A & B Discount Lumber & Supply, Inc. v. Mitchell

• Decision Date: 05 October 2001
• Docket Number: No. 5D00-215.,5D00-215.
• Citation: 799 So.2d 301
• Parties: A & B DISCOUNT LUMBER & SUPPLY, INC., Appellant, v. James R. MITCHELL, Trustee, Appellee.
• Court: Florida District Court of Appeals

799 So.2d 301

A & B DISCOUNT LUMBER & SUPPLY, INC., Appellant, v.James R. MITCHELL, Trustee, Appellee.

No. 5D00-215.

District Court of Appeal of Florida, Fifth District.

October 5, 2001.

William N. Asma, P.A., Winter Garden, for Appellant.

John C. Reber of Rush, Marshall, Reber and Jones, P.A., Orlando, for Appellee.

PALMER, J.

In this mortgage foreclosure proceeding, A & B Discount Lumber & Supply, Inc.(A & B) appeals the final summary judgment entered by the trial court in favor of James R. Mitchell, Trustee(Mitchell).Concluding that none of the defenses pled by A & B set forth a valid defense to Mitchell's foreclosure claim, we affirm the final summary judgment entered thereon.However, concluding further that A & B's counterclaim which sought to recover the rents collected by Mitchell during A & B's ownership of the subject property properly set forth a cognizable cause of action, we reverse the trial court's dismissal thereof and remand this matter with instructions to reinstate same.

The evidence of record demonstrates that on June 7, 1996, Jolly Brothers borrowed funds from Waters Mortgage Corporation and secured the loan by placing first mortgages on sixty-four condominium units located in Magnolia Park Villas.The mortgages were recorded June 19, 1996 and then assigned to Guaranty Federal Savings, Inc.(Guaranty Federal).

Thereafter, during the time period between July and October of 1996, A & B supplied lumber and building materials to Magnolia Park Villas pursuant to a contract executed by Jolly Brothers.Unfortunately, the mortgages went into default for non-payment on October 1, 1996, and, by that time, A & B was owed $60,000 for materials sold and delivered to the property.In an effort to receive payment thereon, A & B filed a claim of lien against the property.

In December 1997, Guaranty Federal and Mitchell executed a purchase note and sale agreement.As a result of the transaction, Mitchell became the owner of the mortgage notes.One month later, special warranty deeds were executed by the owner of Magnolia Park Villas and ownership of the units was conveyed to Mitchell.The deeds recited the fact that the mortgage indebtedness on the units had been previously assigned to Mitchell, and language in the special warranty deeds recited that Mitchell took ownership of Magnolia Park Villas without disturbing the mortgage indebtedness.¹

In the meanwhile, A & B pursued its action to foreclose its construction lien.On May 12, 1999, A & B received a certificate of title to the sixty-four units as a result of those proceedings.

A & B immediately filed a demand against Mitchell for payment of the rents which he had received during the pendency of its foreclosure suit, as well as for possession of the sixty-four units.In response, Mitchell filed a complaint against A & B seeking to foreclose the mortgages on each of the units based on the defaults in payment which dated back to October 1996.An injunction was thereafter issued which prevented the rents which had been collected by Mitchell from being turned over to A & B.A & B filed several affirmative defenses to Mitchell's foreclosure suit, as well as a counterclaim which sought recovery of the rents which had been collected during the time period A & B held title to the property.

On October 25, 1999, the trial court conducted a hearing on several pending motions.During the hearing the court struck some of A & B's affirmative defenses and dismissed its counterclaim.The court also issued an order granting A & B's motion to compel discovery from Mitchell by December 6, 1999.

While not complying with the court's discovery order, Mitchell immediately moved for entry of summary judgment on its foreclosure suit.The motion was heard by the court on December 16, 1999, at which time the court granted the motion.A final judgment of foreclosure was thereafter entered on February 7, 2000.

A & B appeals arguing initially that the trial court's ruling on Mitchell's motion for summary judgment was premature in light of the fact that discovery had not yet been completed.SeeRobson v. Haines,634 So.2d 831(Fla. 5th DCA1994).However, that general principle of law applies only when future discovery might create a disputed issue of material fact.Stated another way, when the non-moving party seeks to undertake discovery in support of a position which is not legally valid, it is not improper for the trial court to enter summary judgment before that discovery is complete.Here, A & B asserted four defenses to Mitchell's foreclosure action, yet none of them presented a valid defense.Therefore, the court's ruling in favor of Mitchell was not premature.

