Smith v. F.D.I.C.
| Decision Date | 28 August 1995 |
| Docket Number | No. 93-4686,93-4686 |
| Parties | Grady H. SMITH, Plaintiff-Counter-Defendant-Appellant, v. The FEDERAL DEPOSIT INSURANCE CORPORATION, Defendant-Counter-Claimant-Third-Party-Plaintiff-Appellee, Marc Wahlquist; Maria Wahlquist, his wife; Number One Company, a dissolved Florida corporation, Third-Party-Defendants. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Rex Edward Russo, Coral Gables, FL, for appellant.
Lori L. Heyer, S. Alyssa Roberts, Miami, FL, for F.D.I.C.
Appeal from the United States District Court for the Southern District of Florida.
Before KRAVITCH and HATCHETT, Circuit Judges, and CLARK, Senior Circuit Judge.
Grady Smith appeals from the district court's grant of summary judgment in favor of the Federal Deposit Insurance Corporation ("FDIC") in Smith's quiet title action. Smith had foreclosed his second mortgage on property on which the FDIC had a first mortgage. Smith bought in the property subject to the FDIC mortgage. The district court concluded that the FDIC's first mortgage on property remained a prior claim to the property, since the FDIC asserted its foreclosure counterclaim before the governing statute of limitations had run. Among the issues presented, we address the proper interpretation of 12 U.S.C. Sec. 1821(d)(14), the statute of limitations applicable to the FDIC under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), Pub.L. 101-73, Sec. 212(a), 103 Stat. 183, 232-33 (1989). 1 We hold, inter alia, that the district court correctly concluded that an action to foreclose a mortgage on real property is a "contract claim" within the meaning of 12 U.S.C. Sec. 1821(d)(14)(A)(i). We also hold, however, that genuine issues of material fact remain as to when the FDIC's mortgage foreclosure counterclaim accrued under Florida law. Accordingly, we REVERSE the grant of summary judgment and REMAND for further proceedings.
On October 13, 1983, Smith sold certain real estate in Miami to Marc and Maria Wahlquist and the Number One Company (the "Wahlquists"). To finance the purchase, the Wahlquists gave a $100,000 promissory note and a first mortgage on the property to Tower Bank. The note provided for thirty-five monthly installment payments of $250, beginning on November 13, 1983, and a balloon payment on the stated maturity date of October 13, 1986. The instrument contained an optional acceleration clause in the event of default. 2 On October 13, 1983, the Wahlquists also gave a promissory note and second mortgage to Smith. Both mortgages were properly recorded pursuant to Florida law. The Wahlquists first defaulted on the note to the Tower Bank by failing to make the September 13, 1984 payment and several subsequent payments. (See discussion on page 20 infra regarding details of some later payments and defaults by the Wahlquists.)
On October 3, 1985, Tower Bank was declared insolvent, and the FDIC was appointed receiver. On the same date, the FDIC, in its receivership capacity ("FDIC-Receiver"), entered into a purchase and assumption transaction, selling some of Tower Bank's assets to an assuming bank and transferring the remainder, including the Wahlquists' note and mortgage, to the FDIC in its corporate capacity ("FDIC-Corporate"). Neither the conveyance of the note and mortgage from Tower Bank to FDIC-Receiver, nor the subsequent conveyance from FDIC-Receiver to FDIC-Corporate, were recorded in the Dade County land records as required by state law.
Several years passed without the FDIC bringing suit on the Wahlquists' note and mortgage. Indeed, some time after March 1988, when the FDIC sent a collection letter to the Wahlquists, the agency apparently misplaced the note and mortgage in its records, filing them under the names "Saunders and Hinton." 3 On April 22, 1987, the FDIC communicated with the Dade County Tax Assessor regarding payment of appropriate taxes on the parcel, and, at some point thereafter, brought payment of the property taxes up to date. The record of this tax payment also was filed at the FDIC under the label "Saunders and Hinton."
On August 27, 1991, Smith, on whose obligation the Wahlquists also were in default, foreclosed his second mortgage in state court and obtained title to the property, subject to the first mortgage. On September 17, 1991, Smith's counsel contacted the FDIC to inquire about its interest in the Wahlquists' first note and mortgage. Apparently because the note and mortgage had been misfiled, the FDIC told him that it had no record of those instruments. 4 On November 21, 1991, Smith filed a qui tam action in state court, naming as defendants the FDIC and unknown parties to whom the first mortgage might have been conveyed, seeking to quiet title to the property by extinguishing that mortgage through the running of the statute of limitations. The FDIC removed this qui tam action to federal court, and on August 14, 1992, counterclaimed against the Wahlquists for foreclosure on the first mortgage, finally producing a copy of the Wahlquist instruments. The FDIC also filed a third-party complaint against the Wahlquists for the balance due on the promissory note.
