Third District Court of Appeal State of Florida
Opinion filed June 19, 2024. Not final until disposition of timely filed motion for rehearing.
________________
No. 3D22-1691 Lower Tribunal No. 21-20655 ________________
Katha, LLC, etc., et al., Appellants,
vs.
SHEDDF3-AE, LLC, etc., Appellee.
An appeal from the Circuit Court for Miami-Dade County, Vivianne del Rio, Judge.
Palomares-Starbuck & Associates, and Lorenzo J. Palomares, for appellants.
Agentis PLLC, and Christopher B. Spuches, for appellee.
Before EMAS, MILLER, and LOBREE, JJ.
MILLER, J. Appellants, Katha, LLC and Katherine Betancourt, the borrowers,
challenge a final summary judgment rendered in favor of appellee,
SHEDDF3-AE, LLC (“SHEDD”). Among the myriad of issues on appeal is
whether SHEDD was entitled to record a deed in lieu of foreclosure after
assigning all mortgage and loan documents to a third-party entity.1
Concluding the assignment divested SHEDD of standing to declare a default
and pursue the remedies provided under the documents, we affirm in part
and reverse in part.
BACKGROUND
We relay the facts in the light most favorable to the nonmovants, as we
must. Brevard County v. Waters Mark Dev. Enters., LC, 350 So. 3d 395,
398 (Fla. 5th DCA 2022) (“In determining whether a genuine dispute of
material fact exists, the court must view the evidence and draw all factual
inferences therefrom in a light most favorable to the non-moving party and
must resolve any reasonable doubts in that party's favor.”). The borrowers
obtained a loan from City National Bank of Florida. The loan was secured
by a mortgage on a parcel of commercial property.
1 We summarily reject the threshold jurisdictional argument. See Simpson v. Tarmac Am., LLC, 106 So. 3d 87, 88 (Fla. 3d DCA 2013).
3 For years, the borrowers remitted monthly payments, as required,
without incident. In 2020, City National assigned the loan and mortgage to
SHEDD. Shortly thereafter, SHEDD contacted the borrowers and informed
them they were in default and the loan had been accelerated, but a
modification or forbearance was possible. The precise nature of the default
was not specified.
The parties negotiated a Forbearance Agreement and executed a
Deed in Lieu of Foreclosure. The date of execution is disputed by the parties.
The Forbearance Agreement reads: “This Settlement and Forbearance
Agreement (the “Agreement”) is entered and/or made effective as of the 27th
day of February, 2021,” but e-mail correspondence establishes that, as late
as March 24, 2021, the parties were still negotiating the terms. Under the
version the parties eventually executed, any default would terminate the
forbearance period and entitle SHEDD to immediately exercise the option to
record the Deed in Lieu of Foreclosure without notice to the borrowers.2
The borrowers remitted payment for their February and March
obligations, but a dispute arose as to whether the April payment was timely
rendered. The borrowers contend they delivered a personal check and
2 This provision, of course, must be read as including only a prospective, as opposed to a past, default, or the forbearance period is rendered illusory.
4 SHEDD refused to negotiate it, while SHEDD asserts, without supporting
documentation, that the check did not clear. Regardless, the borrowers
ultimately hand-delivered two certified cashiers’ checks encompassing the
April payment and $4,800 in attorney’s fees, as demanded by SHEDD.
SHEDD then executed an Assignment in favor of 2655 SW 25 LLC.
The Assignment specified that SHEDD assigned “all of [its] right, title[,] and
interest in and to the Loan, the Note, the Mortgage[,] and all other documents
executed in connection with the Loan and the Loan Documents” to 2655 SW
25 LLC. “The Loan Documents” were expressly defined as the Note and
Mortgage, along with “all other documents and instruments executed in
connection with [the] Note.”
Purportedly unaware of the assignment, the borrowers contend they
continued to remit monthly payments to SHEDD, while simultaneously
requesting the loan payoff amount. SHEDD recorded the Deed in Lieu of
Foreclosure.
