Sterling Factors v. U.S. Bank Nat. Ass'n

• Decision Date: 02 November 2007
• Docket Number: No. 2D06-3762.,2D06-3762.
• Citation: 968 So.2d 658
• Parties: STERLING FACTORS CORPORATION, Appellant, v. U.S. BANK NATIONAL ASSOCIATION; Dean N. Meyers, a/k/a Dean Meyerson, a/k/a Dean Meyer; Deborah C. Meyers; Daniel W. Nester; and United States of America, Department of the Treasury-Internal Revenue, Appellees.
• Court: Florida District Court of Appeals

968 So.2d 658

STERLING FACTORS CORPORATION, Appellant, v. U.S. BANK NATIONAL ASSOCIATION; Dean N. Meyers, a/k/a Dean Meyerson, a/k/a Dean Meyer; Deborah C. Meyers; Daniel W. Nester; and United States of America, Department of the Treasury-Internal Revenue, Appellees.

No. 2D06-3762.

District Court of Appeal of Florida, Second District.

November 2, 2007.

James J. Webb of Haley, Sinagra, Paul & Toland, P.A., Fort Lauderdale, for Appellant.

Jane Ellen Bond of Butler & Hosch, P.A., Orlando, for Appellee U.S. Bank National Association.

D. Keith Wickenden and Rachael S. Loukonen of Grant, Fridkin, Pearson, Athan & Crown, P.A., Naples, for Appellee Daniel W. Nester.

No appearance for Appellees Dean N. Meyers, Deborah C. Meyers and United States of America, Department of the Treasury-Internal Revenue.

ALTENBERND, Judge.

Sterling Factors Corporation appeals an order denying its motion to set aside a final summary judgment of foreclosure. Sterling held a second mortgage on a parcel of real estate owned by Dean N. Meyers and his wife. U.S. Bank National Association held the first mortgage. After the trial court refused to set aside the judgment in favor of U.S. Bank or to stay the foreclosure sale, Daniel W. Nester and his wife purchased the property at the foreclosure sale for an amount that will not provide sufficient funds to satisfy Sterling's lien.

To the extent that the trial court ruled it had no jurisdiction to set aside the foreclosure judgment once the sale occurred based upon its interpretation of section 702.07, Florida Statutes (2005), the trial court erred. Nevertheless, we affirm the order because Sterling's motion for relief from the foreclosure judgment did not allege a ground for which relief could be granted. Sterling sought relief pursuant to Florida Rule of Civil Procedure 1.540(b)(4) by alleging only that the final summary judgment was void because Sterling did not receive actual notice of the hearing at which the motion for summary judgment was considered. Sterling admitted, however, that it had been served with appropriate process and participated in the foreclosure proceedings and that it received a copy of the final judgment within a few days of its entry. We conclude as a matter of law that under these circumstances the judgment was, at best, voidable.

I. A SUMMARY OF THE PROCEEDINGS IN THE CIRCUIT COURT

Because this appeal involves a nonfinal order, this court does not have a complete record. The appendix provided by Sterling is somewhat abbreviated. It contains no transcripts, nor a copy of the complaint that commenced this action in November 2005. The complaint was apparently filed by U.S. Bank National Association "as trustee" seeking to foreclose a mortgage on a Naples home owned by Mr. and Mrs. Meyers. It is not clear what instrument names U.S. Bank as a trustee or on whose behalf it acts as trustee. The civil action progress docket indicates that the complaint was served on Mr. and Mrs. Meyers in early December 2005. U.S. Bank filed an initial motion for summary judgment in early January 2006, just before it obtained a clerk's default against the Meyerses.

In late January 2006, however, U.S. Bank filed an amended complaint to foreclose the mortgage. The amended complaint, which is in the appendix provided by Sterling for this appeal, attached a copy of the note and mortgage. The note and mortgage are dated February 6, 2004, and provide that Finance America, LLC, is the lender and holder of the note for $650,000. The second count of the amended complaint alleged that the original documents were missing and sought to reestablish the lost note and mortgage. The amended complaint also alleged the existence of Sterling's mortgage, dated December 28, 2004, and filed in the official records of Lee County in April 2005, and in the official records of Collier County in December 2005.¹ Sterling's mortgage secured a $500,000 obligation.

In February 2006, Sterling filed an answer to the amended complaint, admitting only that it had an interest in the property. In early March 2006, U.S. Bank served a notice of hearing on all parties to the foreclosure, scheduling its motion for summary judgment for a hearing on April 17, 2006.² That notice indicated it was served on Sterling, but the address on the certificate of service for Sterling's attorney was incorrect; it listed the proper street address but omitted the city, state, and zip code. Our record does not establish with any certainty whether the envelope contained a similar error or what actually happened to the notice that was supposed to be delivered to Sterling.

