U.S. Bank Nat'l Ass'n v. Farhood, 1D14–0268.

• Decision Date: 16 December 2014
• Docket Number: No. 1D14–0268.,1D14–0268.
• Parties: U.S. BANK NATIONAL ASSOCIATION, Trustee for Lehman Brothers–Structured Asset Investment Loan Trust Sail 2005–3, Appellant, v. Nicholas F. FARHOOD a/k/a Nicholas F. Farhood; Mortgage Electronic Registration Systems, Inc., as Nominee for Countrywide Home Loans, Inc.; Sides Moreno Point West; Leah Farhood, Unknown Spouse of Nicholas Farhood; Unknown spouse of Leah Farhood, Beach Community Bank; John E. Venn, Jr., Trustee., Appellees.
• Court: Florida District Court of Appeals

153 So.3d 955

U.S. BANK NATIONAL ASSOCIATION, Trustee for Lehman Brothers–Structured Asset Investment Loan Trust Sail 2005–3, Appellant

v.Nicholas F. FARHOOD a/k/a Nicholas F. Farhood; Mortgage Electronic Registration Systems, Inc., as Nominee for Countrywide Home Loans, Inc.; Sides Moreno Point West; Leah Farhood, Unknown Spouse of Nicholas Farhood; Unknown spouse of Leah Farhood, Beach Community Bank; John E. Venn, Jr., Trustee., Appellees.

No. 1D14–0268.

District Court of Appeal of Florida, First District.

Dec. 16, 2014.

Thomas H. Loffredo and Jeffrey T. Kuntz of GrayRobinson, P.A., Fort Lauderdale, and Michael E. Riley of GrayRobinson, P.A., Tallahassee, for Appellant.

Jacob A. Brainard, Scott C. Davis, and Candice J. Gundel of Business Law Group, P.A., Tampa, for Appellee Sides Moreno Point West Owners Association, Inc.

Opinion

CLARK, J.

This appeal is from the final summary judgment of foreclosure upon cross-motions for summary judgment for mortgage and lien foreclosures. U.S. Bank National Association, as Trustee for Structured Asset Investment Loan Trust, Mortgage Pass–Through Certificates, Series 2005–3 (“U.S.Bank”) appeals the portions of the final summary judgment wherein the trial court, “pursuant to the Court's order of April 17, 2012,” deemed the lien for association fees of Sides Moreno Point West Owners' Association, Inc. (“the Association”) superior in priority to the mortgage lien of U.S. Bank. U.S. Bank contends that the trial court abused its discretion by sanctioning U.S. Bank with a penalty which contravenes the statutory provisions governing lien priority and which ignores the complete and adequate procedures and remedies at law available if a party fails to diligently prosecute its case or willfully employs delay tactics in the litigation. We agree and reverse the challenged portion of the final summary judgment of foreclosure and the prior order upon which it is based. In all other respects, the final summary judgment of foreclosure is affirmed.

U.S. Bank filed its complaint for foreclosure in the circuit court on July 15, 2007. The Association was included as a party defendant based on its claim of lien for condominium association assessments, which—according to the allegations of the complaint—had been recorded in the official records of Okaloosa County prior to the filing of U.S. Bank's complaint.¹ The Association answered the complaint and asserted a counter claim for foreclosure on its claim of lien for the condominium assessments. § 718.116(5)(a), Fla. Stat. From the initial pleadings and throughout the litigation, the priority of the respective parties' liens was a contested issue.

The litigation progressed slowly for four years after the filing of the initial complaint. However, the record contains no motion under rule 1.420(e), Florida Rules of Civil Procedure and no notice for trial or order setting the action for trial pursuant to rule 1.440. On September 1, 2011, upon U.S. Bank's motion to dismiss the Association's counterclaim and upon an unrecorded hearing on that motion, the circuit court entered an order denying the motion to dismiss. In that order, the court found that U.S. Bank had delayed the case and failed to act upon it. As a “sanction,” the court ordered U.S. Bank to pay $2,500.00 to the Association.

In early 2012, U.S. Bank filed its motion for summary judgment of foreclosure, which included allegations that its mortgage was recorded prior to the liens of other defendants and was thus superior in interest to those liens. The Association then filed its motion to dismiss and for sanctions against U.S. Bank for additional delay tactics. The Association also sought summary judgment on its counter claim for foreclosure on its claim of lien for the assessments and alleged that its lien was superior to any interest of U.S. Bank and the borrowers.

