ROCKA FUERTA CONSTRUCTION INC., APPELLANT,
v.
SOUTHWICK, INC., APPELLEE
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Rocka Fuerta Construction appeals the trial court's dismissal of its breach of contract complaint as a sanction for alleged fraud on the court. The court reversed the dismissal, holding that Rocka's failure to reference a settlement agreement in its complaint did not constitute the egregious misconduct necessary to justify dismissal with prejudice.
The trial court abused its discretion in dismissing the complaint with prejudice. Rocka's omission of the settlement agreement from its complaint does not constitute fraud on the court or the type of egregious misconduct necessary to justify such extreme sanction. The settlement agreement was properly an affirmative defense for Southwick to raise, not a matter that required Rocka to plead or seek rescission.
[1] Dismissal of a complaint as a sanction for fraud on the court requires a clear and convincing showing of an unconscionable scheme to interfere with the judicial system.
[2] A settlement agreement's effect on a prior claim is generally an affirmative defense, not a basis for dismissing a complaint as fraud.
Previewing 2 of 5 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“while trial courts have the inherent authority to dismiss actions based on fraud, that power should be used 'cautiously and sparingly,' and only upon the most blatant showing of fraud, pretense, collusion, or other similar wrong doing.”
Establishes the stringent standard for dismissal based on fraud and the requirement that such sanctions be rare and only in extreme circumstances.
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Join FLexlaw to unlock all legal intelligenceRocka completed several projects for Southwick and a payment dispute arose. The parties executed a settlement agreement requiring Southwick to pay Roc…
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Rocka Fuerta Construction, Inc. (“Roc-ka”) appeals the final order dismissing its complaint against Southwick, Inc. as a sanction. We reverse the order of dismiss*1024al, but dismiss, as premature, the appeal of the order granting sanctions pursuant to section 57.105, Florida Statutes (2010).
Rocka completed several projects for Southwick. A dispute regarding payment arose between them that was resolved when they entered into a settlement agreement (“Settlement Agreement”), which required Southwick to make two payments of $4,000 each to Rocka, the first of which was due upon the Settlement Agreement’s execution. Southwick delivered a check to Rocka as required for the first payment; however, the bank refused to honor it. Rocka resubmitted the check, and it was again dishonored.
Rocka retained counsel and advised them of the Settlement Agreement and about the bad check. Rocka’s attorneys proceeded to file a multi-count complaint against Southwick, seeking $42,835, the amount Rocka originally claimed South-wick owed, not the $8,000 agreed to in the Settlement Agreement. The complaint did not refer to or seek to rescind the Settlement Agreement. Southwick responded by filing a “Motion for Sanctions in Attempting to Perpetrate a Fraud Upon the Court” and a motion for sanctions pursuant to section 57.105, Florida Statutes. In both motions, Southwick argued that the Settlement Agreement superseded any underlying contractual agreements between the parties and that Rocka acted in bad faith by not disclosing the Settlement Agreement to the court. Southwick asked the court to dismiss Rocka’s suit with prejudice and to award it section 57.105 attorney’s fees.
At the hearing on the motions, Rocka’s attorneys argued that they did not refer to the Settlement Agreement in the complaint because, they contended, there was no valid Settlement Agreement, i.e., it was void or voidable due to Southwick’s failure to make the required payments. Unconvinced by that argument, the trial court dismissed Rocka’s complaint with prejudice as a sanction for what it believed was Rocka’s attempt to perpetrate a fraud on the court.
An order dismissing a case as a sanction will be upheld absent an abuse of discretion.1 Morgan v. Campbell, 816 So.2d 251, 253 (Fla. 2d DCA 2002). However, while trial courts have the inherent authority to dismiss actions based on fraud, that power should be used “cautiously and sparingly,” and only upon the most blatant showing of fraud, pretense, collusion, or other similar wrong doing. Granados v. Zehr, 979 So.2d 1155, 1157 (Fla. 5th DCA 2008). In other words, the extreme sanction for a dismissal should be imposed only where “it can be demonstrated, clearly and convincingly, that a party has sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system’s ability impartially to adjudicate a matter by improperly influencing the trier of fact or unfairly hampering the presentation of the opposing party’s claim or defense.” Cox v. Burke, 706 So.2d 43, 46 (Fla. 5th DCA 1998) (quoting Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir.1989)). When reviewing a case for fraud, the court *1025should consider the proper mix of factors and carefully balance a policy favoring adjudication on the merits with competing policies to maintain the integrity of the judicial system. Because dismissal sounds the “death knell of the lawsuit,” courts must reserve such strong medicine for instances where the defaulting party’s misconduct is correspondingly egregious. Id.; see Kozel v. Ostendorf, 629 So.2d 817, 818 (Fla.1993).
