Gotham Insurance Co. v. Matthew

Citations: 179 So. 3d 437; 2015 Fla. App. LEXIS 17004; 40 Fla. L. Weekly Fed. D 2562Docket: No. 5D13-3008

Court: District Court of Appeal of Florida; November 12, 2015; Florida; State Appellate Court

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Gotham Insurance Company (Appellant) is appealing the trial court's denial of its motion to vacate an amended default final judgment related to a cross-claim by Lake Buena Vista Vacation Resort, L.C. (LBV) against Coastal Title Insurance, Co. (Coastal), which is insured by Appellant. The trial court had originally entered a default final judgment against Coastal 18 months prior, which LBV later moved to amend. The amended judgment created a dispute regarding Appellant's coverage, prompting Appellant to assert standing under Florida Rule of Civil Procedure 1.540(b) due to potential adverse effects on its rights.

The original default judgment, which resulted in significant damages awarded to LBV, did not include findings of negligence against Coastal. LBV's motion to amend claimed entitlement to an amended judgment based on its ownership of Coastal's assets and the need for the judgment to reflect actual events. The trial court adopted LBV's proposed amended judgment, which included new findings of negligence against Coastal, deviating from the original claims. 

Appellant's motion to vacate argued that LBV's amendment was untimely and obtained through intrinsic fraud and misconduct. However, the trial court denied this motion, stating that Appellant failed to sufficiently demonstrate any fraud or misconduct. Ultimately, the appellate court concluded that Appellant had standing to challenge the amended judgment and vacated it, ruling that the trial court lacked jurisdiction to amend the default judgment substantively.

Appellant, a nonparty, was found to have standing to move to vacate the amended judgment under rule 1.540(b), as determined by precedents from Pearlman v. Pearlman and Davis v. M. M Aircraft Acquisitions, Inc. These cases established that a nonparty may seek relief from a judgment if their rights are directly affected, particularly in claims of fraud or collusion. Appellant alleged that LBV misled the trial court regarding the nature of a cross-claim, asserting that this misrepresentation impacted its rights and could affect future proceedings.

Regarding the trial court's jurisdiction, it was noted that subject-matter jurisdiction can be questioned at any time and may be raised by an appellate court sua sponte. The provisions of rule 1.540 allow a court to relieve a party from finality in specific circumstances. After a final judgment, a trial court typically loses jurisdiction, but LBV sought to amend the default judgment, claiming the changes were clerical. However, rule 1.540(a) permits corrections only for clerical mistakes, not substantive errors. Given that 18 months had passed since the final judgment, LBV's ability to amend was restricted to the specific grounds outlined in rules 1.540(a), (b)(4), and (b)(5).

In Byers v. Callahan, the court addressed procedural issues surrounding amendments to a default final judgment. The trial court's amendment to include "with prejudice" in a voluntary dismissal improperly altered the dismissal's substantive effect, violating rule 1.540(a), which only allows clerical corrections. Additionally, LBV's extensive findings added to the judgment required evidence and were not clerical changes. The court clarified that substantive errors, such as a judgment differing materially from what was announced at trial, are not correctable under rule 1.540(a). 

LBV sought relief under rule 1.540(b)(5), which permits relief when it is no longer equitable for a judgment to apply prospectively, with no time limit for motions under this rule. However, LBV failed to present new circumstances justifying the amendment, leading the court to conclude that the default final judgment had attained finality. As a result, the court vacated the amended judgment, affirming that the trial court lacked subject matter jurisdiction to make substantive changes. Only LBV participated in the appeal, while Mr. Hatch, a related party, was serving a prison sentence for racketeering. The court also noted that past rulings support the applicability of rule 1.540(b) for amending judgments, despite arguments to the contrary.