Third District Court of Appeal State of Florida
Opinion filed February 21, 2018. Not final until disposition of timely filed motion for rehearing.
________________
No. 3D17-434 Lower Tribunal No. 12-31154 ________________
Coconut Grove Acquisition, LLC, etc., Appellant,
vs.
S&C Venture, etc., et al., Appellees.
An Appeal from the Circuit Court for Miami-Dade County, Samantha Ruiz- Cohen, Judge.
Akerman LLP, and Kristen M. Fiore (Tallahassee), Michael O. Mena, and Alexandra M. Mora, for appellant.
Legon Fodiman, P.A., and Todd R. Legon and William F. Rhodes, for appellees.
Before ROTHENBERG, C.J., and EMAS and LUCK, JJ.
ROTHENBERG, C.J. Coconut Grove Acquisition, LLC (“CGA”) appeals from a final judgment
entered in favor of S&C Venture, etc., (“S&C”), among others, who were the
defendants below in this breach of promissory note and foreclosure action.
Because we find that the law and the record fully support the trial court’s rulings,
we affirm.
BACKGROUND
S&C owns commercial property in Miami-Dade County. In September
2007, S&C executed a balloon payment promissory note (“the Note”) for more
than $7.9 million, secured by a mortgage on its commercial property, to Mercantil
CommerceBank, N.A., f/k/a CommerceBank, N.A. (“Mercantil”). The loan
provided for a maturity date of August 20, 2012, and included an option of
extending the maturity date by five years, until August 20, 2017, if certain
requirements were met. S&C maintained an operating account at Mercantil, from
which Mercantil withdrew S&C’s monthly mortgage payments.
In 2010, after S&C defaulted on the Note, Mercantil and S&C entered into a
forbearance agreement, which reaffirmed the original obligations in the loan
documents except as specifically modified in the forbearance agreement. Mercantil
agreed to forbear on any legal action until the maturity date of the loan so long as,
among other things, S&C did not default again. It is undisputed that S&C never
missed a payment to Mercantil under the forbearance agreement.
2 The confusion that spawned this litigation commenced in November 2011,
when Mercantil sold the loan to Stabilis Fund II, LLC (“Stabilis”). Although it no
longer held the Note and was no longer in privity with S&C, Mercantil sent S&C a
letter (“goodbye letter”) on November 14, 2011, via overnight mail, informing
S&C that Mercantil had sold the mortgage to Stabilis and directing S&C to submit
its payments to Stabilis at the address provided in the letter. This letter also
informed S&C that the monthly payments would no longer be deducted from the
Mercantil operating account and provided a phone number to call if S&C had any
questions. Despite these instructions, S&C continued to deposit sufficient funds to
cover its monthly payment obligations into the operating account at Mercantil
rather than sending the payments directly to Stabilis.
It was not until December 2011 that S&C received a letter (“hello letter”)
from Stabilis’s loan servicer, which provided specific payment instructions. The
hello letter informed S&C that it would receive a billing statement two weeks prior
to a payment due date. However, rather than receiving the promised billing
statement, S&C received a default notice from Stabilis on January 11, 2012,
informing S&C that the entire loan balance was immediately due and owing
because of existing defaults. In the ensuing months, while the parties attempted to
resolve their disputes, S&C sent Stabilis all monthly payment due under the terms
3 of the loan documents, and Stabilis accepted each payment, with the qualification
that it was not waiving any preexisting default.
On July 19, 2012, S&C attempted to exercise its right to extend the maturity
date of the loan from August 20, 2012 to August 20, 2017, pursuant to the terms of
the loan documents and the forbearance agreement. To that end, S&C tendered the
required extension fee to Stabilis. Stabilis rejected the tender and informed S&C
on August 24, 2012, that the maturity date would not be extended because S&C’s
loan was in default.
Thereafter, Stabilis filed a two-count complaint against S&C for breaching
the Note and for foreclosure on the collateral property. Stabilis argued, among
other things, that S&C failed to make its monthly payments in November and
December 2011. S&C responded that Stabilis and its agents were responsible for
any delay in payments because they caused the confusion that resulted in the delay.
