U.S. Bank Nat'Lass'N v. Bevans, 3D12–3445.

• Decision Date: 21 May 2014
• Docket Number: No. 3D12–3445.,3D12–3445.
• Citation: 138 So.3d 1185
• Parties: U.S. BANK NATIONAL ASSOCIATION, etc., Appellant, v. Mary BEVANS, etc., et al., Appellees.
• Court: Florida District Court of Appeals

138 So.3d 1185

U.S. BANK NATIONAL ASSOCIATION, etc., Appellant,

v.Mary BEVANS, etc., et al., Appellees.

No. 3D12–3445.

District Court of Appeal of Florida, Third District.

May 21, 2014.

Timothy D. Padgett, P.A., and Timothy D. Padgett, Matthew E. Bryant, Evan S. Singer, and Preston C. Davis, Tallahassee, for appellant.

The Offices of Roman Groysman, P.A., and Roman Groysman, Fort Lauderdale, for appellees.

Before WELLS, EMAS, and LOGUE, JJ.

LOGUE, J.

U.S. Bank National Association challenges an order that (1) vacated a final judgment of foreclosure entered in favor of the Bank; and (2) elevated above the Bank's mortgage the interest of a party that obtained title to the subject property through the foreclosure of a junior lien. We reverse and remand for further proceedings.

FACTS AND PROCEDURAL BACKGROUND

In November 2007, Mary Bevans borrowed money from a financial institution to purchase a condominium. Bevans executed a note and mortgage. The mortgage was recorded in January 2008 and was subsequently assigned to the Bank. At some point, Bevans stopped making her mortgage payments and stopped paying her condominium fees. In 2009, the Condominium Association recorded a lien against the property for unpaid assessments. At that point in time, there were two relevant liens on the property: the Bank's senior mortgage lien and the Association's junior lien.

In January 2010, the Association filed a foreclosure action. That case is not before us, but developments in that case bear directly on the issues in this case. In the Association's foreclosure action, it did not name the Bank as a defendant. The court in that case entered a final judgment of foreclosure in favor of the Association in July 2010. Final Judgment, Palm Residences of S. Beach Condo. Ass'n v. Bevans, 10–1895–CC–23 (Fla. 11th Cir. July 19, 2010).

In February 2011, the Bank filed the present case to foreclose on its mortgage. The Bank's action was filed before the judicial sale on the Association's foreclosure took place. The Bank named the Association as a defendant but failed to record a notice of lis pendens, although there is an unresolved dispute in the record whether this failure was caused by the Bank or the Clerk of the Court.

In March 2011, after the Bank had filed its foreclosure action, the judicial sale based on the Association's foreclosure took place. At the sale, IES Holdings, LLC purchased the subject property. IES then sold the property to Appellee Striding Figure Holdings, LLC by quit-claim deed in July 2011.

The trial court subsequently entered a judgment of foreclosure in favor of the Bank in this case. Striding, which held legal title to the subject property by that time, filed a notice of limited appearance in the Bank's foreclosure suit. Striding moved to vacate the final judgment. In Striding's motion, it argued that it took title to the subject property free of the Bank's claims. This was so, Striding reasoned, because a notice of lis pendens was not properly recorded in the Bank's foreclosure action and because the Bank did not name Striding as a party in that suit. The trial court agreed and entered an order vacating the final judgment. Besides vacating the Bank's final judgment of foreclosure, the order states: “Striding Figure Holdings, LLC shall keep the property exempt from the claims of U.S. Bank, N.A. (‘Plaintiff’).”

ANALYSIS

We first consider whether Striding obtained an interest exempt from the Bank's mortgage. Striding purchased its interest in the property at a judicial sale that resulted from the Association's foreclosure. The Association did not and, in fact, normally could not name a superior lienholder like the Bank as a defendant in the Association's suit to foreclose on its junior lien. See Gonzalez v. Chase Home Fin. LLC, 37 So.3d 955, 957 (Fla. 3d DCA 2010) (“[P]arties claiming title superior to the lien of a mortgage being foreclosed are not proper parties to the foreclosure suit.”) (internal quotations and citations omitted). Thus, the final judgment of foreclosure entered in favor of the Association in the Association's foreclosure action did not eliminate the Bank's senior mortgage interest because “[f]oreclosure does not terminate interests in the foreclosed real estate that are senior to the mortgage being foreclosed.” Garcia v. Stewart, 906 So.2d 1117, 1120 (Fla. 4th DCA 2005) (citations omitted). Accordingly, the Bank's senior interest in the property survived the Association's foreclosure.

Striding, however, argues that it took title free and clear of the Bank's senior mortgage because it acquired title while the Bank's mortgage foreclosure action was pending and the Bank failed to cause the Clerk to record a lis pendens. In support, Striding cites section 48.23(b), Florida Statutes (2012), which reads, in pertinent part:

1. An action that is filed for specific performance or that is not based on a duly recorded instrument has no effect, except as between the parties to the proceeding, on the title to, or any lien upon, the real or personal property unless a notice of lis pendens has been recorded and has not expired or been withdrawn or discharged.

2. Any person acquiring for value an interest in the real or personal property during the pendency of an action described in subparagraph 1 ... shall take such interest exempt from all claims against the property that were filed in such action by the party who failed to record a notice of lis pendens or whose notice expired or was withdrawn or discharged, and from any judgment entered in the proceeding ... as if such person had no actual or constructive notice of the proceeding or of the claims made therein or the documents forming the causes of action...