Royal Palm Corporate Ctr. Ass'n, Ltd. v. PNC Bank, NA

• Decision Date: 10 May 2012
• Docket Number: 4D10–4822,Nos. 4D10–4152,4D11–1787,4D11–1853.,s. 4D10–4152
• Citation: 89 So.3d 923
• Parties: ROYAL PALM CORPORATE CENTER ASSOCIATION, LTD., a Florida limited liability company, and Royal Palm Corporate Center, Inc., a Florida corporation, Thirty Fifth Street Land Development Associates, LLC, a Florida limited liability company, Osprey Boulevard Properties, LLC, a Florida limited liability company, The Grove Community Association, Inc., a Florida non-profit corporation, and Anthony V. Pugliese, III, an individual, Appellants, v. PNC BANK, NA, as successor by merger to National City Bank, NA, as successor by merger to Fidelity Federal Bank & Trust, Appellee.
• Court: Florida District Court of Appeals

89 So.3d 923

ROYAL PALM CORPORATE CENTER ASSOCIATION, LTD., a Florida limited liability company, and Royal Palm Corporate Center, Inc., a Florida corporation, Thirty Fifth Street Land Development Associates, LLC, a Florida limited liability company, Osprey Boulevard Properties, LLC, a Florida limited liability company, The Grove Community Association, Inc., a Florida non-profit corporation, and Anthony V. Pugliese, III, an individual, Appellants,

v.PNC BANK, NA, as successor by merger to National City Bank, NA, as successor by merger to Fidelity Federal Bank & Trust, Appellee.

Nos. 4D10–4152, 4D10–4822, 4D11–1787, 4D11–1853.

District Court of Appeal of Florida, Fourth District.

March 21, 2012.

Rehearing Denied May 10, 2012.

Edgar Belaval, Jr. of Belaval Law Firm, P.A., Delray Beach, for appellants.

Michael T. Kranz and Roberto M. Vargas of Jones, Foster, Johnston & Stubbs, P.A., West Palm Beach, for appellee.

GROSS, J.

We affirm the procedure the circuit courts utilized in the final foreclosure judgments on appeal, where the courts allowed the plaintiff to pursue its remedy at law and authorized the initiation of the equitableremedy, the foreclosure sale process, only after the plaintiff certified that the money judgment had not been satisfied.

Facts

These consolidated appeals involve loans that PNC Bank made to corporate entities associated with Anthony V. Pugliese III. In a representative case, PNC sued Pugliese, Royal Palm Corporate Center Association, Ltd., and Royal Palm Corporate Center, Inc. in a two-count complaint. According to the complaint, PNC lent Royal Palm Corporate Center Association over $3 million. Royal Palm Corporate Center Association put up a piece of real estate as security for the loan; this was not a loan for the purchase money of the real estate. Royal Palm Corporate Center, Inc., the general partner of Royal Palm Corporate Center Association, and Pugliese each executed commercial guaranties for security.

In count one of the complaint, PNC sought a foreclosure judgment on the mortgaged property and, if necessary, a deficiency judgment. In count two, PNC sought money damages for breach of the note and guaranties. The case went to a non-jury trial.

The trial court found in favor of PNC. On the foreclosure count, the court determined that the defendants owed PNC $4,753,786.19. The final judgment did not set a sale of the mortgaged property, but provided:

C. The court is withholding having a sale of the mortgaged property, pending an application by the plaintiff requesting a sale of the mortgaged property and certifying that the monetary judgment has not been satisfied.

D. Upon application by plaintiff requesting a sale of the Mortgaged Property and certifying that the monetary judgment has not been satisfied, this court shall enter an order instructing the Clerk of Court to sell the mortgaged property at the next available sale date in accordance with Section 45.031, Florida Statutes.

The court reserved jurisdiction to handle any remaining issues, such as a deficiency judgment. On the damages count, the trial court repeated that the defendants owed PNC $4,753,786.19, and ordered that PNC “recover from the defendants” that amount, “for which let execution issue.”

The defendants moved for reconsideration and rehearing, among other things. They attacked the structure of the final judgment, which allowed PNC to attempt collection on the money judgment before setting a foreclosure sale. It does not appear that the court ruled on the motion prior to the filing of the notice of appeal.

The above summary of the facts in PNC Bank, N.A. v. Royal Palm Corporate Center Association, Ltd., is similar to the resolution of the other cases. In each case, PNC sued Pugliese and an associated corporation for foreclosure and damages. In each, the trial court found for PNC and implemented the two-step structure of the final judgment described above. The judgments are nearly identical.

Section 45.031 Did Not Require the Trial Courts to Set a Foreclosure Sale

Defendants first contend that the trial courts contravened section 45.031, Florida Statutes (2008), by granting foreclosure without scheduling a foreclosure sale. They argue that subsection 45.031(1)(a) requires that the foreclosure sale be set within a certain time and that it was an abuse of discretion to indefinitely stay the sale. We reject this argument.

