Answer the Lawsuit, Even If You Think It Doesn’t Have a Chance

The Florida Supreme Court had bad news for a Hialeah Gardens investor who didn’t answer a slip-and-fall lawsuit from a tenant injured while another owner controlled the property.

Even though Mauna Loa Investments LLC didn’t own the warehouse when Anamaria Santiago was injured in 2008, its failure to defend against her lawsuit created an error that carried over to the appellate review.

The case tested the scope of judicial review. It also led to years of litigation, a default judgment against Mauna Loa and a nearly $1.1 million jury award for Santiago, a tenant who leased space for an art business.

For the investor, the latest blow came March 17 when the high court sided with Santiago and reinstated the default judgment and jury award that a lower court wiped out.

Mauna Loa purchased the warehouse at 9325 Okeechobee Road from Iberia NV LLC in October 2008, about three months after Santiago’s injury.

But it was the sole defendant in 2010 when Santiago sued alleging she slipped and fell because of holes and uneven surfaces on a concrete walkway.

In the complaint, Santiago described Mauna Loa as the owner at the time of the accident, prompting repeated denials from the investor.

Mauna Loa insisted it was not liable and repeatedly argued — with mixed results — that Santiago failed to state a cause of action against it. It convinced the Third District Court of Appeal, but the high court disagreed.

For the Supreme Court, the issue was the scope of judicial review for examining sufficiency in stating a cause of action. On that point, it found the Third DCA decision conflicted with Supreme Court precedent. It held that instead of sticking to the complaint and its attachments, the district court went beyond the scope of review by examining documents from a related lawsuit by Santiago against Mauna’s predecessor.

Without the evidence from the related suit, Mauna Loa’s defense appeared to come too late. And when it did come, the Supreme Court found it lacked the necessary elements to set aside the default judgment.

To overturn the order, Mauna needed a meritorious defense, due diligence in requesting relief after discovering the default and proof of excusable neglect for its failure to file a response.

“After one call to her attorney’s office, the company’s president took no further action to assure a timely response to the complaint was filed,” Justice Charles Canady wrote in the unanimous order.

‘Dropped The Ball’

One major misstep seemed to haunt the investor.

When Santiago served court papers on the company, its registered agent, Colombian investor Mawanphy Gil, hired attorney Libio Calejo. But Calejo, who was later disbarred for failing to notify all his clients and opposing counsel of his law license suspension in an unrelated case, never responded to the lawsuit.

“An attorney dropped the ball,” said Mauna Loa’s lawyer, Dorothy Frances Easley of Easley Appellate Practice in Miami. “The client trusted the attorney — as clients should be able to do — to answer the complaint, but the attorney did not do his job.”

With no response to her suit, Santiago cinched a default judgment and won nearly $1.1 million after a jury trial on damages.

The rulings would spark years of litigation for the investor, now in bankruptcy proceedings, after five attempts to set aside the default judgment fizzled before Miami-Dade Circuit Judge Jacqueline Hogan Scola and retired Judge Amy Steele Donner.

Scola would eventually prohibit Mauna from filing new motions to vacate the default judgment.

The investor, meanwhile, continued to unsuccessfully argue it had no control over the walkway and Santiago’s case wasn’t a slip-and-fall at all. The company argued Santiago was injured when a 400-pound statute she was moving fell off a dolly and crushed her foot.

It seemed the case would turn in Mauna’s favor in 2011 when Santiago filed another suit against the previous landlord, including a special warranty deed and documentation listing Iberia as the owner at the time of her injury. She sought damages for the same injury on three counts of negligence and one count of fraudulent transfer of the property.

“They were trying to hedge their bets,” said Austin Carr, Mauna Loa’s trial counsel.

Santiago’s trial lawyer, Miami attorney Carlos Cruanes, said Iberia and Mauna belonged to the same family of investors.

“Looking at all the evidence, we felt very confident we had the right party, and we came out vindicated,” he said.

Carr asked the trial court to consolidate the two lawsuits, then attempted to use Santiago’s documentation in the Iberia case to excuse Mauna from the suit. He argued the documents showed Santiago knowingly made misrepresentations about the property’s ownership — a meritorious defense that provided grounds for setting aside the default judgment.

But Santiago wiped out that strategy and seemingly took the documents out of play by voluntarily withdrawing her complaint against Iberia.

On appeal, though, Mauna Loa won its first victory.

“The special warranty deed established that because Mauna did not own the property on the date of Santiago’s injury, no relief could be granted against Mauna,” Third DCA Judge Barbara Lagoa wrote in a unanimous decision with Judges Richard Suarez and Vance Salter concurring. “As the record before the trial court established that the complaint failed to state a claim for relief against Mauna, the trial court had no discretion but to grant the amended motion and set aside the default as void.”

Four-Corners Rule

But the ruling conflicted with precedent in the high court, which accepted review.

“We reaffirm our longstanding rule that the sufficiency of a complaint to state a cause of action must be determined solely by examination of the complaint and its related attachments, if any,” Canady wrote. “The district court’s scope of review erroneously included a separate complaint, which was outside the ‘four corners’ scope. We also hold that because there was no showing of excusable neglect, the trial court properly denied the motion to set aside the default.”

Even though Santiago’s two complaints were consolidated, the high court found it went beyond the scope of the surviving case.

“Within the four corners of the Mauna complaint, Santiago clearly stated a cause of action for premises liability against Mauna,” Canady wrote. “And the well-pleaded allegations of that complaint were admitted by Mauna’s default.”

Cruanes and co-counsel Gregory Moore celebrated the latest ruling, but Mauna is at work on an appeal.

“We in the legal profession are beholden to the truth. However, the court ruled in this case that procedure trumps truth,” said Carr, a partner at Koch, Parafinczuk & Wolf in Fort Lauderdale. “The court held that a procedural default created ownership where there was none in a premises liability case for a slip-and-fall accident that never occurred.”

This article was originally published in the Daily Business Review and authored by Samantha Joseph.

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