Haven Federal Sav. & Loan Ass'n v. Kirian
| Decision Date | 09 May 1991 |
| Docket Number | No. 76082,76082 |
| Citation | 16 Fla. L. Weekly 309,579 So.2d 730 |
| Parties | 16 Fla. L. Weekly 309 HAVEN FEDERAL SAVINGS & LOAN ASSOCIATION, Appellant, v. Larry F. KIRIAN, et al., Appellees. |
| Court | Florida Supreme Court |
Steven R. Scott of Gable, Taylor & Dees, Jacksonville, for appellant.
Alan K. Smith of Strohauer & Smith, P.A., Clearwater, for appellees.
Haven Federal Savings & Loan Association (Haven Federal) appeals a district court's express declaration that section 702.01, Florida Statutes (1987), is unconstitutional. Kirian v. Haven Federal Savings & Loan Association, 560 So.2d 380 (Fla. 1st DCA 1990). We have jurisdiction pursuant to article V, section 3(b)(1), Florida Constitution, and affirm the district court's decision.
Haven Federal filed foreclosure actions against Kirian on two condominium units in a failed development. Kirian responded by asserting affirmative defenses seeking recoupment or rescission, by filing counterclaims seeking damages, and by seeking a jury trial on these issues. Both the affirmative defenses and the counterclaims were based on allegations of fraud and misrepresentation. Kirian alleged that Haven Federal entered into an arrangement with the owners and developers to defraud potential purchasers by, having knowledge of the development's inevitable financial collapse, agreeing to portray a falsely optimistic investment outlook and concealing its own financial interest in the development while providing financing for prospective purchasers.
Haven Federal moved to sever the counterclaims from the foreclosure action, relying exclusively upon section 702.01 which states:
All mortgages shall be foreclosed in equity. In a mortgage foreclosure action, the court shall sever for separate trial all counterclaims against the foreclosing mortgagee. The foreclosure claim shall, if tried, be tried to the court without a jury.
(Emphasis added.) The trial court granted the motion to sever, finding the language of section 702.01 mandatory and that severance would not preclude a separate hearing on the merits of Kirian's counterclaims. Haven Federal subsequently filed a motion for summary judgment, claiming that, because the grounds supporting Kirian's counterclaims and affirmative defenses were identical, the order severing the counterclaims would be thwarted if the court did not strike the affirmative defenses. The trial court agreed, struck the affirmative defenses, and granted summary judgment.
On appeal, Kirian argued that, unlike the mandatory severance of counterclaims required by section 702.01, the severance of counterclaims is discretionary under Florida Rule of Civil Procedure 1.270(b) which states:
The court in furtherance of convenience or to avoid prejudice may order a separate trial of any claim, cross-claim, counterclaim or third party claim or of any separate issue or of any number of claims, cross-claims, counterclaims, third party claims or issues.
(Emphasis added.) Kirian contended that, because section 702.01 conflicted with rule 1.270(b), it unconstitutionally encroached upon this Court's exclusive power to regulate matters of practice and procedure in all courts. See art. V, Sec. 2(a), Fla. Const. Kirian further contended that the trial court improperly struck his affirmative defenses.
The district court agreed and reversed the trial court's decision. The court held that section 702.01, to the extent it conflicts with rule 1.270(b), unconstitutionally infringes upon the power of this Court to regulate matters of practice and procedure. The court further held that the trial court erred when it struck Kirian's affirmative defenses and granted summary judgment. We agree on both points.
With regard to the constitutionality of section 702.01, we must determine whether the statute concerns matters of substantive law, which is within the legislature's domain, or whether it concerns matters of practice and procedure, which this Court has the exclusive authority to regulate. Markert v. Johnston, 367 So.2d 1003 (Fla.1978). Substantive law has been defined as that part of the law which creates, defines, and regulates rights, or that part of the law which courts are established to administer. State v. Garcia, 229 So.2d 236 (Fla.1969). It includes those rules and principles which fix and declare the primary rights of individuals with respect towards their persons and property. Adams v. Wright, 403 So.2d 391 (Fla.1981). On the other hand, practice and procedure In re Florida Rules of Criminal Procedure, 272 So.2d 65, 66 (Fla.1972) (Adkins, J., concurring). It is the method of conducting litigation involving rights and corresponding defenses. Skinner v. City of Eustis, 147 Fla. 22, 2 So.2d 116 (1941).
In view of these categorizations of, and distinctions between, procedural and substantive matters, we hold that the severance provision of section 702.01 is procedural in nature. Where this Court promulgates rules relating to the practice and procedure of all courts and a statute provides a contrary practice or procedure, the statute is unconstitutional to the extent of the conflict. School Board v. Surette, 281 So.2d 481 (Fla.1973), receded from on other grounds, School Board v. Price, 362 So.2d 1337 (Fla.1978). Pursuant to rule 1.270(b) the severance of counterclaims is at a trial court's discretion. Section 702.01, however, removes that discretion in mortgage foreclosure cases and mandates severance of all counterclaims. Thus, section 702.01 is unconstitutional to the extent it conflicts with rule 1.270(b).
In reaching our decision, we reject Haven Federal's argument that the legislature has granted mortgage lenders a substantive right to foreclose on a defaulted mortgage undelayed by counterclaims. To support its argument, Haven Federal relies upon VanBibber v. Hartford Accident & Idemnity Insurance Co., 439 So.2d 880 (Fla.1983), wherein this Court held that a statute precluding joinder of insurance companies in litigation against their insureds was substantive because of the legislature's long and continuing interest in the insurance area and its policy determination that the statute was in the public's best interest. Haven Federal asserts that section 702.01 reflects the legislature's intent to provide greater legal protection to commercial mortgage lenders and is therefore substantive in nature. We disagree.
We do not interpret the legislative history of the pertinent amendments to section 702.01 to show that the legislature clearly intended to grant lenders a substantive right to foreclose mortgages undelayed by counterclaims. The amendments were part of a comprehensive revision of laws addressing difficulties lenders...
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