Deutsche Bank Trust Co. v. Beauvais, 3D14-575

• Court: Court of Appeal of Florida (US)
• Decision Date: 17 December 2014
• Docket Number: No. 3D14-575,3D14-575
• Parties: Deutsche Bank Trust Company Americas, etc., Appellant, v. Harry Beauvais, et al., Appellees.

Deutsche Bank Trust Company Americas, etc., Appellant,
v.
Harry Beauvais, et al., Appellees.

No. 3D14-575

Third District Court of Appeal State of Florida

December 17, 2014

Not final until disposition of timely filed motion for rehearing.

Lower Tribunal No. 12-49315

An Appeal from the Circuit Court for Miami-Dade County, Peter R. Lopez, Judge.

K & L Gates LLP, William P. McCaughan, Steven R. Weinstein and Stephanie N. Moot, for appellant.

Sigfried, Rivera, Hyman, De La Torre, Mass & Sobel, Steven M. Siegfried and Nicholas Sigfried; The Wallen Law Firm and Todd L. Wallen, for appellees.

Before SHEPHERD, C.J., and EMAS and SCALES, JJ.

EMAS, J.

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I. INTRODUCTION

Deutsche Bank Trust Company Americas, as Indenture Trustee for American Home Mortgage Investment Trust 2006-2 ("Deutsche Bank"), appeals from the trial court's order of final summary judgment in favor of Aqua Master Association, Inc. ("the Association"). Deutsche Bank asserts the trial court erred in concluding that the expiration of the statute of limitations barred the cause of action and rendered the lien of mortgage on the property null and void. The following issue is squarely raised in this case:

Where a lender files a foreclosure action upon a borrower's default, and expressly exercises its contractual right to accelerate all payments, does an involuntary dismissal of that action without prejudice in and of itself negate, invalidate or otherwise "decelerate" the lender's acceleration of the payments, thereby permitting a new cause of action to be filed based upon a new and subsequent default?

We answer that question in the negative, and hold that the involuntary dismissal without prejudice of the foreclosure action did not by itself negate, invalidate or otherwise decelerate the lender's acceleration of the debt in the initial action. The lender's acceleration of the debt triggered the commencement of the statute of limitations, and because the installment nature of the loan payments was never reinstated following the acceleration, there were no "new" payments due and thus there could be no "new" default following the dismissal without prejudice of the initial action. The filing of the subsequent action, after expiration of the statute

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of limitations, was therefore barred. We reverse, however, that portion of the order which canceled the note and mortgage and quieted title in favor of the Association.

II. BACKGROUND AND FACTS

The mortgage at issue ("the Mortgage") encumbered a condominium on Aqua Avenue in Miami Beach ("the Property"), which is currently owned by the Association. Harry Beauvais, the mortgagor and original borrower, lost title to the Property as a result of an unrelated foreclosure proceeding initiated by the Association, as will be described below. The Association has owned the property since February 22, 2011.

The note and mortgage were executed on February 10, 2006 in the principal amount of $1,440,000. Beauvais defaulted on his payments to the original mortgagee in September 2006. There are three actions regarding the Property that provide context for this appeal:

• American Home Mortgage Servicing, Inc. ("AHMS") v. Beauvais, et al. ("the Initial Action"): This Initial Action was commenced on January 23, 2007, after Beauvais defaulted on his payments in September 2006. AHMS sought to foreclose on the mortgage on the full amount of the debt. In paragraph four of its complaint, AHMS alleged: "Defendant, Harry Beauvais, failed to pay the payment due on the Note on September 1, 2006, and Plaintiff elected to accelerate payment of the balance." (Emphasis added.) In its complaint, AHMS sought payment of the full, accelerated amount of the remaining principal due-- $1,439,926.80. On December 6,

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2010, the trial court dismissed the Initial Action without prejudice because AHMS failed to appear at a case management conference. AHMS did not appeal this dismissal order, and took no further action with regard to its acceleration of the payments.

• Aqua Master Association, Inc. v. Beauvais, et al ("the Condominium Action"): In the Condominium Action, Association foreclosed its lien on the Property based on Beauvais' failure to pay condominium assessments. The Association obtained title to the Property in 2011, by issuance of a certificate of title, and obtained title subject to the AHMS mortgage.

