Reid v. Compass Bank

• Court: Florida District Court of Appeals
• Writing for the Court: PER CURIAM.
• Citation: Reid v. Compass Bank, 164 So. 3d 49 (Fla. App. 2015)
• Decision Date: 01 May 2015
• Docket Number: No. 1D14–930.,1D14–930.
• Parties: Robert G. REID, Appellant, v. COMPASS BANK, Appellee.

164 So.3d 49

Robert G. REID, Appellant

v.COMPASS BANK, Appellee.

No. 1D14–930.

District Court of Appeal of Florida, First District.

May 1, 2015.

Rehearing Denied June 3, 2015.

Matthew W. Burns, Destin, for Appellant.

Tompkins A. Foster and Wayne E. Klinkbeil of Foster & Klinkbeil, P.A., Orlando, for Appellee.

Opinion

PER CURIAM.

Appellant, Robert G. Reid, seeks review of a Final Judgment wherein the trial court determined that Appellant was indebted to Appellee, Compass Bank, in the amount of $619,690.27. Appellant's primary argument on appeal is that Appellee was precluded from filing an action at law seeking damages as a result of Appellant's failure to satisfy his promissory note on the property at issue because Appellee included a prayer for a deficiency judgment in its foreclosure complaint and because the trial court reserved jurisdiction in the foreclosure judgment to enter a deficiency judgment. For the reasons stated herein, we affirm the Final Judgment.

In 2008, Appellee sued Appellant in Okaloosa County to foreclose the mortgage on Appellant's property. Appellee requested that the trial court determine the total amount owed by Appellant and that if the proceeds of a foreclosure sale were not sufficient to satisfy its claim, the court “enter an order for a deficiency judgment” against Appellant. In May 2009, the trial court entered a Summary Judgment in Foreclosure, finding that Appellant owed Appellee $969,690.27 and retaining jurisdiction “for the purpose of making any and all further orders as may be necessary and proper, including a deficiency judgment against appropriate Defendant(s) herein.” In October 2009, Appellee purchased the property at the foreclosure sale, and a Certificate of Title was issued in November 2009.

In January 2010, Appellee filed a Complaint against Appellant in Okaloosa County, seeking damages resulting from Appellant's failure to satisfy the promissory note on the property. In April 2010, Appellant moved to dismiss the Complaint for lack of jurisdiction, arguing that because the foreclosure judgment reserved jurisdiction to adjudicate a deficiency judgment, “jurisdiction reposes in that case and cannot be acquired in the present civil action.” In June 2010, Appellee moved to consolidate the foreclosure action and the action at law. The trial court granted the consolidation motion in November 2010. Appellant's motion to dismiss the action at law was denied in May 2012.

The trial court held a bench trial in the consolidated cases in January 2014, during which Appellee presented evidence that it sold the property in February 2010 for $350,000 cash “less roughly 40–some odd thousand in costs, which gives us $318,000” and testimony that the property's appraised value was $350,000 at the time of the foreclosure sale and the subsequent sale of the property. Appellee's counsel argued that after deducting the $318,200 Appellee received for the property after costs, the remaining balance due from Appellant was $651,409. After hearing argument concerning the propriety of the action at law in light of Appellee's prayer for a deficiency judgment in its foreclosure complaint and the court's reservation of jurisdiction in the foreclosure judgment to enter a deficiency decree, the trial court stated in part:

I do agree with you in one regard and that is that because it is in fact a deficiency, not truly an action on the note, that all of the principles would apply as to deficiency law in determining the amount that remained outstanding ....

...

Now, let's address the question of value. I am also aware the decisions recently have said that if a judge makes a decision as to value, which I believe in this case that is the credit that should be given, is the value of the property at the date of sale, that I have to express the basis of that determination.... Here I have the testimony, both of the appraiser and we have an actual sale within four months, I believe, of the date of foreclosure to a third-party. And that amount is $350,000. Now, we have—now the owner is always entitled to express an opinion of value. [Appellant's] opinion is that the property was worth a million dollars. I will take that at face value, but it is hard for the Court to reconcile with great disparity between [Appellant's] opinion of value and what appears to be a third-party sale on the market. I heard no testimony that would suggest that the sale was other than a free and voluntary sale.... So, I believe the competent, substantial evidence is to accept the valuation of 350. I realize that the testimony was [ ] that there were costs of that sale. However, since I am accepting—since I am determining that the proper measure is a deficiency measure, it would be the value of the property, not the proceeds of the sale, which would determine the credit to which the debtor was entitled. Under the circumstances, that credit would be the $350,000, not the, what, 318,200.... That would be the judgment of the Court.