This case plainly fails to present the type of egregious misconduct or extreme circumstance to support dismissal with prejudice. Rocka’s failure to refer to or seek to rescind the Settlement Agreement is simply not fraud. Instead, if anything, the Settlement Agreement’s effect on Rocka’s claim is more appropriately raised by Southwick as an affirmative defense.2 Wolowitz v. Thoroughbred Motors, Inc., 765 So.2d 920, 928 (Fla. 2d DCA 2000) (holding accord and satisfaction must be pled as affirmative defense). South-wick was not hampered in the presentation of its case by the alleged pleading defect since it was aware of, and a party to, the Settlement Agreement. Dismissal with prejudice is particularly inappropriate in those situations where the attorney, and not the client, is responsible for the error. See Am. Express Co. v. Hickey, 869 So.2d 694, 695 (Fla. 5th DCA 2004). Here, Roc-ka disclosed the Settlement Agreement to its attorneys, and there is nothing in the record to suggest that Rocka, or its attorneys, engaged in what Southwick contends was a “fraud on the court.”
Next, Rocka alleges that the trial court abused its discretion by granting sanctions and awarding attorney’s fees and costs to Southwick pursuant to section 57.105, Florida Statutes. While the dismissal order was styled as an order granting sanctions pursuant to section 57.105, the court made no determination of the amount of the fees to be imposed as a sanction under section 57.105.3 Instead, *1026the dismissal order simply indicated that “[t]he case is dismissed and the court reserves as to other sanctions.” Thus, the appeal as to this issue is premature. See Cummings v. Campbell, 7 So.3d 1135, 1137 (Fla. 4th DCA 2009); Harrison v. Gattozzi, 992 So.2d 865, 866 (Fla. 5th DCA 2008); Ross v. Blank, 958 So.2d 437, 441 (Fla. 4th DCA 2007); Adlow, Inc. v. Mauda, Inc., 632 So.2d 714 (Fla. 5th DCA 1994). However, given our reversal of the order dismissing Rocka’s suit, this issue is most likely moot.
For these reasons, we reverse the order dismissing Rocka’s suit. We dismiss, as premature, Rocka’s appeal of the order concerning attorney’s fees and costs under section 57.105.
REVERSED in part; DISMISSED in part.
GRIFFIN and JACOBUS, JJ., concur.
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Previewing 3 of 4 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited (24 total)
- Carolann D. Kozel v. Ostendorf, 629 So. 2d 817 (Fla. 1993)
- COX v. Burke, 706 So. 2d 43 (Fla. 5th DCA 1998)
- Salim Aoude v. Mobil OIL Corp., 892 F.2d 1115 (1st Cir. 1989)
- Morgan v. Campbell, 816 So. 2d 251 (Fla. 2d DCA 2002)
- Sonny Ramey and Vicky Ramey v. Haverty Furniture Cos., Inc., 993 So. 2d 1014 (Fla. 2d DCA 2008)
- TRI Star Invs., Inc. v. Miele, 407 So. 2d 292 (Fla. 2d DCA 1981)
- Hannah v. James A. Ryder Corp., 380 So. 2d 507 (Fla. 3d DCA 1980)
- Wolowitz v. Thoroughbred Motors, Inc., 765 So. 2d 920 (Fla. 2d DCA 2000)
- Jose and Anais Suarez v. Benihana Nat'l OF Fla. Corp., 88 So. 3d 349 (Fla. 3d DCA 2012)
- Granados v. Zehr, 979 So. 2d 1155 (Fla. 5th DCA 2008)