E-Z Cashing, LLC v. Ferry (In re Ferry)
Decision Date | 21 February 2023 |
Docket Number | 8:20-cv-1179-VMC,Bankr. 8:11-bk-1854-RCT |
Parties | IN RE SUZANNE V. FERRY, Debtor. E-Z CASHING, LLC, Appellant/Cross-Appellee, v. SUZANNE V. FERRY, Appellee/Cross-Appellant. |
Court | United States District Courts. 11th Circuit. United States District Court of Middle District of Florida |
In the context of an adversary proceeding commenced in a Chapter 11 bankruptcy case, Appellant/Cross-Appellee E-Z Cashing, LLC appeals the Bankruptcy Court's May 7, 2020, decision granting Appellee/Cross-Appellant Suzanne Ferry's motion for summary judgment and denying E-Z Cashing's crossmotion for summary judgment. E-Z Cashing filed a brief in support of its appeal on February 8, 2022. (Doc. # 47). On April 5, 2022, Ms. Ferry filed a response to E-Z Cashing's appeal. (Doc. # 52). She also cross-appeals the Bankruptcy Court's May 7, 2020, decision denying her motion for attorney's fees and costs. (Id.). Both parties filed response and reply briefs. (Doc. ## 58, 60). As discussed below, the Court affirms in part and reverses in part the decision of the Bankruptcy Court as to its order on the cross-motions for summary judgment. The Court dismisses as moot Ms. Ferry's cross-appeal regarding her motion for attorney's fees.
Ms. Ferry signed a promissory note and mortgage in favor of Allied Mortgage & Financial Corp. dated May 26, 2004, in the principal amount of $550,000 (the “Loan”). (Doc. # 8-8 at 13). The Loan was secured by 550 Corey Avenue, St. Pete Beach, Florida (“550 Corey”). (Doc. # 8-14 at 2). Bayview Loan Servicing, LLC acquired the Loan by assignment in September 2007. (Doc. # 8-14 at 2).
The 550 Corey Loan contains three clauses relevant to the case at bar. First, Section 5.12 establishes that interest would accrue upon default at the “maximum rate permissible under Florida law.” (Doc. # 8-100 at 17). Second, Section 4.03(a) provides that “no delay by the Mortgagee in exercising any such remedy shall operate as a waiver thereof or preclude the exercise thereof during the continuance of that or any subsequent default.” (Id. at 14). Third, Section 1.08(a) provides that the mortgagee is entitled to reasonable attorney's fees and expenses if “the Mortgagee commences an action against the Mortgagor . . . for the recovery of any sum secured hereby[.]” (Id. at 4). Section 1.08(a) also provides:
Ms. Ferry filed for protection under Chapter 11 of the Bankruptcy Code on February 1, 2011. (Doc. # 8-8). She listed 550 Corey on Schedule A, and Bayview's Loan is item number 4 on Schedule D. (Id. at 13, 22). Bayview filed Proof of Claim 14-1 in the amount of $941,887.77. (Doc. # 8-113). In its claim, Bayview stated that the loan balance as of Petition Date was $941,887.77, of which $282,806.26 represented accrued interest at a default rate of 18 percent. (Id. at 3). The proof of claim stated that “[i]nterest continues to accrue at the default rate of interest, post petition.” (Id.).
On June 29, 2012, the Bankruptcy Court entered an order confirming Ms. Ferry's Fourth Amended Plan of Reorganization (the “Plan”). (Doc. # 8-20). The Plan reduced the secure portion of the 550 Corey Loan from $941,887.77 to $680,000 and required Ms. Ferry to make monthly payments of $4,880.77. (Doc. # 8-18 at 4).
On October 5, 2018, Bayview filed a motion to dismiss, or alternatively, for relief from the automatic stay with respect to three of Ms. Ferry's properties, including 550 Corey (the “Motion for Stay Relief”). (Doc. # 8-21). As to 550 Corey, Bayview alleged that Ms. Ferry failed to comply with her payment obligations under the Plan. (Id.).
On November 8, 2018, the Court entered an order granting, in part, Bayview's Motion for Stay Relief (the “Stay Relief Order”). (Doc. # 8-27). The Stay Relief Order provided in relevant part:
(Id. at 2). The Bankruptcy Court never entered a revised Stay Relief Order.
Sometime around September 17, 2019, Ms. Ferry requested an estoppel letter from Bayview for 550 Corey pursuant to Fla. Stat. § 701.04(1). (Doc. # 8-84 at 1). In response, Bayview sent Ms. Ferry an estoppel letter dated September 25, 2019, showing a total payoff amount of $965,242.52 as of October 31, 2019, itemized as follows:
The current Unpaid Principal Balance is:
(Doc. # 8-65 at 2) (emphasis added) (the “Estoppel Letter”). The second page of the Estoppel Letter contained the following paragraphs:
(Id. at 3). The Estoppel Letter was valid through October 31, 2019. (Id. at 2).
Ms. Ferry entered into a contract to sell 550 Corey for $1.5 million on November 19, 2019. (Doc. # 8-86 at 2). On December 20, 2019, Ms. Ferry filed a motion seeking leave to sell 550 Corey for $1.5 million. (Doc. # 8-62). Ms. Ferry requested permission to sell 550 Corey free and clear of the Loan lien and instead asked that the lien attach to the sale proceeds. (Id. at 2). She stated that the proceeds would be held in trust until the Bankruptcy Court approved its distribution. (Id.). In the motion, she stated that the sale was “fair and equitable.” (Id.). While noting that she disagreed with the amount, Ms. Ferry indicated that Bayview “alleged it held a claim of no less than $1,177,838.42” secured by 550 Corey. (Id.). She did not explain why she disagreed with the amount.
On February 3, 2020, the Bankruptcy Court granted Ms. Ferry's motion to sell 550 Corey. (Doc. # 8-66). The sale order did not declare or limit the amount owed by Ms. Ferry under the Loan. (Id.). It provided that the lien would attach to the sale proceeds, which would be held in trust pending a later determination of entitlement. (Id.).
On February 12, 2020, Ms. Ferry requested an updated estoppel letter from Bayview (Doc. # 8-86 at 3), but she did not receive an updated estoppel letter in response to her request. (Id.). Bayview did provide Ms. Ferry with a loan history summary dated February 13, 2020, for the period of August 15, 2007, through February 10, 2020. (Id. at 2).
On February 28, 2020, Bayview purportedly assigned the Loan to E-Z Cashing. (Doc. # 8-100 at 2). On the same day, Ms. Ferry sold 550 Corey, generating sale proceeds of $1,404,833.20. (Doc. # 8-68 at 2). Ms. Ferry's title agent performed a search prior to closing and did not find an assignment of the Loan to E-Z Cashing. (Doc. # 8-96 at 2).
On March 2, 2020, E-Z Cashing sent Ms. Ferry's counsel a letter indicating that E-Z...
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