183 So. 3d 1206
Fla. Dist. Ct. App.2016Background
- In March 2010 Crown Financial, MTT, and Scott & Stephanie Cleveland executed a Profit Sharing Agreement (the "Agreement") providing Crown would make up to $300,000 available to MTT on a revolving basis; the Agreement stated the "aggregate amount outstanding at any one time shall never exceed the sum of $300,000."
- The Agreement was secured by a mortgage on Walton County property and other collateral; the mortgage incorporated the Agreement and included a "future advances" clause (Paragraph 24) allowing future advances within 20 years and limiting secured indebtedness to up to double the original principal.
- Crown later advanced sums that, according to Crown's witness, exceeded $300,000 (reaching about $500,000) but did not amend the Agreement in writing.
- Crown sued for mortgage foreclosure, alleging indebtedness of roughly $419,000; the trial court entered judgment for Crown and ordered foreclosure.
- On appeal the Clevelands argued the Agreement’s explicit $300,000 cap controlled and barred any secured advances beyond that amount; Crown argued the mortgage’s future-advances clause allowed the larger secured balance.
- The First District Court of Appeal reversed in part and remanded, holding the Agreement’s unambiguous $300,000 cap controls and any ambiguity must be construed against Crown, the drafter.
Issues
| Issue | Plaintiff's Argument (Crown) | Defendant's Argument (Clevelands) | Held |
|---|---|---|---|
| Whether advances exceeding $300,000 are secured by the mortgage under its future-advances clause | The mortgage’s future-advances clause secures advances beyond $300,000 (up to mortgage limits); thus Crown’s additional advances are secured and collectible | The Agreement expressly caps outstanding advances at $300,000; mortgage cannot contradict or enlarge that cap without a written amendment | The Agreement’s clear "never exceed $300,000" clause controls; mortgage cannot be read to secure amounts beyond that cap; judgment reversed and remanded to recalculate indebtedness |
| Whether appellants waived the right to assert the Agreement cap on appeal | Crown suggested waiver/estoppel could bar the argument | Clevelands argued they preserved the issue; trial record lacks findings of waiver | Court declined to decide waiver because it was not argued below and there were no factual findings; did not apply tipsy-coachman rule |
Key Cases Cited
- CitiMortgage, Inc. v. Turner, 172 So.3d 502 (Fla. 1st DCA 2015) (standard of review for contract interpretation)
- Columbia Bank v. Columbia Developers, LLC, 127 So.3d 670 (Fla. 1st DCA 2013) (clear contract language controls)
- City of Homestead v. Johnson, 760 So.2d 80 (Fla. 2000) (ambiguities construed against drafter)
- Bank of N.Y. Mellon v. Reyes, 126 So.3d 304 (Fla. 3d DCA 2013) (note and mortgage are distinct; note controls conflicting terms)
- Lewis v. Estate of Turcol, 709 So.2d 186 (Fla. 5th DCA 1998) (when note and mortgage conflict, note governs)
- Hotel Mgmt. Co. v. Krickl, 158 So. 118 (Fla. 1934) (give effect to both note and mortgage when no necessary conflict)