Madison at Soho II Condominium Association v. Devo Acquisition Enterprises, LLC , 2016 Fla. App. LEXIS 12740 ( 2016 )

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
MADISON AT SOHO II )
CONDOMINIUM ASSOCIATION, )
INC., a Florida not-for-profit corporation, )
)
Appellant, )
)
v. ) Case No. 2D15-2067
)
DEVO ACQUISITION )
ENTERPRISES, LLC, a Florida limited )
liability company, )
)
Appellee. )
)
Opinion filed August 24, 2016.
Appeal from the Circuit Court for
Hillsborough County; Frank A. Gomez,
Judge.
Jacob A. Brainard and Scott Davis of
Business Law Group, P.A., Tampa,
for Appellant.
Shazia N. Sparkman of Sparkman &
Sparkman, P.A., Tampa, for Appellee.
BADALAMENTI, Judge.
I. INTRODUCTION
Madison at SoHo II Condominium Association, Inc. (the Association) sued
Devo Acquisition Enterprises, LLC (Devo), for foreclosure or a money judgment,
alleging that Devo was liable for $40,645.70 in unpaid condominium fees and
assessments. Devo argued that the Association's acceptance of Devo's $2412
payment constituted an accord and satisfaction of that debt, pursuant to section
673.3111, Florida Statutes (2014). The Association countered that accord and
satisfaction principles were inapplicable to the collection of unpaid fees and
assessments under section 718.116(3), Florida Statutes (2014). While the litigation was
pending in the trial court, this court decided St. Croix Lane Trust v. St. Croix at Pelican
Marsh Condominium Ass'n, 144 So. 3d 639 (Fla. 2d DCA 2014), review denied, 160 So.
3d 898 (Fla. 2015). In St. Croix Lane Trust, we held that section 718.116(3), the text of
which is incorporated into the Association's Declaration of Condominium (Declaration),
did not operate to limit or alter the law concerning accord and satisfaction. Id. at 643.
Relying upon St. Croix Lane Trust, the trial court granted summary judgment to Devo.
During the pendency of this appeal and in the legislative session
immediately following our St Croix Lane Trust decision, the legislature passed an
amendment to section 718.116(3) expressly clarifying that section 718.116(3) applies
notwithstanding the law of accord and satisfaction under section 673.3111. See ch.
2015-97, § 9, at 18-19, Laws of Fla. The dispositive issue in this appeal is whether this
court may utilize the legislature's recent clarifying amendment to a statute, enacted
during the pendency of this appeal, to interpret the pre-amended version of that statute.
We answer this question in the affirmative, recognize that our decision in St. Croix Lane
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Trust has been abrogated, reverse the grant of summary judgment to Devo, and
remand to the trial court for proceedings consistent with this opinion.
II. FACTUAL AND PROCEDURAL BACKGROUND
A. The Initial Dispute
The Association is a not-for-profit corporation designed to manage an
eponymous condominium development in Hillsborough County. Devo acquired title to
unit 939B of the Association's condominium development. The previous owners of the
unit had been delinquent in paying assessments and related charges to the Association.
In acquiring title to the unit, Devo became jointly and severally liable for the delinquent
assessments and charges under the terms of the Declaration. The Association
attempted to obtain payment from Devo. In turn, Devo disputed the amount it owed.
On January 28, 2014, Devo sent the Association a proposed offer for
accord and satisfaction of the contested debt, along with a corresponding check for
$2412. The Association does not contest that Devo intended its check to be an accord
and satisfaction of the delinquent amount owed. On February 17, 2014, the
Association's counsel informed Devo by email that Devo's offer was rejected. On July
1, 2014, the Association filed a lien foreclosure complaint against Devo for failing to pay
certain assessments due from November 2008 through April 2014. The Association
alleged that Devo owed $28,472 in unpaid assessments, plus other associated fees and
costs, for a total outstanding amount of $40,645.70. On July 21, 2014, Devo filed a
verified motion to dismiss the Association's complaint. In or around October 2014, Devo
discovered that the Association deposited Devo's check for $2412 two days after Devo
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sent its offer of accord and satisfaction, despite the Association's previous
representation that it was not accepting Devo's offer.