(Emphasis added). The Final Judgment, which was filed under the foreclosure case number, not the action at law case number, set forth that the amount due on the foreclosure judgment, which was $969,690.27, “Less Credit for Value at time of sale” of $350,000, resulted in Appellant being indebted to Appellee in the amount of $619,690.27. This appeal followed.

Appellant's main argument on appeal is that Appellee was foreclosed from filing an action at law on the promissory note given its prayer for a deficiency judgment in its foreclosure complaint and the trial court's reservation of jurisdiction to enter a deficiency judgment. This argument presents an issue of law that is reviewable de novo. Fla. Ins. Guar. Ass'n, Inc. v. Bernard, 140 So.3d 1023, 1027 (Fla. 1st DCA 2014) (noting that an issue of law is reviewable de novo).

Prior to June 7, 2013, section 702.06, Florida Statutes, which is entitled “Deficiency decree; common-law suit to recover deficiency,” provided:

In all suits for the foreclosure of mortgages heretofore or hereafter executed the entry of a deficiency decree for any portion of a deficiency, should one exist, shall be within the sound judicial discretion of the court, but the complainant shall also have the right to sue at common law to recover such deficiency, provided no suit at law to recover such deficiency shall be maintained against the original mortgagor in cases where the mortgage is for the purchase price of the property involved and where the original mortgagee becomes the purchaser thereof at foreclosure sale and also is granted a deficiency decree against the original mortgagor.¹

(Emphasis added). Section 702.06 was amended in 2013 to read:

In all suits for the foreclosure of mortgages heretofore or hereafter executed the entry of a deficiency decree for any portion of a deficiency, should one exist, shall be within the sound discretion of the court; however, in the case of an owner-occupied residential property, the amount of the deficiency may not exceed the difference between the judgment amount, or in the case of a short sale, the outstanding debt, and the fair market value of the property on the date of sale. For purposes of this section, there is a rebuttable presumption that a residential property for which a homestead exemption for taxation was granted according to the certified rolls of the latest assessment by the county property appraiser, before the filing of the foreclosure action, is an owner-occupied residential property. The complainant shall also have the right to sue at common law to recover such deficiency, unless the court in the foreclosure action has granted or denied a claim for a deficiency judgment.

See Ch. 13–137, § 5, Laws of Fla. (Emphasis added).²

In addressing Appellant's argument, a review of the case law construing section 702.06 is instructive. In Younghusband v. Ft. Pierce Bank & Trust Co., 100 Fla. 1088, 130 So. 725, 727 (1930), the supreme court held that “[i]f no deficiency judgment is entered in foreclosure sale, it is clear that a suit at law for any amount still due is available to the holder.” In Cragin v. Ocean & Lake Realty Co., 101 Fla. 1324, 135 So. 795, 797 (1931), the supreme court set forth that a plaintiff “having applied for and obtained a deficiency decree in their favor in the court of equity, could not, under the act of 1927, go into a court of law and maintain therein suits for the recovery of the balance due on the notes.” In Provost v. Swinson, 109 Fla. 42, 146 So. 641, 643 (1933), a case relied upon by Appellant, the supreme court set forth, “When the complainant filed his bill in equity to foreclose the mortgage and therein prayed for a deficiency decree, he elected that forum in which to have his right adjudicated and became bound by that choice.”

In Belle Mead Development Corp. v. Reed, 114 Fla. 300, 153 So. 843, 844 (1934), another case relied upon by Appellant, the supreme court explained that in August 1928, the appellee executed three promissory notes payable to the McElroys. It was alleged that the notes were assigned and delivered before maturity to the appellant, the plaintiff in the case. Id. The appellant filed suit for the foreclosure of the mortgage, praying for a deficiency decree. Id. A foreclosure decree was obtained, the property was sold, and the proceeds were applied to the payment of the debt. Id. The appellant asked for a deficiency decree which was “resisted” by the “defendant,” and the chancellor refused to enter a deficiency judgment. Id. The appellant subsequently filed an action at law to recover on the promissory notes, and the trial court “struck those pleas.” Id. The supreme court, in affirming, set forth, “In the case at bar there was a special prayer for affirmative relief [for a deficiency decree]. The complainant thereby elected that forum in which to have its rights adjudicated and became bound by that choice.” Id. The supreme court further set forth, “After specifically praying for a deficiency, the complainant...