Torts
— Insurance — Subrogation — Default — Subrogation action by insurance
company against defendant and his wife to recover amounts paid to company’s
insured under uninsured motorist coverage for personal injury and for damage to
insured’s vehicle resulting from wife’s negligent operation of vehicle owned by
defendant and his wife — It was error to award default judgment against
defendant for damages without evidentiary hearing where damages were
unliquidated — Claims for personal injury, disability, discomfort, pain and
suffering, mental anguish, loss of capacity for enjoyment of life, loss of
wages, loss of earning capacity, and property damage, although pled as an exact
amount in subrogation action, were unliquidated — Conflict certified — It was
error to enter default against defendant husband without an adjudication of
liability as to non-defaulting wife who had filed a pro se answer to complaint
on her own behalf

STANISLAV KOTLYAR, Appellant, v. METROPOLITAN CASUALTY
INSURANCE COMPANY, as subrogee of CHERYL DAMBROSIO, Appellee. 4th District.
Case Nos. 4D14-1878 and 4D14-4377. May 18, 2016. Consolidated appeals from the
Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Catherine
M. Brunson, Judge; L.T. Case No. 2014CA001228XXXXMB. Counsel: George P. Ord of
Murphy Reid, LLP, Palm Beach Gardens, for appellant. Sarah Clark, St.
Petersburg, for appellee.

(CONNER, J.) In this subrogation action, Stanislav Kotlyar
appeals the final default judgment in favor of Metropolitan Casualty Insurance
Company and the denial of his motion to vacate the default and judgment.
Kotlyar argues that the trial court erred in (1) determining the damages to be
liquidated, and in turn, entering final judgment for damages without an
evidentiary hearing, and (2) in denying his motion to set aside the default and
judgment, where allowing a default judgment to stand against him, absent an
adjudication regarding the liability of his wife, could lead to an absurd and
unjust result. We agree, and reverse and remand for further proceedings.

Factual
Background and Trial Court Proceedings

Metropolitan, as subrogee of Cheryl Dambrosio (“the
Insured”), filed a complaint against Kotlyar and his wife concerning a motor
vehicle collision involving the Insured. The complaint alleged that on the date
of the incident, Kotlyar and his wife owned a vehicle which was negligently and
carelessly operated by Kotlyar’s wife.

Count 1 of the complaint asserted an uninsured motorist
claim in which Metropolitan alleged that, as a direct and proximate result of
the negligence of Kotlyar and his wife, the Insured suffered:

personal
injury, disability, discomfort, pain and suffering, mental anguish, loss of
capacity for the enjoyment of life, loss of wages and loss of wage-earning
capacity, and aggravation of pre-existing conditions all of which conditions
are continuing or are permanent in nature; and further, for the care and
treatment of these injuries.

Metropolitan alleged that as a result of these injuries, it
paid the Insured the sum of $50,000.00 and was entitled to subrogation in that
amount, as well as prejudgment interest and costs of the action.

Count 2 of the complaint asserted a property damage claim in
which Metropolitan alleged that, as a direct and proximate result of the
negligence of Kotlyar and his wife, the Insured’s motor vehicle was damaged and
depreciated in value. Metropolitan alleged that as a result of these damages,
it paid the Insured the sum of $3,389.85 and the Insured incurred a deductible
of $1,400.00 and was entitled to subrogation in that amount. Thus, Metropolitan
sought a judgment against Kotlyar and his wife for the amount of $4,789.85,
together with prejudgment interest and costs, for a total due under both Counts
1 and 2 of $54,789.85, together with prejudgment interest and costs of the
action.

Kotlyar’s wife filed a pro se answer to the complaint
on her own behalf, wherein she denied liability and responsibility for damages.
Kotlyar did not file an answer to the complaint and a default was entered
against him. Thereafter, Metropolitan filed a motion for entry of final default
judgment against Kotlyar, asserting that by his default, he had admitted
liability. Additionally, Metropolitan asserted that the damages in this case
were “liquidated” in nature, and that Metropolitan was therefore entitled to a
final default judgment without a hearing as to damages. The trial court entered
a final default judgment as to Kotlyar, based on his default and Metropolitan’s
supporting affidavits which attested to the amounts paid to the Insured as
listed in the complaint.

