a question of law that we review de novo. See Kaaa v. Kaaa, 58 So. 3d 867, 869 (Fla. 2010) (as revised on denial of rehearing). The de novo standard of review also applies to the review of an order determining whether a final judgment by default is void for lack of personal jurisdiction over the defendant. See Wendt v. Horowitz, 822 So. 2d 1252, 1256 (Fla. 2002); Schwartzberg v. Knobloch, 98 So. 3d 173, 180 (Fla. 2d DCA 2012), review denied, 116 So. 3d 383 (Fla. 2013); Infante v. Vantage Plus Corp., 27 So. 3d 678, 680 (Fla. 3d DCA 2009).
V. DISCUSSION
A. Waiver
The first question that we are called upon to decide is whether a nonresident defendant, who has been properly served with process, may ignore the proceeding until after a default judgment is entered and then move to vacate the judgment as void based on a lack of personal jurisdiction. Stated differently, the question is whether a nonresident defendant, who has been properly served, waives the
Tigrent argues that because Mr. Wiggins failed to respond timely to the complaint and essentially ignored the proceedings until after the circuit court entered a default judgment against him, he waived his right “to object to the trial court‘s personal jurisdiction over him nearly two years later.” Mr. Wiggins responds that his failure to respond timely to the complaint does not result in a waiver. According to Mr. Wiggins, as long as his “first step” in the case was to challenge the circuit court‘s personal jurisdiction over him—even though he took that first step after the entry of the default judgment—he could still properly raise the issue of personal jurisdiction.
Before analyzing the parties’ arguments, it will be helpful to review a few basic principles regarding the difference between void and voidable judgments and the effect of the entry of a judgment by a court that lacked personal jurisdiction of the defendant. This court has previously described the difference between a judgment that is “void” and one that is “voidable” as follows:
A void judgment is so defective that it is deemed never to have had legal force and effect. In contrast, a voidable judgment is a judgment that has been entered based upon some error in procedure that allows a party to have the judgment vacated, but the judgment has legal force and effect unless and until it is vacated.
Sterling Factors Corp. v. U.S. Bank Nat‘l Ass‘n, 968 So. 2d 658, 665 (Fla. 2d DCA 2007) (citations omitted). A judgment that is entered against a defendant over whom the court lacks personal jurisdiction is a void judgment. Id. There is no time limitation on setting aside a void judgment. Johnson v. State, Dep‘t of Revenue, ex rel. Lamontagne, 973 So. 2d 1236, 1238 (Fla. 1st DCA 2008). On the contrary, a void judgment may be
Tigrent bases its argument that Mr. Wiggins waived the defense of lack of personal jurisdiction on the pertinent provisions of
(a) When Presented.
(1) Unless a different time is prescribed in a statute of Florida, a defendant shall serve an answer within 20 days after service of original process and the initial pleading on the defendant, or not later than the date fixed in a notice by publication.
. . . .
(b) How Presented. Every defense in law or fact to a claim for relief in a pleading shall be asserted in the responsive pleading, if one is required, but the following defenses may be made by motion at the option of the pleader: (1) lack of jurisdiction over the subject matter, (2) lack of jurisdiction over the person, (3) improper venue, (4) insufficiency of process, (5) insufficiency of service of process, (6) failure to state a cause of action, and (7) failure to join indispensable parties. A motion making any of these defenses shall be made before pleading if a further pleading is permitted.
. . . .
(h) Waiver of Defenses.
(1) A party waives all defenses and objections that the party does not present either by motion under subdivisions (b), (e), or (f) of this rule or, if the party has made no motion, in a responsive pleading except as provided in subdivision (h)(2).
(2) The defenses of failure to state a cause of action or a legal defense or to join an indispensable party may be raised by motion for judgment on the pleadings or at the trial on the merits in addition to being raised either in a motion under subdivision (b) or in the answer or reply. The defense of lack of jurisdiction of the subject matter may be raised at any time.
(Emphasis added.)
(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud; etc. 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: . . . (4) that the judgment or decree is void. . . . The motion shall be filed within a reasonable time, and for reasons (1), (2), and (3) not more than 1 year after the judgment, decree, order, or proceeding was entered or taken.
Notably, the one-year limitation in the rule on the time for filing the motion does not apply to instances where the judgment sought to be vacated is void.
The parties have not cited, and our independent research has not disclosed, any Florida appellate decision directly addressing the specific question of waiver by failure to appear or respond presented here. However, we note that rules 12 and 60 of the Federal Rules of Civil Procedure are substantially similar to the corresponding provisions of rules 1.140 and 1.540 of the Florida Rules of Civil Procedure, respectively. Accordingly, we look to federal decisions for assistance in
In “R” Best Produce, Inc. v. DiSapio, 540 F.3d 115, 123 (2d Cir. 2008), the Second Circuit said, “[I]t is . . . well settled that voidness of a judgment for lack of personal jurisdiction can be asserted on a collateral challenge after entry of a default judgment.” The Second Circuit explained:
It might seem anomalous that an appearing party is deemed to waive lack of personal jurisdiction by not properly asserting it in a timely motion or pleading, but a non-appearing party with notice may suffer a default judgment and later seek relief under Rule 60(b)(4). Apart from juridical fixation on the concept of voidness, the unstated rationale for the distinction is very likely that a non-appearing defendant, even with notice, should be spared the burden of defending in a distant forum and a plaintiff should be careful to join only those defendants as to whom personal jurisdiction can successfully be established in the original action.