The circuit court disposed of the pending motions in its order entered April 17, 2012. The court found that U.S. Bank's failure to pursue the litigation had been “willful, deliberate, and/or contumacious,” resulting in prejudice to the Association's interests and causing “significant problems of judicial administration” without reasonable justification. However, the court did not dismiss U.S. Bank's action, impose any monetary sanction requested in the Association's motion, or charge U.S. Bank with the Association's attorney's fees. Rather, the court stated that it exercised “its equitable power and authority to give [the Association] first lien priority in this matter” and declared that the Association's lien and interest in the real property “is now superior to any right, title, interest or claim” of U.S. Bank. U.S. Bank's petition to this Court for writ of certiorari review was unsuccessful. U.S. Bank Nat'l Ass'n v. Farhood, 110 So.3d 446 (Fla. 1st DCA 2013).

On appeal is the circuit court's final summary judgment of foreclosure, entered December 13, 2013. In that judgment, the circuit court relied on its order entered April 17, 2012 as the basis for holding the Association's lien “superior to the liens or interests of Plaintiff/Counter–Defendant, U.S. Bank” and for ruling that U.S. Bank's lien was “prior, paramount, and superior to all rights, claims, lien interests, encumbrances and equities of the Defendants, except for” the Association. The court determined that the Association was entitled to a total of $79,458.71 for condominium assessments, interest, costs and fees, and that U.S. Bank was entitled to a total of $740,450.73 under the note and mortgage, including principle, interest, escrow payments, and other costs.

We review the circuit court's decision to impose sanctions under an abuse of discretion standard. Boca Burger, Inc. v. Forum, 912 So.2d 561, 573 (Fla.2005). This standard applies to sanctions in the context of foreclosure actions and lien issues. Broward Cnty. v. Recupero, 949 So.2d 274, 276 (Fla. 4th DCA 2007). In this case, the court's resort to its “equitable power and authority” to fashion a sanction for unspecified delays in this case constituted an abuse of discretion which must be reversed.

Mortgage foreclosure actions are equitable in nature. § 702.01, Fla. Stat. The Florida Supreme Court recently reemphasized “[w]hen it is necessary, Florida courts have powers at their disposal to provide equitable remedies to litigants.” Arsali v. Chase Home Fin. LLC, 121 So.3d 511, 517 (Fla.2013). However, the long-enduring principle that “equity will not act when there is a full, adequate, and complete remedy at law” applies to mortgage foreclosure actions and continues in effect today. Wildwood Crate & Ice Co. v. Citizens Bank of Inverness, 98 Fla. 186, 192, 123 So. 699, 701 (1929) ; see also Jackson v. Computer Science Raytheon, 36 So.3d 754, 756 (Fla. 1st DCA 2010) (recitation of rule).

The circuit court's frustration with the slow progress of a stale case is certainly understandable. “Dilatory practices bring the administration of justice into disrepute.” Comment, R. Regulating Fla. Bar 4–3.2. Members of the Florida Bar have an ethical obligation to “make reasonable efforts to expedite litigation consistent with the interests of the client.”R. Regulating Fla. Bar 4–3.2. Tactics to delay or avoid progress employed for the purpose of frustrating an opposing party's attempt to obtain rightful redress are sanctionable. See Comment, R. Regulating Fla. Bar 4–3.2. However, the court's orders do not indicate that any action by U.S. Bank or counsel interfered with the court's ability to manage this case in accordance with rule 2.545(b), Florida Rules of Judicial Administration.

Even if the court correctly found that U.S. Bank or counsel had engaged in sanctionable delay tactics, the court had no need to resort to its equitable powers to create the sanction in this case. Appropriate remedies to address any willful and deliberate delay in the litigation are already established. See § 57.105(2), Fla. Stat. (award of attorney's fees and costs caused by opposing party's deliberate delays); Fla. R. Civ. P. 1.420 (dismissal of all or part of an action); 1.440 (setting action for trial); Fla. R. Jud. Admin. 2.545(e) (continuances should be few, good cause is required).

Not only did the court unnecessarily invoke equitable powers to create a remedy for delay, the order declaring the Association's lien superior to U.S. Bank's lien as a sanction for such delay exceeded the court's authority. “[C]ourts of...