Eduartez v. Fed. Nat'l Mortg. Ass'n

251 So.3d 227

Eduardo F. EDUARTEZ, Appellant,

v.FEDERAL NATIONAL MORTGAGE ASSOCIATION, et al., Appellees.

No. 3D17–1448

District Court of Appeal of Florida, Third District.

Opinion filed June 13, 2018.

Kenzie N. Sadlak, P.A., and Kenzie N. Sadlak, for appellant.

Straley & Otto, P.A., and Shelley J. Murray and Brian T. Meanley (Fort Lauderdale), for appellee Sunshores Condominium Association, Inc; The Griffith Law Firm, P.A., and Derek R. Griffith, for appellee Degel, LLC.

Before LOGUE, SCALES and LINDSEY, JJ.

PER CURIAM.

Appellant Eduardo Eduartez, defendant/mortgagor below, appeals a trial court order denying Eduartez's rule 1.540 motion to vacate an earlier trial court order disbursing surplus funds—realized after a foreclosure sale of Eduartez's condominium—to appellee Sunshores Condominium Association, Inc. ("Association"). Although the trial court, as a matter of statutory construction, incorrectly determined that the sixty-day window for subordinate lienholders to file claims for surplus proceeds commenced upon the clerk's issuance of a Certificate of Title, rather than upon the foreclosure sale, we nevertheless affirm the trial court's order denying Eduartez's motion because the September 6, 2016 disbursement order was merely erroneous rather than void.

I. Relevant Facts and Procedural Background

A. The Final Judgment of Foreclosure

In March 2011, Eduartez executed and delivered to JPMorgan Chase Bank a promissory note secured by a mortgage on a residential condominium unit Eduartez owned in North Miami Beach. In 2014, Eduartez defaulted on his obligations, which led JP Morgan to file its mortgage foreclosure complaint in October 2014. The complaint named Association as a subordinate lienholder by virtue of Association's July 2014 lien for approximately $7,000 in unpaid assessments. Association answered JP Morgan's foreclosure complaint and in its affirmative defenses alleged that, should the property be sold at a foreclosure sale, Association would be entitled to all surplus proceeds. In March 2015, Federal National Mortgage Association was substituted for JP Morgan as the plaintiff in the foreclosure case, and it obtained a final foreclosure judgment on March 17, 2016.

In relevant part, Paragraph 8 of the final judgment reads:

Jurisdiction . The Court retains jurisdiction of this action to enter further orders that are proper, including, without limitation, writs of possession and deficiency judgments.

IF THIS PROPERTY IS SOLD AT PUBLIC AUCTION, THERE MAY BE ADDITIONAL MONEY FROM THE SALE AFTER PAYMENT OF PERSONS WHO ARE ENTITLED TO BE PAID FROM THE SALE PROCEEDS PURSUANT TO THE FINAL JUDGMENT.

IF YOU ARE A SUBORDINATE LIEN HOLDER CLAIMING A RIGHT TO FUNDS REMAINING AFTER THE SALE, YOU MUST FILE A CLAIM WITH THE CLERK NO LATER THAN SIXTY (60) DAYS AFTER THE SALE. IF YOU FAIL TO FILE A CLAIM, YOU WILL NOT BE ENTITLED TO ANY REMAINING FUNDS.

(Bold and all capital letters in original; underlining emphasis added).

In the final judgment, the trial court set April 21, 2016, as the date of the foreclosure sale.

B. The Foreclosure Sale

Due to a pending rehearing motion (ultimately denied by the trial court), the trial court cancelled the April 21, 2016 initial foreclosure sale and, on May 20, 2016, the clerk rescheduled the foreclosure sale for June 21, 2016. Consistent with the above-cited language appearing in paragraph 8 of the final judgment, the clerk's notice of the rescheduled foreclosure sale contained the following notation:

ANY PERSON CLAIMING AN INTEREST IN THE SURPLUS FROM THE SALE, IF ANY, OTHER THAN THE PROPERTY OWNER AS OF THE DATE OF LIS PENDENS MUST FILE A CLAIM WITHIN 60 DAYS AFTER THE SALE.

(All capital letters in original; underlining emphasis added).

The foreclosure sale occurred on June 21, 2016. In conformity with section 45.031(4) of the Florida Statutes, the clerk, on June 24, 2016, issued a Certificate of Sale informing that the property was sold to third-party purchaser Degel, LLC ("Degel") for $116,100 at the June 21, 2016 foreclosure sale.

C. The Certificates of Title and Disbursements

Having received no objections to the sale within ten days after the filing of the Certificate of Sale, the clerk, pursuant to section 45.031(5), issued the Certificate of Title on July 8, 2016. Also on July 8, 2016, in conformity with section 45.031(7), the clerk issued the Certificate of Disbursements, identifying a surplus realized by the foreclosure sale in the amount of $41,578.63. As required by section 45.031(7)(b), the Certificate of Disbursements contained the following instructions to Association:

IF YOU ARE A PERSON CLAIMING A RIGHT TO FUNDS REMAINING AFTER THE SALE, YOU MUST FILE A CLAIM WITH THE CLERK NO LATER THAN 60 DAYS AFTER THE SALE. IF YOU FAIL TO FILE A CLAIM, YOU WILL NOT BE ENTITLED TO ANY REMAINING FUNDS. AFTER 60 DAYS, ONLY

THE OWNER OF RECORDS [sic]¹ AS OF DATE OF THE LIS PENDENS MAY CLAIM THE SURPLUS.

