BCML Holding LLC v. Wilmington Trust, N.A.
201 So. 3d 109
Fla. Dist. Ct. App.2015Background
- In 2007 Gonzalo and Daniela Malesich executed a mortgage (nominee MERS for lender ABC) reciting that Gonzalo was "lawfully seised" and had the right to mortgage the Murano Grande condominium unit, but title at that moment was held by RSV Corp.
- Five days later RSV conveyed the unit to Malesich by warranty deed; the deed and mortgage were recorded shortly thereafter.
- The mortgage was later assigned to Citibank and then Wilmington (successor trustee).
- The condominium association foreclosed for unpaid assessments and sold to Murano, which then sold the unit to BCML in 2012.
- Wilmington sued to foreclose the 2007 mortgage in 2013. BCML counterclaimed seeking declaratory relief and to quiet title, arguing the mortgage was void ab initio because Malesich lacked title when he executed it.
- The trial court granted summary judgment for Wilmington, holding the after-acquired title doctrine (estoppel by deed / covenant of warranty) made the mortgage valid as against BCML; BCML appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does after-acquired title validate a mortgage where the mortgagor lacked title at execution but later acquired it? | Wilmington: after-acquired title (estoppel by deed/covenant of warranty) inures to mortgagee, validating mortgage. | BCML: mortgage was void ab initio as mortgagor had no title when he executed it. | Held: Yes; after-acquired title inures to benefit of mortgagee and its successors, validating the mortgage. |
| Can a later purchaser (BCML), not party to the original mortgage, claim the mortgage is void? | Wilmington: successors in interest and privies are bound by estoppel; recorded mortgage/deed put later purchasers on notice. | BCML: as a non-party and successor purchaser, it is not bound and may treat the mortgage as void. | Held: BCML is bound as a successor in interest; estoppel runs with the land and binds privies. |
| Does the purchase-money mortgage exception bar after-acquired title here? | BCML: the mortgage was labeled purchase-money, so Dwiggins exception should prevent inurement. | Wilmington: the exception applies only where the mortgagee/seller simultaneously conveyed property to the mortgagor; not present here. | Held: Exception inapplicable; this was not a simultaneous seller-buyer purchase-money mortgage, so after-acquired title applies. |
Key Cases Cited
- Florida Land Inv. Co. v. Williams, 92 So. 876 (Fla. 1922) (recognizing after-acquired title inures to mortgagee when mortgage contains covenants of warranty)
- Rose v. Lurton Co., 149 So. 557 (Fla. 1933) (mortgage on after-acquired property can be valid and foreclosed between the parties)
- Trustees of Internal Improvement Fund v. Lobean, 127 So. 2d 98 (Fla. 1961) (defining estoppel by deed and its binding effect on grantor and privies)
- Pitts v. Pastore, 561 So. 2d 297 (Fla. 2d DCA 1990) (mortgage with covenants of warranty permits title acquired later to inure to mortgagee)
- Ackerman v. Abbott, 978 A.2d 1250 (D.C. 2009) (after-acquired title is a species of estoppel by deed; title acquired later vests in grantee)
- Moralis v. Matheson, 79 So. 202 (Fla. 1918) (recitals of seisin in a conveyance estop grantor and privies from denying seisin)
- Murray v. Newsom, 149 So. 387 (Fla. 1933) (after-acquired title doctrine rests on estoppel and intent; binds privies)
- Nelson v. Dwiggins, 149 So. 613 (Fla. 1933) (purchase-money mortgage exception limits inurement where mortgagee is simultaneous seller)
- U.S. Bank Nat. Ass’n v. Bevans, 138 So. 3d 1185 (Fla. 3d DCA 2014) (recorded mortgage and deed give notice to subsequent purchasers)