Craig Toll ("Toll") appeals from a final Order Granting Renewed Motion for Default and a Final Default Judgment entered against him on the basis of discovery violations. For the reasons that follow, we vacate the Final Default Judgment and remand for an evidentiary hearing.
Chris Korge, the plaintiff below, filed an eight-count complaint against Toll, as well as Claudio Osorio, Amarilis Osorio, and InnoVida Holdings, LLC, (collectively the "Defendants"), seeking damages and injunctive relief. Toll was InnoVida's Chief Financial Officer. Claudio Osorio was the Chief Executive Officer, chairman, and eighty-five percent owner of InnoVida. Amarailis Osorio is Claudio's wife and was a director/officer of InnoVida.
Korge's claims arise from his purchase of shares in InnoVida. Korge alleged, inter alia, that he made substantial cash investments in InnoVida which were fraudulently induced and subsequently misappropriated by the Defendants. The complaint alleged causes of action for, inter alia, fraudulent misrepresentation, negligent misrepresentation, and conversion. Korge also sought the appointment of a receiver to oversee InnoVida.
Together with the complaint, Korge filed a motion to expedite discovery, requests for production, and an emergency motion for status conference. At a hearing held on September 27, 2010, the trial court granted Korge's request for expedited discovery and ordered Defendants to respond to the requests for production by October 7, 2010. The court also ordered Toll and Claudio Osorio ("Osorio") to submit to deposition by October 18, 2010.
Korge set the Toll and Osorio depositions for October 14 and 15, 2010. On October 8, 2010, counsel for Toll and Osorio
Toll and Osorio failed to appear for their scheduled depositions, and Korge sought the issuance of a show cause order. The court granted the motion and ordered that Toll and Osorio personally appear before the court on October 18, 2010 to each show cause why they should not be held in contempt or be subject to sanctions. Neither Toll nor Osorio appeared at the show cause hearing, though their attorney attended the hearing, advising the court that Toll was traveling out of the country during the date of his previously-scheduled deposition.
Toll appeared for his deposition on October 21, 2010 and testified as follows: (i) he had not been out of the country during his prior scheduled deposition, and in fact had no knowledge of the court order requiring him to appear for it; (ii) he was unaware that the attorney representing him and Osorio represented to the court that Toll did not appear for such deposition because he was out of the country; (iii) he had never before seen any of the court's prior orders pertaining to depositions, discovery or attendance at hearings; (iv) the first time he met his attorney and discussed anything about this case was on October 20, 2010 — the day prior to his deposition but subsequent to several of the court's orders; and (v) he had no access to InnoVida's Cayman bank statements because they were held by one of InnoVida's subsidiaries.
On December 7, 2010, the trial court held a non-evidentiary hearing in response to Korge's emergency motion for default and for sanctions against Toll and Osorio. The court concluded that the Defendants violated the court's orders and rulings on no less than seven separate occasions. It found these violations to be willful and in bad faith, with the intent to deceive and obstruct Korge's legitimate discovery efforts. The court did not grant the requested default, but awarded Korge attorney's fees and costs incurred as a result of Defendants' misconduct. On February 17, 2011 a hearing was held on a subsequent motion to compel filed by Korge. Korge once again sought production of InnoVida's verified bank statements, and the court again ordered that Toll and Osorio produce the statements-this time by February 21, 2011. Defendants failed to produce the documents and Korge filed a renewed motion for default. This motion was a mere one and one-half pages in length, asserting the following ground as the basis for renewing its request for default: that the Defendants failed "to produce certified copies of InnoVida's bank statements and personal financial records for Defendants Osorio and Amarilis by February 21, 2011."
On March 1, 2011, the trial court held a hearing on the renewed motion for default. As was the case at the December 7, 2010 default hearing, the court took no testimony and received no evidence. At the conclusion of the March 1 hearing, the trial court found that the Defendants willfully disregarded the court's orders in their failure to attend depositions
On March 3, 2011, the court entered an eleven-page order that mirrored, nearly word for word, the proposed order submitted by Korge.
Toll thereafter engaged new and separate counsel to represent him and filed a motion for reconsideration and a request for an evidentiary hearing. In that motion, Toll repeated the assertions made during his deposition testimony — namely, that prior counsel never made Toll aware of the discovery requests or the court's various orders compelling discovery; the first time he met his prior attorney (who represented both Toll and Osorio) was on October 20, the day before Toll's deposition; Toll never advised his prior attorney that he was out of the country and unavailable for deposition on a previous date set for his deposition; and Toll did not have access to InnoVida's Cayman Island bank account or the bank statements. In the motion for reconsideration, Toll alleged that Osorio had hired Toll as a CFO but restricted Toll's access to certain financial information, including the bank statements which were the subject of the request for production. Toll alleged there was a conflict of interest between himself and Osorio, and that prior counsel had kept Toll "in the dark," representing only the interests of Osorio. Toll also alleged that the trial court failed to make the necessary findings as required by Kozel v. Ostendorf, 629 So.2d 817 (Fla.1993) and its progeny. Toll requested the trial court to conduct a hearing to consider this evidence. The trial court denied the motion for reconsideration, and this appeal followed.
