Beltway Capital, LLC v. Greens COA, Inc.
153 So. 3d 330
| Fla. Dist. Ct. App. | 2014Background
- Beltway Capital, LLC filed to foreclose a mortgage on a condominium unit and purchased the unit at the foreclosure sale.
- The Greens Condo Association sought unpaid association assessments and argued Beltway was fully liable under section 718.116(1), Fla. Stat.
- Section 718.116(1)(b) limits a “first mortgagee or its successor or assignees” who acquire title by foreclosure to the lesser of 12 months of assessments or 1% of original mortgage debt.
- The trial court held Beltway was not entitled to the safe-harbor because it was not a direct assignee of the original lender (it was an assignee of an assignee).
- On appeal the court construed “first mortgagee” to mean the holder of the first-priority mortgage (priority, not time), so a subsequent holder who acquires the loan/mortgage is a first mortgagee and entitled to the safe harbor.
- The court reversed and remanded, directing entry of judgment recognizing Beltway’s entitlement to the statutory safe harbor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether safe-harbor in §718.116(1)(b) protects entities that are not direct assignees of the original lender | Beltway: safe-harbor covers all holders of the first mortgage (including subsequent assignees who hold the loan) | The Greens: safe-harbor limited to original lender or its direct assignee(s) only | Court: "first mortgagee" means holder of the first-priority mortgage (priority, not first-in-time); subsequent holders are protected |
| Whether acquiring the loan creates assignment of the mortgage absent a formal mortgage assignment | Beltway: acquiring the loan makes one assignee of the mortgage by operation of law | The Greens: disputed (required direct written assignment) | Court: assignment of the debt transfers the mortgage incident thereto; loan purchaser becomes assignee by operation of law |
| Whether equitable concerns can limit statutory safe-harbor application | Greens: limiting safe-harbor to direct assignees prevents unfairness to unit owners | Beltway: equitable contentions outside record; statutory text controls | Court: equitable arguments cannot override statutory construction; law controls |
| Proper interpretation of term "first mortgagee or its successor or assignees" in context of Condominium Act | Beltway: plain language and mortgage law support broad reading | Greens/trial court: phrase means original lender and its direct assignee only | Court: statutory language and mortgage principles support inclusive reading; safe-harbor applies to Beltway |
Key Cases Cited
- Bay Holdings, Inc. v. 2000 Island Blvd. Condo. Ass’n, 895 So.2d 1197 (Fla. 3d DCA 2005) (describing §718.116(1) as a safe-harbor capping foreclosing mortgagee liability)
- Johns v. Gillian, 184 So. 140 (Fla. 1938) (assignment of the debt operates as assignment of the mortgage)
- Bermuda Dunes Private Residences v. Bank of Am., 133 So.3d 609 (Fla. 5th DCA 2014) (successor-in-interest to mortgagee may be treated as first mortgagee)
- Deutsche Bank Nat’l Trust Co. v. Clarke, 87 So.3d 58 (Fla. 4th DCA 2012) (recognizing transfer of note effects transfer of mortgage interest)
- Polk Cnty. v. Sofka, 702 So.2d 1243 (Fla. 1997) (parties cannot confer subject-matter jurisdiction by stipulation)