PNC Bank, Nat'l Ass'n v. Orchid Grp. Invs., L.L.C.
| Decision Date | 06 August 2014 |
| Docket Number | Case No. 2:13–CV–12–FTM–38CM. |
| Citation | 36 F.Supp.3d 1294 |
| Parties | PNC BANK, NATIONAL ASSOCIATION successor to RBC Bank (USA), Plaintiff, v. ORCHID GROUP INVESTMENTS, L.L.C., a Florida limited liability company, Lynne W. Washburn, an individual, Kristen Flaharty, an individual, Patrick Flaharty, an individual, and John P. Arnold, Jr., an individual, Defendants. |
| Court | U.S. District Court — Middle District of Florida |
Enid Ginnette Childs, Carrie Ann Wozniak, Akerman Senterfitt, LLP, Orlando, FL, Richard H. Martin, Akerman Senterfitt, LLP, Tampa, FL, for Plaintiff.
Darrin Randall Schutt, Schutt Law Firm, PA, Cape Coral, FL, Michael C. Shue, Hahn, Loeser & Parks, LLP, Naples, FL, Theodore Lawton Tripp, Jr., Justin B. Mazzara, Hahn, Loeser & Parks, LLP, Fort Myers, FL, for Defendants.
This matter comes before the Court on Plaintiff PNC Bank, National Association's Renewed Motion for Final Summary Judgment (Doc. # 93) filed on June 12, 2014. Defendants Orchid Investments, L.L.C, Lynne W. Washburn, and John P. Arnold, Jr. filed a Response to Plaintiff's Renewed Motion for Final Summary Judgment (Doc. # 100) on June 26, 2014. Defendants Patrick Flaharty and Kristen Flaherty (the “Flaharty Defendants”) filed an Opposition to Plaintiff's Renewed Motion for Final Summary Judgment and Motion to Strike Kurt Knaus Affidavit (Doc. # 102) on July 3, 2014. Plaintiff thereafter filed a Response to the Flaharty Defendants' Motion to Strike Knaus Affidavit (Doc. # 108) on July 17, 2014. Finally, Plaintiff filed an Unopposed Renewed Motion for Separate Trial on Defendants Kristen Flaharty and Patrick Flaherty's Crossclaim (Doc. # 96) on June 18, 2014. These three matters are thus ripe for review.
On June 21, 2005, Community Bank of Naples, N.A. loaned the sum of $3,965,000.00 to Defendant Orchid Investments, L.L.C. (“Defendant Orchid” or “Borrower”). (Doc. # 105 at ¶ 9). To evidence the loan, Defendant Orchid executed and delivered a promissory note (“2005 Note”) to Community Bank of Naples on June 21, 2005. (Doc. # 105 at ¶ 10; Doc. # 37–1 at 11–15). Under the 2005 Note, Defendant Orchid agreed to make consecutive monthly payments of accrued interest starting on July 20, 2005, through June 20, 2007 (the “Maturity Date”). (Doc. # 37–1 at 11).
To secure the 2005 Note, Defendant Orchid entered into a Mortgage and Security Agreement and Assignment of Leases and Rents (the “2005 Mortgage”). (Doc. # 105 at ¶ 14; Doc. # 37–1 at 19–41). Two tracts of land served as collateral for the 2005 Mortgage. (Doc. # 37–1 at 19–21, 41). Defendant Orchid recorded the 2005 Mortgage in the Official Records of Lee County, Florida on June 30, 2005. (Doc. # 105 at ¶ 14).
On June 21, 2005, Defendants Washburn, Arnold, P. Flaharty, and K. Flaharty (collectively “Defendant Guarantors”) each executed separate guaranties to Community Bank of Naples, guaranteeing payment of the indebtedness, i.e., principal and interest on the 2005 Note, collection costs and attorney's fees, and payment and performance of all Defendant Orchid's obligations under the 2005 Note and related loan documents. (Doc. # 37–1 at 43–89).
On June 20, 2007, Defendant Orchid and Community Bank of Naples executed a Loan Modification Agreement, extending the Maturity Date until August 20, 2007. (Doc. # 37–1 at 17). All other terms and conditions of the 2005 Note remained the same. (Doc. # 37–1 at 17).
On August 20, 2007, Defendant Orchid executed and delivered a Renewal/Re–Write/Reamortalization/Rate Modification of the Note dated August 20, 2007 (the “2007 Renewal Note”) in the amount of $3,965,000.00. (Doc. # 37–1 at 91–93). The 2007 Renewal Note extended the Maturity Date to August 20, 2008. (Doc. # 37–1 at 91).
On April 10, 2008, Community Bank of Naples merged with RBC Bank (USA). (Doc. # 37–1 at 96). Thereafter, on December 12, 2008, RBC Bank and Defendant Orchid entered into a “Change In Terms Agreement” to increase the principle amount of the loan to $3,986,683.02 and extend the Maturity Date to December 11, 2009. (Doc. # 37–1 at 99–100). Defendant Guarantors also executed new guarantees to RBC Bank, again guaranteeing payment of the indebtedness. (Doc. # 37–1 at 2–15, 102–05).
On January 26, 2009, RBC Bank and Defendant Orchid entered into a second “Change in Terms Agreement,” decreasing the principal amount of the loan to $3,980,780.55 and extending the Maturity Date to December 11, 2009. (Doc. # 37–2 at 17–19). To secure payment of the 2005 Note, as modified, RBC Bank and Defendant Orchid entered into a Mortgage Future Advances (the “2009 Mortgage”) on January 26, 2009. (Doc. # 37–2 at 21–32). The 2009 Mortgage was recorded on March 4, 2009, in the Official Records of Lee County, Florida, (Doc. # 37–2 at 21–32).
