Savarese v. Schoner, 464 So. 2d 695

464 So. 2d 695 | Fla. Dist. Ct. App. | 1985

Lead Opinion

PER CURIAM.

This is an appeal from the denial of mortgage foreclosure.

The mortgagor had made timely payments on the mortgage for about two years. She mailed a check on April 14, 1981, to cover the payment which was due the following day. On April 27, 1981, she first learned that she had insufficient funds to cover the check. A bank employee told her that the check would be honored if she would make a $200 deposit that day. She deposited the $200 as advised but due to a failure of communications between two departments in the bank, the check was returned to the mortgagees for insufficient funds. The mortgagees made no effort to contact the mortgagor about the check but sought criminal prosecution and accelerated the balance due on the note and mortgage three days after the expiration of the thirty day grace period. The mortgagees knew before instituting the foreclosure action what had caused the check to be returned for insufficient funds. All subsequent monthly payments were placed by the mortgagor in an interest-bearing escrow account when the mortgagees refused to accept them. The mortgagor had a $30,-000 equity in the property. The trial court, at the conclusion of the final hearing on foreclosure, found that: “The Court is of the opinion that if there ever was one that would be unconscionable, certainly this would be one of them and inequitable and unjust.” We hold that the court acted within its discretion in declining to foreclose the mortgage. See La Boutique of Beauty Academy, Inc. v. Meloy, 436 So.2d 396 (Fla. 2d DCA 1983).

We find this case distinguishable from David v. Sun Federal Savings & Loan Association, 461 So.2d 93 (Fla. Dec. 20, 1984). In David, the supreme court affirmed a mortgage foreclosure despite the existence of certain equities favoring the mortgagor since there was no evidence of fault on the part of the mortgagee. Admittedly, the mortgagees in the instant case also did nothing to contribute to the failure to make timely payment. However, a salient fact that distinguishes David is that the mortgagee there had exercised its right to accelerate only after giving notice and opportunity to the mortgagor to cure the default. Moreover, the supreme court was affirming the trial court’s decision to order foreclosure and limited its ruling to “the facts of the given case.” Here, the trial judge refused to order foreclosure, and we cannot say that he abused his discretion in doing so.

On the other hand, we believe that the court erred in ruling that the mortgagees were not entitled to attorney’s fees. The mortgage contained a covenant which provided for attorney’s fees “reasonably incurred ... because of the failure of the mortgagor to ... comply with the agreements, stipulations, conditions and covenants of said note and mortgage or ei-ther_” The note provided for attorney’s fees when it became “necessary to collect this note through an attorney.” When the payment was not made within the grace period, the mortgage was in default. The mortgagees did nothing to mislead the mortgagor into allowing the default to occur. As we explained under similar circumstances in Maw v. Abinales, 463 So.2d 1245 (Fla. 2d DCA 1985), once the default occurred the mortgagees were contractually entitled to attorney’s fees for prosecuting their action even though they were unsuccessful in obtaining foreclosure. The mortgagees’ motivation in filing the suit was irrelevant.

We affirm the denial of foreclosure. We reverse the denial of attorney’s fees and remand for an award of fees measured by the standard announced in Schechtman v. Grobbel, 226 So.2d 1 (Fla. 2d DCA 1969).

GRIMES, A.C.J., and OTT, J., concur. CAMPBELL, J., concurs in part and dissents in part with opinion.

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Concurrence in Part

CAMPBELL, Judge,

concurring in part and dissenting in part.

I concur completely with affirming the refusal of the court below in refusing to order a foreclosure because the default was technical and the result would be unjust.

I dissent from the majority in its reversal of the denial of attorney’s fees below. I believe where the court below finds that to allow foreclosure as a remedy for a technical default would be “unconscionable,” it follows that to allow attorney’s fees for bringing that “unconscionable” foreclosure action is likewise unconscionable.

While I agree that attorney’s fees are sometimes found appropriate even when foreclosure is denied, that is more properly the case when the mortgagee obtains some affirmative relief from the foreclosure action. See Schechtman v. Grobbel, 226 So.2d 1 (Fla. 2d DCA 1969). But see Rockwood v. DeRosa, 279 So.2d 54 (Fla. 4th DCA 1973). This court in Schechtman, though awarding attorney’s fees to the mortgagee where foreclosure was denied, but other relief obtained, said: “We do not agree under the circumstances of this case attorney’s fees are solely dependent upon the granting of foreclosure or upon foreclosure being proper.” 226 So.2d at 3. That language seems to indicate that where foreclosure is the sole remedy sought and it is denied, attorney’s fees would not be proper. The court in Rice v. Campisi, 446 So.2d 1120 (Fla. 3d DCA 1984), approved an award of attorney’s fees to the mortgagee where foreclosure was denied because there was no showing that the foreclosure “was not prosecuted upon a good faith belief” that the mortgagor was responsible for the default.

In this case, the mortgagor had a $30,000 equity in the property. One check in two years of payments was returned for insufficient funds. The mortgagor was not aware of the problem, having been informed by the bank that the check would clear. The mortgagees (appellants) made no effort to contact appellee over the one check, but sought criminal prosecution and immediately accelerated the balance due on the note and mortgage. Appellants knew before instituting the foreclosure action what had caused the one check to be returned for insufficient funds. All future monthly payments were placed by appellee in an interest-bearing escrow account when appellants refused to accept them.

As pointed out by the majority, any attorney's fees to which appellants would be entitled, grow out of the provisions of the note and mortgage. The mortgage has a covenant that provides for attorney’s fees “reasonably incurred ... because of the failure of the mortgagor to ... comply with the agreements, stipulations, conditions and covenants of said note and mortgage or either....” However, the note provides for attorney’s fees only when it becomes “necessary to collect this note through an attorney.” I differ from my colleagues in the majority opinion and in Maw v. Abinales, 463 So.2d 1245 (Fla. 2d DCA 1985), that the provisions of the note mandate an award of attorney’s fees in this case. It is very clear from the facts in this case that it was not “necessary” to collect the note through the services of an attorney. What, to me, is so significant is that no means other than immediate foreclosure was sought to cure what was clearly an inadvertent failure to miss one payment due on the note.