After learning the Deed in Lieu had been recorded, the borrowers filed
suit in the circuit court seeking relief from the Forbearance Agreement. In a
four-count complaint, they alleged claims for declaratory relief, rescission,
unconscionability, and unjust enrichment. SHEDD counterclaimed for
ejectment and moved for summary judgment.
5 The parties filed competing affidavits sharply disputing the underlying
default, and the motion proceeded to a hearing. At the conclusion of the
hearing, the trial court granted summary judgment on the complaint and
counterclaim in favor of SHEDD. This appeal ensued.
STANDARD OF REVIEW
We review the issue of standing in a foreclosure dispute under a de
novo standard. See St. Clair v. U.S. Bank Nat’l Ass’n, 173 So. 3d 1045, 1046
(Fla. 2d DCA 2015). Similarly, “[s]ummary judgment is proper if there is no
genuine issue of material fact and if the moving party is entitled to a judgment
as a matter of law. Thus, our standard of review is de novo.” Volusia County
v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000)
(internal citation omitted). While “[t]he new Florida Rule of Civil Procedure
1.510 indubitably endows the trial court with considerably broader authority
to resolve a case on summary judgment,” Navarro v. Borges, 2024 WL
1422996, at *2 (Fla. 3d DCA Apr. 3, 2024), “‘the general rule remains intact:
credibility determinations and weighing the evidence are jury functions, not
those of a judge.’” Id. (internal quotation marks omitted) (quoting Gracia v.
Sec. First Ins. Co., 347 So. 3d 479, 482 (Fla. 5th DCA 2022)).
ANALYSIS
6 It is well-established under Florida law that an assignment operates as
“a transfer of all the interests and rights to the thing assigned.” Lauren Kyle
Holdings, Inc. v. Heath-Peterson Constr. Corp., 864 So. 2d 55, 58 (Fla. 5th
DCA 2003). Thus, after an assignment of contractual rights is consummated,
the assignee “stands in the shoes of the assignor,” and the assignor “retains
no rights to enforce the contract.” Id.
Here, the dueling summary judgment affidavits chronicled a markedly
different version of pre-suit events. As relevant to our analysis, the
borrowers submitted record evidence refuting the allegation of default.
Further, SHEDD conceded the authenticity of the Assignment assigning
2655 SW 25 LLC its right to enforce “the Loan Documents.”
The term “Loan Documents” was contractually defined as broadly
encompassing all documents executed in connection with the Loan. Hence,
by executing the assignment, SHEDD transferred its prerogative to declare
the loan in default and record the Deed in Lieu of Foreclosure to 2655 SW
25 LLC. See Country Place Cmty. Ass’n, Inc. v. J.P. Morgan Mortg.
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Third District Court of Appeal State of Florida
Opinion filed June 19, 2024. Not final until disposition of timely filed motion for rehearing.
________________
No. 3D22-1691 Lower Tribunal No. 21-20655 ________________
Katha, LLC, etc., et al., Appellants,
vs.
SHEDDF3-AE, LLC, etc., Appellee.
An appeal from the Circuit Court for Miami-Dade County, Vivianne del Rio, Judge.
Palomares-Starbuck & Associates, and Lorenzo J. Palomares, for appellants.
Agentis PLLC, and Christopher B. Spuches, for appellee.
Before EMAS, MILLER, and LOBREE, JJ.
MILLER, J. Appellants, Katha, LLC and Katherine Betancourt, the borrowers,
challenge a final summary judgment rendered in favor of appellee,
SHEDDF3-AE, LLC (“SHEDD”). Among the myriad of issues on appeal is
whether SHEDD was entitled to record a deed in lieu of foreclosure after
assigning all mortgage and loan documents to a third-party entity.1
Concluding the assignment divested SHEDD of standing to declare a default
and pursue the remedies provided under the documents, we affirm in part
and reverse in part.