B. The Court's Intervening Decision in St. Croix Lane Trust
On August 8, 2014, approximately one month after the Association
commenced its foreclosure action, this court issued St. Croix Lane Trust. In St. Croix
Lane Trust, a condominium association sought to foreclose a lien against a
condominium unit owned by a trust because of past-due assessments. 144 So. 3d at
640. The trust argued that accord and satisfaction, pursuant to section 673.3111,
occurred when the condominium association deposited the trust's $840 check in full
satisfaction of the more than $36,000 in various assessments and fees owed to the
condominium. St. Croix Lane Tr., 144 So. 3d at 642. The trial court granted summary
judgment in favor of the condominium association, ruling that section 718.116(3),
Florida Statutes (2011), rendered ineffective any accord and satisfaction offered by the
trust. Id. at 641. At the time of the controversy in St. Croix Lane Trust, section
718.116(3) read, in pertinent part:
Any payment received by an association must be applied
first to any interest accrued by the association, then to any
administrative late fee, then to any costs and reasonable
attorney's fees incurred in collection, and then to the
delinquent assessment. The foregoing is applicable
notwithstanding any restrictive endorsement, designation, or
instruction placed on or accompanying a payment.
(Emphasis added.) Thus, the trial court in St. Croix Lane Trust held that when a
condominium association negotiates a check, the order of priority set out in section
718.116(3) governs how the check must be applied to amounts due, irrespective of the
law of accord and satisfaction.
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On appeal, this court disagreed, holding that nothing in section
718.116(3)'s legislative history revealed any intention to make the accord and
satisfaction principles set forth in section 673.3111 inapplicable to condominium
associations. St. Croix Lane Tr., 144 So. 3d at 643. In particular, we did not entertain
the condominium association's argument that the term "restrictive endorsement" applied
to accord and satisfaction. Id. We also noted that a case from the Third District, Ocean
Two Condominium Ass'n v. Kliger, 983 So. 2d 739, 741 (Fla. 3d DCA 2008), could be
read to reach the opposite construction. St. Croix Lane Tr., 144 So. 3d. at 643.
However, we distinguished Kliger on its facts and on the apparent unavailability of
legislative materials to aid the Kliger court in its analysis. See St. Croix Lane Tr., 144
So. 3d at 643-44.
C. The Trial Court Grants Summary Judgment in Favor of Devo
On October 9, 2014, after discovering that the Association had deposited
Devo's $2412 check, Devo filed an amended motion to dismiss, alleging in part that the
negotiation of Devo's check operated as accord and satisfaction, and citing this court's
decision in St. Croix Lane Trust for support. On November 12, 2014, Devo filed an
answer and affirmative defenses. Devo's first affirmative defense was accord and
satisfaction, pursuant to section 673.3111. On November 18, 2014, the trial court
denied Devo's amended motion to dismiss.
On February 10, 2015, Devo moved for summary judgment. This motion
again alleged, in part, that accord and satisfaction occurred pursuant to section
673.3111, and again cited St. Croix Lane Trust for support. On April 1, 2015, the trial
court heard argument on Devo's motion for summary judgment. At the hearing, Devo
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reiterated its point concerning accord and satisfaction. The Association pointed to
paragraph 13.10 of its Declaration and argued that St. Croix Lane Trust did not apply
because it concerned statutory interpretation, whereas the litigation concerned
contractual interpretation. Paragraph 13.10, which tracks the statutory language of
section 718.116(3), reads:
13.10 Application of Payments. Any payments
received by the Association from a delinquent Unit Owner
shall be applied first to any interest accrued on the
delinquent installment(s) as aforesaid, then to any
administrative late fees, then to any costs and reasonable
attorneys' fees incurred in collection and then to the
delinquent and any accelerated Assessments. The
foregoing shall be applicable notwithstanding any restrictive
endorsement, designation or instruction placed on or
accompanying a payment.