The district court granted summary judgment in favor of the FDIC on the quiet title claim, concluding that, since the applicable statute of limitations had not yet run on the date the FDIC asserted its counterclaim, the mortgage remained a valid first lien on Smith's title. 5
At the outset, Smith challenges the district court's predicate holding that the FDIC had standing, as a matter of Florida law, to enforce the first mortgage. The fact that the Wahlquists' note and mortgage were filed at the FDIC under the heading "Saunders and Hinton," Smith contends, is not mere chance. Rather, he argues, this fact suggests that the FDIC at some point conveyed the note and mortgage to Saunders and Hinton as private investors. Saunders and Hinton in turn pledged the note and mortgage as collateral for a loan from the bank in Tampa, and the FDIC re-acquired the note when the Tampa bank failed.
We need not decide whether Smith's speculations about the fate of the note and mortgage are sufficient to create a genuine factual dispute. Even if they are, the question of whether the FDIC holds the note and mortgage as successor in interest of a mortgagee (Tower Bank) or of a pledgee (bank in Tampa) is, in any event, utterly immaterial. See Fed.R.Civ.P. 56(c) (). Under Florida law, "a pledgee [may] foreclose a mortgage deposited with him as collateral security for the payment of a debt due him by the mortgagee, and ... [the pledgee's] assignee [may also] maintain his bill to enforce the lien." Gables Racing Ass'n Inc. v. Persky, 116 Fla. 77, 156 So. 392, 394-95 (1934). 6 Indeed, once the mortgagee pledges a mortgage as collateral, it is itself divested of the power to foreclose. See Laing v. Gainey Builders, Inc., 184 So.2d 897, 900 (Fla.Dist.Ct.App.1966). Consequently, the FDIC had standing to bring the foreclosure counterclaim irrespective of the capacity in which it held the Wahlquists' note and mortgage.
Smith next contends that even if the FDIC had standing generally to foreclose the first mortgage, it nonetheless was disabled from foreclosing it against him. Because the FDIC failed to record either the conveyance of the mortgage interest from Tower Bank to FDIC-Receiver, or from FDIC-Receiver to FDIC-Corporate, Smith argues that he is protected from foreclosure of the first mortgage by Florida's recording statute, as he was the purchaser of the property at the foreclosure sale of the second mortgage. 7 See Fla.Stat.Ann. Sec. 701.02(1) (West 1994). 8
The FDIC responds that asset transfers from the failed bank to FDIC-Receiver and subsequent conveyances to FDIC-Corporate during purchase and assumption transactions are not subject to state recording acts, even absent explicit preemption of such statutes by FIRREA. In effect, the FDIC asks us to exempt this aspect of its operations from the reach of state recording statutes by creating a new federal common law rule. 9 We need not decide this issue.
Smith cannot benefit from the protection of the Florida recording statute, even if it applies to the challenged conveyances, because he was not "without notice" of the FDIC's unrecorded acquisition of the Wahlquists' mortgage within the meaning of Fla.Stat.Ann. Sec. 701.02(1). 10
The proper inquiry is whether Smith was on notice, on August 27, 1991, the date he bought the property at the foreclosure sale and purportedly became a "creditor[ ] or subsequent purchaser[ ] for valuable consideration," that the FDIC, at that same moment, possessed the Wahlquist instruments. Florida recognizes three kinds of notice under its recording statutes--express actual notice, implied actual notice (more commonly known in other jurisdictions as inquiry notice), and constructive notice. See Sapp v. Warner, 105 Fla. 245, 141 So. 124, 127-28 (1932), readopted on rehearing, 105 Fla. 245, 143 So. 648, 650-51 (1932). It is undisputed that, until the FDIC filed its counterclaim, Smith did not have express actual notice of the FDIC's continued possession of the Wahlquist instruments on the day of foreclosure. 11 Furthermore, because nothing pertaining to the first mortgage was recorded in the chain of title after the initial recording by Tower Bank, Smith was not on constructive notice of the FDIC's acquisition of that mortgage. but was on notice of Tower Bank's interest. See Dunn v. Stack, 418 So.2d 345, 349 (Fla.Dist.Ct.App.1982) (), rev'd on other grounds, 444 So.2d 935 (Fla.1984). The question, then, is whether Smith was on implied actual notice.
Implied...
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