Afterward, Kotlyar filed a motion to vacate the default and
judgment, arguing that the judgment was void because the complaint sought unliquidated
damages, and that a defaulting party is entitled to notice and an
opportunity to be heard when the amount of damages is unliquidated.
Additionally, Kotlyar’s motion asserted that his failure to respond to the
complaint was due to excusable neglect, that he had a meritorious defense to
the action, and that he acted with due diligence in moving to set aside the
default.

After a hearing, the trial court denied Kotlyar’s motion,
finding that Kotlyar failed to establish excusable neglect. The trial court
specifically found that Kotlyar was personally served with the summons and the
complaint, and that Kotlyar failed to read the documents, seek the advice of an
attorney, file an answer or any paper with the court, or take any action to
protect his interest. Additionally, the trial court found that Kotlyar was
charged with notice of the contents served upon him, including the specific
amount of damages sought by Metropolitan, which the trial court found to be
“liquidated.” Accordingly, the trial court found that Kotlyar’s liability and
damages were admitted by his default. Thereafter, Kotlyar gave notice of
appeal.

Appellate
Analysis

Kotlyar argues that the trial court erred in (1) determining
the nature of the damages, and in turn, entering a final default judgment for
damages without an evidentiary hearing, and (2) in denying his motion to vacate
the default and judgment, where allowing a default judgment to stand against
him, without an adjudication as to the liability of his wife, could lead to an
absurd and unjust result.

Determination of the Nature of the Damages

“Whether damages alleged are liquidated or unliquidated is a
question of law subject to de novo review.” Talbot v. Rosenbaum, 142 So.
3d 965, 967 (Fla. 4th DCA 2014). We have held that “ ‘the setting of
unliquidated damages without the required notice and without proof is regarded
as fundamental error.’ ” Id. (quoting Cellular Warehouse, Inc. v. GH
Cellular, LLC, 957 So. 2d 662, 666 (Fla. 3d DCA 2007)).

“When a default is entered, the defaulting party admits all
well-pled factual allegations of the complaint.” Phadael v. Deutsche Bank
Trust Co. Ams., 83 So. 3d 893, 895 (Fla. 4th DCA 2012) (citing Donohue
v. Brightman, 939 So. 2d 1162, 1164 (Fla. 4th DCA 2006)). “Likewise, a
default terminates the defending party’s right to further defend, except to
contest the amount of unliquidated damages.” Id. (emphasis added)
(citing Donohue, 939 So. 2d at 1164). We have consistently held that, “
‘[a] default admits a plaintiff’s entitlement to liquidated damages under
a well-pled cause of action, but not to unliquidated damages.’ ” Talbot,
142 So. 3d at 967 (emphasis added) (quoting BOYI, LLC v. Premiere Am. Bank,
N.A., 127 So. 3d 850, 851 (Fla. 4th DCA 2013); Minkoff v. Caterpillar
Fin. Servs. Corp., 103 So. 3d 1049, 1051 (Fla. 4th DCA 2013)); Bodygear
Activewear, Inc. v. Counter Intelligence Servs., 946 So. 2d 1148, 1150
(Fla. 4th DCA 2006). Furthermore, “[i]t is well-settled that ‘[a] defaulting
party has a due process entitlement to notice and an opportunity to be heard as
to the presentation and evaluation of evidence necessary to a judicial
interpretation of the amount of unliquidated damages.’ ” Bodygear, 946
So. 2d at 1150 (quoting Asian Imports, Inc. v. Pepe, 633 So. 2d 551, 552
(Fla. 1st DCA 1994)). In other words, while entry of a default terminates the
defendant’s right to contest liability or the plaintiff’s entitlement to liquidated
damages, entry of a default does not deprive the defendant of the right to
a hearing to determine damages which are unliquidated.