(Emphasis added.) The Association argued that this contractual language precluded
accord and satisfaction, even though St. Croix Lane Trust held that the same language
in section 718.116(3) had no such effect. In the alternative, counsel for the Association
alerted the trial court that the legislature was considering an amendment to section
718.116(3). In the words of the Association's counsel, this amendment would "overrule
the St. Croix Lane Trust decision and include accord and satisfaction designations
within the statutory language, and it also includes a sentence that says, 'This is
intended to clarify existing law.' " Devo replied by arguing that the Association should
not be able to contract around a clearly unfavorable statutory interpretation, and that the
trial court should not rule on an amendment which had yet to pass the legislature. After
the hearing, the trial court granted summary judgment to Devo on the grounds that "a
full accord and satisfaction took place pursuant to Florida Statutes."
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D. The Clarifying Amendment to Section 718.116(3)
On June 2, 2015, the clarifying amendment, which the Association had
pointed out to the trial court was pending in the legislature, was approved by the
governor after passing both houses of the legislature. See ch. 2015-97, § 9, at 18-19,
Laws of Fla. The approval occurred almost one month after Devo filed its notice of
appeal, two months after the trial court had granted summary judgment, and ten months
after this court decided St. Croix Lane Trust. As amended, the pertinent part of section
718.116(3) now reads as follows:
(3) Any payment received by an association must be applied
first to any interest accrued by the association, then to any
administrative late fee, then to any costs and reasonable
attorney fees incurred in collection, and then to the
delinquent assessment. The foregoing is applicable
notwithstanding s. 673.3111, any purported accord and
satisfaction, or any restrictive endorsement, designation, or
instruction placed on or accompanying a payment. The
preceding sentence is intended to clarify existing law. A late
fee is not subject to chapter 687 or s. 718.303(4).
(Emphasis added.) With the passage of this amendment during the pendency of this
appeal, the Association's position on appeal shifted from its primary position in the trial
court. Whereas the Association once argued that the statutory language should not
trump the language of its Declaration, it now argues that the recent statutory
amendment to section 718.116(3) clarified the legislature's original intent and should
therefore result in reversal. Devo argues that reversal in this case would be an
improper retroactive application of a substantive change in law. We address these
arguments in turn.
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III. ANALYSIS
A. Utilization of a Legislature's Amendment of a Statute Enacted Shortly After a
Controversy Arises Regarding the Interpretation of the Statute
Florida courts have "the right and the duty" to consider the legislature's
recently enacted statute clarifying its intent in a prior version of a statute, which was
passed soon after a controversy arose in the interpretation of that original, pre-amended
statute. Ivey v. Chicago Ins. Co., 410 So. 2d 494, 497 (Fla. 1982) (quoting Gay v.
Canada Dry Bottling Co. of Fla., 59 So. 2d 788, 790 (Fla. 1952)); Finley v. Scott, 707
So. 2d 1112, 1116-17 (Fla. 1998) (first citing Parole Comm'n v. Cooper, 701 So. 2d 543
(Fla. 1997); then citing Lowry v. Parole & Prob. Comm'n, 473 So. 2d 1248, 1250 (Fla.
1985)). "When the legislature amends a statute shortly after controversy has arisen
over its interpretation, the amendment can be considered an interpretation of the
original law, not a substantive change." Essex Ins. Co. v. Integrated Drainage Sols.,
Inc., 124 So. 3d 947, 952 (Fla. 2d DCA 2013) (citing Metropolitan Dade County v.
Chase Fed. Hous. Corp., 737. So. 2d. 494, 503 (Fla. 1999)); see also Lowry, 473 So. 2d
at 1250.
