Olympia Mortgage Corp. v. Pugh, 4D00-128.

• Decision Date: 27 December 2000
• Docket Number: No. 4D00-128.,4D00-128.
• Citation: 774 So.2d 863
• Parties: OLYMPIA MORTGAGE CORP., Appellant/Cross-Appellee, v. Theodore D. PUGH and Pamela A. Pugh, his wife, Appellees/Cross-Appellants, and John Doe and Jane Doe as unknown tenants in possession, Appellees.
• Court: Florida District Court of Appeals

774 So.2d 863

OLYMPIA MORTGAGE CORP., Appellant/Cross-Appellee, v. Theodore D. PUGH and Pamela A. Pugh, his wife, Appellees/Cross-Appellants, and John Doe and Jane Doe as unknown tenants in possession, Appellees.

No. 4D00-128.

District Court of Appeal of Florida, Fourth District.

December 27, 2000.

Forrest G. McSurdy of Law Offices of David J. Stern, P.A., Plantation, for appellant/cross-appellee.

Steven L. Perry of McCarthy, Summers, Bobko, Wood, Sawyer, & Perry, P.A., Stuart, for Appellees/Cross-Appellants-Theodore Pugh and Pamela A. Pugh, his wife.

HAZOURI, J.

Olympia Mortgage Corporation (Olympia) filed a complaint for mortgage foreclosure against Theodore Pugh and Pamela Pugh. The Pughs asserted as an affirmative defense that the cause of action was barred by Florida Rule of Civil Procedure 1.420(a), the two-dismissal rule. In its final judgment, the trial court applied the two-dismissal rule and held that Olympia forfeited certain amounts owing on the mortgage, but not the total balance of the mortgage. Olympia appeals and the Pughs cross-appeal.

Olympia filed two successive mortgage foreclosure actions against the Pughs in Martin County Circuit Court, which Olympia voluntarily dismissed. Both mortgage foreclosure actions were based on the same promissory note and in each Olympia elected to accelerate payment of the entire amount due on the note and mortgage.

The first foreclosure action was filed on July 23, 1996, alleging a payment default date of April 1, 1995, and an unpaid principal of $124,050.97. The action was voluntarily dismissed on February 16, 1998. The court record does not indicate why Olympia elected to voluntarily dismiss the action; however, on the date that Olympia filed the action it had not yet been assigned the note and mortgage. Olympia was not assigned the note and mortgage until August 7, 1996.

The second foreclosure action was filed on February 17, 1998, alleging a payment default date of May 1, 1995, and unpaid principal of $123,947.26. The case was voluntarily dismissed on May, 28, 1998, because Olympia failed to comply with certain necessary technical requirements prior to institution of the foreclosure action. The Pughs did not reinstate the loan subject to either of the two foreclosure actions. However, in 1998, Olympia applied funds held in escrow and belonging to the Pughs to the payment due for April of 1995.

On October 13, 1998, Olympia filed the instant mortgage foreclosure action against the Pughs, alleging a payment default date of May 1, 1995 and unpaid principle of $123,947.26. The Pughs asserted as an affirmative defense that the two dismissal rule precluded Olympia from obtaining a foreclosure judgment. In the course of the bench trial, the parties agreed that the two prior foreclosure actions had alleged failure to pay the April 1, 1995 payment and "all payments subsequent thereto."¹

In its final judgment, the trial court found that Olympia applied monies held in escrow, belonging to the Pughs, to pay the amount owing for April of 1995, solely to create a new cause of action. The trial court further found that the instant foreclosure action presents the same claim as the two prior foreclosure actions, irrespective of the different default alleged herein. The trial court concluded that Olympia is entitled to foreclose the mortgage because no payments have been made under the note and mortgage since April of 1995.

Nevertheless, the trial court held that Olympia forfeited all amounts owing under the promissory note and mortgage from March of 1995 through February of 1998, based on the two dismissal rule, Florida Rule of Civil Procedure 1.420(a).² The trial court assumed, for purposes of relief, that the mortgage was current through and including February of 1998. Furthermore, the trial court held that the Pughs defaulted under the mortgage by failing to pay all amounts due under the mortgage since March 1, 1998. This included principal, interest, taxes, insurance and other charges allowable under the mortgage, amounting to $31,381.90. Additionally, if the Pughs failed to reinstate the mortgage by January 1, 2000, Olympia would be due $151,518.48 and entitled to foreclose on the mortgage.

Olympia argues on appeal that the "Two Dismissal Rule" does not apply in this case and that the trial court should have awarded it the entire balance due on the note and mortgage. We agree.

The two dismissal rule, Florida Rule of Civil Procedure 1.420(a), provides that "a notice of dismissal operates as an adjudication on the merits when served by a plaintiff who has once dismissed in any court an action based on or including the same claim." As used in the two dismissal rule, the word "action" denotes an "entire controversy," whereas the word "claim" describes a "cause of action." Crump v. Gold House Restaurants, Inc., 96 So.2d 215, 218 (Fla.1957). Therefore, the rule applies where there is an identity of the causes of action. Edmondson v. Green, 755 So.2d 701 (Fla. 4th DCA 1999) (citing Variety Children's Hosp. v. Mt. Sinai Hosp. of Greater Miami, Inc., 448 So.2d 546, 547 (Fla. 3d DCA 1984)).

Whether there is an identity of the causes of action depends upon a comparison of the facts constituting the underlying transaction. Id. If the facts necessary to the maintenance of the first suit are the same as in the second suit, and the judgment sought in each requires the same proof to justify it, then the third suit should be barred by the rule. See Variety Children's Hosp. v. Mt. Sinai Hosp. of Greater Miami, Inc., 448 So.2d 546, 548 (Fla. 3d DCA 1984).

The Pughs contend that there is identity of the causes of action. They argue that when Olympia elected to accelerate payment on the note in the first and second foreclosure actions, it placed the entire balance of the note at issue, thereby eliminating any factual distinctions between the two foreclosure actions.

We disagree that the election to accelerate placed future installments at issue. We note our decision in Capital Bank v. Needle, 596 So.2d 1134 (Fla. 4th DCA 1992), where we stated:

[A] final adjudication in a foreclosure action that also prays for a deficiency judgment on the underlying debt may, but does not necessarily, bar a subsequent action on the debt. For instance, if the plaintiff in a foreclosure action goes to trial and loses on the merits, we do not believe such plaintiff would

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