In relevant part, subsection 45.031(1)(a) provides:

In the order or final judgment, the court shall direct the clerk to sell the property at public sale on a specified day that shall be not less than 20 days or more than 35 days after the date thereof, on terms and conditions specified in the order or judgment.

The defendants rely on the above language.

However, the plain language of the statute demonstrates that the procedure set forth in section 45.031 is not the exclusive procedure for setting a foreclosure sale and that a judge has the discretion to use a different procedure. The introductory paragraph of section 45.031 states:

In any sale of real or personal property under an order or judgment, the procedure provided in this section and ss. 45.0315–45.035 may be followed as an alternative to any other sale procedure if so ordered by the court.

(Emphasis supplied.) By the use of the term “may” and the suggestion that section 45.031 procedure is an “alternative to any other sale procedure,” the statute plainly gives a circuit judge discretion to tailor the procedure for a foreclosure sale. See The Fla. Bar v. Trazenfeld, 833 So.2d 734, 738 (Fla.2002) (“The word ‘may’ when given its ordinary meaning denotes a permissive term rather than the mandatory connotation of the word ‘shall.’ ” (citation omitted)).

The nature of mortgage foreclosures lends support to this interpretation. Mortgages are “foreclosed in equity.” § 702.01, Fla. Stat. (2008). “Historically, courts of equity came into being in order to provide a forum for the granting of relief in accordance with the broad principles of right and justice in cases where the restrictive technicalities of the law prevented the giving of relief.” Hedges v. Lysek, 84 So.2d 28, 31 (Fla.1955). While section 45.031 contains a ready-made procedure for a court to adopt, the statute does not mandate that a court utilize that procedure; rather, the judge may fashion a different sale procedure after considering the equities in the case.

The defendants cite a line of cases to argue that a trial court's indefinite stay of a sale constitutes an abuse of discretion. Those cases are distinguishable because they involve courts working within the structure of a section 45.031 sale procedure and mortgagees that are prevented from realizing the benefits of a foreclosure judgment, without an equitable basis which justifies the bar.

An exemplar is First Nationwide Savings v. Thomas, 513 So.2d 804 (Fla. 4th DCA 1987). There, a trial court issued a final judgment of mortgage foreclosure, apparently setting the sale date for the property. Id. at 804–05. The sale was stayed, reset, and subsequently postponed. Id. at 805. In the order on the second delay, the trial court cancelled the sale and stated “the sale of subject property shall not be reheld.” Id. On appeal, we held that “[t]his permanent cancellation of the sale without explanation is reversible error.” Id. (emphasis supplied). We reasoned that “[a] lender has the right, under the statutes, except under extraordinary circumstances not found in this record, to proceed with the sale of any real estate on which it has successfully foreclosed its mortgage.” Id. Thus, we reversed and instructed the trial court to set a sale date. Id.

Thomas presents a scenario different than this case. There, the trial court in the final judgment set a date for the sale and adopted the alternative procedure set out in section 45.031, rather than fashioning its own procedure. Once it adopted the statutory procedure, the court's discretion to indefinitely delay the sale sought by the plaintiff was limited, in the absence of circumstances justifying the delay. In the instant case, however, the final judgments expressly declined to set sale dates so that PNC could pursue its final judgment at law. They provided that the section 45.031 sale procedure would be invoked once PNC certified that it was unable to satisfy the money judgments against the defendants.

The other cases in the line likewise involved situations where sales were actually set, and where the failure to reschedule the sales unjustifiably frustrated the rights of the plaintiffs to the sale of the foreclosed property. See Bankers Trust Co. v. Edwards, 849 So.2d 1160 (Fla. 1st DCA 2003) (citing Thomas );Bankers Trust Co. of Cal., N.A. v. Weidner, 688 So.2d 453 (Fla. 5th DCA 1997); Chem. Mortg. Co. v. Dickson, 651 So.2d 1275 (Fla. 4th DCA 1995) (citing, inter alia, Thomas );A Mortg. Co. v. Bowman, 642 So.2d 123 (Fla. 4th DCA 1994) (citing, inter alia, Thomas );Admin. of Veteran's Affairs v. Bertsche, 574 So.2d 320 (Fla. 4th DCA 1991) (citing, inter alia, Thomas ). Only after the setting of the sale according to the statutory procedure would the trial court's discretion to control the timing of the sales fall under the limitations described in the Thomas line of cases.

In addition, the defendants rely on LR5A–JV v. Little House, LLC, 50 So.3d 691 (Fla. 5th DCA 2010). However, the case does not support the defendants' contention that the statute is a procedural straightjacket for a circuit court. Instead, it supports the notion that, even within the section 45.031 procedure, the circuit court “has reasonable discretion within the statutory framework to set or reset the date for such sale,” which is “consistent with the equitable nature of such proceedings,” id. at 693–94; a circuit court has the ability to “consider the interests of all of the parties in determining the matter of the judicial sale,” id. at 695.

Finally, the defendants base an argument upon Rule of...