At first blush, it may appear that a court's consideration of a legislature's
clarification of its intent with regard to the passage of an earlier statute is akin to
retroactively applying an amended statute to pending litigation, which has the potential
to create constitutional concerns. See Fla. Ins. Guar. Ass'n v. Devon Neighborhood
Ass'n, 67 So. 3d 187, 195 (Fla. 2011) (explaining that there is a presumption against the
retroactive application of substantive statutory amendments). This is not the situation
here. The legislature's clarification of a statute is a tool of statutory construction that
can be used to guide the interpretation of the pre-amended version of the statute. See
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Leftwich v. Fla. Dep't of Corr., 148 So. 3d 79, 83 (Fla. 2014) (explaining that "if the
Legislature amends a statute shortly after a controversy arises with respect to the
interpretation of the statute, then the amendment may be considered to be a legislative
interpretation of the original statute rather than a substantive change to the statute"
(citing Lowry, 473 So. 2d at 1250)); Essex Ins. Co., 124 So. 3d at 952.
Thus, the legislature's clarification of the prior version of a statute after a
recent controversy, such as a court's interpretation of the statute in contravention of the
legislature's intent, is permissible. See Finley, 707 So. 2d at 1116 (first citing Cooper,
701 So. 2d at 544; then citing Lowry, 473 So. 2d at 1250)). This distinction is
emphasized by the fact that, when the Florida Supreme Court has had occasion to
simultaneously consider retroactivity and the recent controversy rule, it has treated the
recent controversy rule as an inquiry that is distinct from retroactive application of an
amended statute. See Leftwich, 148 So. 3d at 83-84 (treating the recent controversy
rule as distinct from retroactive application of a criminal statute under the Ex Post Facto
Clause); Metropolitan Dade County, 737 So. 2d at 502-03 (treating the application of
controversy rule as distinct from the retroactive application of an amended statute). The
Association asks us to revisit our prior construction of the pre-amended section
718.116(3), not to retroactively apply a newer version of section 718.116(3). Because
we are applying the legislature's amendment, which clarified the legislature's intent in a
prior version of a statute after a recent controversy, we do not apply retroactivity
principles here. This is because retroactive application of a statute is not the inquiry
before us. See generally Devon Neighborhood Ass'n, 67 So. 3d at 195. Devo's
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mention of its vested rights as they relate to the second prong of the retroactivity test is
therefore inapposite.
B. The Application of Stare Decisis to the Recent Controversy Rule
Now that we have established that statutory construction, not retroactive
application, is the task before us, we must explain how stare decisis interacts with the
recent controversy rule. Devo argues that because St. Croix Lane Trust was good law
at the time of the final judgment in this case, the trial court made the correct decision.
Devo suggests that it would be unfair to reverse the trial court simply for applying
binding precedent.
"[C]oncerns about maintaining settled law are strong when the question is
one of statutory interpretation." Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551
U.S. 877, 899 (2007) (citing Hohn v. United States, 524 U.S. 236, 251 (1998)). "When a
court has interpreted a statute . . . and the Legislature does nothing to suggest that the
interpretation does not effectuate legislative intent, there is ordinarily no good reason to
alter the interpretation." Clark v. State, 823 So. 2d 809, 811 (Fla. 1st DCA 2002)
(emphasis added) (first citing State v. Hall, 641 So. 2d 403, 405 (Fla.1994); then citing B
& L Servs. v. Coach USA, 791 So. 2d 1138, 1142 (Fla. 1st DCA 2001)). But in the case
before us, the legislature did not do "nothing." It instead passed legislation effectuating
its intent shortly after our decision in St. Croix Lane Trust. And, to the Association's
credit, it brought to the trial court's attention that there was legislation in the works which
would amend section 718.116(3).