It is undisputed in this case that a hearing was not held
for the determination of the amount of damages prior to the trial court’s entry
of the final judgment against Kotlyar for the amount of damages sought in the
complaint.

We have previously explained that “ ‘[d]amages are
liquidated when the proper amount to be awarded can be determined with
exactness from the cause of action as pleaded, i.e., from a pleaded
agreement between the parties, by an arithmetical calculation or by application
of definite rules of law.’ ” Id. (emphasis added) (quoting Pierce
v. Anglin, 721 So. 2d 781, 783 (Fla. 1st DCA 1998)). For example,
“liquidated damages may exist in a contractual setting ‘when a specific sum of
money has been expressly stipulated or agreed to by the parties for recovery by
either party following a breach of the contract by the other.’ ” Id. (quoting
Hartford Fire Ins. Co. v. Controltec, Inc., 561 So. 2d 1334 (Fla. 5th
DCA 1990)). “However, damages are not liquidated if a court must consider
testimony or evidence ‘to ascertain facts upon which to base a value judgment.’
” Id. (quoting Bowman v. Kingsland Dev., Inc., 432 So. 2d 660,
662 (Fla. 5th DCA 1983)); see also Hartford Fire, 561 So. 2d at 1335
(rejecting plaintiff’s assertion that its damages were liquidated simply
because a fixed sum was demanded by the complaint; thus, alleging a fixed sum
in the complaint does not render unliquidated damages, liquidated).

Here, Kotlyar argues that the damages sought in the
complaint alleging a fixed sum, were in fact unliquidated damages. We agree.
Count I of the complaint sought damages for personal injury, disability,
discomfort, pain and suffering, mental anguish, loss of capacity for the
enjoyment of life, loss of wages and earning capacity. Count 2 sought recovery
for property damage to the Insured’s vehicle. These damages are the very types
of unliquidated damages for which a hearing must be held to determine the
proper amount to be awarded. Neither the damages sought for the personal
injuries alleged in Count 1, nor the property damage alleged in Count 2, can be
determined from an agreement between the parties, by arithmetical calculation,
or by application of any definite rule of law. As such, we hold that the nature
of the damages alleged in this case are unliquidated, and although Kotlyar
admitted to liability by defaulting, he would nevertheless be entitled to a
hearing regarding the amount of unliquidated damages before such can be
awarded.

Metropolitan argues the trial court correctly determined the
damages in this case were liquidated, citing Dunkley Stucco, Inc. v.
Progressive American Insurance Co., 751 So. 2d 723 (Fla. 5th DCA 2000). We
agree that the facts in Dunkley are very similar to the facts in this
case, where an insurer brought a claim, as subrogee, to recover the amount it
paid as an insurer to its insured, after the insured was injured in a car
accident caused by the defendant. Id. at 724. There, as in this case, a
default final judgment was entered against the defendant and the defendant appealed
the trial court’s denial of his motion to vacate the judgment on the argument
that the damages were unliquidated, and the defendant was entitled to an
evidentiary hearing on damages. Id. The Fifth District held that because
the complaint stated specific amounts for damages, the default against the
defendant “converts what would have been an unliquidated amount into a
liquidated one.” Id. The Fifth District went on to say:

If
defendant admits that the amount claimed is due, whether by a general admission
or by default, he has, by not disputing the claim, “determined” it and is not
thereafter entitled to a hearing to require plaintiff to again establish that
amount to which defendant agrees he is liable.

Id.

Our research reveals no other appellate district that has
agreed with the Fifth District’s position in this factual scenario.

