15 Fla. L. Weekly Supp. 1139a

Insurance — Default — Vacation — Excusable neglect — Abuse of discretion to deny motion to vacate default where affidavit of adjuster demonstrates that summons and complaint were mishandled internally by insurer and never forwarded to counsel

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. PATRICIA LAWRENCE, Appellee. Circuit Court, 5th Judicial Circuit (Appellate). Case No. 2008-AP-05. L.C. Case No. 2007-CC-343. September 18, 2008. Appeal from the County Court, Marion County, Honorable James R. McCune, County Judge. Counsel: Robert H. Oxendine, Tampa, for Appellant. Clayton K. Ellis, Ocala, for Appellee.

OPINION

(SEMENTO, L., J.) The issue before this court is whether the Appellant has demonstrated excusable neglect sufficient to set aside a default final judgment. We review the trial court’s Order denying the Appellant’s motion to set aside the final judgment under an abuse of discretion standard. Jeyanandarajan v. Freedman, 863 So.2d 432, 433 (Fla. 4th DCA 2003).¹

Appellee’s Complaint was served on Appellant on May 22, 2007. A default was entered by the Clerk of the Court on June 22, 2007. Appellee filed a Motion for Entry of Final Judgment Based on Default, and the trial court entered a Final Judgement Against Defendant Insurance Company on July 10, 2007. Appellant filed a Motion to Set Aside Final Judgment on July 20, 2007. In support of the Motion, Appellant filed an Affidavit of Jennifer Haschel, the adjuster assigned to this litigation, stating that State Farm was not aware of the lawsuit until after it received the Final Judgment, that the Complaint and Summons had been mishandled internally by State Farm and were never forwarded to counsel so that an Answer could be timely filed. The Affidavit set forth Appellant’s meritorious defense².

The court conducted a hearing on the Motion to Set Aside Default, and entered an Order Denying Defendant’s Motion to Set Aside Final Judgment. Appellant filed a Motion for Rehearing, which was denied by the trial court. Although there is no transcript of the hearings on these motions, the court’s Order Denying Defendant’s Motion for Rehearing indicates that the court relied on State Farm’s Affidavit to determine that the Appellant had failed to show excusable neglect.

Florida courts have a liberal policy in favor of vacating defaults so that cases may be decided on their merits. Kindle Trucking Company v. Marmar Corporation, 468 So.2d 502 (Fla. 5th DCA 1985). The mishandling or misfiling of pleadings or court documents has been determined to be sufficient to demonstrate excusable neglect. Somero v. Hendry General Hospital, 467 So.2d 1103 (Fla. 4th DCA 1985) contains a good discussion of applicable case law. Noting that a default will not be set aside where a party simply forgot or intentionally failed to take action, a default should be vacated “. . .where the inaction results from clerical or secretarial error, reasonable misunderstanding, a system gone awry or any other of the foibles to which human nature is heir.” Id. at 1106. In Hialeah, Inc. v. Adams, 566 So.2d 350 (Fla. 3d DCA 1990), the court found that excusable neglect existed where the clerical staff inadvertently mishandled the summons and complaint, which was not discovered until after the default final judgment was entered. In Credit General Insurance Company v. Thomas, 515 So.2d 336 (Fla. 3d DCA 1987), the insurance company received and misplaced the complaint. The court, acknowledging Florida’s policy of allowing actions to be decided on the merits, found sufficient excusable neglect to set aside the default.

The cases cited by the Appellee are distinguishable. In John B. Pike & Son, Inc. v. Atlantic Coast Asphalt, Inc., 530 So.2d 487 (Fla. 1st DCA 1988), the court found there was no excusable neglect because the parties engaged in settlement negotiations after suit had been filed and served, and a default was not entered until after the defendant had been warned to file responsive pleadings. In Allstate Floridian Ins. Co. v. Ronco Inventions, LLC, 890 So.2d 300 (Fla. 2d DCA 2004), there was no dispute that the party moving to set aside the default had shown a meritorious defense and excusable neglect, and the issue concerned the movant’s due diligence in seeking to set aside the default. The court found that under the circumstances of that case, including the seven week delay in the filing of the motion for relief, there was a lack of due diligence. Id. at 302.

Here, the Affidavit demonstrates that the Appellant mishandled the summons and complaint. The Appellant demonstrated excusable neglect, and the trial court abused its discretion in denying the Appellant’s motion to vacate the default and judgment. Therefore, we REVERSE and REMAND this matter to the trial court to vacate the judgment and default.

REVERSED AND REMANDED. (MERRITT, D., SR. And LAMBERT, B., JJ. concur.)

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¹An order denying a motion to vacate is reviewed under an abuse of discretion standard; an order granting a motion to vacate is reviewed under a gross abuse of discretion standard. Id.

²To prevail on a motion to vacate default, the movant must demonstrate three elements: due diligence, a meritorious defense, and excusable neglect. Net One, LLC v. Christian Telecom Network, LLC, 901 So.2d 417 (Fla. 5th DCA 2005). The only element addressed by the trial court in this action is whether excusable neglect was shown, and the parties stipulate that this is the only issue on appeal.