BACKGROUND
We relay the facts in the light most favorable to the nonmovants, as we
must. Brevard County v. Waters Mark Dev. Enters., LC, 350 So. 3d 395,
398 (Fla. 5th DCA 2022) (“In determining whether a genuine dispute of
material fact exists, the court must view the evidence and draw all factual
inferences therefrom in a light most favorable to the non-moving party and
must resolve any reasonable doubts in that party's favor.”). The borrowers
obtained a loan from City National Bank of Florida. The loan was secured
by a mortgage on a parcel of commercial property.
1 We summarily reject the threshold jurisdictional argument. See Simpson v. Tarmac Am., LLC, 106 So. 3d 87, 88 (Fla. 3d DCA 2013).
3 For years, the borrowers remitted monthly payments, as required,
without incident. In 2020, City National assigned the loan and mortgage to
SHEDD. Shortly thereafter, SHEDD contacted the borrowers and informed
them they were in default and the loan had been accelerated, but a
modification or forbearance was possible. The precise nature of the default
was not specified.
The parties negotiated a Forbearance Agreement and executed a
Deed in Lieu of Foreclosure. The date of execution is disputed by the parties.
The Forbearance Agreement reads: “This Settlement and Forbearance
Agreement (the “Agreement”) is entered and/or made effective as of the 27th
day of February, 2021,” but e-mail correspondence establishes that, as late
as March 24, 2021, the parties were still negotiating the terms. Under the
version the parties eventually executed, any default would terminate the
forbearance period and entitle SHEDD to immediately exercise the option to
record the Deed in Lieu of Foreclosure without notice to the borrowers.2
The borrowers remitted payment for their February and March
obligations, but a dispute arose as to whether the April payment was timely
rendered. The borrowers contend they delivered a personal check and
2 This provision, of course, must be read as including only a prospective, as opposed to a past, default, or the forbearance period is rendered illusory.
4 SHEDD refused to negotiate it, while SHEDD asserts, without supporting
documentation, that the check did not clear. Regardless, the borrowers
ultimately hand-delivered two certified cashiers’ checks encompassing the
April payment and $4,800 in attorney’s fees, as demanded by SHEDD.
SHEDD then executed an Assignment in favor of 2655 SW 25 LLC.
The Assignment specified that SHEDD assigned “all of [its] right, title[,] and
interest in and to the Loan, the Note, the Mortgage[,] and all other documents
executed in connection with the Loan and the Loan Documents” to 2655 SW
25 LLC. “The Loan Documents” were expressly defined as the Note and
Mortgage, along with “all other documents and instruments executed in
connection with [the] Note.”
Purportedly unaware of the assignment, the borrowers contend they
continued to remit monthly payments to SHEDD, while simultaneously
requesting the loan payoff amount. SHEDD recorded the Deed in Lieu of
Foreclosure.
After learning the Deed in Lieu had been recorded, the borrowers filed
suit in the circuit court seeking relief from the Forbearance Agreement. In a
four-count complaint, they alleged claims for declaratory relief, rescission,
unconscionability, and unjust enrichment. SHEDD counterclaimed for
ejectment and moved for summary judgment.
5 The parties filed competing affidavits sharply disputing the underlying
default, and the motion proceeded to a hearing. At the conclusion of the
hearing, the trial court granted summary judgment on the complaint and
counterclaim in favor of SHEDD. This appeal ensued.
STANDARD OF REVIEW
We review the issue of standing in a foreclosure dispute under a de
novo standard. See St. Clair v. U.S. Bank Nat’l Ass’n, 173 So. 3d 1045, 1046
(Fla. 2d DCA 2015). Similarly, “[s]ummary judgment is proper if there is no
genuine issue of material fact and if the moving party is entitled to a judgment
as a matter of law. Thus, our standard of review is de novo.” Volusia County
v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000)
(internal citation omitted). While “[t]he new Florida Rule of Civil Procedure
1.510 indubitably endows the trial court with considerably broader authority
to resolve a case on summary judgment,” Navarro v. Borges, 2024 WL
1422996, at *2 (Fla. 3d DCA Apr. 3, 2024), “‘the general rule remains intact:
credibility determinations and weighing the evidence are jury functions, not
those of a judge.’” Id. (internal quotation marks omitted) (quoting Gracia v.