Id. In its review of a district court‘s order denying a motion to vacate a final judgment, the Sixth Circuit held that the district court erred in concluding that a defendant waived its defense of lack of personal jurisdiction by failing to raise the issue until after a default judgment had been entered. Reynolds v. Int‘l Amateur Athletic Fed‘n, 23 F.3d 1110, 1120-21 (6th Cir. 1994). Closer to home, the Eleventh Circuit has said:
Rule 60(b)(4) allows a litigant—even one who does not initially appear—to collaterally attack a judgment on the ground that it is void due to lack of personal jurisdiction. See, e.g., Hazen Research, Inc. v. Omega Minerals, Inc., 497 F.2d 151, 154 (5th Cir. 1974). This is because “[a]n in personam judgment entered without personal jurisdiction over a defendant is void at to that defendant.” Combs v. Nick Garin Trucking, 825 F.2d 437, 442 (D.C. Cir. 1987).
Our independent research has located only a few state cases on point, but these cases also support Mr. Wiggins’ position on the waiver issue. In Crouch v. Crouch, 641 S.W.2d 86, 90 (Mo. 1982) (en banc), the Supreme Court of Missouri said:
Absent contacts with Missouri that satisfy the long-arm provision of Rule 54.06(b), the due process limitations on state power to assert jurisdiction over nonresident defendants, see World-Wide Volkswagen [v. Woodson, 444 U.S. 286, 291-94 (1980)], compel the conclusion that a defendant over whom the trial court could not otherwise constitutionally acquire jurisdiction does not waive the jurisdictional defense merely by his nonappearance. Two fundamental precepts must be borne in mind. First, a personal judgment rendered by a court without personal jurisdiction over the defendant is void and may be attacked collaterally. Ray v. Ray, 330 Mo. 530, 536, 50 S.W.2d 142, 143 (1932); Adams v. Cowles, 95 Mo. 501, 507, 8 S.W. 711, 714 (1888). See Gaffney v. Gaffney, 528 S.W.2d 738, 742 [(Mo. 1975) (en banc)]. Second, a defendant “is always free to ignore the judicial proceedings, risk a default judgment and then challenge that judgment on jurisdictional grounds in a collateral proceeding.” Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 102 S.Ct. 2099, 2106, 73 L. Ed. 2d --- (1982).
See also Architectural Woodcraft Co. v. Read, 464 A.2d 210, 212 (Me. 1983) (“Where . . . a defendant has not appeared in an action and where due process issues are generated by the exercise of personal jurisdiction over him, the defense of lack of personal jurisdiction is not waived.“); I.S.H. v. M.D.B., 987 N.E.2d 223, 229-30 (Mass. App. Ct. 2013) (holding that a father‘s failure to appear before the entry of a paternity judgment did not waive the defense of lack of personal jurisdiction).
In this case, Mr. Wiggins does not deny that he was properly served with process. Undeniably, he “sat on his rights” for more than a year instead of filing a timely motion challenging the circuit court‘s personal jurisdiction.2 But Mr. Wiggins has made a
challenge to the very validity of the judgment. Due process requires that the circuit court must have first acquired jurisdiction of Mr. Wiggins before it could contemplate entering an in personam judgment against him. Based on the authorities discussed above, we conclude that Mr. Wiggins did not waive the right to challenge the default judgment by failing to challenge the circuit court‘s jurisdiction of him for fifteen months after he was served with process.
B. Long-Arm Statute/Personal Jurisdiction
Having determined the question of waiver in Mr. Wiggins’ favor, we turn now to the question of whether the default judgment is void because the circuit court lacked personal jurisdiction over him under the long-arm statute. “Because this case arises from a motion to dismiss for lack of personal jurisdiction, we derive the facts from the affidavits in support of the motion to dismiss, and the transcripts and records submitted in opposition to the motion to dismiss.” Wendt, 822 So. 2d at 1254.
1. Sufficiency of the complaint
The long-arm statute,
(1) Any person, whether or not a citizen or resident of this state, who personally or through an agent does any of the acts enumerated in this subsection thereby submits himself or herself and, if he or she is a natural person, his or her personal representative to the jurisdiction of the courts of this state for any cause of action arising from the doing of any of the following acts:
. . . .
(b) Committing a tortious act within this state.
. . . .
(2) A defendant who is engaged in substantial and not isolated activity within this state, whether such activity is wholly interstate, intrastate, or otherwise, is subject to the jurisdiction of the courts of this state, whether or not the claim arises from that activity.