S&C also counterclaimed, seeking a declaratory judgment finding that it had
properly extended the maturity date of the loan. In December 2014, Stabilis
assigned the loan to CGA.
After a non-jury trial in November 2016, the trial court entered a detailed
forty-six-page final judgment in favor of S&C, concluding that: (1) CGA failed to
prove that S&C breached the note; (2) CGA failed to prove that it is entitled to
foreclosure, and it would be inequitable, unjust, and unconscionable to foreclose;
4 and (3) S&C is entitled to declaratory judgments finding that S&C is not in default,
the January 2012 notice of default is invalid, S&C’s rights under the loan
documents remain valid and enforceable, and S&C properly exercised its option to
extend the loan’s maturity date to August 20, 2017. Thereafter, the trial court
denied CGA’s motion for rehearing, and this appeal followed.
ANALYSIS
We review the trial court’s construction and interpretation of notes and
mortgages de novo; however, we review the trial court’s findings of facts to
determine if they are supported by competent substantial evidence. Smith v.
Reverse Mortg. Sols., Inc., 200 So. 3d 221, 224 (Fla. 3d DCA 2016).
CGA contends on appeal that S&C defaulted because it failed to make its
required monthly payments in November and December 2011 despite receiving the
goodbye letter from Mercantil before either payment was due, a letter which
specifically instructed S&C to pay Stabilis at an address contained therein. We,
however, find that based on the place of payment clause contained in the Note,
S&C was not required to follow the instructions contained in Mercantil’s goodbye
letter, and because S&C continued to deposit sufficient funds to cover its payment
obligations into its account with Mercantil, S&C was not in default of either the
Note or the forbearance agreement.
5 The following findings by the trial court are supported by competent
substantial evidence: (1) in November and December 2011, S&C continued to
make payments into the operating account held at Mercantil; (2) sufficient funds
existed in the operating account to cover all loan payment obligations that came
due during that time; and (3) S&C did not receive the hello letter from Stabilis’s
loan servicer, which was the first letter from Stabilis to include payment
instructions, until after the November and December 2011 payments were due.
The place of payment clause in the Note, which the forbearance agreement
does not modify, provides: “This Note is payable at the place designated
hereinabove or at such other place as the payee or holder hereof may hereafter
designate in writing.” (emphasis added). The plain meaning of this provision is
controlling. Bradley v.
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Third District Court of Appeal State of Florida
Opinion filed February 21, 2018. Not final until disposition of timely filed motion for rehearing.
________________
No. 3D17-434 Lower Tribunal No. 12-31154 ________________
Coconut Grove Acquisition, LLC, etc., Appellant,
vs.
S&C Venture, etc., et al., Appellees.
An Appeal from the Circuit Court for Miami-Dade County, Samantha Ruiz- Cohen, Judge.
Akerman LLP, and Kristen M. Fiore (Tallahassee), Michael O. Mena, and Alexandra M. Mora, for appellant.
Legon Fodiman, P.A., and Todd R. Legon and William F. Rhodes, for appellees.
Before ROTHENBERG, C.J., and EMAS and LUCK, JJ.
ROTHENBERG, C.J. Coconut Grove Acquisition, LLC (“CGA”) appeals from a final judgment
entered in favor of S&C Venture, etc., (“S&C”), among others, who were the
defendants below in this breach of promissory note and foreclosure action.
Because we find that the law and the record fully support the trial court’s rulings,
we affirm.
BACKGROUND
S&C owns commercial property in Miami-Dade County. In September
2007, S&C executed a balloon payment promissory note (“the Note”) for more
than $7.9 million, secured by a mortgage on its commercial property, to Mercantil
CommerceBank, N.A., f/k/a CommerceBank, N.A. (“Mercantil”). The loan
provided for a maturity date of August 20, 2012, and included an option of
extending the maturity date by five years, until August 20, 2017, if certain
requirements were met. S&C maintained an operating account at Mercantil, from
which Mercantil withdrew S&C’s monthly mortgage payments.
