Amegy Bank Nat'l Ass'n v. Deutsche Bank Corp.

• Decision Date: 10 January 2013
• Docket Number: Case No. 2:12–cv–243–UA–SPC.
• Court: U.S. District Court — Middle District of Florida
• Parties: AMEGY BANK NATIONAL ASSOCIATION, Plaintiff, v. DEUTSCHE BANK CORPORATION, DB Private Wealth Mortgage Ltd., and Deutsche Bank Alex.Brown, Defendants.

917 F.Supp.2d 1228

AMEGY BANK NATIONAL ASSOCIATION, Plaintiff,
v.
DEUTSCHE BANK CORPORATION, DB Private Wealth Mortgage Ltd., and Deutsche Bank Alex.Brown, Defendants.

Case No. 2:12–cv–243–UA–SPC.

United States District Court,
M.D. Florida,
Fort Myers Division.

Jan. 10, 2013.

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Geoffrey H. Bracken, Gardere Wynne Sewell LLP, Houston, TX,

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Hunter Wyman Carroll, Matthews, Eastmoore, Hardy, Crauwels & Garcia, PA, Sarasota, FL, for Plaintiff.

Joanne M. O'Connor, Allen R. Tomlinson, Jones, Foster, Johnston & Stubbs, PA, West Palm Beach, FL, for Defendants.

ORDER
ROY B. DALTON JR., District Judge.

This cause is before the Court on Defendants' Motion to Dismiss and Incorporated Memorandum of Law (“Defendants' Motion”), filed on October 23, 2012 (Doc. No. 31), Plaintiff's Response, filed on November 06, 2012 (Doc. No. 32), and Defendants' Reply in Support of their Motion to Dismiss (“Defendants' Reply”), filed on December 10, 2012. (Doc. No. 35.) After a careful review of the parties' submissions and the applicable law, the Court finds the Motion due to be GRANTED in part and DENIED in part.

BACKGROUND

Plaintiff, Amegy Bank National Association (“Amegy”) seeks relief from the unlawful conversion of its security interest held in the partnership stock of a hotel. (Doc. No. 30, pp. 9–10.) In early 2008, Amegy loaned William B. Johnson (“Johnson”) and his single member limited liability company, Monarch Flight II, LLC (“Monarch Flight”) Fifteen Million Dollars to purchase a 1983 Gulfstream Jet, to complete a development project in the Bahamas, known as Orchid Bay, and for other purposes. ( Id., p. 2.) Johnson executed a Promissory Note obligating Monarch Flight to pay Amegy the loan amount plus interest in monthly payments by May 1, 2011. ( Id., p. 3.) As collateral for the loan, Johnson assigned and granted to Amegy a security interest in 825,457 units of partnership interest in Host Hotels & Resorts, L.P., any shares of the Host Hotels & Resorts, Inc. owned by Johnson as a result of the redemption or exchange of the partnership units, and all products and proceeds from the partnership units and/or related stock (“Hotel Stock” or “Hotel Proceeds”). ( Id., p. 4.) The Security Agreement with Amegy forbade Johnson from selling, assigning, conveying, pledging, or otherwise disposing of the partnership units or the related stock without the prior written consent of Amegy. ( Id.) Upon an “Event of Default” as defined in the Promissory Note, the Security Agreement granted Amegy all rights and remedies of a secured party under the Uniform Commercial Code (“U.C.C.”), including the ability to collect, receive, or take possession of the partnership units and related stock. ( Id.) On May 7, 2008, Amegy filed a UCC–1 Financing Statement perfecting its security interest in Johnson's partnership units and related stock. ( Id., pp. 4–5.)

In October 2008, Monarch Flight defaulted on the loan. ( Id., p. 5.) On December 10, 2009, Amegy sent a letter demanding that Monarch Flight and Johnson repay fifty percent of the loan by December 31, 2009. ( Id., p. 5.) In response, Johnson's attorney, John T. Bobo confirmed that Johnson retained and continued to pledge the 825,457 partnership units to Amegy. ( Id., p. 6.) However, on January 5, 2010, Johnson redeemed his interest in the partnership units and liquidated the stock in violation of the Security Agreement. ( Id.) Johnson then deposited the proceeds of the stock into an account opened with Defendant Alex.Brown, a division of Deutsche Bank Securities (collectively “DBS”). ( Id.) As a prerequisite to opening the account with Alex.Brown, Johnson was required to grant to DBS and all its affiliates a security interest in all securities and other property in Johnson's possession. ( Id.)

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Despite pledging the stock proceeds to Amegy and without Amegy's knowledge, Johnson paid at least $98,177.25 of the funds to Defendant, DB Private Wealth Mortgage (“PWM”) on a mortgage loan made on a real estate property, known as Spyglass. ( Id.) In addition, Johnson paid $407,394.04 to non-party contractors to make improvements on the Spyglass property and an additional $81,849.39 to the Collier County Tax Collector to discharge tax obligations on the property. ( Id., p. 8.) PWM holds a first-priority security interest and lien on the Spyglass property, which is otherwise unrelated to the Amegy transaction. (Doc. No. 31, p. 2.) ¹

Amegy maintains that DBS and PWM are working in concert with each other to convert its secured collateral in the Hotel stocks. (Doc. No. 30, p. 6.) On October 23, 2012, Defendants moved to dismiss. (Doc. No. 31.)

