Wells Fargo Equip. Fin., Inc. v. Bacjet, LLC

221 So.3d 671

WELLS FARGO EQUIPMENT FINANCE, INC., Appellant,

v.BACJET, LLC, a Florida limited liability company, Bernard A. Carballo, Carballo Ventures, Ltd., a Florida limited partnership, Bernard A. Carballo, as Trustee for the Bernard A. Carballo Living Trust, Carballo Family Ltd., a Florida limited partnership, ACP Jet Charters, Inc., a Florida corporation, and Carballo Aviation, LLC, a Florida limited liability company and Prime Bank of Oklahoma, Appellees.

No. 4D16–2594

District Court of Appeal of Florida, Fourth District.

[June 21, 2017]

Joseph H. Lang, Jr., and Donald R. Kirk of Carlton Fields Jorden Burt, P.A., Tampa, for appellant.

Mark A. Levy and Brent V. Trapana of Brinkley Morgan, Fort Lauderdale for appellee, Prime Bank of Oklahoma.

May, J.

Whether Florida can exercise personal jurisdiction over an Oklahoma lender, whose subject loan is secured by homestead property in Florida is the question we must decide. A creditor of the Florida resident argues the trial court erred in determining that Florida did not have personal jurisdiction over the Oklahoma lender. We agree and reverse.

The creditor, Wells Fargo Equipment Finance, obtained a $7,200,000 judgment against an individual ("debtor") in a dispute arising in Florida. The debtor lives in, and claims homestead on, his Florida home. The judgment was recorded in August 2014, in Florida.

After domesticating its judgment in Oklahoma, the creditor served a post-judgment garnishment summons on the lender in connection with debtor's accounts at the lender. The lender is an Oklahoma corporation with its principal place of business in Edmond, Oklahoma. It is not in the business of making loans to residents of states other than Oklahoma.

In its answer, the lender indicated that the debtor is also indebted to the lender, and the debt is evidenced by a promissory note and security agreement dated June 7, 2013. The lender holds a "first security interest against" the accounts and stock certificates of the debtor.

When attempting to collect on the judgment against the debtor, the creditor learned that the lender loaned three million dollars to the debtor, who is a significant investor in lender's corporation, and secured the loan with collateral valued at six million dollars. The collateral includes liens against several of the debtor's deposit accounts, his stock in the lender's Bank Group, and his unencumbered homestead property located in Jupiter, Florida. The Florida property serves as the primary security to provide collateral protection; but, according to the lender's chief lending officer, the stocks and deposit accounts were included as main sources of repayment.

The lender held the liens as a result of a loan it made to the debtor in June 2013, one year before the creditor obtained its judgment. The lender was aware of the dispute concerning a multi-million dollar jet between the creditor and debtor when it issued the loan, but it did not know the magnitude of the dispute or that a legal action had been filed. The lender also knew the debtor was in default on a multi-million dollar loan with a second creditor, First Fidelity Bank.

After discovering the loan history, the creditor initiated proceedings supplementary by filing a complaint against the lender, alleging fraudulent transfers of certain stock certificates and bank accounts, and that the lender encumbered nearly all of the debtor's unencumbered property in exchange for a loan of half the value of the security interest transferred, with the intent to defraud creditors. The creditor asserted the trial court had personal jurisdiction over the lender under section 48.193, Florida Statutes (2014), and the lender conducted business in Florida by making loans against the debtor's real property located here.

The lender moved to dismiss the original complaint. At the hearing on the motion, creditor's counsel explained that the mortgage facilitated the lender's willingness to loan money to the debtor. Without the mortgage, the creditor would be able to seize the debtor's bank stock and would not have a fraudulent transfer action against the lender. The court responded that the creditor needed to amend its complaint to make it more apparent that the Florida property collateralizing the loan formed a substantial nexus to Florida.