In July 2010, RBC Bank and Defendant Orchid entered into a third “Change In Terms Agreement,” but this time only extending the Maturity Pate to August 11, 2010. (Doc. # 37–2 at 34–37). On October 22, 2010, RBC Bank and Defendant Orchid again extended the Maturity Date to December 31, 2010. (Doc. # 37–2 at 39–46).
On January 14, 2011, RBC Bank renewed the loan to Defendant Orchid. (Doc. # 37–2 at 48–50). On that same date, Defendant Orchid executed and delivered to RBC Bank a Commercial Promissory Note (the “2011 Note”) in the amount of $3,730,781.00. (Doc. # 37–2 at 52–55). The 2011 Note amended, restated, and renewed the 2007 Renewal Note, as modified, and provided for the loan to mature on January 31, 2013. (Doc. # 105 at ¶ 24). Pursuant to the 2011 Note, Defendant Orchid agreed to make consecutive monthly installments of interest, commencing on March 1, 2011 through January 31, 2013, at which time all outstanding amounts on the 2011 Note were to be due. (Doc. # 37–2 at 53; Doc. # 114 at ¶ 11). In connection with the 2011 Note's closing, Defendant Orchid paid $250,000.00 to reduce the principal owed on the 2007 Note and paid $200,000.00 to establish an interest reserve. (Doc. # 114 at ¶ 16).
On January 14, 2011, Defendant Orchid also executed and delivered to RBC Bank an Amended and Restated Mortgage (“2011 Mortgage”), which was recorded on February 24, 2011, in the Official Records of Lee County, Florida. (Doc. # 37–2 at 57–70). The 2011 Mortgage amended and restated the 2009 Mortgage, and it deleted the property described in the 2005 Mortgage and replaced it with different real property, namely 20 acres in Cape Coral, Florida located on the Northeast corner of Pine Island Road and Corbett Road (“2011 Mortgaged Property”). (Doc. # 37 at ¶ 45; Doc. # 37–2 at 53, 70). Moreover, to induce RBC Bank to enter into the 2011 Loan Agreement, Defendant Guarantors each executed separate Single Loan Guaranty Agreements on January 14, 2011. (Doc. # 37–2 at 72–90). Importantly, the 2011 Note, 2011 Loan Agreement, 2011 Mortgage, and Single Loan Guaranty Agreements superseded the prior loan documents.
Effective March 2, 2012, RBC Bank merged with Plaintiff. (Doc. # 37–2 at 92–93). Plaintiff was the surviving entity. (Doc. # 114 at ¶ 16). As such, Plaintiff owns and holds all legal and beneficial interest in the 2011 Note, 2011 Mortgage, the 2011 Guaranties, and other loan documents. (Doc. # 105 at 12–13; Doc. # 114 at ¶ 21).
Following the merger, Plaintiff took custody of RBC Bank's books and records, including those records regarding Defendant Orchid's loan. (Doc. # 114 at ¶ 19). RBC Bank used a computer software system, Commercial Loan System (“CLS”), to maintain its loan history servicing records. (Doc. # 114 at ¶ 17). Sometime after the merger, Plaintiff converted RBC Bank's records to its own computer system called Advanced Commercial Banking System (“ACBS”). (Doc. # 114 at ¶ 20).
Defendant Orchid defaulted under the terms of the 2011 Note and 2011 Mortgage by failing to make payment when due on August 1, 2012. (Doc. # 114 at ¶ 22). Plaintiff sent a demand letter to Defendant Orchid and Defendant Guarantors on September 20, 2012, accelerating and demanding immediate payment of all amounts owed under the 2011 Note. (Doc. # 37–2 at 95–96). Defendant Orchid failed to cure the default and has not made payments due and owing under the 2011 Note since July 2012. (Doc. # 114 at ¶ 24). Additionally, Defendant Guarantors have failed to make any payments to Plaintiff pursuant to the 2011 Guaranties. (Doc. # 114 at ¶ 25)
On January 1, 2013, Plaintiff commenced this action to foreclose on the 2011 Mortgaged Property. (Doc. # 1). Plaintiff thereafter filed a Verified Amended Complaint to Foreclose Mortgage and for Other Relief on July 2, 2013. (Doc. # 37). Plaintiff's claims are mortgage foreclosure against all Defendants (Count I); foreclosure of security interest in leases and rents against all Defendants (Count 11); breach of note against Defendant Orchid (Count III); and breach of guaranties against Defendants Washburn, Arnold, K. Flaharty, and P. Flaharty (Counts IV–VII). Defendants timely answered the Verified Amended Complaint. (Doc. # 38, Doc. # 39, Doc. # 40, Doc. # 44).
On August 15, 2013, the Flaharty Defendants brought two cross-claims against Defendants Washburn and Arnold for contribution. (Doc. # 44 at 15–18). The Flaharty Defendants allege they “have or will have contributed more than their proportionate share of the obligation incurred by the borrower, [Defendant] Orchid, either by settlement, judgment or otherwise, with the lender, [Plaintiff] PNC Bank,” and Defendants Washburn and Arnold “should be required to contribute a proportionate share of the money paid by the Flahartys to [Plaintiff] on the obligation incurred by the borrower, [Defendant] Orchid.” (Doc. # 44 at 17–18).
On December 13, 2013, Plaintiff filed a motion for summary judgment (Doc. # 59), which the Court denied on February 13, 2014. (Doc. # 78). The Court then held a final pretrial conference on February 21, 2014....
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