Catalina West Homeowners Association, Inc. v. Federal National Mortgage Association , 2016 Fla. App. LEXIS 4889 ( 2016 )

Third District Court of Appeal
State of Florida
Opinion filed March 30, 2016.
Not final until disposition of timely filed motion for rehearing.
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No. 3D15-271
Lower Tribunal No. 14-1385
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Catalina West Homeowners Association, Inc., and Old Cutler Lakes
by the Bay Community Association, Inc.,
Appellants,
vs.
Federal National Mortgage Association,
Appellee.
An Appeal from the Circuit Court for Miami-Dade County, Jorge E. Cueto,
Judge.
Paige Law Group, P.A., and Robert E. Paige, for appellants.
Gladstone Law Group, P.A., and Allen S. Katz, Yacenda Hudson, and Jason
Joseph (Boca Raton), for appellee.
Before SHEPHERD, LAGOA, and EMAS, JJ.
LAGOA, J.
Appellants, Catalina West Homeowners Association, Inc. (“Catalina West”)
and Old Cutler Lakes by the Bay Community Association, Inc. (“Old Cutler”)
(collectively, the “Associations”), appeal from a final judgment entered in favor of
appellee, Federal National Mortgage Association (“FNMA”), and the denial of
their motion for rehearing, on FNMA’s action for declaratory and injunctive relief.
We affirm.
I. FACTUAL AND PROCEDURAL HISTORY
On December 23, 2005, Adriana Villamizar and her husband Luis Reyes
entered into a mortgage with JPMorgan Chase Bank, N.A., for property located in
a development called Lakes by the Bay. On or about February 6, 2006, FNMA
purchased the loan that was the subject of the mortgage. FNMA filed a mortgage
foreclosure action in 2011, and the Associations were named as defendants. Final
judgment was entered in favor of FNMA on February 6, 2013. On April 2, 2013, a
certificate of title was issued to FNMA.
On December 19, 2013, the Associations each provided payoff/estoppel
letters to FNMA. In addition to quarterly assessments and late charges, the letters
sought amounts for violation charges, costs, and attorney’s fees.
FNMA subsequently filed a complaint for declaratory and injunctive relief,
alleging that the amounts set forth in the estoppel letters did not comply with the
“safe harbor” protection provided to first mortgagees in section 720.3085(2)(c),
Florida Statutes (2014). Specifically, FNMA asserted that the Associations
improperly included attorney’s fees and costs which they were not entitled to
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collect from FNMA. FNMA further alleged that the Associations refused to
provide estoppel letters providing FNMA with the safe harbor protection of section
720.3085(2)(c). FNMA alleged that it was in need of a declaration that FNMA
was entitled to the protection of section 720.3085(2)(c), and that the Associations
were not entitled to attorney’s fees, costs, interest, or other charges accruing prior
to the certificate of title being issued.
The Associations each filed an answer and affirmative defenses. As
affirmative defenses, the Associations alleged that section 720.3085 required them
to apply any payments received from FNMA first to late charges and interest, and
then to costs and attorney’s fees incurred in collection, and only then to
assessments. The Associations further alleged that they alerted FNMA to sums
necessary to bring FNMA’s account current, and that the Associations “would
have to violate Florida Statutes [section] 720.3085 in order to provide the relief it
requested.”
FNMA filed a motion for summary judgment, asserting that the
Associations’ demand for attorney’s fees and costs was inconsistent with FNMA’s
entitlement to limited liability under section 720.3085(2)(c). The trial court
entered final judgment in favor of FNMA. The trial court found that, pursuant to
section 720.3085(2)(c), FNMA’s liability to the Associations “for unpaid
assessments and all other charges, including attorneys’ fees, costs, interest, and late
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fees incurred prior to April 2, 2013 is limited to . . . [the] 12 past months of
assessments prior to [FNMA] taking title to the property.” The trial court
concluded that because the safe harbor protection of section 720.3085(2)(c)
applied, the Associations were not entitled to interest, late fees, attorney’s fees,
court costs, collection costs, or other charges incurred.
The Associations filed a motion for rehearing, arguing that the final
judgment “reads out of existence Florida Statutes §720.3085(3)(b).” The
Associations asserted that were they to apply the sums FNMA was directed to pay
in the final judgment in the order required by section 720.3085(3)(b), it would not
bring current either Association’s account. The trial court denied the motion for
rehearing and this appeal ensued.1
II. ANALYSIS
At issue in this appeal are two subsections of section 720.3085: subsection
(2)(c), the so-called “safe harbor” provision,2 and subsection (3)(b).