The judge opined that, in his view, pleading in this vein would "pass muster" for personal jurisdiction. In its amended complaint, the creditor alleged jurisdiction was proper under sections 48.193(1)(a) 1. and 3., Florida Statutes, by carrying on business in Florida and holding a lien on the debtor's real property in Florida.

The lender filed a second motion to dismiss arguing the court lacked jurisdiction because the lender does not have sufficient minimum contacts with Florida to satisfy constitutional due process requirements. The lender filed an affidavit by its chief lending officer, stating that it is a foreign entity that is not registered or licensed to do business in Florida, does not maintain a mailing address, telephone listing, or bank account in Florida, has never had employees, officers, agents, or other representatives located in Florida, and does not own property in Florida.

The lender further asserted that it has never opened a bank account for a Florida resident other than for the debtor, it has no outstanding loans to a Florida resident, and had only made two loans secured by Florida property, both to Oklahoma residents. The lender had three customers that moved to Florida after opening their respective accounts in Oklahoma, one of which is the debtor.

At the hearing on the lender's second motion to dismiss, the creditor clarified that section 48.193(1)(a) 3. "was the provision that [it was] really traveling under" because the lender owned, used, or possessed a lien on real property within Florida. The court granted the lender's motion to dismiss, finding no direct tie or nexus to Florida because the acts that gave rise to the creditor's cause of action were all allegedly committed in Oklahoma. The court described the residence in Jupiter as "tangential" to the cause of action. The court only addressed the long-arm statute and did not address minimum contacts.

From this order, the creditor appeals.

The creditor argues the court erred by granting the motion to dismiss for lack of personal jurisdiction because it established jurisdiction pursuant to section 48.193(1)(a) 3. by showing that without the Florida mortgage, there would be no loan and no reason for proceeding with proceedings supplementary. The lender responds the court did not err by dismissing the case because there was no direct affiliation, nexus, or substantial connection between the creditor's claims and the mortgage the lender holds.

The creditor replies that the lender mischaracterizes the claims because the creditor is seeking to avoid the mortgage lien on the Florida homestead; therefore, a nexus exists. It further replies that it is not requesting any relief against exempt property, but rather seeks to set aside the lender's security interests created by its loan transaction with the debtor.

We have de novo review of dismissal orders based on a lack of personal jurisdiction. Wendt v. Horowitz , 822 So.2d 1252, 1256 (Fla. 2002).

Personal jurisdiction can exist in two forms: specific, in which the defendant's actions are directly connected to the forum state; and general, in which "the defendant's connection with the forum state is so substantial that no specific or enumerated relationship between the alleged wrongful actions and the state is necessary." Caiazzo v. American Royal Arts Corp. , 73 So.3d 245, 250 (Fla. 4th DCA 2011). The creditor limits its argument to specific jurisdiction only.

Specific jurisdiction over a non-resident defendant exists where: (1) the defendant's conduct in Florida falls within the enumerated acts listed in Florida's long-arm statute, section 48.193(1)(a) ; and (2) where the defendant has sufficient minimum contacts to satisfy federal due process requirements. Caiazzo , 73 So.3d at 256.

Section 48.193(1)(a) lists enumerated acts allowing a Florida court to exercise specific jurisdiction over a defendant if minimum contacts also exist. The non-resident defendant's actions fall within the statute if it does one of the enumerated acts and the plaintiff's claim "arose from" that act. Caiazzo , 73 So.3d at 256. For a plaintiff's claim to arise from the defendant's actions, there must be a "direct affiliation, nexus, or substantial connection" between the basis for the plaintiff's claim and the defendant's activity in the state. Ferguson v. Estate of Campana , 47 So.3d 838, 842 (Fla. 3d DCA 2010).

Here, the creditor alleges jurisdiction exists over the lender, pursuant to section 48.193(1)(a) 3., because the creditor's cause of action arose from the lender "owning, using, possessing, or holding a mortgage or other lien on [ ] real property within [Florida]." § 48.193(1)(a) 3. However, this portion of Florida's long-arm statute can only be satisfied if: (1) the...