(All capital letters; underlining emphasis added).

On July 26, 2016, the clerk issued a Corrected Certificate of Disbursements correcting the amount of disbursements to the mortgagee, resulting in an adjusted surplus amount of $41,569.05. This Corrected Certificate of Disbursements contained the same instructions to Association—in all capital letters—as in the initial Certificate of Disbursements.

D. Disbursement Motions and the Disbursement Order

Notwithstanding the language contained in (i) the final judgment, (ii) the clerk's notice of sale, and (iii) the Certificate of Disbursements, Association did not file a claim for the surplus funds within sixty days of the June 21, 2016 foreclosure sale (i.e., on or before August 20, 2016). Rather, on August 25, 2016, sixty-five days after the foreclosure sale, the third-party purchaser, Degel, filed a motion requesting the court to disburse $31,087.58 to Association.² It was not until September 1, 2016—seventy-two days after the foreclosure sale—that Association filed its own motion seeking a portion of the surplus. In this September 1, 2016 motion, Association asserted it was owed $31,982.30, inclusive of Association maintenance fees, interest, late fees and attorney's fees.

The record reflects that, on September 6, 2016, the trial court held, on its uniform motion calendar, a non-evidentiary hearing on the two disbursement motions, and that Eduartez's counsel appeared telephonically at this hearing. There is no transcript of this hearing. After the hearing, the trial court entered its September 6, 2016 order directing the clerk to disburse $32,601.05 of the surplus funds to Association's counsel ("the September 6, 2016 disbursement order"). Eduartez filed no rehearing motion directed toward the September 6, 2016 disbursement order, nor did Eduartez appeal this order.³

E. Surplus Trustee Petition and Resulting "Agreed" Order

Several months later, on February 23, 2017, in an effort to disburse the remaining $8,938.00 in surplus proceeds being held by the clerk,⁴ the clerk, pursuant to section 45.032(3)(c), appointed a surplus trustee to locate the property's owner of record. On March 3, 2017, the surplus trustee filed its petition in the circuit court, indicating that it had located the owner of record (Eduartez) and recommending that the $8,938.00 in surplus proceeds held by the clerk (minus its statutory fees pursuant to section 45.034(7) ) be distributed to Eduartez via his legal counsel.

Presumably to avoid his having to pay the approximately $536 in statutory fees due to the surplus trustee, Eduartez, through counsel, objected to the appointment of the surplus trustee and the surplus trustee's petition. Nothing, however, in Eduartez's objection challenged the September 6, 2016 disbursement order. Ultimately, the trial court entered a May 15, 2017 "agreed" order authorizing the disbursement of the $8,938.00 remaining surplus proceeds, minus the surplus trustee's fee and allowable clerk's fee, to Eduartez.

F. Eduartez's Rule 1.540(b)(4) Motion and the Order on Appeal

Three days after the entry of this May 15, 2017 "agreed" disbursement order, Eduartez filed a Florida Rule of Civil Procedure 1.540(b)(4) motion challenging, for the first time, the September 6, 2016 disbursement order. In his rule 1.540 motion, Eduartez asserted that the trial court was without subject matter jurisdiction to entertain either Degel's August 25, 2016 disbursement motion or Association's September 1, 2016 disbursement motion, because neither motion was filed within sixty days of the June 21, 2016 foreclosure sale. Eduartez argued (as he does on appeal) that the September 6, 2016 disbursement order is therefore void.

On May 30, 2017, the trial court conducted a hearing on Eduartez's rule 1.540 motion. At the hearing, the parties presented the trial court with two competing district court of appeal opinions regarding when the sixty-day period commences for a junior lienholder to file a claim for surplus proceeds: (i) Straub v. Wells Fargo Bank, N.A., 182 So.3d 878, 881 (Fla. 4th DCA 2016) (holding that the sixty-day period commences when the clerk issues and files the Certificate of Title), and (ii) Bank of N.Y. Mellon v. Glenville, 215 So.3d 1284, 1286 (Fla. 2nd DCA 2017) (holding that the sixty-day period commences on the date of the foreclosure sale). After the May 30, 2017 hearing, the trial court, relying upon and citing the Straub decision, concluded that the Association's disbursement motion was timely and entered the order on appeal denying Eduartez's rule 1.540 motion.⁵ Eduartez timely appealed this order.

II. Standard of Review

A trial court's denial of a rule 1.540 motion is generally reviewed for an abuse of discretion. Foche Mortg., LLC v. CitiMortgage, Inc., 163 So.3d 525, 526 (Fla. 3d DCA 2015). When, however, our review turns either on a purely legal, statutory construction or voidness issue, we review the rule 1.540 order de novo . Metcalfe v. Lee, 952 So.2d 624, 627–28 (Fla. 4th DCA 2007) (statutory construction); see also State Farm Mut. Auto. Ins. Co. v....