We cannot agree with the Fifth District’s position because
it ignores the legal status of a subrogee. A subrogee stands in the shoes of
the subrogor. Fla. Patient’s Comp. Fund v. St. Paul Fire and Marine Ins. Co.,
559 So. 2d 195, 197 (Fla. 1990) (“[A]n insurer cannot have a greater right than
the insured through the remedy of subrogation.”). Thus, if the same suit had
been filed by the insured, rather than the insurer, there is no doubt that the
claims for damages would be unliquidated. Rich v. Spivey, 922 So. 2d
326, 327 (Fla. 1st DCA 2006) (“[A] claim for a sum certain in a complaint does
not render such alleged damages liquidated.”); see also U.S. Fire Ins. Co.
v. C & C Beauty Sales, Inc., 674 So. 2d 169, 172 (Fla. 3d DCA 1996)
(“The fact that [plaintiff] alleged in its complaint that the value of the
stolen inventory was a certain amount does not make the claim liquidated.”).
Thus, we disagree that filing a claim by a subrogee, citing specific amounts of
damages, “converts” the damages from unliquidated to liquidated, and we certify
conflict with the Fifth District on that issue.

Denial of Kotlyar’s Motion to Set Aside Default and Default
Judgment

While we do not determine that the trial court erred in
finding that Kotlyar failed to establish excusable neglect, we agree with
Kotlyar’s contention that allowing a default judgment to stand against him,
without an adjudication as to the liability of his wife, could lead to an absurd
and unjust result.

In Days Inns Acquisition Corp. v. Hutchinson, 707 So.
2d 747, 749 (Fla. 4th DCA 1997), we confronted the issue of “whether there are
any limitations on the trial court’s discretion to enter a default judgment
where the liability of the non-defaulting co-defendant has not yet been
determined.” In that case, we rejected the notion that a trial court is
required “to defer entry of a default judgment in all cases where there
are non-defaulting defendants.” Id. at 751 (emphasis added). However, we
also rejected the notion that “a plaintiff is always entitled to a
default judgment against a defaulting defendant prior to the adjudication of
the merits against non-defaulting co-defendants.” Id. (emphasis added).
In this regard, we explained:

In
exercising its discretion, the trial court should evaluate whether the entry of
the default judgment could lead to an absurd, unjust, or logically inconsistent
result. Where, as here, relief against one defendant is completely dependent
upon the liability of a co-defendant, it would be improper to allow the final
judgment to be entered until the liability of the co-defendant has been
decided.

Id. (emphasis added).

Likewise, in this case, allowing a default judgment to stand
against Kotlyar, without an adjudication as to the liability of his wife, could
lead to an absurd and unjust result if Metropolitan is able to obtain damages
against Kotlyar based solely on his ownership of the vehicle, prior to an
adjudication that his wife negligently operated that vehicle. Review of the
complaint reflects that it alleged no particular independent wrongdoing by
Kotlyar; instead, it appears that his liability as the owner of the vehicle
rests entirely upon the theory that his wife was negligent in operating the
vehicle that they owned together. Therefore, because Kotlyar’s liability is
completely dependent upon his wife’s liability, it would be improper to allow
the final default judgment to be entered until the liability of Kotlyar’s wife
has been determined.

Accordingly, we reverse the final default judgment. If
Metropolitan’s claim against Kotlyar’s wife as to her negligence in the
accident is concluded in Metropolitan’s favor, the final default judgment
against Kotlyar may be re-entered after a hearing is held for the determination
of the amount of damages. See id. at 752. However, we do not contend
that Kotlyar may participate as a party or otherwise defend against
Metropolitan’s claim against his wife. See id. at 752 n.6.

Reversed and remanded. (STEVENSON, J., concurs.
DAMOORGIAN, J., dissents in part and concurs in part.)

__________________

(DAMOORGIAN, J., dissenting in part and concurring in part.)
I dissent on the issue of the determination of the nature of damages and would
adopt the Fifth District’s reasoning in Dunkley. As the court in Dunkley
noted, “[t]he effect of a default is that the defaulting party admits all
well pleaded allegations of the complaint.” Dunkley, 751 So. 2d at 724.
In this case, the exact amount of damages being sought were pled in the complaint.
The pleading, therefore, left no question as to what amounts were being sought
or what amounts could be awarded upon entry of default. By definition, the
damages became liquidated upon default. See id. I concur with the
majority on the status of the default pending a resolution of the negligence
claim against Kotlyar’s wife.