OTI Fiber, LLC v. CenterState Bank, N.A.

326 So.3d 743

OTI FIBER, LLC, Appellant,

v.CENTERSTATE BANK, N.A. ; Florida Fiber Networks, LLC; David Orshan; and David S. Suarez, Appellees.

No. 2D20-1196

District Court of Appeal of Florida, Second District.

August 11, 2021

Todd L. Wallen of Wallen | Kelley, Coral Gables, for Appellant.

Kristen M. Fiore of Akerman LLP, Tallahassee; Christian George of Akerman LLP, Jacksonville; and John L. Dicks, II, of Akerman LLP, Tampa, for Appellee CenterState Bank, N.A.

No appearance for remaining Appellees.

ROTHSTEIN-YOUAKIM, Judge.

OTI Fiber, LLC, appeals from the final summary judgment entered in favor of CenterState Bank, arguing that reversal is warranted because, among other things, CenterState did not meet its initial burden of showing that there are no genuine issues of material fact and either factually refuting all of OTI's affirmative defenses or showing that they are legally insufficient. We agree.

Florida Fiber Networks, LLC, obtained a $330,000 loan from Sunshine Bank, CenterState's predecessor. The loan was secured by certain equipment. Florida Fiber then sold that equipment to OTI as part of an asset purchase agreement ("APA"), and OTI agreed to assume Florida Fiber's debt. CenterState and OTI dispute whether OTI's assumption of the debt was conditional on OTI's ultimate acceptance of the equipment.

OTI made multiple monthly payments on the equipment to CenterState but stopped making payments after determining that the equipment was unsuitable for its purposes. No longer receiving any payments, CenterState filed suit.

After initially seeking damages solely from Florida Fiber and its principals, CenterState filed an amended complaint adding a claim for damages against OTI (Count V), alleging that OTI had expressly and voluntarily assumed Florida Fiber's debt to CenterState. Specifically, Florida Fiber alleged:

75. When it executed the APA, OTI expressly or impliedly assumed [Florida Fiber's] obligations under the Note and other loan documents.

76. OTI ratified its obligations when it made a payment on the assumed obligations.

77. OTI has breached the Note by failing to make payments and failing to pay all amounts outstanding upon demand.

78. CenterState has declared and, once again, hereby declares the full amount payable under the Note to be due and payable.

79. CenterState has been damaged by OTI's breach of the Note.

After unsuccessfully moving to dismiss on the ground that CenterState "ha[d] failed to allege any contractual or legal obligation between [it] and [OTI] which would support a claim for monetary damages against OTI," OTI filed its answer and raised four affirmative defenses: that CenterState had failed to state a cause of action; that CenterState was equitably estopped from proceeding against OTI based on CenterState's actions and the actions of Florida Fiber's principals; that OTI had failed to receive any consideration for allegedly assuming the debt; and that the debt had already been satisfied through payment or discharge of the obligation. In the meantime, Florida Fiber and OTI also filed cross-claims and countercross-claims against each other.

CenterState moved for summary judgment on all counts of its amended complaint. With respect to OTI, CenterState argued that the undisputed evidence established as a matter of law that pursuant to the APA, OTI had voluntarily assumed Florida Fiber's debt to CenterState. CenterState argued generally that OTI's affirmative defenses did not preclude summary judgment because they were "devoid of any specific factual allegations." It argued further that the trial court had previously denied OTI's motion to dismiss for failure to state a claim, that OTI's defense of equitable estoppel "makes absolutely no sense," that OTI's defense of failure of consideration "is wrong and devoid of any factual support" because OTI had "bought the [equipment] and whatever other assets" Florida Fiber had bought with the loan, and that OTI's defense of payment was factually incorrect.

In support of its motion, CenterState filed, among other things, the affidavit of its vice president, Mark Hill, copies of various documents between Sunshine Bank and Florida Fiber, a copy of the APA between OTI and Florida Fiber, copies of checks and payment records for payments that OTI had made to CenterState, and a copy of CenterState's demand letter to Florida Fiber. OTI filed nothing in response except for the affidavit of its managing member, Mario M. Bustamante.

After a hearing,¹ the trial court granted CenterState's motion in toto and rendered judgment in CenterState's favor on all counts. As to Count V, the court determined that pursuant to the APA, OTI had "expressly assumed the debt owed to CenterState" and had "received a benefit when it expressly assumed the debt owed to CenterState, because the Purchase Price was reduced by the amount of the debt." This appeal followed.²

"The party seeking summary judgment must not only show that there are no genuine issues of material fact, it must also factually refute any affirmative defenses or show that they are legally insufficient." W. Edge II v. Kunderas , 910 So. 2d 953, 955 (Fla. 2d DCA 2005).³ Moreover, "[a] party opposing a motion for summary judgment has no initial obligation to submit affidavits or proof to establish its affirmative defense[ ]." Colon v. JP Morgan Chase Bank, NA , 162 So. 3d 195, 198 (Fla. 5th DCA 2015) (citing Stop & Shoppe Mart, Inc. v. Mehdi , 854 So. 2d 784, 786 (Fla. 5th DCA 2003) ). "The obligation to do so occurs once the movant has properly met its burden of demonstrating the nonexistence of a genuine issue of material fact," Vitelli v. Hagger , 268 So. 3d 246, 248–49 (Fla. 5th DCA 2019) (citing Colon , 162 So. 3d at 198 ), which includes its burden with respect to affirmative defenses, see id.

We agree with OTI that CenterState did not refute its affirmative defense that CenterState has failed to state a cause of action against it. Although CenterState alleged that OTI had "assumed ... [Florida Fiber's] obligations under the Note" and repeatedly alleged that OTI had "breached the Note," OTI is not and never has been a party to the Note. Rather, any obligation that OTI may have to CenterState is necessarily based solely on the APA—a separate contract to which CenterState is not a party—and the APA never even mentioned the Note; rather, the "assumed obligation" as identified in Schedule 3.13 was simply the balance outstanding on the debt, "$322,664."

Because any obligation that OTI may have to CenterState is based solely on the APA and because CenterState is not a party to the APA, CenterState has a cause of action against OTI only pursuant to a third-party-beneficiary theory. See Esposito v. True Color Enters. Constr., Inc. , 45 So. 3d 554, 555 (Fla. 4th DCA 2010) (explaining that a person who is not a party to a contract may not sue to enforce its terms unless the person is an intended third-party...