Archive for January 23rd, 2014

“Excusable Neglect” in Foreclosure-World

Florida Rule of Civil Procedure 1.540 authorizes Florida courts to grant litigants relief from an Order if the Order resulted from the litigant’s “excusable neglect.”  The classic example of this is when a party loses at a hearing because of an inadvertent calendaring error.  That rule makes sense, and there are lots of cases which say so.  After all, litigants should lose cases on the merits, not because the lawyer’s staff calendared a hearing incorrectly.

In foreclosure-world, where sloppy lawyering and careless bank practices are often the norm, the extent to which this Rule applies is a frequent source of contention.

An example we often see is when a bank’s lawyer fails to attend a court-ordered Case Management Conference.  You see, judges in foreclosure cases routinely set such CMCs as a way to force dilatory plaintiffs to come to court to prosecute their cases.  If the bank’s lawyer doesn’t attend this CMC, then boom – case dismissed.  See Fla.R.Civ.P. 1.420(b) (authorizing dismissal for violation of a court order).

Often, plaintiffs’ attorneys seek relief from the Order of dismissal under Rule 1.540 by arguing “excusable neglect.”  “Sorry, judge.  We inadvertently failed to calendar the hearing, so we missed it.  Don’t dismiss the case where we made a calendaring error.”

As bad as that may sound, there are many cases supporting that argument.  Again, courts prefer to adjudicate cases on the merits, not by foibles of human nature.  The problem, of course, is the plaintiffs’ lawyers know this, so it’s easy for them to cite the buzzwords to argue to obtain relief under Rule 1.540.  As a result, the Rule is easy to abuse.  You’re a bank lawyer and you want a adverse ruling vacated?  From an Order at a hearing you didn’t even attend?  Just argue your staff inadvertently failed to calendar the hearing, so that’s why you didn’t attend.  Have the legal assistant sign an affidavit to that effect and the Order will get vacated.  Right?

Often, it’s not that simple – or it shouldn’t be, anyway.  You see, Florida courts only authorize relief where the neglect was “excusable.”  That merely begs the question – when is neglect “excusable” and when it is inexcusable?

By way of example, suppose a plaintiff’s counsel did not even have a system in place to calendar hearings, rather the lawyer simply tried to remember all of the hearings.  Or suppose there was a calendaring system, but the lawyer knew his secretary wasn’t calendaring hearings correctly and didn’t do anything about it.  In those examples, that type of neglect would not excusable.  As the Fourth District said in a similar context, that’s not evidence of a “system gone awry,” but a ”defective system altogether.”  Bequer v. Nat’l City Bank, 46 So. 3d 1199 (Fla. 4th DCA 2010) (reversing finding of “excusable neglect”).  To use the words of the Second District, that wouldn’t be ”excusable neglect” justifying relief from an Order, but ”gross negligence.”  See Hurley v. Govt. Employees Ins. Co., 619 So. 2d 477 (Fla. 2d DCA 1993) (reversing order finding “excusable neglect”).

Those might sound like extreme, even ridiculous examples, but let’s go back to my CMC example, sharing a real-life argument.

Recently, a Polk County judge dismissed a case I was defending where the plaintiff’s counsel did not attend a CMC.  Order entered, case dismissed.  Months later, the bank’s lawyer moved to vacate the Order, arguing his staff inadvertently failed to calendar the hearing.  The lawyer even filed affidavits from his staff saying such.

I took a closer look at the file, then drafted this Timeline.  It reflects how plaintiff’s current counsel had the file transferred to it by a different firm in June of 2013, yet new counsel did not actually file an appearance in the case until two months later.  By that point, however, the Order setting the CMC had already been mailed (to prior counsel) and the CMC had already taken place.  Hence, this wasn’t a calendaring error – the new firm wasn’t even counsel when the Order was mailed.  The new firm had simply failed to appear in the case, even though the file had been transferred to them two months earlier.  In other words, there wasn’t anything for the new firm to calendar; they hadn’t even received the Order due to their failure to appear in the case!  Compounding the problem, the new firm waited two more months before seeking relief under Rule 1.540, arguing “excusable neglect.”

Here, take a look at the bank’s arguments.  Now compare them to the facts in the Timeline.  Not exactly an honest characterization of the facts, huh?  And more significantly, it wasn’t ”excusable neglect,” either.  The judge agreed, the bank’s motion was denied, and the Order dismissing the case remained in place.

What’s the moral of the story?  Excusable neglect might seem like a low standard – a low bar to clear.  In many ways, it is.  But all neglect isn’t excusable, particularly not in foreclosure-world.

Mark Stopa

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