Norris v. Paps

• Court: Florida District Court of Appeals
• Writing for the Court: ALTENBERND; RYDER, A.C.J., and FRANK
• Citation: Norris v. Paps, 615 So.2d 735 (Fla. App. 1993)
• Decision Date: 19 February 1993
• Docket Number: No. 92-01376,92-01376
• Parties: 18 Fla. L. Week. D534 Richard T. NORRIS and Sandra M. Norris, Petitioners, v. James PAPS, Mary F. Paps, and James Ferry, Respondents.

Page 735

615 So.2d 735

18 Fla. L. Week. D534

Richard T. NORRIS and Sandra M. Norris, Petitioners, v. James PAPS, Mary F. Paps, and James Ferry, Respondents.

No. 92-01376.

District Court of Appeal of Florida Second District.

Feb. 19, 1993.

Rehearing Denied March 31, 1993.

James F. McCollum, Sebring, for petitioners.

J. Davis Connor of Peterson, Myers, Craig, Crews, Brandon & Puterbaugh, P.A., Winter Haven, for respondents.

ALTENBERND, Judge.

The defendants in this mortgage foreclosure action, Richard and Sandra Norris, appeal two orders entered at the same hearing: an order severing compulsory counterclaims from the foreclosure, and a judgment of foreclosure. We conclude that the trial court improperly resolved disputed factual issues raised in the affirmative defenses when it entered a judgment on the pleadings. The trial court did not have the discretion to defer the jury trial on these factual issues by severing a counterclaim of fraud. See Adams v. Citizens Bank of Brevard, 248 So.2d 682 (Fla. 4th DCA 1971) (error to proceed with foreclosure action before jury trial on interrelated legal counterclaim).

Jack and Mary Paps and James Ferry (collectively referred to herein as "the Paps") owned a golf course and country club, including eighteen lakefront apartments in Sebring, Florida. In November 1988, they sold the property to Mr. and Mrs. Norris for $920,000. The Norrises paid $300,000 down and gave the Paps a promissory note and mortgage in the amount of $620,000.

The Paps filed this foreclosure action because the Norrises refused to make payments on the note after June 1990. The Norrises filed an answer admitting the execution of the note and mortgage and their failure to make payments. As an affirmative defense, however, they alleged fraud in the inducement. This defense was supplemented by a lengthy multicount counterclaim, alleging that the Paps had concealed numerous problems with the golf course. The Norrises alleged that the Paps concealed evidence of structural damage by termites and water. The swimming pool allegedly had an undisclosed leak. The survey provided by the Paps allegedly overstated both the acreage of the property and the front footage on a lake. The Norrises claim the Paps were aware of these errors in the survey and failed to disclose them. The Norrises maintain that they stopped paying on the promissory note when they discovered these problems. Their counterclaim sought rescission and, in the alternative, requested monetary damages. They demanded a jury trial on the legal issues.

The Paps filed a motion for judgment on the pleadings and a motion to sever the counterclaim. In March 1992, the trial court granted the motion to sever because it concluded the allegations of fraud in the inducement constituted a permissive counterclaim, presenting factual issues distinct from the issues raised in the foreclosure action. It decided that these issues could be severed for subsequent jury trial. As a result of this decision and without any express order concerning the affirmative defense of fraud, the trial court granted foreclosure.

I. JURISDICTION

The Norrises filed this appeal pursuant to Florida Rule of Appellate Procedure 9.110, as an appeal from the final judgment of foreclosure. This was a logical decision. The judgment of foreclosure was sufficiently final to authorize a foreclosure sale. Indeed, the foreclosure sale was not stayed during this appellate proceeding, and the Paps purchased the property at that sale.

The Norrises' counterclaim, however, is still pending in the trial court. On a motion to dismiss filed earlier in this appeal, the Paps argued that this court could not review the final judgment of foreclosure until disposition of the counterclaim. The Paps relied on Taussig v. Insurance Co. of North America, 301 So.2d 21 (Fla. 2d DCA1974). Taussig and other cases hold that where either the original claim or a compulsory counterclaim has been dismissed and the other claim remains pending, the appeal from the dismissal is not appealable until the remaining claim has been adjudicated. See City of Haines City v. Allen, 509 So.2d 982 (Fla. 2d DCA1987); Del Castillo v. Ralor Pharmacy, 512 So.2d 315 (Fla. 3d DCA1987). We note that Mendez v. West Flagler Family Ass'n, 303 So.2d 1 (Fla.1974), and S.L.T. Warehouse Co. v. Webb, 304 So.2d 97 (Fla.1974), which were decided after Taussig, also support the general rule preventing a final appeal before disposition of a compulsory counterclaim. See Key Credit, Inc. v. Espirito Santo Bank of Fla., 610 So.2d 568 (Fla. 3d DCA1992) (fraudulent inducement of note is compulsory counterclaim in suit to foreclose note and therefore not appealable before judgment is entered on pending foreclosure). ¹

This court has decided to treat the appeal as a petition for writ of certiorari because the trial court's orders deny the Norrises their right to a jury trial on the counterclaims seeking monetary damages in fraud. See Dykes v. Trustbank Sav., F.S.B., 567 So.2d 958 (Fla. 2d DCA1990). In so doing, however, we leave open the question of whether a severed counterclaim that is still pending in the trial court invokes the rule of Taussig when a final judgment has been signed expressly authorizing a foreclosure sale or collection by execution. See Fla.R.App.P. 9.110(k); cf. Duke v. Reed, 396 So.2d 1218 (Fla. 3d DCA1981) (summary judgment of foreclosure in multicount complaint is reviewable nonfinal order).

II. THE SEVERANCE

For a brief time, the legislature attempted to require trial courts to sever counterclaims against mortgagees in foreclosure actions. Sec. 702.01, Fla.Stat. (1987). The Florida Supreme Court declared that statute unconstitutional as an infringement upon judicial power. Haven Fed. Sav. & Loan v. Kirian, 579 So.2d 730 (Fla.1991). Thus, the primary issue in this case is whether the trial court abused its discretion when it granted a severance under Florida Rule of Civil Procedure 1.270(b).

It is well established...