Bankers Lending v. Jacobson

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT
NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED
BANKERS LENDING COMPANY, LLC,
Appellant,
v. Case No. 5D17-542
ANGELA JACOBSON A/K/A
ANGELA J. JACOBSON A/K/A
ANGELA COOK, ROYALS PORTFOLIO, LLC,
DUN MAR CORPORATION A/K/A DUNMAR
CORPORATION, DUNBAR ESTATES
HOMEOWNERS ASSOCIATION, INC.,
Appellees.
____________________________________/
Opinion filed August 10, 2018
Appeal from the Circuit Court
for Seminole County,
Michael J. Rudisill, Judge.
Victor Kline, Amanda L. Chapman and
Edmund O. Loos, III, of Greenspoon
Marder, PA, Orlando, for Appellant.
Jamie Billotte Moses, Suzanne E. Gilbert
and Edward M. Fitzgerald, of Holland &
Knight LLP, Orlando, for Appellee, Royals
Portfolio, LLC.
No Appearance for other Appellees.
PER CURIAM.
Bankers Lending Company, LLC appeals the summary final judgment of
foreclosure entered in favor of Pennymac Holdings, LLC, owner and holder of the first
mortgage, and the underlying order allowing Bankers, a junior mortgagee on a portion of
the property, to redeem the mortgage as to the entire property, but prohibiting it from
foreclosing on the remainder of the property owned by Royals Portfolio, LLC. Bankers
argues the trial court erred when it limited the scope of its equitable subrogation claim.
We agree and reverse.
The facts are undisputed. Pennymac was the holder of a promissory note and
mortgage executed by Angela Jacobson and her deceased husband in the original
amount of $505,085 for the purchase of approximately ten contiguous acres in Seminole
County, Florida. The Jacobsons defaulted on the loan in 2010.
Sometime thereafter, Royals domesticated a Georgia state court judgment against
the Jacobsons. When the final judgment remained unpaid, Royals levied on the
mortgaged property. Consequently, the mortgaged property was partitioned. Jacobson
maintained title to half an acre as her homestead, and Royals took title to the remaining
nine-and-a-half acres, subject to the Pennymac mortgage, through the levy and Sheriff's
sale. Bankers obtained its lien on Jacobson's half-acre parcel when she executed and
delivered a note and mortgage to Bankers in exchange for $25,000. Jacobson remained
liable on the Pennymac note for the entire mortgaged property, including the nine-and-a-
half acres titled to Royals.
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opportunity to reassemble and acquire the entire ten acres through redemption and
foreclosure.
The trial court ultimately concluded, without making any factual findings, that "[i]t
would be inequitable to allow Bankers to be equitably subrogated to the extent it would
permit foreclosure of the Royals Parcel." Bankers was permitted to redeem the
Pennymac mortgage under section 45.0315; however, the trial court ruled that Bankers
"shall not be permitted to pursue a foreclosure claim against the Royals Parcel."
Thereafter, Bankers redeemed the Pennymac mortgage and moved for final
judgment of foreclosure. The trial court's summary final judgment made a finding that
Bankers held a lien superior to all defendants on the mortgaged property as limited by the
trial court's redemption order.
Section 45.0315, Florida Statutes, provides:
At any time before the later of the filing of a certificate of sale
by the clerk of the court or the time specified in the judgment,
order, or decree of foreclosure, the mortgagor or the holder of
any subordinate interest may cure the mortgagor's
indebtedness and prevent a foreclosure sale by paying the
amount of moneys specified in the judgment, order, or decree
of foreclosure, or if no judgment, order, or decree of
foreclosure has been rendered, by tendering the performance
due under the security agreement, including any amounts due
because of the exercise of a right to accelerate, plus the
reasonable expenses of proceeding to foreclosure incurred to
the time of tender, including reasonable attorney's fees of the
creditor. Otherwise, there is no right of redemption.
"The right to redeem is an incident to every mortgage and belongs to the mortgagor and
those claiming under him." Quinn Plumbing Co. v. New Miami Shores Corp., 129 So.
690, 692 (Fla. 1930). "As against a senior mortgagee, the only absolute right of a junior
mortgagee is the right to redeem from the senior mortgage[e]." Id. (citing Parker v. Child,
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opportunity to reassemble and acquire the entire ten acres through redemption and
foreclosure.
The trial court ultimately concluded, without making any factual findings, that "[i]t
would be inequitable to allow Bankers to be equitably subrogated to the extent it would
permit foreclosure of the Royals Parcel." Bankers was permitted to redeem the
Pennymac mortgage under section 45.0315; however, the trial court ruled that Bankers
"shall not be permitted to pursue a foreclosure claim against the Royals Parcel."
Thereafter, Bankers redeemed the Pennymac mortgage and moved for final
judgment of foreclosure. The trial court's summary final judgment made a finding that
Bankers held a lien superior to all defendants on the mortgaged property as limited by the
trial court's redemption order.
Section 45.0315, Florida Statutes, provides:
At any time before the later of the filing of a certificate of sale
by the clerk of the court or the time specified in the judgment,
order, or decree of foreclosure, the mortgagor or the holder of
any subordinate interest may cure the mortgagor's
indebtedness and prevent a foreclosure sale by paying the
amount of moneys specified in the judgment, order, or decree
of foreclosure, or if no judgment, order, or decree of
foreclosure has been rendered, by tendering the performance
due under the security agreement, including any amounts due
because of the exercise of a right to accelerate, plus the
reasonable expenses of proceeding to foreclosure incurred to
the time of tender, including reasonable attorney's fees of the
creditor. Otherwise, there is no right of redemption.
