207 So. 3d 304
Fla. Dist. Ct. App.2016Background
- In 2003 Barton executed a note and mortgage in favor of Bayrock; the mortgage was recorded; the note was later assigned to Wells Fargo but that assignment was not recorded timely.
- The mortgage was eventually assigned to MetroJax (recording steps for assignments occurred later, including an affidavit of lost assignment).
- In 2011 the City of Key West recorded code compliance liens against Barton.
- MetroJax filed foreclosure in 2014 asserting it owned the originally recorded Bayrock mortgage; the City claimed its later liens were superior because an assignment to Wells Fargo was not recorded before the City’s liens, relying on §701.02(1).
- The trial court foreclosed MetroJax’s mortgage but held the City’s code liens superior to MetroJax’s lien; MetroJax cross‑appealed and also sought attorney’s fees. The appellate court affirmed foreclosure, reversed the fee award, and held the City’s reliance on §701.02(1) was misplaced.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a later‑recorded municipal code lien can take priority over an earlier recorded mortgage when an assignment of the mortgagee was not recorded prior to the lien | MetroJax: earlier recorded mortgage (now owned by MetroJax) is superior because the mortgage was on record before the City’s liens | City: §701.02(1) makes unrecorded assignments ineffective against subsequent creditors/purchasers, so City’s liens are superior | Court held the mortgage (MetroJax) has priority; §701.02(1) does not strip priority from an already recorded mortgage as to subsequent lienors like the City |
| Scope of §701.02(1) — who it protects | MetroJax: statute protects competing assignees/creditors of the mortgagee, not third‑party lienors of the mortgagor | City: statute protects subsequent creditors/purchasers generally, including municipal lienors | Held: §701.02(1) protects competing assignees/creditors of the mortgagee chain, not mortgagor’s subsequent creditors; mortgagor and those claiming under mortgagor have constructive notice of recorded mortgage |
| Effect of failure to record an assignment on enforceability of mortgage against subsequent lienors | MetroJax: failure to record assignment does not invalidate mortgage against those with constructive notice | City: failure to record assignment renders assignment ineffective as to subsequent creditors without notice | Held: failure to record affects priorities among assignees, not mortgage’s validity against subsequent lienors with constructive notice |
| Attorney’s fees award to MetroJax | MetroJax: sought fees and costs in foreclosure judgment | Barton: challenged amount/award | Court reversed the award of attorney’s fees and remanded to enter correct amount due |
Key Cases Cited
- JP Morgan Chase v. New Millennial, LC, 6 So.3d 681 (Fla. 2d DCA 2009) (§701.02(1) protects competing assignees/creditors in the mortgage chain, not mortgagor’s subsequent creditors)
- Kapila v. Atlantic Mortg. & Inv. Corp. (In re Halabi), 184 F.3d 1335 (11th Cir. 1999) (recording requirement aims to protect assignees/creditors of mortgagee; mortgagor is not the statute’s intended beneficiary)
- Bradenburg v. Residential Credit Solutions, Inc., 137 So.3d 604 (Fla. 4th DCA 2014) (failure to record an assignment does not invalidate the mortgage but affects priority among assignees)
- Argent Mortg. Co., LLC v. Wachovia Bank, N.A., 52 So.3d 796 (Fla. 5th DCA 2010) (discussion of Florida as a notice state for recording and priority)
- City of Palm Bay v. Wells Fargo Bank, N.A., 114 So.3d 924 (Fla. 2013) (statutory exceptions can supplant chapter 695 priority rules)