It is well established in Florida "that determining sanctions for discovery violations is committed to the discretion of the trial court, and will not be disturbed upon appeal absent an abuse of the sound exercise of that discretion." Ham v. Dunmire, 891 So.2d 492, 495 (Fla.2004) (citing
Ham, 891 So.2d at 496. (Internal quotations omitted).
The Supreme Court has articulated a six-factor analysis to determine whether a dismissal with prejudice is an appropriate sanction due to an attorney's behavior:
Kozel, 629 So.2d at 818. See also Deutsche Bank Nat. Trust Co. v. Cagigas, 85 So.3d 1181 (Fla. 3d DCA 2012). The Kozel factors ensure that a sanction is directed towards the party responsible for the error or misconduct and that dismissal is "reserved for those aggravating circumstances in which a lesser sanction would fail to achieve a just result." Id.
While the record certainly establishes a persistent pattern of foot-dragging and failure to comply with court orders, we are compelled to conclude the trial court abused its discretion in striking Toll's pleadings and granting a default judgment against him in the absence of compliance with the requisite procedures outlined in Ham and Kozel, in order to justify the extreme sanction imposed. The trial court failed to hold an evidentiary hearing and failed to make the necessary findings under Kozel, rendering it impossible to determine whether the Defendants' collective dilatory conduct was personally attributable to Toll, to another defendant, or to Toll's counsel.
For example, in the court's March 3, 2011 order memorializing the granting of Korge's default motion, it stated that the Defendants (referred to collectively) "willfully disobeyed" court orders, "testified falsely," and "made false representations" to the court. However, the absence of an evidentiary record, the lack of explicit findings as to Toll, personally, and the concomitant failure to analyze the Kozel factors, especially as they pertain to Toll's prior
Accordingly, we vacate the final default judgment and remand for an evidentiary hearing and consideration of the Kozel factors. If, on remand, the trial court determines that dismissal is appropriate, the trial court shall include in its written order findings of fact with respect to each factor, and individualized findings with regard to the conduct of each of the sanctioned parties and their counsel.
ROTHENBERG, J., concurs.
SHEPHERD, C.J., dissenting.
I respectfully dissent. The majority opinion portrays one reading of the facts of this case. The detailed and thorough eleven-page order rendered by the trial court portrays another. Utilizing the pertinent standard set forth in Mercer v. Raine, 443 So.2d 944, 946 (Fla.1983) — which, as opposed to the standard in Kozel v. Ostendorf, 629 So.2d 817, 818 (Fla.1993), applies when the discovery misconduct is attributable to the litigant rather than his attorney — I conclude the trial court properly exercised its discretion in finding that Craig Toll had demonstrated a deliberate and contumacious disregard of the authority of the court. Mercer, 443 So.2d at 946.
As in Mercer, here, "[t]here was no showing that the defendant either attempted to comply with the discovery order[s] or communicated any explanation or excuse to the court." Id. Although Toll testified in his first deposition, taken on October 21, 2010, that he was not in possession of requested documents relating to InnoVida Holdings, he acknowledged as CFO he had the ability to request the documents directly from the subsidiary. Additionally, at the receivership hearing on November 5, 2010, at which Toll was present, his attorney strongly suggested Toll was aware of all prior court orders. Despite the issuance of an additional two orders compelling production after his first deposition, Toll made no effort to request the documents by the time of his second deposition on December 15, 2012. For five or six months before the default final judgment was entered, both Toll and his attorney knew Toll was in breach of his responsibilities. Thus, even if Toll had a defense prior to October 21, 2010, he did not after that date.
Although the record suggests Defendant's counsel contributed to the delay in the discovery proceedings, the court ultimately found the individual parties responsible for the non-compliance. An order
I would affirm the order striking pleadings and the final judgment.
(Emphasis added).
However, as described earlier in this opinion, Toll had already explained during his October 21, 2010 deposition that he never advised his attorney that he was out of the country and unavailable for the previously-scheduled deposition. Toll also stated in his deposition that his attorney had never notified him of any court orders requiring him to appear for any deposition other than the deposition taken on October 21.