A & B's first affirmative defense alleged that the claimed mortgage default should have been deemed to be sham and, as a matter of equity, Mitchell's claim for foreclosure disallowed because during the default period Mitchell simultaneously held the mortgage, and owned and controlled the property by collecting rents thereon.More specifically, A & B asserted that the non-payment of the mortgage debt, which constituted the underlying basis for Mitchell's mortgage foreclosure action, was the direct result of Mitchell's conscious decision not to use the rent monies which he had collected on the units to make the mortgage payments when they became due.However, it is undisputed that the mortgage default occurred before Mitchell took ownership of either the mortgage notes or the mortgages.Accordingly, Mitchell's decision concerning how he used the rent monies once he became the owner of the property could not have constituted a viable defense to the foreclosure action.

A & B also asserted that a disputed issue of material fact existed, or could have been discovered, with regard to its affirmative defense of "estoppel from inaction."The basis of that alleged defense was A & B's claim that Mitchell should have been estopped from asserting a claim for foreclosure because he did not file suit until more than two and one half years after the mortgage went into default.However, since the alleged default occurred in October of 1996, and A & B supplied its material to the property between July and October of 1996, A & B can not demonstrate any prejudice resulting from Mitchell's delay in filing suit.

A & B further contended that Mitchell's purchase of the notes and mortgage during the period of time when A & B was in the process of foreclosing on its construction lien provided a valid basis for asserting an estoppel defense based upon Darling v. Kagan,133 So.2d 599(Fla. 2d DCA1961), cert. denied,138 So.2d 333(Fla.1962).However, Darling involved alleged knowledge by the mortgage holder of services provided to the property prior to the date of the first mortgage.No such allegation is contained in this case and, therefore, Darling is not applicable.

A & B lastly averred the affirmative defense of merger.Such a defense was not available to A & B because the deed which conveyed the property to Mitchell contained specific language evidencing Mitchell's intent not to merge the legal and equitable estates.A & B maintains that, in spite of that express language, it should have been permitted to undertake additional discovery to determine whether the facts surrounding the transactions contradict that expressed intention.We disagree.A merger will not be held to take place if merger was not the intention of the owner.SeeWalter J. Dolan Properties, Inc. v. Vonnegut,133 Fla. 854, 184 So. 757(1938).Since Mitchell, as the owner of the property, expressed in writing his clear and unambiguous intent that a merger not take place, A & B could not, by way of parol evidence, contradict that unambiguous written expression.Having concluded that the trial court properly determined that none of A & B's affirmative defenses presented a valid defense, we affirm the summary judgment entered in favor of Mitchell on his foreclosure claim.

However, concerning A & B's claim that the trial court erred in dismissing its counterclaim against Mitchell for rents, we agree that the court erred in so ruling and that reversal is warranted on this issue.A & B's counterclaim alleged that, pending disposition of Mitchell's foreclosure suit, A & B owned the property, having received ownership as a result of the disposition of its earlier construction lien suit.The counterclaim alleged further that, as a result of such ownership, A & B possessed the superior right to receive the rents collected by Mitchell during that ownership period.Such allegations sufficiently stated a cause of action for rent.Accordingly, we reverse the trial court's dismissal of A & B's counterclaim and remand this matter with instructions to reinstate same.

AFFIRMED in part, REVERSED in part; and REMANDED for further proceedings.

PETERSON, J., concurs.

SHARP, W., concurs in part and dissents in part, with opinion.

SHARP, W., J. concurring in part, dissenting in part.

In my view, the facts, status, relative rights and equities of the two parties in this case,² are so unclear, partially due to Mitchell's failure to respond to A & B's discovery requests, that summary judgment against A & B is unjustified at this point on its defenses to Mitchell's foreclosure suit.I agree that clearly A & B should be permitted to pursue its counterclaim for rents, as provided in the majority opinion.

In July and October of 1996, A & B furnished lumber and building materials to a rehabilitation project consisting of sixty-four condominium units named Magnolia Park Villas, pursuant to a contract with the owner, Jolly Brothers, Inc.At some point, Magnolia Properties South, Inc. became the owner of the sixty-four units.It intended to sell the units to low-income families, in conjunction with a much larger number of units, but the plan was never completed and the sixty-four units remained rental properties.

On June 7, 1996, Jolly Brothers...