Echo River Sanctuary, LLC v. 21st Mortg. Corp.
| Decision Date | 15 June 2022 |
| Docket Number | 1D21-1940 |
| Parties | Echo River Sanctuary, LLC f/k/a TSE Plantation, LLC, Appellant/Cross-Appellee, v. 21st Mortgage Corp., Meri L. Harrell; Curtis R. Harrell, et al., Appellees/Cross-Appellants. |
| Court | Florida District Court of Appeals |
Echo River Sanctuary, LLC f/k/a TSE Plantation, LLC, Appellant/Cross-Appellee,
v.
21st Mortgage Corp., Meri L. Harrell; Curtis R. Harrell, et al., Appellees/Cross-Appellants.
No. 1D21-1940
Florida Court of Appeals, First District
June 15, 2022
Not final until disposition of any timely and authorized motion under Fla. R. App. P. 9.330 or 9.331.
On appeal from the Circuit Court for Suwannee County. David W. Fina, Judge.
Thomas S. Edwards, Jr., of Edwards & Ragatz, P.A., Jacksonville, for Appellant/Cross-Appellee.
Laura H. Mirmelli of Busch Mills & Slomka LLP, Atlanta, Georgia, for Appellee/Cross-Appellant 21st Mortgage Corporation.
JAY, J.
Appellant, Echo River Sanctuary, LLC ("Echo River"), appeals the trial court's judgment that awarded Appellee, 21st Mortgage Corporation ("21st Mortgage") the right to possess a mobile home that sits on a parcel of land in Live Oak, Florida. For the reasons that follow, we reverse the trial court's judgment.
I.
Curtis and Meri Harrell-husband and wife-owned a 160-acre parcel of land in Live Oak. They initially resided in a
singlewide trailer on the property. First Guaranty Bank and Trust Company of Jacksonville ("First Guaranty") held a mortgage on the land, which originated in 2006. The mortgage contained an after-acquired property clause, meaning that the mortgage encumbered the land as well as all future fixtures and improvements. The Harrells defaulted on their mortgage, and in November 2010, First Guaranty initiated foreclosure proceedings.
In November 2011, while the foreclosure process was ongoing, the Harrells purchased a 2009 Scotbilt doublewide mobile home and installed it as their new residence on the 160-acre lot. They financed their purchase with a loan from 21st Mortgage and granted 21st Mortgage a security interest in the mobile home. In December 2011, approximately one month after the purchase, Curtis Harrell filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Middle District of Florida. Ultimately, Mr. Harrell breached the terms of his settlement agreement with the bankruptcy trustee, and in June 2014, the bankruptcy court revoked Mr. Harrell's bankruptcy discharge and dismissed the bankruptcy case.
First Guaranty's mortgage of the Harrells' land passed to CenterState Bank of Florida ("CenterState"). In December 2017, CenterState obtained a final judgment of foreclosure and became the owner of the 160-acres. In February 2018, pursuant to an option contract that it executed in June 2013, Echo River bought the property from CenterState.
Meanwhile, the Harrells also defaulted on their mobile home loan from 21st Mortgage. In November 2017, 21st Mortgage filed a replevin action against the Harrells to repossess the mobile home. Echo River intervened in the case as the owner of the land. Echo River asserted ownership of the mobile home, alleging that it was a fixture to the land that Echo River acquired from CenterState. 21st Mortgage amended its complaint to add a replevin claim against Echo River. In response, Echo River asserted that 21st Mortgage never perfected its mobile home lien and that 21st Mortgage acted with unclean hands in Mr. Harrell's bankruptcy case.
In the first installment of the trial proceedings, the court granted summary judgment for Echo River, finding that 21st Mortgage's claim failed because 21st Mortgage acted with unclean hands in the bankruptcy proceedings by misrepresenting the mobile home's value and Mr. Harrell's equity. See 21st Mortg. Corp. v. TSE Plantation, LLC, 301 So.3d 1120, 1122 (Fla. 1st DCA 2020) (the doctrine of unclean hands is an equitable defense that applies when "the plaintiff has engaged in some manner of unscrupulous conduct, overreaching, or trickery," and it may be raised by a defendant who claims the plaintiff's unscrupulous conduct toward a third party also injured the defendant). In the appeal from that judgment, this Court summarized the mobile home's role in the bankruptcy proceeding:
When the bankruptcy trustee sought to bring the mobile home into the bankruptcy estate, 21st Mortgage filed an objection arguing that the mobile home was only worth $30, 000 and the Harrells owed more than $60, 000 on the loan. 21st Mortgage asserted that there was no equity in the mobile home and, therefore, the bankruptcy trustee should abandon its interest in that asset. Neither the Harrells nor 21st Mortgage notified the bankruptcy trustee or the bankruptcy court that the mobile home at issue was not the old mobile home originally on the property, but a brand new Scotbilt mobile home recently financed for $81, 000.
