159 So. 3d 250
Fla. Dist. Ct. App.2015Background
- HSBC held a mortgage on James J. Mullan’s 99-year condominium leasehold; Mullan defaulted and HSBC initiated foreclosure in 2008.
- East Bay Country Club Apartments, Inc. (East Bay), the fee simple reversioner under the condominium lease, was served and asserted a counterclaim for unpaid lease payments ("rents").
- East Bay amended to seek quiet title, alleging Mullan’s lease was terminated for unpaid rents and therefore HSBC’s mortgage on the leasehold was extinguished.
- East Bay moved for summary judgment to quiet title; the trial court granted final summary judgment, nullifying HSBC’s mortgage.
- The trial court’s ruling rested primarily on finding HSBC was not an "institutional mortgagee" entitled to notice under the lease; HSBC contended that issue had not been raised before the summary judgment hearing.
- The appellate court found disputed material facts about notice sufficiency and a lease provision requiring East Bay to waive arrears while mortgage foreclosure proceeds, and concluded the trial court relied on a ground not raised in the motion for summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether East Bay could quiet title by claiming lease termination eliminated HSBC's mortgage | East Bay: unpaid rents terminated the lease; mortgage interest ended with leasehold | HSBC: East Bay's notice was insufficient and lease may require waiving arrears while foreclosure proceeds | Reversed: material fact disputes about notice and lease waiver precluded summary judgment |
| Whether HSBC was entitled to notice as an "institutional mortgagee" under lease §24 | East Bay: only enumerated institutional mortgagees require notice; MERS/HSBC not among them | HSBC: issue was not raised before hearing; court cannot grant judgment on unpled ground | Reversed: trial court erred by deciding an issue not raised in motion for summary judgment |
| Whether East Bay’s notice to HSBC was legally sufficient to terminate the lease | East Bay: the notice it sent sufficed to effect termination | HSBC: notice was insufficient and factual dispute exists | Reversed: sufficiency of notice is a disputed material fact for further proceedings |
| Whether lease clause requiring waiver of arrears during foreclosure applies | East Bay: relied on termination theory, did not litigate waiver issue at summary judgment | HSBC: lease may require East Bay to waive arrears while HSBC forecloses, defeating quiet-title relief | Reversed: waiver clause raises factual/legal issues precluding summary judgment |
Key Cases Cited
- Hornfischer v. Manatee Cnty. Sheriffs Office, 136 So.3d 703 (Fla. 2d DCA 2014) (standard of review for summary judgment)
- Harvey v. Deutsche Bank Nat'l Trust Co., 69 So.3d 300 (Fla. 4th DCA 2011) (view record in favor of nonmoving party on summary judgment)
- Rosenberg v. Cape Coral Plumbing, Inc., 920 So.2d 61 (Fla. 2d DCA 2005) (trial court limited to grounds raised in summary judgment motion)
- Williams v. Bank of Am. Corp., 927 So.2d 1091 (Fla. 4th DCA 2006) (rule promotes fair notice and opportunity to argue issues)
- H.B. Adams Distrib. Inc. v. Admiral Air of Sarasota Cnty., Inc., 805 So.2d 852 (Fla. 2d DCA 2001) (purpose of limiting summary judgment grounds)
- Cheshire v. Magnacard, Inc., 510 So.2d 1231 (Fla. 2d DCA 1987) (reversible error where court decides unpled grounds)
- Swift Indep. Packing Co. v. Basic Food Int'l, Inc., 461 So.2d 1017 (Fla. 4th DCA 1984) (same)