One S. Ocean Drive 2000, Ltd. v. One Ocean Boca, LLC, 4D14–2918.

• Decision Date: 06 January 2016
• Docket Number: No. 4D14–2918.,4D14–2918.
• Citation: 182 So.3d 872
• Parties: ONE SOUTH OCEAN DRIVE 2000, LTD., a Florida limited partnership and One Ocean Plaza 2001, Ltd., a Florida limited partnership, Appellants, v. ONE OCEAN BOCA, LLC, a Florida limited liability company, Appellee.
• Court: Florida District Court of Appeals

182 So.3d 872

ONE SOUTH OCEAN DRIVE 2000, LTD., a Florida limited partnership and One Ocean Plaza 2001, Ltd., a Florida limited partnership, Appellants,

v.ONE OCEAN BOCA, LLC, a Florida limited liability company, Appellee.

No. 4D14–2918.

District Court of Appeal of Florida, Fourth District.

Jan. 6, 2016.

Michael J. Pike, Daniel Lustig, and Michelle Nichols DeLong of Pike & Lustig, LLP, West Palm Beach, for appellants.

Bradley S. Shraiberg and Lenore M. Rosetto Parr of Shraiberg, Ferrara & Landau, P.A., Boca Raton, for appellee.

WARNER, J.

One South Ocean Drive, 2000, Ltd., appeals an order denying its motion requesting leave to file a lawsuit against Kenneth A. Welt, the receiver appointed during a foreclosure proceeding of One South's commercial property. The trial court denied One South leave to file suit against the receiver because it concluded that the receiver already had been discharged and released from further liability through an agreed order entered in the foreclosure proceedings. We reverse, concluding that the order did not release the receiver with regard to actions that could be construed as a breach of fiduciary duty.

A bank filed a commercial foreclosure action against One South. During the foreclosure proceedings, the trial court entered an agreed order appointing the receiver to collect rents and manage the properties. As part of his duties, the receiver was authorized to market the commercial property for lease to third parties upon the approval of the bank and owner, or upon court order. The receiver filed a bond in the amount of $75,000, and took possession and control of the property. Subsequently, the receiver entered into five lease agreements for which he did not obtain either approval from the bank and owner or a court order. His monthly statement of services, however, did mention the lease negotiation.

The bank obtained a final judgment of foreclosure, which was subsequently assigned to One Ocean Boca, LLC, who was substituted as the plaintiff in the suit. One South then entered into a purchase and sale agreement with a third party, who agreed to pay One South $2,000,000 plus the outstanding sum owed on the foreclosure judgment.

The plaintiff—One Ocean Boca, LLC—and defendant—One South—filed a Joint Motion to Discharge Receiver, seeking the removal of the receiver and for One Ocean Boca, LLC, to become the new manager of the property. The trial court entered an Agreed Order Terminating Receivership and Discharging Receiver ("Agreed Discharge Order") on August 21, 2012. The Agreed Discharge Order specified that the receiver was discharged, his bond was discharged, and "[t]he Receiver and the surety thereunder are relieved of any further liability, duties, and responsibilities as Receiver[.]"

One South claims to have discovered the execution of the leases by the receiver in September 2012. Because of their terms and the effect on the income potential of the commercial building, the value of the property was significantly reduced. The purchaser ended up paying One South only $1,200,000 above the foreclosure amount.

Twenty months later, One South filed a motion requesting leave to file suit against the receiver. It argued that it had a prima facie case for negligence, breach of fiduciary duty, and unjust enrichment against the receiver for entering into lease agreements without the approval of the parties or the court. The receiver responded that the Agreed Discharge Order was a general release, and thus no action could be filed against him. Moreover, because One South was essentially seeking to set aside the agreed order, such action was untimely under Florida Rule of Civil Procedure 1.540(b). After a full hearing, the trial court denied the motion seeking leave to file suit against the receiver, holding that the terms of the Agreed Discharge Order relieved the receiver from further liability. The court held that since more than one year had passed since the entry of the Agreed Discharge Order, One South was precluded from seeking relief under Rule 1.540(b). One South appeals.

Where a receiver has been appointed, the general rule is that leave of the appointing court must be obtained before an action can be brought against the receiver. This is called the Barton Doctrine. Barton v. Barbour, 104 U.S. 126, 127, 26 L.Ed. 672 (1881). This doctrine is recognized in Florida. See, e.g., Murtha v. Steijskal, 232 So.2d 53, 55 (Fla. 4th DCA 1970). Even where a receiver or trustee has been discharged, leave of court must be obtained to file suit. See In re Kashani, 190 B.R. 875, 885 (9th Cir. BAP 1995). To obtain authorization to file suit, the requesting party must demonstrate a prima facie case of liability before leave will be granted.Id.

The trial court concluded that leave should not be granted in this case because the Agreed Discharge Order relieved the receiver of further liability. One South objects to the finding that the Agreed Discharge Order constituted a general release. It argues that the Agreed Discharge Order's reference to "further liability as Receiver" refers to future liability, meaning that from the time the Agreed Discharge Order was entered, going forward, the receiver cannot incur any liability. The receiver argues that interpreting the word "further" to mean future would render the Agreed Discharge Order meaningless; the receiver will never have future liability since he was discharged and is no longer in possession of the property.

Under Florida law, "the intent of the parties controls interpretations of their releases." Rosen v. Fla. Ins. Guar. Ass'n, 802 So.2d 291, 295 (Fla.2001) (quoting Auto–Owners Ins. Co. v. St. Paul Fire & Marine Ins. Co., 547...