Pensacola Beach, L. L.C. v. Am. Fid. Life Ins. Co.
| Decision Date | 15 April 2020 |
| Docket Number | 1D17-2914,Nos. 1D17-2741,Nos. 1D17-4132,1D18-0907,1D17-4751,s. 1D17-2741,s. 1D17-4132 |
| Citation | 294 So.3d 976 |
| Parties | PENSACOLA BEACH, L.L.C., Pensacola Beach, Inc., and David A. Brannen, Appellants, v. AMERICAN FIDELITY LIFE INSURANCE COMPANY, Santa Rosa Island Authority, and Michael J. Stebbins, Appellees. Pensacola Beach, Inc. and Pensacola Beach, L.L.C., Appellants, v. Via De Luna Corporation, American Fidelity Life Insurance Company, and Santa Rosa Island Authority, Appellees. |
| Court | Florida District Court of Appeals |
Robert O. Beasley, Phillip A. Pugh, and DeWitt D. Clark, of Litvak, Beasley, Wilson & Ball, LLP, Pensacola; Jessica L. Scholl and W. David Jester, of Galloway, Johnson, Tompkins, Burr & Smith, Pensacola, for Appellants Pensacola Beach, Inc., Pensacola Beach, LLC, and David Brannen.
Linda A. Hoffman, Brian W. Hoffman, and Robert S. Rushing, of Carver, Darden, Koretzky, Tessier, Finn, Blossman & Areaux, LLC, Pensacola, for Appellee American Fidelity Life Insurance Company.
Michael J. Stebbins of Michael J. Stebbins, P.L., Pensacola, for Appellee Santa Rosa Island Authority.
Matt E. Dannheisser of Matt E. Dannheisser, P.A., Pensacola, for Appellee Michael J. Stebbins.
These consolidated appeals involve a complex array of parties, proceedings, and issues arising from a commercial real estate mortgage default and foreclosure. The primary issues involve Appellants’ attempts to redeem the property. After considering all arguments raised, we affirm for the reasons set forth below. We begin by setting forth the factual and procedural history.
The relevant property is the Marriott SpringHill Suites Hotel on Santa Rosa Island. Escambia County owns the island, and leased it to Appellee Santa Rosa Island Authority (SRIA) under a renewable 99-year lease.1 SRIA entered a long-term ground lease with Appellant Pensacola Beach Incorporated (PBI), covering the land to be used for the hotel plus some additional land. The lease between SRIA and PBI requires PBI to develop a "hotel/motel with related facilities," and sets forth related terms and conditions in great detail. PBI and a related entity, Appellant Pensacola Beach Limited Liability Company (PBLLC), then entered an agreement titled as a sublease. Appellant Mr. Brannen is the managing member of both PBI and PBLLC.2
The sublease covered less land than the master lease between SRIA and PBI, but otherwise was identical to the master lease. The sublease imposed on PBLLC all of the hotel-related obligations imposed on PBI in the master lease. These obligations included developing the hotel property and business, and paying all necessary expenses including mortgage payments, taxes, and fees. The sublease from PBI to PBLLC also provided that PBLLC would mortgage the hotel property; and authorized PBI to terminate the sublease and take back the property, after providing notice and an opportunity to cure, if PBLLC defaulted on its obligations.
PBLLC mortgaged the property to Appellee American Fidelity Life Insurance Company (AmFi). PBI is not a party to the mortgage nor mentioned therein. The property descriptions referenced in and attached to the mortgage were identical to those of the sublease to PBLLC. In the mortgage, PBLLC conveyed to AmFi the tract of land for the hotel buildings and operations; all buildings and improvements on the land including those yet to be erected; all "right, title and interest of [PBLLC] in and to all leases or subleases covering the Premises or any portion thereof now or hereafter existing or entered into"; "any greater estate in the Premises owned or hereafter acquired"; "[a]ll easements, rights-of-way and rights used in connection therewith"; and many other broad provisions to the same effect. PBLLC further covenanted that PBLLC was "indefeasibly seized of said Premises as to leasehold interest" and had "full power and lawful right to convey the same as to leasehold interest." PBLLC assigned and transferred to AmFi "all leases [and] subleases" of the mortgaged property, expressly calling the assignment "absolute." The mortgage provided that PBLLC's failure to perform as required would constitute a default, as would the filing of a petition in bankruptcy by PBLLC or any guarantor or surety of the related note.
