SHIRLEY SUTTON v. WILMINGTON TRUST, NATIONAL ASSOCIATION, etc.

• Court: District Court of Appeal of Florida
• Decided: February 15, 2023
• Docket: 22-1274
• Status: Published

Opinion

Third District Court of Appeal State of Florida

Opinion filed February 15, 2023. Not final until disposition of timely filed motion for rehearing.

________________

No. 3D22-1274 Lower Tribunal No. 19-23438 ________________

Shirley Sutton, Appellant,

vs.

Wilmington Trust, N.A., etc., et al., Appellees.

An appeal from a non-final order from the Circuit Court for Miami-Dade County, Migna Sanchez-Llorens, Judge.

Robert Flavell, P.A., and Robert Flavell (Celebration), for appellant.

Robert G. Post P.A., Robert G. Post, Troutman Pepper Hamilton Sanders LLP, and Hallie S. Evans (Atlanta, GA), for appellees.

Before EMAS, MILLER, and LOBREE, JJ.

MILLER, J. Appellant, Shirley Sutton, challenges an order denying her motion to

vacate a foreclosure sale. On appeal, Sutton invokes the seminal case of

Arsali v. Chase Home Finance, LLC, 121 So. 3d 511 (Fla. 2013), for the

proposition that the trial court erred in categorically rejecting her motion on

the basis she failed to establish fraud or an irregularity in the conduct of the

sale. Because Sutton alleged facially equitable grounds for relief, we reverse

and remand for further consideration.

BACKGROUND

After they defaulted on their obligations under their mortgage, Sutton

and her husband consented to a final judgment of foreclosure in favor of

appellee, Wilmington Trust, N.A. (the “Bank”). The judgment reflected an

extended judicial sale date. Weeks before the sale was scheduled to

convene, Sutton’s husband unexpectedly passed away. Sutton and the

Bank then separately sought to postpone the sale to finalize a refinancing

agreement.

In the days leading up to the sale, the Bank prepared and circulated a

proposed order canceling the sale. An inferior lienholder objected to both

the form and substance of the order. Due in large part to the fact that a

holiday weekend preceded the sale date, neither Sutton nor the Bank

2 obtained a hearing on their respective motions. The sale proceeded as

scheduled, and a third-party was deemed the successful bidder.

Sutton timely filed a motion seeking to vacate the sale, detailing the

miscommunication. The trial court convened a hearing but denied relief

because Sutton failed to establish fraud or an irregularity in the conduct of

the sale. The instant appeal ensued.

STANDARD OF REVIEW

We ordinarily review an order denying a motion to set aside a

foreclosure sale for an abuse of discretion. See Aparicio v. Deutsche Bank

Nat’l Tr. Co., 278 So. 3d 814, 816 (Fla. 3d DCA 2019). Whether the trial

court applied the correct legal standard in exercising such discretion,

however, is subject to de novo review. See Paul v. Wells Fargo Bank, N.A.,

68 So. 3d 979, 986 (Fla. 2d DCA 2011).

ANALYSIS

In Florida, foreclosure actions are convened in equity. Tanis v. HSBC

Bank USA, N.A., 289 So. 3d 517, 520 (Fla. 3d DCA 2019). Consequently,

trial courts are guided by the adage that “equity will act to prevent the wrong

result” in judicial foreclosure sales. Arsali, 121 So. 3d at 519 (quoting Arlt v.

Buchanan, 190 So. 2d 575, 577 (Fla. 1966)). In accord with these principles,

a proper showing of one or more equitable factors, including “gross

3 inadequacy of consideration, surprise, accident, or mistake imposed on

complainant, and irregularity in the conduct of the sale,” may support relief

from such a sale. Moran-Alleen Co. v. Brown, 123 So. 561, 561 (Fla. 1929).

In the instant case, Sutton alleged she erroneously believed the Bank

had obtained an order canceling the sale. The trial court found that, in the

absence of irregularity in the conduct of the sale or fraud, relief was

unavailable. This limitation on relief was eschewed by the Florida Supreme

Court in Arsali, 121 So. 3d at 517. There, the court approved a Fourth District

Court of Appeal decision affirming a ruling granting relief to borrowers on

equitable grounds. Id. at 519. The borrowers asserted mistake and proved

that the bank “neglected to arrange for the cancelation of the foreclosure

sale with the clerk of court . . . [and they] were not aware that the scheduled

judicial sale of their residence had not been canceled.” Id. at 513. In

approving the Fourth District’s decision, the Supreme Court observed:

[T]here is a presumption among the district courts that a single equitable factor (i.e., grossly inadequate bid price) or a specific combination of previously identified factors must be applied by the trial courts in order to set aside judicial foreclosure sales. We state that such a presumption is incorrect.

Id. at 517. The Court further expounded:

Our decisions show that we have consistently held that the mere allegation of any single factor or any specific combination of factors is insufficient for litigants to prevail in an action seeking a set aside of a judicial foreclosure sale. Instead our previous

4 decisions have consistently required that litigants allege one or more adequate equitable factors and make a proper showing to the trial court that they exist in order to successfully obtain an order that sets aside a judicial foreclosure sale.

Id. at 518.

Arsali and its progeny have clarified that relief may lie to relieve a party

from the consequences of a mutual mistake in fact surrounding the

scheduling of a foreclosure sale. In Gavidia v. Specialized Loan Servicing,

LLC, 301 So. 3d 413, 415 (Fla. 2d DCA 2020), a mortgage loan servicer and

mortgagor agreed to reinstate a loan prior to a foreclosure sale and

subsequently filed respective motions to cancel the sale. Neither motion was

heard before the sale, and the trial court later denied a motion to vacate the

sale, in part, because there were no allegations of irregularities in the sale

itself. Id. at 417. Underscoring Arsali’s commitment to the principle that a

judicial sale may be vacated and set aside on any or all well-pled equitable

grounds, the Second District concluded that the trial court “applied an

incorrect legal standard and failed to consider the equitable grounds alleged

as Arsali allows.” Id. The court expressly indicated, “[o]n remand, the trial

court should consider the equitable grounds alleged . . . with a hearing to

allow those equitable grounds to be established.” Id. at 418.

Confronting a similar factual scenario, the Fifth District Court of Appeal

adopted the same approach. In Josecite v. Wachovia Mortg. Corp., 97 So.

5 3d 265, 266 (Fla. 5th DCA 2012), the lender and mortgagors entered into a

forbearance agreement days before a foreclosure sale. Notwithstanding the

agreement, the sale proceeded as scheduled. Id. The mortgagors sought

equitable relief from the sale. Id. The trial court denied the mortgagors’

motion on the basis that the sale price was not grossly inadequate or

irregular. Id. The Fifth District remanded, reasoning that “[t]he trial court’s

conclusion that a foreclosure sale may only be vacated for a grossly

inadequate bid price or other sale irregularity deprives the courts of their

equitable powers.” Id. at 267.

The facts of this case are on all fours with Arsali, Gavidia, and Josecite.

Accordingly, remand is warranted for reconsideration of the equitable

grounds alleged. 1

Reversed and remanded.

1 We reject the successful bidders’ contention that section 702.036, Florida Statutes (2019), bars relief. This argument was not raised below, and the plain language of the statute extends only to challenges to “the validity of a final judgment” not to motions for relief from a judicial foreclosure sale. § 702.036(1)(a), Fla. Stat.