Id. at 1121.
This Court, finding that there was a genuine issue of material fact as to whether Echo River was injured by 21st Mortgage's purported misconduct in the bankruptcy proceeding, reversed the summary judgment. Id. at 1122-23 (noting that the unclean hands defense is "generally not suitable for resolution on summary judgment because it requires the determination of factual disputes" and holding that Echo River's alleged injury was not clear from the record). On remand, the trial court held a non-jury trial. Before this trial, the parties stipulated to the following facts:
1. Meri and Curtis Harrell first executed documents granting a security interest in the Scotbilt mobile home on November 4 and 8, 2011.
2. Plaintiff [21st Mortgage] entered into a contract to fund the purchase of a Scotbilt Mobile Home by Defendants Meri and Curtis Harrell on November 18, 2011.
3. Meri and Curtis Harrell have not responded to this suit or the related claims.
4. The mobile home was installed on Defendant Harrell's property on November 18, 2011, including connecting to septic and utilities.
5. Defendant Curtis Harrell filed a Chapter 7 petition in the bankruptcy court on December 11, 2011, in the Middle District of Florida Jacksonville Division.
6. Plaintiff [21st Mortgage] first filed lien papers with the Department of Motor Vehicles on January 4, 2012.
7. Defendant TSE [Echo River] entered into an option contract to purchase the real property on June 18, 2013, from Park Properties, Inc., a subsidiary of CenterState Bank, should it acquire title to the property.
8. The property was sold to Echo River Sanctuary, LLC when it was known as TSE Plantation, LLC on February 2, 2018.[1]
Two witnesses testified at trial: Jeffrey Warkins, a staff attorney for 21st Mortgage, and Thomas S. Edwards, Jr., Echo
River's managing member. Warkins testified that the Harrells defaulted on the mobile home loan in 2017. The Harrells' contract with 21st Mortgage characterized the mobile home as personal property. Because it is a doublewide, the mobile home has two certificates of title from the Department of Highway Safety and Motor Vehicles ("DHSMV"). The DHSMV issued those certificates on January 4, 2012. Each identifies 21st Mortgage as the sole lien holder. Warkins agreed that 21st Mortgage had not perfected its security interest in the mobile home at the time that Mr. Harrell filed his bankruptcy petition on December 11, 2011. Warkins also acknowledged that 21st Mortgage did not notify the bankruptcy court that 21st Mortgage attempted to perfect its security interest after Mr. Harrell filed his bankruptcy petition.
Edwards testified that during the time between when Echo River exercised its option contract with CenterState and when the closing occurred, he went to the property to inspect it. While there, he saw the mobile home-which bore a permanent real property sticker and had no license plate. The mobile home was affixed to the ground and had no wheels. It was connected to a septic system and had utilities. It was also surrounded by trees and plants. Edwards concluded that "it was made a part of the property in that it was not going to be removed without doing damage []." Records from the Suwanee County tax collector's office showed that the mobile home was classified as real property. Edwards contacted CenterState about the mobile home. While CenterState would not issue a title warranty on the doublewide, as part of the land sale, they granted Echo River any rights or interests they had in the mobile home.
After completion of the non-jury trial, the court entered a boilerplate final judgment-in the form proposed by 21st Mortgage with little alteration-which concluded that 21st Mortgage's right to possess the mobile home was superior to that of Echo River's. The judgment directed the clerk to issue a writ of possession[2] in
favor of 21st Mortgage and declared that Echo River was not entitled to relief on its counterclaims. This appeal followed.
II.
The trial court's determination that 21st Mortgage has a possessory interest in the mobile home that is superior to Echo River's is a legal conclusion that we review de novo.[3] See Young v. Young, 96 So.3d 478, 478 (Fla. 1st DCA 2012). The central question in this appeal is whether 21st Mortgage's purported lien on the mobile home survived the 2017 foreclosure by CenterState-Echo River's predecessor in interest-such that 21st Mortgage's interest in the mobile home is superior to Echo River's. We hold that the lien did not survive foreclosure, and that the mobile home is a fixture on the land that passed to Echo River.
Perfection of 21st Mortgage's Security Interest
The parties agree that the Harrells granted 21st Mortgage a security interest in the mobile home in November 2011 when the Harrells signed their security agreement, and 21st Mortgage loaned them the money to buy the mobile home. See § 679.2031(1), Fla. Stat. (a...
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