That is, upon this court's decision in St. Croix Lane Trust, the bill
amending section 718.116(3) was introduced into the legislature six months later and,
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upon passage, received final gubernatorial approval. See Bill History, CS/CS/HB 0791
(2015), https://www.flsenate.gov/Session/Bill/2015/791/?Tab=BillHistory (last visited
June 23, 2016). The plain language of the amended section 718.116(3) states that the
order of priority for delinquent payments laid out in the statute "is applicable
notwithstanding [section] 673.3111" or "any purported accord and satisfaction." The
amended section 718.116(3) then states, "The preceding sentence is intended to clarify
existing law."1
It is clear to us that the legislature amended section 718.116(3) in
response to a recent controversy arising out of our construction of that statute in St.
Croix Lane Trust, and our disavowal in St. Croix Lane Trust of a possibly contrary
construction in Kliger as dicta. The clear legislative directives, coupled with the close
temporal proximity of the amendment to St. Croix Lane Trust, leave no room for any
other reasonable conclusion. Of course, there may be some length of time between a
controversy and legislative action which precludes the controversy from being
considered "recent." But the fact that this amendment passed in the legislative session
immediately following St. Croix Lane Trust clearly distinguishes the present case from
the most egregious counterexamples imaginable. See, e.g., State Farm Mut. Auto. Ins.
Co. v. Laforet, 658 So. 2d 55, 62 (Fla. 1995) ("It would be absurd . . . to consider
legislation enacted more than ten years after the original act as a clarification of original
intent . . . ."). Hence, we believe it is proper to reexamine St. Croix Lane Trust in light of
1
The legislative staff analyses, for those who choose to rely on them,
highlight that the purpose of the amendment was to apply the payment structure in
section 718.116(3) "in spite of" any accord and satisfaction, and that this amendment
was "intended to clarify existing law." See, e.g., Fla. H.R. Subcomm. on Civ. Just.,
CS/CS/HB 0791 (2015), Final Bill Analysis 3 (June 4, 2015).
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the legislature's recent clarification of its intent. After all, "[a] court's purpose in
construing a statute is to give effect to legislative intent, which is the polestar that guides
the court in statutory construction." Larimore v. State, 2 So. 3d 101, 106 (Fla. 2008)
(citing Bautista v. State, 863 So. 2d 1180, 1185 (Fla. 2003)).
C. A Reexamination of St. Croix Lane Trust
Having distinguished retroactive application from the recent controversy
rule and having explained why the recent legislative clarification to section 718.116(3)
permits us to reexamine our precedent, we now must revisit our St. Croix Lane Trust
decision. We do so with the benefit of hindsight and the legislature's recent clarifying
amendment.
The opinion in St. Croix Lane Trust sought to determine whether the
language in section 718.116(3) concerning a "restrictive endorsement, designation or
instruction placed on or accompanying a payment" meant that the payment procedure
for delinquent assessments in the statute applied despite accord and satisfaction. 144
So. 3d at 642. Our analysis of this question in St. Croix Lane Trust contains an inquiry
into legislative intent principally guided by section 718.116(3)'s legislative history. Id. at
643. Finding no indication in the legislative materials that section 718.116(3) was
meant to abrogate accord and satisfaction, we decided that it was not meant to do so.
"To discern legislative intent, a court must look first and foremost at the
actual language used in the statute." Larimore, 2 So. 3d at 106 (emphasis added)
(citing Bautista, 863 So. 2d at 1185). As previously noted, the version of section
718.116(3) analyzed by the St. Croix Lane Trust court contained the phrase "restrictive
endorsement." A restrictive endorsement is nothing more than an endorsement which
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"includes a condition . . . or any other language restricting further negotiation."
Restrictive Indorsement, Black's Law Dictionary 893 (10th ed. 2014).2 A proper offer of
accord and satisfaction contains such a condition in the form of a "conspicuous
statement" that an offer "was tendered as full satisfaction of the claim." § 673.3111(2).