Section 720.3085(2)(c) states as follows:
1 We review a final summary judgment de novo. Tropical Glass & Constr. Co. v.
Gitlin, 13 So. 3d 156 (Fla. 3d DCA 2009). Additionally, we review a trial court’s
interpretation of a statute, de novo. See State v. Brock, 138 So. 3d 1060 (Fla. 4th
DCA 2014).
2In Bay Holdings, Inc. v. 2000 Island Boulevard Condominium Ass’n, 895 So. 2d
1197, 1197 (Fla. 3d DCA 2005), this Court, in addressing the analogous statute
concerning condominium associations, stated that the “safe harbor” provision
“provides a statutory cap on liability of foreclosing mortgagees.”
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(c) Notwithstanding anything to the contrary contained in
this section, the liability of a first mortgagee, or its
successor or assignee as a subsequent holder of the first
mortgage who acquires title to a parcel by foreclosure or
by deed in lieu of foreclosure for the unpaid assessments
that became due before the mortgagee's acquisition of
title, shall be the lesser of:
1. The parcel’s unpaid common expenses and regular
periodic or special assessments that accrued or came
due during the 12 months immediately preceding the
acquisition of title and for which payment in full has not
been received by the association; or
2. One percent of the original mortgage debt.
The limitations on first mortgagee liability provided by
this paragraph apply only if the first mortgagee filed suit
against the parcel owner and initially joined the
association as a defendant in the mortgagee foreclosure
action. Joinder of the association is not required if, on the
date the complaint is filed, the association was dissolved
or did not maintain an office or agent for service of
process at a location that was known to or reasonably
discoverable by the mortgagee.
(emphasis added).
Section 720.3085(3)(b) states as follows:
(3) Assessments and installments on assessments that are
not paid when due bear interest from the due date until
paid at the rate provided in the declaration of covenants
or the bylaws of the association, which rate may not
exceed the rate allowed by law. If no rate is provided in
the declaration or bylaws, interest accrues at the rate of
18 percent per year.
....
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(b) Any payment received by an association and
accepted shall be applied first to any interest accrued,
then to any administrative late fee, then to any costs
and reasonable attorney fees incurred in collection,
and then to the delinquent assessment. This paragraph
applies notwithstanding any restrictive endorsement,
designation, or instruction placed on or accompanying a
payment. A late fee is not subject to the provisions of
chapter 687 and is not a fine.
(emphasis added).
While the Associations raise several points on appeal, only one merits
discussion. The Associations argue that the final judgment should be “vacated”
because it improperly prohibits them from complying with their statutory duty to
apply payments as required by section 720.3085(3)(b).3
That FNMA’s liability for “unpaid common expenses and regular periodic
or special assessments” does not include amounts for attorney’s fees, costs, and
interest, however, is evident from the plain language of the statute. Section
720.3085(2)(b) provides that “[a] parcel owner is jointly and severally liable with
the previous parcel owner for all unpaid assessments that came due up to the time
3 It should be noted that FNMA’s first response on this issue is that not only did the
trial court correctly determine that it was not liable for interest, late fees, attorney’s
fees, and costs, but that this Court should find that it also has no liability for any
past due common expenses and assessments. FNMA’s argument on this point is
based entirely upon each Association’s respective Declaration. This argument
cannot be considered by this Court for two reasons. First, it is undisputed that
FNMA did not raise this argument below nor were the Declarations filed below or
considered by the trial court. Equally important, FNMA did not file a cross-appeal
from the final judgment.
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of transfer of title.” That liability, however, is limited in section 720.3085(2)(c)—
the safe harbor provision—as it concerns “a first mortgagee . . . who acquires title
to a parcel by foreclosure.” Paragraph (c) states that “the liability of a first
mortgagee . . . shall be the lesser of” either “unpaid common expenses and regular
periodic or special assessments that accrued or came due during the 12 months
immediately preceding the acquisition of title,” or one percent of the original
mortgage debt. § 720.3085(2)(c)1., 2., Fla. Stat. (emphasis added). The plain
language of paragraph (c) clearly limits the extent of a qualifying first mortgagee’s
liability to the lesser of the two specific options that follow—either “unpaid
common expenses and regular periodic or special assessments” or one percent of
the original mortgage debt. Given the unambiguous language of the statute, we
must conclude that if the Legislature intended to include attorney’s fees, costs,
interest, or other charges as part of the first mortgagee’s liability, it would have
included any one or more of those items in the safe harbor provision. See Thayer
v. State, 335 So. 2d 815, 817 (Fla. 1976) (“It is, of course, a general principle of
statutory construction that the mention of one thing implies the exclusion of
another; expressio unius est exclusio alterius. Hence, where a statute enumerates
the things on which it is to operate, or forbids certain things, it is ordinarily to be
construed as excluding from its operation all those not expressly mentioned.”); see
also Moonlit Water Apartments, Inc. v. Cauley, 666 So. 2d 898, 900 (Fla. 1996)
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(“Under the principle of statutory construction, expressio unius est exclusio
alterius, the mention of one thing implies the exclusion of another.”); cf. Haskins v.