APPLICABLE STANDARDS

In deciding a Rule 12(b)(6) motion to dismiss, the Court must accept all well pleaded factual allegations in a complaint as true and take them in the light most favorable to plaintiff. Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007); Bingham v. Thomas, 654 F.3d 1171, 1175 (11th Cir.2011). “To survive dismissal, the complaint's allegations must plausibly suggest that the plaintiff has a right to relief, raising that possibility above a speculative level; if they do not, the plaintiff's complaint should be dismissed.” James River Ins. Co. v. Ground Down Eng'g, Inc., 540 F.3d 1270, 1274 (11th Cir.2008) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)); see also Edwards v. Prime, Inc., 602 F.3d 1276, 1291 (11th Cir.2010). Therefore, courts must follow a two-step approach when considering a motion to dismiss: first, “eliminate any allegations in the complaint that are merely legal conclusions;” and second, “where there are well-pleaded factual allegations, ‘assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.’ ” Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir.2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 664, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). The standard “does not require ‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me-accusation.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955).

DISCUSSION A. Multiple Claims Combined into Count I

Prior to addressing the merits of Defendants' Motion, the Court must resolve Defendants' procedural argument (Doc. No. 31, p. 7) that Amegy has impermissibly combined two claims into one count—one for equitable subrogation and one for declaratory relief. Federal Rule of Civil Procedure 10(b) requires parties to

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limit claims “as far as practicable to a single set of circumstances,” and to state in a separate count or defense “each claim founded on a separate transaction or occurrence ....” The separation of claims, however, is required by Rule 10(b) “only when necessary to facilitate a clear presentation.” 5A Fed. Prac. & Proc. Civ. § 1324 (3d ed.). Here, Count IV requests a declaratory judgment that Amegy is entitled to equitable subrogation to the collateral proceeds. The declaratory judgment claim is inextricably tied to the equitable subrogation claim and the two claims relate to a single set of circumstances. Moreover, Defendants have drafted their Motion to Dismiss without indicating any prejudice or confusion over Amegy's allegations. The Court rejects Defendants' Motion to Dismiss on these grounds.

B. Equitable Subrogation

Pursuant to Rule 57 of the Federal Rules of Civil Procedure and 28 U.S.C. § 2201, Amegy seeks a declaratory judgment to be equitably subrogated to: (a) all of PWM's rights and remedies as a lien holder on the Spyglass property “by virtue of Defendants' receipt of the partnership assets and their benefit therefrom;” and (b) Collier County's rights and remedies as first-priority lien holder for the funds used to satisfy the tax obligations on the Spyglass property. (Doc. No. 30, p. 9.) The Court will address each argument in turn.

1. Subrogation to PWM's Lien

Amegy argues that it is entitled to be subrogated to PWM's lien on the Spyglass Property in the amount of $587,420.68. (Doc. No. 30, p. 9.) Defendants assert that Amegy has failed to state a viable claim for equitable subrogation. Defendants are correct.

Florida courts recognize two forms of subrogation: conventional and equitable subrogation. Conventional subrogation stems from a contractual obligation that the party paying the debt will be provided with the rights and remedies of the creditor whose debt has been paid. Boley v. Daniel, 72 Fla. 121, 123, 72 So. 644 (Fla.1916). In contrast, equitable subrogation (also known as legal subrogation) derives from the legal consequences of the parties' acts and relationships, not from a statute or a contract. Dade Cnty. Sch. Bd. v. Radio Station WQBA, 731 So.2d 638, 646 (Fla.1999). As an equitable remedy, Florida courts broadly apply the principle “in almost every conceivable type of transaction where the party invoking the doctrine has been required to pay a debt for which another is primarily answerable ....” Rebozo v. Royal Indem. Co., 369 So.2d 644, 646 (Fla.Dist.Ct.App.1979); see also Picker Fin. Group L.L.C. v. Horizon Bank, 293 B.R. 253, 259 (M.D.Fla.2003).

To assert an equitable subrogation claim, the subrogee must establish that: (1) it made a payment to pay off a debt; (2) it did not act as a volunteer; (3) it was not primarily liable for the debt; (4) the subrogee paid off the entire debt of the subrogor; and (5) subrogation would not work any injustice to the rights of a third party. Dade Cnty. Sch. Bd., 731 So.2d at 646.² When properly invoked, equitable

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subrogation permits “the person discharging the debt [to] stand in the shoes of the person whose claim has been discharged, thereby succeeding to the rights and priorities of the original creditor.” Id., at 646 (quoting E. Nat'l Bank v. Glendale Fed. Sav. & Loan Ass'n, 508 So.2d 1323, 1324 (Fla.Dist.Ct.App.1987)).

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