In 2010, after S&C defaulted on the Note, Mercantil and S&C entered into a
forbearance agreement, which reaffirmed the original obligations in the loan
documents except as specifically modified in the forbearance agreement. Mercantil
agreed to forbear on any legal action until the maturity date of the loan so long as,
among other things, S&C did not default again. It is undisputed that S&C never
missed a payment to Mercantil under the forbearance agreement.
2 The confusion that spawned this litigation commenced in November 2011,
when Mercantil sold the loan to Stabilis Fund II, LLC (“Stabilis”). Although it no
longer held the Note and was no longer in privity with S&C, Mercantil sent S&C a
letter (“goodbye letter”) on November 14, 2011, via overnight mail, informing
S&C that Mercantil had sold the mortgage to Stabilis and directing S&C to submit
its payments to Stabilis at the address provided in the letter. This letter also
informed S&C that the monthly payments would no longer be deducted from the
Mercantil operating account and provided a phone number to call if S&C had any
questions. Despite these instructions, S&C continued to deposit sufficient funds to
cover its monthly payment obligations into the operating account at Mercantil
rather than sending the payments directly to Stabilis.
It was not until December 2011 that S&C received a letter (“hello letter”)
from Stabilis’s loan servicer, which provided specific payment instructions. The
hello letter informed S&C that it would receive a billing statement two weeks prior
to a payment due date. However, rather than receiving the promised billing
statement, S&C received a default notice from Stabilis on January 11, 2012,
informing S&C that the entire loan balance was immediately due and owing
because of existing defaults. In the ensuing months, while the parties attempted to
resolve their disputes, S&C sent Stabilis all monthly payment due under the terms
3 of the loan documents, and Stabilis accepted each payment, with the qualification
that it was not waiving any preexisting default.
On July 19, 2012, S&C attempted to exercise its right to extend the maturity
date of the loan from August 20, 2012 to August 20, 2017, pursuant to the terms of
the loan documents and the forbearance agreement. To that end, S&C tendered the
required extension fee to Stabilis. Stabilis rejected the tender and informed S&C
on August 24, 2012, that the maturity date would not be extended because S&C’s
loan was in default.
Thereafter, Stabilis filed a two-count complaint against S&C for breaching
the Note and for foreclosure on the collateral property. Stabilis argued, among
other things, that S&C failed to make its monthly payments in November and
December 2011. S&C responded that Stabilis and its agents were responsible for
any delay in payments because they caused the confusion that resulted in the delay.
S&C also counterclaimed, seeking a declaratory judgment finding that it had
properly extended the maturity date of the loan. In December 2014, Stabilis
assigned the loan to CGA.
After a non-jury trial in November 2016, the trial court entered a detailed
forty-six-page final judgment in favor of S&C, concluding that: (1) CGA failed to
prove that S&C breached the note; (2) CGA failed to prove that it is entitled to
foreclosure, and it would be inequitable, unjust, and unconscionable to foreclose;
4 and (3) S&C is entitled to declaratory judgments finding that S&C is not in default,
the January 2012 notice of default is invalid, S&C’s rights under the loan
documents remain valid and enforceable, and S&C properly exercised its option to
extend the loan’s maturity date to August 20, 2017. Thereafter, the trial court
denied CGA’s motion for rehearing, and this appeal followed.
ANALYSIS
We review the trial court’s construction and interpretation of notes and
mortgages de novo; however, we review the trial court’s findings of facts to
determine if they are supported by competent substantial evidence. Smith v.
Reverse Mortg. Sols., Inc., 200 So. 3d 221, 224 (Fla. 3d DCA 2016).
CGA contends on appeal that S&C defaulted because it failed to make its
required monthly payments in November and December 2011 despite receiving the
goodbye letter from Mercantil before either payment was due, a letter which
specifically instructed S&C to pay Stabilis at an address contained therein. We,
however, find that based on the place of payment clause contained in the Note,
S&C was not required to follow the instructions contained in Mercantil’s goodbye
letter, and because S&C continued to deposit sufficient funds to cover its payment
obligations into its account with Mercantil, S&C was not in default of either the
Note or the forbearance agreement.
