Firm Wins Reversal of Order Denying Relief from Default Judgment, Prevailing under Difficult Abuse of Discretion Standard

The firm, through Of Counsel attorney Michele Feinzig, recently prevailed in an appeal brought by our clients, Mohammad Aboumahboub and Financial Group of America, LLC, from an order denying their motion to vacate an ex parte Final Judgment that was entered based on their default of payment obligations under a mediated settlement agreement entered into on September 11, 2012 to resolve a business dispute with Paul Honig.  Under that agreement, our clients agreed to pay Honig a settlement sum of $56,000 under a specific payment plan, with the entire sum to be paid by November 2014.  The agreement’s payment schedule included a default cure provision that required Honig to provide written notice of default to our clients, and allowed our clients five days from delivery of such written notice to remedy any non-payment.  Written notice could be made either by mail, fax or email at the addresses provided in the agreement, which specified both an email address and a physical mailing address.  If any default was not cured within five days of delivery of written notice, the agreement allowed for a Final Judgment to be entered against our clients in the amount of $100,000 less payments made, which would exact a substantial penalty above the $56,000 settlement figure.

Our clients made all required payments under the agreement in 2012 and 2013, but in January 2014, Mr. Aboumahboub’s wife passed away after a long battle with cancer.  On January 24, 2014, Mr. Aboumahboub asked Honig if he would agree to an extension for the January payment, so that Mr. Aboumahboub could use that money to pay his wife’s funeral expenses, which he would make up over the next four months.  Honig agreed.  On February 25, 2014, our clients made their February payment plus a small amount toward the January payment, leaving $1,800.00 still owed for January 2014.  Honig’s counsel, however, sent a notice of default letter dated March 6, 2014 by Certified Mail to Mr. Aboumahboub at the physical address provided in the agreement, demanding that our clients immediately pay the remaining $1,800.00.  The Notice Letter listed two email addresses under Mr. Aboumahboub’s physical address, but neither of those was a proper email address for email notice under the agreement.  The Notice Letter was delivered by Certified Mail to Mr. Aboumahboub on March 10, 2014, and on March 13, 2014, three days after delivery, the remaining $1,800 owed for January 2014 was paid, thus timely curing the default within five days of delivery of written notice.

Despite this, on March 17, 2014, Honig filed an ex parte motion with the trial court seeking entry of a default Final Judgment against our clients, claiming that our clients had “failed to pay in accordance with the Agreement and refused to make any further payments.”  Based upon the motion, the court entered a Final Judgment for the default amount due, plus attorneys’ fees and costs.  Our clients then moved to vacate the Final Judgment, arguing that Honig misrepresented that the default was not cured, since our clients had paid the default amount of $1,800 on March 13, 2014.  After an evidentiary hearing, the trial court denied our clients’ motion, and they filed an appeal.

On December 9, 2015, the Fourth District Court of Appeal issued an Opinion reversing the trial court’s order denying our clients’ motion to vacate, and remanding for the trial court to vacate the Final Judgment.  The Opinion agreed with our clients’ position, and concluded that Honig misrepresented in his motion for entry of a default Final Judgment that our clients had not made any payment and refused to make further payments, when Honig had received the specified default payment four days prior to filing his motion and within the five-day cure period.  The appellate court found that Honig’s misrepresentation should have resulted in the vacatur of the Final Judgment, and that the trial court abused its discretion in denying our clients’ motion to vacate when the facts from the record conclusively established the misrepresentation.  The appellate court also granted our clients’ motion for appellate attorneys’ fees, and remanded the issue of determining the amount of those fees to the trial court.

*The decision is not final until disposition of a motion for rehearing.