In 2009, PBLLC defaulted on the mortgage payments and failed to pay property taxes. We will expand on the ensuing proceedings, but the short summary is that after some litigation delay, AmFi successfully foreclosed, bought the property, and received the certificate of title. The property foreclosed upon was described in the foreclosure proceedings and judgment as identical to that described in both the sublease and the mortgage. The certificate of title issued to AmFi on December 3, 2013. AmFi immediately transferred the property to a wholly owned subsidiary, Appellee Via De Luna Corporation (named after the property's street address), which has assumed the duties set forth in the lease from SRIA to PBI and in the sublease from PBI to PBLLC.
The heart of the litigation below, and these appeals, is PBI's attempt to redeem the property, and to keep its original leasehold interest and the equity in the hotel land and improvements—all free and clear of the mortgage. PBI's multiple pleadings below consistently alleged that PBI retained the leasehold interest in the hotel land and improvements, and that the foreclosure judgment incorrectly encompassed that land and improvements.3
PBI also alleged, without ever providing any supporting evidence other than Mr. Brannen's conclusory affidavit, that it terminated PBLLC's interests before the foreclosure and in that additional manner retained an independent and exclusive right of redemption. Nevertheless, both PBI and PBLLC attempted to redeem the property. Mr. Brannen and two new entities were identified as borrowers in a proposed financing agreement with a third party not involved here. That agreement presumably would have made redemption economically feasible. As conditions of the new financing, PBI and PBLLC asked SRIA to correct what they described as a title error, and to enter a new ground lease. SRIA's attorney, Appellee Mr. Stebbins, conducted research and advised SRIA about these issues. SRIA declined to comply with PBI's and PBLLC's requests. The foreclosure process became final with issuance of the certificate of title, and the litigation proceeded.4
Before the judicial sale occurred and the certificate of title issued to AmFi, PBI filed a declaratory judgment action against AmFi, primarily seeking a declaration that the mortgage between AmFi and PBLLC did not encumber PBI's leasehold interest in the hotel property, and thus the foreclosure judgment did not extinguish PBI's interest. PBI later filed a Notice of Lis Pendens. This prompted Via De Luna to file a slander of title action against PBI and PBLLC. Several years of extensive motion and pleading practice culminated in the operative pleadings now before us. In what was titled a third amended complaint, PBI, PBLLC, and Mr. Brannen alleged that PBI had terminated PBLLC's interest in the hotel property before the foreclosure; that PBI retained an unencumbered interest in the hotel property; and that PBI had arranged third-party financing to redeem the property, but the tortious concerted actions of AmFi, SRIA, and Mr. Stebbins thwarted the financing and redemption. That complaint alleged tortious interference (four counts), civil conspiracy, abuse of process, and violation of the Florida Antitrust Act. PBI and PBLLC also counterclaimed in Via De Luna's slander of title action, asserting the same claims alleged in their declaratory judgment action; and they brought a third-party claim against AmFi and SRIA.
In the declaratory judgment action, the lower tribunal struck the claims of PBI and Mr. Brannen as a sanction for repeated discovery violations. This left PBLLC as the sole plaintiff, with claims pending against AmFi, SRIA, and Mr. Stebbins. AmFi moved to dismiss those claims, arguing that PBLLC lacked standing to pursue them. AmFi also argued that PBLLC had inconsistently and thus improperly asserted both that its interest in the hotel property had been terminated, and that it still had a right of redemption. SRIA and Mr. Stebbins joined in this motion to dismiss. The lower tribunal dismissed PBLLC's claims with prejudice and denied its request to amend. After a subsequent hearing, at which PBLLC did not renew its motion to amend, the lower tribunal entered a partial final judgment dismissing PBLLC's claims against AmFi, SRIA, and Mr. Stebbins.
After dismissal of PBLLC's claims in the declaratory judgment action, AmFi moved for summary judgment against PBI, PBLLC, and Mr. Brannen. AmFi argued that the agreement between PBI and PBLLC, although titled a sublease, was functionally an assignment as to the hotel property, and therefore it did not reserve for PBI the right to redeem the property. PBI, PBLLC, and Mr. Brannen maintained that the document was a sublease, because PBI had retained a convenience store that was not part of the hotel property, as well as a reversionary interest. PBI, PBLLC, and Mr. Brannen also argued for the first time that AmFi lacked standing to seek a declaratory judgment. After a hearing, the lower tribunal entered summary judgment for AmFi.
Parallel to the declaratory judgment action, Via De Luna's slander of title claim was litigated, including the PBI/PBLLC counterclaim and third-party claim against AmFi and SRIA. The counterclaim and third-party claim were predominantly the same as the claims PBI and PBLLC had asserted in the third amended complaint for declaratory judgment, which the lower tribunal had stricken as to PBI and Mr. Brannen. PBI and PBLLC also alleged in this action that Via De Luna was part of the conspiracy against them, in that it was a product of the conspiracy. PBI, PBLLC, and Mr. Brannen further argued that although SRIA did not...
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