In determining whether it may exercise personal jurisdiction over a nonresident of Florida, a trial court, upon proper motion, must make two inquiries. ” ‘First, it must be determined that the complaint alleges sufficient jursidictional facts to bring the action within the ambit of the statute; and if it does, the next inquiry is whether sufficient ‘minimum contacts’ are demonstrated to satisfy due process requirements.’ ” Borden v. East-European Ins. Co., 921 So. 2d 587, 592 (Fla. 2006) (quoting Venetian Salami Co. v. Parthenais, 554 So. 2d 499, 502 (Fla. 1989)). “A judgment rendered in violation of due process is void in the rendering State and is not entitled to full faith and credit elsewhere.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980) (citing Pennoyer v. Neff, 95 U.S. 714, 732-33 (1877)).
In this case, Tigrent alleged in its complaint that Mr. Wiggins had submitted to jurisdiction in Florida because he “(a) [c]ommitted a tortuous [sic] act within the State of Florida as more particularly described herein, and/or (b) [e]ngaged in substantial and not isolated activities in the State of Florida.” Tigrent also alleged that Mr. Wiggins diverted funds from a specific holding account, the assets of which were the property of Tigrent, intentionally withheld those funds despite Tigrent‘s demands, and used those funds to offset a corporate liability of WCC. Here, Tigrent‘s complaint
2. Minimum Contacts
Florida courts may exercise personal jurisdiction of a nonresident defendant only if there are sufficient minimum contacts between the defendant and the state such that maintaining the action in Florida does not offend traditional notions of fair play and substantial justice. See Int‘l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945). “Personal jurisdiction can be either general or specific, depending upon the nature of the contacts that the defendant has with the forum state.” Bird v. Parsons, 289 F.3d 865, 873 (6th Cir. 2002).
a. General Jurisdiction
A plaintiff establishes general jurisdiction by showing that the defendant engaged in substantial and not isolated activity in Florida, pursuant to
b. Specific Jurisdiction
That the injury must occur in Florida, although obviously a fundamental requirement of personal jurisdiction, is not, standing alone, determinative of specific personal jurisdiction under
In contrast, in Kountze v. Kountze, 996 So. 2d 246, 252 (Fla. 2d DCA 2008), the act of recording a phone call in another state during a conversation with a resident in Florida—a violation of a Florida Statute—did not constitute a tortious act committed in Florida for the purpose of long arm jurisdiction because the act did not occur in Florida and it was not illegal in the state where the recording was made. And in two cases involving claims for conversion—similar to the claim Tigrent asserted against Mr. Wiggins in this case—personal jurisdiction was not found based on conversion of funds that originated in Florida and were the property of a plaintiff in Florida. In both of these cases, the tort of conversion was held to have occurred in the state where wrongful dominion and control over the property occurred. See Ernie Passeos, Inc. v. O‘Halloran, 855 So. 2d 106, 109 (Fla. 2d DCA 2003) (holding that an alleged conversion occurred—if at all—in Ohio, where the defendant received certain goods, and where the original transfer of the goods to Ohio from Florida was lawful at the time the goods were transferred); Merkin v. PCA Health Plans of Fla., Inc., 855 So. 2d 137, 141 (Fla. 3d DCA 2003) (holding that the plaintiff did not satisfy the requirements for personal jurisdiction for conversion under Florida‘s long-arm statute because the alleged tort of conversion occurred in California, where the defendant “exercised wrongful dominion and control over Humana‘s funds“).
Finally, although a nonresident corporate officer committing fraud or other intentional tort in his individual capacity may be subject to personal jurisdiction in Florida, see Kitroser v. Hurt, 85 So. 3d 1084, 1088 n.3 (Fla. 2012); Doe v. Thompson, 620 So. 2d 1004, 1006 n.1 (Fla. 1993), it is well settled that the acts of a corporate employee performed in a corporate capacity do not form the basis for personal jurisdiction over that employee, Thompson, 620 So. 2d at 1006. See also Kennedy v. Reed, 533 So. 2d 1200, 1202 (Fla. 2d DCA 1988) (“[J]urisdiction will not lie over an individual because of acts performed in his capacity as agent for another.“); Bloom v. A.H. Pond Co., 519 F. Supp. 1162, 1170-71 (S.D. Fla. 1981) (“[U]nless the agents transact business on their own account and not on behalf of the corporation, the agents are not engaged in business so as to sustain an application of the long-arm statute to them as individuals.“).
Here, Tigrent has not shown that any of Mr. Wiggins’ alleged actions were performed in his personal capacity and not in his capacity as a corporate officer on
VI. CONCLUSION
To summarize, Mr. Wiggins did not waive his right to challenge the circuit court‘s personal jurisdiction over him by waiting to file his motion to vacate until after the circuit court entered a final judgment against him. In addition, the circuit court lacked personal jurisdiction over Mr. Wiggins; thus the judgment against him was void. It follows that the circuit court erred in failing to vacate the final judgment as to Mr. Wiggins and to dismiss the action as to him.
Accordingly, we reverse the order denying the motion to vacate the default final judgment and to dismiss the complaint. On remand, the circuit court shall enter an order vacating the default final judgment as to Mr. Wiggins and dismissing the action as to him. Our decision does not affect the judgment as it relates to WCC.
Reversed and remanded.
SILBERMAN and BLACK, JJ., Concur.