U.S. Bank obtained a summary final judgment on April 17, 2006. Sterling admitted that it received a copy of this summary final judgment shortly after it was entered and that it took no steps to seek rehearing or otherwise object. It did not appeal this judgment. The summary final judgment established that the total amount due to U.S. Bank was $694,689.64 and set the foreclosure sale for May 18, 2006. The judgment declared this lien superior to all others and explained that any surplus funds from the foreclosure sale would be placed in the registry of the court for the benefit of the other parties, even defaulted ones.

On May 16, 2006, Mr. and Mrs. Meyers filed a motion to cancel the sale. On May 17, Sterling served by facsimile a motion joining in their motion to cancel sale and an "emergency verified" motion to set aside the summary final judgment pursuant to rule 1.540(b)(4). The only ground pleaded in this motion was that the summary final judgment was void because Sterling had not received notice of the hearing on the motion for summary judgment because of the defect in the certificate of service on the notice.

The trial court declined to stay the sale or rule on the motion on an emergency basis. The civil action progress docket indicates that the sale proceeded, and the property was sold to Daniel W. Nester for $850,000. On May 18, the Clerk of the Circuit Court issued a certificate of sale. Although it appears Sterling did not participate in this sale, it later filed an appraisal that valued the property at $1,600,000. If the property is worth this amount and Sterling had a valid lien against the property, then some or all of its $500,000 loan could have been recovered in the foreclosure sale if someone had been willing to bid an amount closer to the fair market value of the property.³ Sterling served an objection to the sale.⁴

Sterling filed a memorandum in support of its motion for relief from judgment and to set aside the sale. From the appendix, it appears that only the purchaser, Mr. Nester, filed a memorandum in opposition to Sterling's motion. The circuit court conducted a hearing on this motion on July 6, 2006, but we have no transcript of that hearing. Thereafter, the trial court entered an order simply denying the motion to set aside the judgment without further explanation and directing the clerk to issue a certificate of title to Mr. Nester. If Mr. and Mrs. Meyers or any of the other defendants objected to this outcome, it is not apparent from the appendix and they have not participated in this appeal.

II. SECTION 702.07 DID NOT DEPRIVE THE CIRCUIT COURT OF JURISDICTION TO CONSIDER THE MOTION FOR RELIEF FROM JUDGMENT

Without a transcript or a more detailed order, it is difficult to determine why the circuit court denied the motion for relief from judgment. However, Mr. Nester's written memorandum argued that the court had no jurisdiction to rule upon the motion in light of section 702.07. Counsel for Mr. Nester candidly admitted at the oral argument held in this appeal that she believed the trial court had based its ruling on this argument. Despite a 1960 decision from the Third District supporting Mr. Nester's argument, see Holiday, Inc. v. Glaser, 121 So.2d 677 (Fla. 3d DCA 1960), we conclude that the trial court had jurisdiction to rule on this motion.

Section 702.07 states:

The circuit courts of this state, and the judges thereof at chambers, shall have jurisdiction, power, and authority to rescind, vacate, and set aside a decree of foreclosure of a mortgage of property at any time before the sale thereof has been actually made pursuant to the terms of such decree, and to dismiss the foreclosure proceeding upon the payment of all court costs.

This statute was enacted in 1927 and has remained unchanged since that time. Ch. 11881, § 1, Laws of Fla. (1927).⁵ This statute has been cited in case law a total of nine times.⁶ Otherwise, it appears to have been largely overlooked.

Facially, the statute grants circuit courts the power to set aside foreclosure decrees at any time before the sale. Nester seeks to interpret a negative from this language: That the statute thus prohibits the circuit courts from doing so after the sale. This interpretation is seemingly supported by one case: Holiday, 121 So.2d 677.

In Holiday, the defendants sought review of an order denying their motion to set aside a foreclosure decree, filed after the sale of the property. In affirming the order, the Holiday court focused initially on the fact that the defendants had not sought a motion for rehearing or a notice of appeal from the judgment of foreclosure before seeking to set it aside. The court thus primarily held that it could not "review a final decree not appealed" in "proceedings to review a subsequent order." Id. at 678.⁷

However, the court then acknowledged the plaintiff's argument that pursuant to section 702.07 the chancellor "lost the power" to set aside the decree once the sale occurred. Id. The Third District distinguished two cases in which foreclosure judgments were set aside after the sale, concluding those cases "dealt with the equity courts' power of general supervision of judicial sales made under their decree and further afforded certain procedures for vacating and setting aside such sales." Holiday, 121 So.2d at 678. Without articulating a...