John B. Pike & Son, Inc. v. Atlantic Coast Asphalt, Inc. 530 So. 2d 487

WIGGINTON, Judge.

This appeal is from the trial court’s order denying appellant’s motion to vacate a final judgment of default. The action arose from a dispute regarding the payment and performance of a subcontract between appellant John B. Pike & Son, Inc., the general contractor, and appellee Atlantic Coast Asphalt, Inc., the subcontractor. Atlantic filed a complaint to recover monies allegedly wrongfully retained by Pike, who received service of the summons and complaint on May 22, 1987. No answer was filed, although in the subsequent months settlement negotiations were ongoing. Consequently, on August 13, 1987, Atlantic’s counsel orally informed Bob Cross, Pike’s employee who had been communicating with Atlantic during the negotiations, that Atlantic had not authorized withdrawal of the legal action and that Pike was being given until August 24, 1987, to file responsive pleadings or a default judgment would be obtained. A letter confirming the conversation, dated August 13, was received by Cross on August 17, 1987. Cross also participated in another telephone conversation with Atlantic on August 18, in which he was advised that Atlantic was proceeding with the litigation despite an August 14 letter to Cross from its executive vice-president concerning the negotiations.

On August 25, 1987, when Pike took no further action, a motion for default was filed and a default was entered. Final judgment thereon was entered on September 3, 1987, a copy of which was forwarded to Pike and received by appropriate officers on Friday, September 11. Upon learning of the final judgment, Pike’s officers contacted counsel for the first time and a motion to vacate final judgment was served on Monday, September 14. After hearing argument from counsel, the trial court denied the motion to vacate finding that Pike had stated a meritorious defense but that *488its “actions or inactions to monitor the status of the pending action and the conduct of Bob Cross in failing to make Pike aware of the status of this action do not constitute excusable neglect.”

On the basis of the record before us, we cannot hold that the trial court grossly abused its discretion in denying Pike’s motion to vacate. Although it is true that Pike was in the process of closing Bob Cross’s office and moving its files and records to the main office in Rochester, New York, we nonetheless conclude, as did the trial court, that Pike was given fair warning that a default judgment was being sought and a fair period of time in which to file a responsive pleading prior to and after that warning was given. It is significant that Pike was twice apprised of Atlantic’s intention to move for default judgment and we cannot say that the continuing negotiations conclusively lulled Pike into believing that an action would not be pursued. Compare Bludworth v. Lally, 415 So.2d 164 (Fla. 4th DCA 1982); but cf. Florida Aviation Academy v. Charter Air Center, Inc., 449 So.2d 350 (Fla. 1st DCA 1984) (in that case the error was caused by an “inexperienced secretary’s failure to calendar the time for filing an answer to the complaint, contrary to established office policy and procedure”).

Accordingly, the trial court’s order denying appellant’s motion to vacate judgment is affirmed.

WENTWORTH, J., concurs.

SMITH, C.J., dissents with written opinion.

SMITH, Chief Judge,

dissenting with opinion.

I would reverse. Both the trial court and the majority, in my view, tend to rely heavily on the knowledge possessed by Pike’s employee, Bob Cross, concerning the pending litigation and the need to turn the matter over to Pike’s counsel for the filing of legal defenses, and at the same time tend to minimize the actions of Atlantic which substantially contributed to the state of confusion which Pike encountered in the period immediately preceding entry of the default.

It is undisputed that settlement negotiations between Atlantic and Pike’s non-lawyer employee, Cross, commenced after service of the summons and complaint on May 22, 1987, and continued into August. Atlantic’s counsel was well aware of the fact that the litigation had been in a state of suspension until August 13,1987, on which date counsel filed the return of service of the summons and complaint with the clerk. On the same date, counsel wrote to Cross stating, among other things (and confirming a telephone conversation with Cross), that “my client has never authorized me to withdraw the legal action” filed against Pike. He also advised that the Release of Lien forms sent by Cross had been received but could not be executed; and, since Pike had received the final contract payment less a reserve for deficiencies, “our client is entitled to proceed under the complaint subject to any other defenses that you might have.” (emphasis supplied). The letter continues and concludes with notice that Pike was given until August 24, 1987, to file a responsive pleading to the complaint, and, finally: “If this is not done I have been instructed to enter a default judgment against your company.” Even had the matter gone no further, the letter from counsel, coming on the heels of a long period of negotiation and communication, does not unequivocally close the door on possible further consideration of Pike’s position. It is not surprising, therefore, that on August 14, 1987, the day following this letter by Atlantic’s counsel, Atlantic’s Executive Vice President wrote a lengthy letter addressed to Pike, to the attention of Cross, commenting on the results of some engineering tests of the asphalt pavement in controversy. In this letter, Atlantic acknowledged, in effect, the failure of the asphalt and recommended its removal and the resurfacing of the parking area with another type mix than the one specified in the plans, i.e., Type S-I mix rather than 1 ¼ inch Type II. The letter concludes with an offer to make a bid to accomplish the additional work, qualified by the statement that “the matter of the tender Type II asphalt *489and an agreeable method of payment for the additional work would have to be worked out prior to our starting work.”

Again, through the letter from its corporate official, Atlantic manifested a continuing disposition to work out the problems associated with this construction job by means other than litigation. What should be of great concern, moreover, is that Atlantic here sought to “double-track” its dispute resolution efforts, proceeding both by edict from its counsel, and by subsequent and contradictory overture by its corporate official.

I would hold that under these circumstances, the entry of default and securing of a final judgment without notice of hearing should not stand.

The Bludworth case, cited in the majority opinion, is distinguishable. There the two defendants, both lawyers, simply failed to do anything in response to the suit filed against them after plaintiff’s counsel orally advised them of the default status of the case, and again advised them by letter that they were in default and asked them to please file a responsive pleading. The Bludworth defendants’ sole contention on appeal was that a secretary in Mr. Blud-worth’s office failed to forward the suit papers to the Attorney General as soon as she should have, which they urged (unsuccessfully) “constituted a ‘clerical error’ or excusable neglect as a matter of law.” Id. at 165.

Although admittedly the facts here are not identical, this case more nearly resembles Johnson v. Buxton, 262 So.2d 892 (Fla. 2nd DCA 1972). In Johnson, after negotiations and successful arbitration of some differences between the parties, plaintiff’s attorney filed a praecipe for default on the day before the plaintiff wrote to the defendant asking that a contemplated second meeting with the arbitrators “be cancelled ‘for the time being.’ ” Id. at 893. In reversing the trial court’s order denying a motion to set aside the default judgment, the appellate court observed: “Buxton’s [the plaintiff’s] conduct in this case might reasonably have led the defendant to think that, unless arbitration failed, he might never need a lawyer at all.” Id. at 893.

Here, while Atlantic cannot be held directly responsible for any confusion existing in Pike’s local office during the crucial period between Atlantic’s letter of August 14, 1987, and entry of the default on August 25, 1987, nevertheless, Atlantic’s delayed action in reengaging the legal machinery after a prolonged period of negotiation with Pike’s lay employee had the effect of thrusting the matter into the litigation mode at a time when Pike was indisposed to handle it properly.

For the above reasons, the default judgment should be set aside and the cause should be determined on its merits.