Sec. First Ins. Co., 347 So. 3d 479, 482 (Fla. 5th DCA 2022)).
ANALYSIS
6 It is well-established under Florida law that an assignment operates as
“a transfer of all the interests and rights to the thing assigned.” Lauren Kyle
Holdings, Inc. v. Heath-Peterson Constr. Corp., 864 So. 2d 55, 58 (Fla. 5th
DCA 2003). Thus, after an assignment of contractual rights is consummated,
the assignee “stands in the shoes of the assignor,” and the assignor “retains
no rights to enforce the contract.” Id.
Here, the dueling summary judgment affidavits chronicled a markedly
different version of pre-suit events. As relevant to our analysis, the
borrowers submitted record evidence refuting the allegation of default.
Further, SHEDD conceded the authenticity of the Assignment assigning
2655 SW 25 LLC its right to enforce “the Loan Documents.”
The term “Loan Documents” was contractually defined as broadly
encompassing all documents executed in connection with the Loan. Hence,
by executing the assignment, SHEDD transferred its prerogative to declare
the loan in default and record the Deed in Lieu of Foreclosure to 2655 SW
25 LLC. See Country Place Cmty. Ass’n, Inc. v. J.P. Morgan Mortg.
Acquisition Corp., 51 So. 3d 1176, 1179 (Fla. 2d DCA 2010) (explaining party
who “did not own or possess the note and mortgage when it filed its lawsuit
. . . lacked standing to maintain the foreclosure action”); Laing v. Gainey
Builders, Inc., 184 So. 2d 897, 899 (Fla. 1st DCA 1966) (“[T]he assignee of
7 a mortgage and note assigned as collateral security is the real party in
interest, that he holds the legal title to the mortgage and note, and that he,
not the assignor, is the proper party to file a suit to foreclose the mortgage.”).
SHEDD, however, advances the alternative contention that 2655 SW
25 LLC is an affiliated entity with overlapping management and aligned
interests, therefore, the judgment is capable of affirmance. While the former
factual allegation may indeed be true, the record is devoid of any showing of
attendant circumstances that would permit us to disregard the corporate form
and legally impute the action of one entity to another. See Am. Int’l Grp., Inc.
v. Cornerstone Bus., Inc., 872 So. 2d 333, 336 (Fla. 2d DCA 2004) (“A parent
corporation and its wholly-owned subsidiary are separate and distinct legal
entities.”). Because both the ejectment and unjust enrichment counts
implicate the declaration of default and recording of the Deed in Lieu of
Foreclosure, summary judgment on those claims cannot be sustained.
We find no merit, however, to the further assertion that the trial court
erred in refusing to rescind or otherwise void the Forbearance Agreement.
The terms may appear draconian to some, but the contract reflects it was
entered into at arms’ length. As the trial court astutely observed, “when
parties choose to agree upon certain terms and conditions of their contract,
it is not the province of the court to second-guess their wisdom or ‘substitute
8 [its] judgment for that of the parties in order to relieve one from an alleged
hardship of an improvident bargain.’” City of Pompano Beach v. Beatty, 222
So. 3d 598, 600 (Fla. 4th DCA 2017) (alteration in original) (quoting Int'l
Expositions, Inc. v. City of Miami Beach, 274 So. 2d 29, 30–31 (Fla. 3d DCA
1973)). Accordingly, we affirm the judgment under review on all counts, save
that of ejectment and unjust enrichment.
Affirmed in part; reversed in part; and remanded.