Florida case law acknowledges that accord and satisfaction results "when an offeree
accepts a payment which is tendered only on the express condition that its receipt is to
be deemed a complete satisfaction of a disputed claim." Hannah v. James A. Ryder
Corp., 380 So. 2d 507, 509-10 (Fla. 3d DCA 1980) (emphasis added); see also St.
Mary's Hosp., Inc. v. Schocoff, 725 So. 2d 454, 456 (Fla. 4th DCA 1999); Republic
Funding Corp. of Fla. v. Juarez, 563 So. 2d 145, 147 (Fla. 5th DCA 1990).
Courts in Florida and elsewhere have plainly characterized statements
that an offer was tendered in full satisfaction of a disputed claim as restrictive
endorsements. See, e.g., E & S Realty, Inc. v. Am. Equity Int'l Corp., 478 So. 2d 1160,
1160 (Fla. 3d DCA 1985); Jobear, Inc. v. Dewind Mach. Co., 402 So. 2d 1357, 1358
(Fla. 4th DCA 1981); Yelen v. Cindy's, Inc., 386 So. 2d 1234, 1235 (Fla. 3d DCA 1980);
see also Rhone v. State Auto. Mut. Ins. Co., 858 F.2d 1507, 1511 (11th Cir. 1988);
Anderson v. Rosebrook, 737 P.2d 417, 419 (Colo. 1987); Didriksen v. Sewerage &
Water Bd., 527 So. 2d 319, 321 (La. Ct. App. 1988); Hixson v. Cox, 633 S.W.2d 330,
331 (Tex. App. 1982). Our interpretation of "restrictive endorsement," guided by the
legislature's recent clarifying amendment, leaves only one possible outcome. The
legislature abrogated our interpretation of section 718.116(3) in St. Croix Lane Trust.
2
For clarity's sake, we note that this entry in Black's Law Dictionary
recognizes that "indorsement" is sometimes spelled "endorsement."
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D. Application of the Clarifying Amendment to this Appeal
It is of little consequence that the Association’s initial argument was based
in contract. This is not a case where the contractual language possesses a "scope
independent of the proper construction of the statute" based on some specific facts or
the intent of the parties at formation. Pennzoil Co. v. F.E.R.C., 645 F.2d 360, 386 n.54
(5th Cir. 1981) (citing Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 678
(1950)). In the absence of evidence that the Association and Devo intended to execute
a contract beyond the scope of section 718.116(3), it is proper to look to evidence of the
meaning of section 718.116(3) in seeking to determine the meaning of a contract which
mimics that statute. See Smith v. Reverse Mortg. Sols., Inc., 40 Fla. L. Weekly D1624,
D1625 (Fla. 3d DCA July 15, 2015) ("We are compelled to construe a contract
consistent with specific statutes that regulate and govern the contract."); Westside EKG
Assocs. v. Found. Health, 932 So. 2d 214, 216 (Fla. 4th DCA 2005) ("[W]hen parties
contract upon a matter which is the subject of statutory regulation, the parties are
presumed to have entered into their agreement with reference to such statute, which
becomes a part of the contract, unless the contract discloses a contrary intention.").
Section 718.116(3), and by extension paragraph 13.10 of the Declaration,
is not impacted by Devo's offer of accord and satisfaction. As evidenced by the
legislature's clarifying amendment, it clearly intended for section 718.116(3) to function
this way all along. Accordingly, the Association's depositing Devo's check did not
provide grounds for granting summary judgment in favor of Devo.
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IV. CONCLUSION
Guided by the legislature's recent clarification of section 718.116(3), our
preceding analysis leads us to reverse the decision of the trial court and conclude that
our prior interpretation of section 718.116(3)'s holding in St. Croix Lane Trust has been
abrogated by the legislature's recent clarifying amendment.
Reversed; remanded for proceedings consistent with this opinion.
WALLACE and LaROSE, JJ., Concur.
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