In KB Home Fort Myers LLC v. Taishan Gypsum Co., No.
2D21-384, 2022 WL 1099385 (Fla. Dist. Ct. App. Apr. 13, 2022), Florida’s Second
District Court of Appeal reversed a trial court’s decision to vacate an $18 million
default judgment against a supplier that sold defective drywall. The Court of
Appeal reversed the trial court because the default judgment was not void and
the drywall supplier waited over seven years to seek relief.
In 2011, Plaintiff KB Homes Fort Meyers (“KB”) sued Defendants
Taishan Gypsum Co. and Tai'an Taishan Plasterboard Co. (collectively the “Taishan
Defendants”) for selling defective drywall that KB used to construct homes in Florida.
KB’s lawsuit related to damages it incurred following the multidistrict litigation
involving Chinese manufactured drywall products. KB sought to recover the costs
to repair the homes where it had installed the defective drywall purchased from
the Taishan Defendants.
KB obtained service of process; however, the Taishan Defendants
never filed or served any documents or pleadings in the action. In 2012, KB
moved for clerk’s default and, subsequently, a final default judgment. KB
served the motions for clerk’s default and final judgment on the Taishan Defendants
by mail. The trial court referred KB’s motion for final judgment to a
magistrate.
The magistrate held a hearing in June 2013. The Taishan
Defendants were notified about the referral and hearing via mail. The Taishan
Defendants did not file or serve any documents or appear for the hearing.
In July 2013, the magistrate issued a report and recommendation
finding that KB was entitled to an $18 million judgment against the Taishan
Defendants. The trial court adopted the report and recommendation in October
2013.
In August 2020—nearly seven years later—the Taishan
Defendants appeared in the case and moved to vacate the default judgment on the
basis it was “void.” The Taishan Defendants alleged that service of process was
deficient, as KB should have notified the Taishan Defendants’ counsel at Hogan
Lovells about the default proceedings.
In response, KB submitted extensive evidence showing over
100 pre-suit notices and communications were sent to Hogan Lovells. KB argued
the lack of response from Hogan Lovells indicated that Hogan Lovells was not representing
the Taishan Defendants in this action. The Taishan Defendants did not offer any
evidence to explain why the pre-suit communications from KB went unanswered.
The trial court held that KB was required to notify Hogan
Lovells about the default proceedings, even though KB’s pre-suit attempts to
communicate with Hogan Lovells were unsuccessful. The trial court held the
default judgment was “void,” because KB failed to notify Hogan Lovells about the
default proceedings.
The Court of Appeals disagreed, holding the default judgment
was not “void” but rather “voidable.” The Court of Appeal found that KB’s
failure to notify Hogan Lovells about the default proceedings did not amount to
deficient service of process to render the default judgment void. Rather, KB’s
failure to notify Hogan Lovells about the default proceedings was a mere procedural
defect that would render the default judgment voidable—not void.
The Court of Appeal went on to hold that the Taishan
Defendants could not challenge the default judgment seven years after the
default order was entered. Under the Florida Rules of Civil Procedure, voidable
judgments can only be challenged within one year after the judgment was entered.
Because the Court of Appeal held the default judgment was merely voidable—not void—the
Taishan Defendants could no longer challenge the default judgment. The Court of
Appeal remanded the case to the trial court with instructions to reinstate the default
order as a final judgment in favor of KB.
