Bank of N.Y.Mellon v. P2D2, LLC

• Decision Date: 31 October 2012
• Docket Number: No. 2D11–3661.,2D11–3661.
• Parties: BANK OF NEW YORK MELLON, f/k/a The Bank of New York, as Trustee for the Certificate Holders CWALT, Inc., Alternative Loan Trust 2005–20CB, Mortgage Pass–Through Certificates, Series 2005–20CB, Appellant, v. P2D2, LLC, a Florida limited liability company, Appellee.
• Court: Florida District Court of Appeals

100 So.3d 205

BANK OF NEW YORK MELLON, f/k/a The Bank of New York, as Trustee for the Certificate Holders CWALT, Inc., Alternative Loan Trust 2005–20CB, Mortgage Pass–Through Certificates, Series 2005–20CB, Appellant,

v.P2D2, LLC, a Florida limited liability company, Appellee.

No. 2D11–3661.

District Court of Appeal of Florida, Second District.

Oct. 31, 2012.

Roy A. Diaz and Diana B. Matson of Smith, Hiatt & Diaz, P.A., Fort Lauderdale, for Appellant.

Courtney L. Fish and Ronald W. Gregory of Englander Fischer, St. Petersburg, for Appellee.

VILLANTI, Judge.

Bank of New York Mellon appeals two orders entered by the trial court: (1) an order denying the Bank's motion to vacate default as to Count I of the Complaint, and (2) an order granting summary judgment on Count III ¹ of the Complaint in favor of P2D2, LLC, and against the Bank. We affirm the trial court's order denying the Bank's motion to vacate default as to Count I. But we reverse the trial court's order granting summary judgment against the Bank on Count III of the Complaint because we find that the mortgage signed by Jorgensen conveyed to the Bank an interest in Jorgensen's Ground Lease, and there are genuine issues of material fact regarding whether P2D2 satisfied certain conditions precedent to suit set forth in that lease.

The land at issue in this case was the subject of a Ground Lease signed in 1971 and running until the year 2071. The terms of the Ground Lease required the tenants to build a single-family dwelling on the land within two years of signing the lease. It appears that a single-family dwelling was built on the land many years before the current dispute arose.

Debra S. Jorgensen and James W. Snyder (collectively “Jorgensen”) obtained an assignment of the Ground Lease on March 31, 2005. At that time, the owner and lessor of the land (Hilda M. Strome, trustee of the Hilda M. Strome trust) signed a document consenting to the assignment of the Ground Lease to Jorgensen. That same day, Jorgensen obtained a $186,400 loan from the Bank and secured that loan with a traditional, single-family home mortgage in favor of the Bank. The mortgage documents described the property being mortgaged by simply listing the land's address and legal description. Nowhere in the mortgage is there any indication that Jorgensen did not actually own the land described in the mortgage documents or that their only interest on that land was a lease. Notably, all of the documents signed on March 31, 2005—the assignment of the Ground Lease, the lessor's consent to the assignment of the Ground Lease, and the mortgage to the Bank—were handled by the same title company/attorney.

Hilda M. Strome died in February 2009 and Phillip Apple succeeded her as trustee and lessor of the property. In September 2009, he deeded the land and all of his rights and interest in the Ground Lease to P2D2. Apple is the manager of P2D2.

In December 2009, Jorgensen stopped paying on the debt to the Bank and in April 2010, the Bank filed an action against Jorgensen to foreclose the mortgage. That complaint ² asserted that Jorgensen was the owner of the property and sought to foreclose and sell the property. The Bank did not name P2D2 as a defendant in that lawsuit and did not mention Jorgensen's Ground Lease.

Jorgensen also failed to pay rent on the Ground Lease to P2D2 beginning in January 2010. In May 2010, P2D2 sent a “Ten (10) Day Notice of Demand for Rent or Possession of Residential Premises” to Jorgensen.³ The notice stated that Jorgensen owed P2D2 delinquent rent. P2D2 sent a copy of the notice to the Bank.

Jorgensen failed to pay rent after receiving P2D2's notice and, on September 17, 2010, P2D2 filed a three-count complaint against Jorgensen and the Bank ⁴ seeking eviction (Count I), rent damages (Count II), and to quiet title (Count III). Count III sought to quiet title against the Bank.

P2D2 moved for default as to Count I and the trial court entered default on that count. The Bank moved to vacate the default, but its motion was not sworn and contained nothing more than conclusory assertions of excusable neglect, meritorious defenses, and due diligence. The Bank filed no affidavits with its motion nor did it file an answer and affirmative defenses as to Count I. We find no error in the trial court's order denying the Bank's motion to vacate default.

A party seeking to vacate a default bears the burden of establishing excusable neglect, a meritorious defense, and due diligence by affidavit or sworn statement setting forth facts explaining its mistake or inadvertence. See, e.g., Coquina Beach Club Condo. Ass'n v. Wagner, 813 So.2d 1061, 1063 (Fla. 2d DCA 2002); Geer v. Jacobsen, 880 So.2d 717, 720 (Fla. 2d DCA 2004). And the defendant cannot simply state that he has meritorious defenses, but must disclose such defenses in a defensive pleading or affidavit. Pedro Realty, Inc. v. Silva, 399 So.2d 367, 369 (Fla. 3d DCA 1981). Failure to satisfy these requirements is fatal to a motion to vacate. Church of Christ Written in Heaven, Inc. v. Church of Christ Written in Heaven of Miami, Inc., 947 So.2d 557, 559 (Fla. 3d DCA 2006). In this case, the Bank satisfied none of the elements required for relief from a default and, as a result, the trial court did not abuse its discretion in denying the motion to vacate default.

As to Count III, the Bank filed an answer and affirmative defenses asserting that it held an interest in the property and that P2D2 had failed to satisfy certain conditions precedent to suit set forth in the Ground Lease. P2D2 moved for summary judgment on Count III. P2D2 made several arguments in support of summary judgment against the Bank, but its most basic argument was that the Bank never had an interest in, or a mortgage encumbering, the real property. According to P2D2, because Jorgensen never owned the real estate itself, Jorgensen did not have the authority to execute a valid mortgage in favor of the Bank using the property as security and, therefore, the Bank's mortgage was invalid. P2D2's related argument was that Jorgensen could have secured the mortgage with their leasehold interest. But because the mortgage documents did not mention the Ground Lease, and referred only to the land itself, Jorgensen never actually gave the Bank a mortgage on the leasehold interest. Thus, P2D2 argued, it was entitled to quiet title against the Bank.

Presumably agreeing with P2D2's argument,⁵ the trial court granted summary judgment quieting title in favor of P2D2 and declaring the Bank's claims arising from the mortgage cancelled, null, and void. We reverse the summary judgment as to Count III because, as explained below, Jorgensen gave the Bank a mortgage on the Ground Lease and there are genuine issues of material fact as to whether P2D2 satisfied certain conditions precedent to suit set forth in that Ground Lease.

Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, admissions, affidavits, and other materials as would be admissible in evidence on file show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Verizzo v. Bank of New York, 28 So.3d 976, 977 (Fla. 2d DCA 2010). The court's function on summary judgment is to determine whether the record conclusively shows that the moving party proved a negative: the nonexistence of any genuine issue of material fact. Land Dev. Servs., Inc. v. Gulf View Townhomes, LLC, 75 So.3d 865, 869 (Fla. 2d DCA 2011) (quoting Winston Park, Ltd. v. City of Coconut Creek, 872 So.2d 415, 418 (Fla. 4th DCA 2004)). Summary judgment...