5 The following findings by the trial court are supported by competent
substantial evidence: (1) in November and December 2011, S&C continued to
make payments into the operating account held at Mercantil; (2) sufficient funds
existed in the operating account to cover all loan payment obligations that came
due during that time; and (3) S&C did not receive the hello letter from Stabilis’s
loan servicer, which was the first letter from Stabilis to include payment
instructions, until after the November and December 2011 payments were due.
The place of payment clause in the Note, which the forbearance agreement
does not modify, provides: “This Note is payable at the place designated
hereinabove or at such other place as the payee or holder hereof may hereafter
designate in writing.” (emphasis added). The plain meaning of this provision is
controlling. Bradley v. Sanchez, 943 So. 2d 218, 221 (Fla. 3d DCA 2006) (“Where
there is no facial ambiguity in the portion of the subject contract, the provision
must be afforded its plain meaning.”) (internal quotation and citation omitted).
The Note designated that S&C deposit sufficient funds into the operating account
S&C opened at Mercantil for that purpose. It is undisputed that since the execution
of the forbearance agreement, S&C complied with its contractual obligations by
depositing sufficient funds into the operating account at Mercantil, which was the
place “designated hereinabove,” until another place was designated by “the payee
or holder” of the Note.
6 Although Mercantil attempted to change the place of payment when it sent
its goodbye letter to S&C after it sold the loan to Stabilis, Mercantil was no longer
the payee or holder of the Note, and it therefore had no authority to change the
place of payment. It is neither the fault of S&C nor Mercantil that S&C did not
receive new payment instructions from Stabilis, the then-current payee and/or
holder of the Note, until after the November and December 2011 payments became
due. In fact, if S&C had sent its monthly payments to the address contained in the
“goodbye letter,” these payments would have been in conflict with the binding
place of payment term in the Note. Accordingly, S&C’s decision to continue
depositing sufficient funds into the operating account to cover its monthly payment
obligations was in compliance with its contractual duties.1
Lastly, we conclude that the trial court did not err by declaring that S&C
properly extended the maturity date of the loan to August 20, 2017. On appeal,
CGA contends that one of the conditions precedent for extending the maturity date
of the loan was not met. Specifically, CGA contends that the forbearance
agreement’s required debt service coverage ratio (“DSCR”), which is a measure of
1 The trial court’s order included several findings related to the discretion the trial court has to deny foreclosure on equitable grounds. See Amerifirst Fed. Sav. & Loan Ass’n of Miami v. Century 21 Commodore Plaza, Inc., 416 So. 2d 45, 46 (Fla. 3d DCA 1982) (“It is axiomatic that a court of equity may refuse to foreclose a mortgage when an acceleration of the due date makes acceleration unconscionable and foreclosure inequitable and unjust.”). However, we decline to address such issues because we find that there is no breach from which foreclosure could follow.
7 the ability of net income to service a debt, was not met as of the initial maturity
date, August 20, 2012. The parties contested the measure of the DSCR vigorously
below, and the trial court found that the required DSCR of 1.3:1 was satisfied after
hearing detailed testimony from the parties’ expert witnesses and evaluating the
witnesses’ credibility. The trial court’s finding is supported by competent
substantial evidence, and thus, we will not second guess the trial court on appeal.
Bare Necessities, Inc. v. Estrada, 902 So. 2d 184, 185 (Fla. 3d DCA 2005) (noting
that “when competent, substantial evidence supports a trial court’s ruling, the
appellate court will not ‘second-guess the trial court’”) (citing Bryan v.
Butterworth, 692 So. 2d 878, 881 (Fla. 1997)).
CONCLUSION
Because there is competent substantial evidence in the record that supports
the trial court’s finding that S&C did not fail to make its monthly payments in
November and December 2011, we find no error in the trial court’s comprehensive
order concluding that S&C did not breach the terms of the forbearance agreement
or other loan documents, CGA failed to prove that it is entitled to foreclose on
S&C’s commercial property, and S&C properly extended the maturity date of the
loan. We also find the remainder of CGA’s arguments to be without merit, and
thus, we decline to address them further. Accordingly, we affirm in all respects.
Affirmed.