Suniland Associates, Ltd. v. Wilbenka, Inc.
| Decision Date | 21 June 1995 |
| Docket Number | No. 94-2734,94-2734 |
| Parties | 20 Fla. L. Weekly D1454 SUNILAND ASSOCIATES, LTD., etc., Appellant, v. WILBENKA, INC., Appellee. |
| Court | Florida District Court of Appeals |
Greenspoon, Marder, Hirschfeld & Rafkin, Michael Marder and Victor Kline, Fort Lauderdale, for appellant.
Proenza, White & Roberts, Tilghman & Vieth and H. Mark Vieth, Miami, for appellee.
Before SCHWARTZ, C.J., and JORGENSON and LEVY, JJ.
Suniland Associates appeals from an amended final judgment denying its claim for foreclosure of a mortgage and awarding Wilbenka damages and interest on its counterclaim for breach of a conditional assignment of lease. For the following reasons, we reverse.
In 1987, Wilbenka entered into a Termination of Lease agreement with Suniland Partners ["SPL," not related to the appellee Suniland Associates], which held title to the property known as the Suniland Shopping Center. SPL sought to remove Wilbenka's lease, which was burdensome to SPL, and proceed with redevelopment of the property. SPL purchased Wilbenka's leasehold and executed a note for the indebtedness. As collateral for the note, SPL executed a Conditional Assignment of Lease ["Assignment"] by which it transferred to Wilbenka its right to receive rental payment pursuant to a lease with Mr. Pottery, another tenant at Suniland. The Assignment was recorded. Paragraph 23 of SPL's lease with Mr. Pottery, which was referred to in the Assignment and attached to the Assignment, provided that Mr. Pottery's lease was subordinate to present and future mortgages to which the landlord was a party, and which in any way affected the premises.
In April, 1988, SPL's successor in interest, Real Estate Equities Joint Venture, executed a mortgage and security agreement on the property in favor of Balcor Real Estate Finance, Inc. This mortgage was recorded three weeks after the Assignment was recorded.
In 1989, Wilbenka sued SPL, its individual partners, and its successor in interest seeking a declaration that its lien stemming from the Assignment was superior to the later-recorded mortgage. A Stipulation and Settlement filed in that action provided that the interest of Wilbenka in the leased premises had not been challenged by Balcor, and that the Assignment had in fact been recorded in the public records before Balcor's mortgage was recorded.
Six months later, Balcor sought foreclosure of its mortgage on behalf of Nationsbank, its mortgage trustee. Wilbenka was not named as a party in that action. A final judgment of foreclosure was entered and a certificate of title was issued in favor of Nationsbank.
Six months after that final judgment of foreclosure was entered, Balcor and Nationsbank filed an action against Wilbenka to reforeclose the mortgage. Nationsbank alleged that Wilbenka was inadvertently omitted from the prior foreclosure action, and that Wilbenka's Assignment was a junior encumbrance that was subject to Balcor's mortgage. Balcor and Nationsbank relied on paragraph 23 of the Mr. Pottery lease, to which the Assignment referred. Wilbenka answered, asserted that the action was barred by res judicata and collateral estoppel because of the 1989 declaratory judgment action, and filed a counterclaim that sought damages from the property owner for $140,000 in arrearages due under the Assignment note. Suniland Associates purchased the property from Nationsbank one day before this matter was tried.
Following a bench trial, the trial court found that Balcor's admissions in the 1989 action estopped Balcor from asserting the priority of its mortgage over Wilbenka's Assignment; that Wilbenka's interest runs with the land and burdens the interest of the property owner; and that the new owner was obligated to pay Wilbenka the arrearage on the Assignment note.
We reverse, and in this case of first impression in Florida, hold that an agreement to assign rents and profits creates no interest in the property itself. See Perpetual Fed. Sav. & Loan Ass'n v. Willingham, 296 S.C. 24, 370 S.E.2d 286, 288 (Ct.App.1988) ( ). It is not legally significant, therefore, that Wilbenka recorded the Assignment before Balcor recorded its mortgage. See Id. 370 S.E.2d at 288 (citations omitted) ("Since the instrument did not create any security interest in the property, it is immaterial for the purpose of establishing priorities that subsequent creditors had...
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