• Deutsche Bank Trust Company Americas v. Beauvais, et al. ("the Current Action"): The Current Action was filed on December 18, 2012, in which Deutsche Bank¹ sought to foreclosure on the Property due to a default by Beauvais. In its complaint, Deutsche Bank alleges that Beauvais defaulted by failing to make the payment due October 1, 2006² as well as all subsequent payments. Similar to the complaint in the Initial Action, Deutsche Bank's complaint in the Current Action declared that it was exercising its contractual right to accelerate all payments, and alleged the full amount of the principal payable under the note and mortgage to be immediately due, in the amount of $1,439,926.80, the same principal amount sought in the complaint filed in the Initial Action. The Association

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answered, raising as an affirmative defense the expiration of the statute of limitations.

The Association moved for summary judgment in the Current Action, arguing that:

? In the Initial Action, Deutsche Bank exercised its contractual right to accelerate the payments, which triggered the running of the five-year statute of limitations for the entire debt;

? The trial court's dismissal without prejudice of the Initial Action did not negate or otherwise invalidate the acceleration of the debt or otherwise reinstate the installment nature of the payments due;

? Deutsche Bank took no action to withdraw its acceleration of the debt or otherwise reinstate the installment nature of the payments due;

? The Current Action (filed December 18, 2012) was filed more than five years after the statute of limitations commenced with Deutsche Bank's acceleration of the debt in the Initial Action (filed January 23, 2007); and

? Therefore, Deutsche Bank is barred by the statute of limitations from pursuing the Current Action.

Deutsche Bank responded, contending that:

? The Initial Action was based on a default date (September 1, 2006) different from the Current Action (October 1, 2006);

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? The trial court's dismissal of the Initial Action served to "decelerate" the payments, in effect negating the acceleration exercised by Deutsche Bank in the Initial Action and reinstating the installment nature of the loan repayment; and

? Pursuant to Singleton v. Greymar Assocs., 882 So. 2d 1004 (Fla. 2004), and its progeny, the statute of limitations did not bar the Current Action, because the failure to make a subsequent payment following dismissal of the Initial Action constituted a new default, creating a new and distinct cause of action and the commencement of a new statute of limitations period.

The trial court granted the Association's motion, and entered judgment in its favor, determining that: (i) the Current Action was barred by the statute of limitations because it was filed on December 18, 2012, more than five years after the filing of the complaint in the Initial Action in January 2007; and (ii) the expiration of the statute of limitations rendered the mortgage null and void. In its order, the court quieted title to the Property in favor of the Association against the claims of Deutsche Bank. The trial court denied Deutsche Bank's motion for rehearing, and this appeal followed. We review these issues de novo. S. Fla. Coastal Elec., Inc. v. Treasures on Bay II Condo Ass'n, 89 So. 3d 264, 266 (Fla. 2d DCA 2012).

III. ANALYSIS

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Deutsche Bank's primary argument in this appeal is that when the Initial Action was involuntarily dismissed without prejudice in December 2010, this dismissal effectively "decelerated" the loan (which had been expressly accelerated by the complaint in the Initial Action), thus returning Deutsche Bank and Beauvais to their original positions before the lawsuit was filed, meaning that the installment nature of the loan repayment was again in effect. Therefore, Deutsche Bank's argument goes, Beauvais' failure to make a payment on October 1, 2006 (one month after the default date in the Initial Action) constituted a "new" default, creating a new and distinct cause of action with a new limitations period, allowing Deutsche Bank to foreclose (and to again exercise its contractual right to accelerate the loan payments), by filing the Current Action in December 2012.

The Association contends that Deutsche Bank's exercise of its contractual right to accelerate the debt in the Initial Action triggered the commencement of the five-year statute of limitations, and neither Deutsche Bank nor Beauvais took any action to reinstate the installment nature of the payments under the mortgage. The Association posits that the trial court's involuntary dismissal without prejudice could not, by operation of law, serve to "decelerate" the loan, to negate the acceleration of the payments, or to otherwise reinstate the installment nature of the payments, because such a conclusion would in effect permit the trial court to rewrite the terms of the contract between the lender and the borrower. Therefore,

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the statute of limitations continued to run on the accelerated debt, and expired before Deutsche Bank filed the Current Action in December 2012.

A. The Statute of Limitations and a Contractual Acceleration Clause

Under the relevant statute of limitations, section 95.11(2)(c), Florida Statutes, "[a]n action to foreclose a mortgage" "shall be commenced. . . within five years." The statute of limitations begins to run when a cause of action accrues, and "[a] cause of action accrues when the last element constituting the cause of action occurs." City of Riviera Beach v. Reed, 987 So. 2d 168, 170 (Fla. 4th DCA 2008). An acceleration clause contained in a note which by its terms...