City of Ft. Lauderdale, 898 So. 2d 1120, 1123 (Fla. 4th DCA 2005) (“A basic
canon of statutory interpretation requires us to ‘presume that [the] legislature says
in a statute what it means and means in a statute what it says there.’” (quoting
Conn. Nat'l Bank v. Germain, 503 U.S. 249, 253–54 (1992))).
The trial court’s construction of the safe harbor provision is not only
consistent with our analysis in Bay Holdings but also with the analogous case of
United States v. Forest Hill Gardens East Condominium Ass’n, 990 F. Supp. 2d
1344 (S.D. Fla. 2014). In Forest Hill, HUD was the successor and assignee of the
foreclosing first mortgagees on two condominium units situated on land controlled
by a homeowners’ association. The homeowners’ association sought past-due
assessments, interest, and other costs incident to the collection process that accrued
before the banks and HUD took title. Id. at 1349-50. The homeowners’
association also sought late fees. Id. In analyzing the safe harbor provision for
foreclosing first mortgagees contained in section 720.3085(2)(c), the court noted
that “the existence of unpaid assessments is the fact which triggers the foreclosing
first mortgagee’s liability to the homeowners’ association.” Id. at 1350. The court
held that the terms “unpaid common expenses” and “regular periodic or special
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assessments” did not encompass interest, late fees, collection costs, and attorney’s
fees:
In short, chapter 720’s statutory safe harbor includes only
those expenses and assessments that the unit owners’
share collectively, a shared benefit and burden that does
not include amounts for interest, late fees, attorney’s fees,
and costs incidental to the collection process.
Accordingly, the court holds that the HUD has no
liability to the property owners' association other than the
common expenses and unpaid assessments that “accrued
or came due” prior to taking title . . . .
Id. at 1350. In reaching its conclusion, the court reasoned that “interest, late fees,
attorney’s fees, and collection costs” are individualized charges to induce
compliance, rather than “common expenses” or “regular periodic or special
assessments,” terms which infer a shared expense among all the units of a
homeowners’ association. Id.
We agree with the analysis set forth in Forest Hill, and affirm the trial
court’s judgment that FNMA’s liability to the Associations under the safe harbor
provision did not include amounts for interest, late fees, attorney’s fees, or costs.
Finally, the final judgment does not improperly prohibit the Associations
from complying with the statutory application of payments set forth in section
720.3085(3)(b). The final judgment determined the amount due from FNMA to
the Associations, in accordance with the safe harbor provision set forth in section
720.3085(2)(c), and did not address itself to how the Associations were to apply
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the payment made. The priority of payment schedule established by section
720.3085(3)(b) cannot create entitlement to any payments other than those
expressly established by section 720.3085(2)(c). To the extent the Associations are
required to itemize payments pursuant to section 720.3085(3)(b), the line item
entries for interest accrued, administrative fees, and attorney fees and costs,
presumably would be zero dollars, as the Associations have not and are not entitled
to receive payments for those items under the safe harbor provision. The
Associations’ reliance upon St. Croix Lane Trust v. St. Croix at Pelican Marsh
Condominium Ass’n, 144 So. 3d 639 (Fla. 2d DCA 2014), and Ward v. 3900
Condominium Ass’n, 670 So. 2d 1182 (Fla. 4th DCA 1996), for the proposition
that they are required to apply payments in accordance with the formula set forth in
subsection (3)(b), adds nothing to their argument. St. Croix and Ward addressed
section 718.116(3), Florida Statutes, the section of the condominium association
statutes that is analogous to section 720.3085(3)(b). Significantly, neither case
concerns the liability of a foreclosing first mortgagee or the safe harbor provision
of the condominium association statutes.
III. CONCLUSION
For the reasons set forth above, this Court finds that the trial court did not
err in determining that the Associations are not entitled to interest, late fees,
attorney’s fees and costs from FNMA because the safe harbor protection of section
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720.3085(2)(c) applies. Accordingly, the final judgment entered in favor of
FNMA on its claim for declaratory and injunctive relief is affirmed.
AFFIRMED.
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