"The right to redeem is an incident to every mortgage and belongs to the mortgagor and
those claiming under him." Quinn Plumbing Co. v. New Miami Shores Corp., 129 So.
690, 692 (Fla. 1930). "As against a senior mortgagee, the only absolute right of a junior
mortgagee is the right to redeem from the senior mortgage[e]." Id. (citing Parker v. Child,
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25 N.J. Eq. 41, 43-44 (Ch. 1874)). "When the ['right of redemption'] is used with reference
to a junior mortgagee, . . . it refers to his right to satisfy a prior mortgage by payment of
the debt it secures and thereby become equitably subrogated to all rights of the prior
mortgagee." Marina Funding Grp., Inc. v. Peninsula Prop. Holdings, Inc., 950 So. 2d 428,
430 (Fla. 4th DCA 2007) (quoting Engels v. Valdesuso, 497 So. 2d 698, 700 n.1 (Fla. 3d
DCA 1986)).
Generally, a junior mortgagee of only a part of mortgaged premises, must pay the
whole amount of the mortgage debt in order to redeem. Quinn Plumbing, 129 So. at 693.
The junior mortgagee "cannot compel a redemption pro tanto, for the reason that the first
mortgagee has not agreed to separate his debt and security into parts." Id. Instead, the
first mortgagee is entitled to payment of the entire first mortgage. Id. Thus, the junior
mortgagee "must pay the entire mortgage debt in order to redeem the premises in which
he is interested, [and] when there are no intervening rights, he thereby becomes equitably
subrogated to the original rights of the first mortgagee . . . ." Id. at 694.
Equitable subrogation is generally appropriate if the following five elements are
met:
(1) the subrogee made the payment to protect his or her own
interest, (2) the subrogee did not act as a volunteer, (3) the
subrogee was not primarily liable for the debt, (4) the
subrogee paid off the entire debt, and (5) subrogation would
not work any injustice to the rights of a third party.
Dade Cty. Sch. Bd. v. Radio Station WQBA, 731 So. 2d 638, 646 (Fla. 1999) (citing Fowler
v. Lee, 143 So. 613, 614 (Fla. 1932); E. Nat'l Bank v. Glendale Fed. Sav. & Loan Ass'n,
508 So. 2d 1323, 1324-25 (Fla. 3d DCA 1987)). Where a party has discharged the debt
of the original creditor, that party "stands in the shoes" of the creditor whose claim has
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been discharged and he is entitled to the "right and priorities of the original creditor." Id.
(citing E. Nat'l Bank, 508 So. 2d at 1324); see also Tribeca Lending Corp. v. Real Estate
Depot, Inc., 42 So. 3d 258, 262 (Fla. 4th DCA 2010) ("[T]he doctrine of equitable
subrogation . . . is designed to apply where the claimant satisfied an obligation of another
and then stands in the shoes of the satisfied creditor." (citing Radison Props., Inc. v.
Flamingo Groves, Inc., 767 So. 2d 587, 591 (Fla. 4th DCA 2000))). For example, "a
refinancing lender is equitably subrogated to the priority of the first mortgage even where
it has actual knowledge of an intervening lien." Tribeca Lending Corp., 42 So. 3d at 262
(citing Suntrust Bank v. Riverside Nat'l Bank of Fla., 792 So. 2d 1222, 1227 n.3 (Fla. 4th
DCA 2001)).
Royals does not contest that Bankers met the first four requirements for equitable
subrogation. It argues that equitable subrogation is not allowed in the instant case
because subrogation would work an injustice to it because Bankers came to the table
with unclean hands. Royals claims that Bankers acquired its interest in the Jacobson's
half-acre parcel intending to reunite all ten acres once Pennymac foreclosed. While this
may be true, "a party asserting unclean hands 'must prove that he was injured in order
for the unclean hands doctrine to apply.'" See Tribeca Lending Corp., 42 So. 3d at 262
(quoting McCollem v. Chidnese, 832 So. 2d 194, 196 (Fla. 4th DCA 2002)). This Royals
failed to do. Even if it had, redemption and equitable subrogation to all rights of the
Pennymac's mortgage would not have put Royals in a worse position. Royals took title
to the nine-and-a-half-acre parcel subject to Pennymac's mortgage. And like Bankers,
Royals had the right to redeem, but chose not to exercise that option.
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There is simply no record evidence to establish that inequity would result to Royals
if Bankers, rather than Pennymac, had been permitted to foreclose on Pennymac's
mortgage. Instead, the redemption order and final judgment effectively negated Bankers'
right of redemption because Bankers' only option was to pay off the final judgment amount
of $354,802.65, plus post-judgment interest, in order to prevent foreclosure on the half-
acre parcel. Royals' position never changed because the property was going to be
foreclosed upon by either Pennymac or Bankers regardless.
We conclude Bankers is legally entitled to equitable subrogation as to the entire
ten acres. No injustice befalls to Royals. Royals took title to the property subject to
Pennymac's mortgage and would be unjustly enriched if Bankers was forced to pay the
entire amount set forth in the final judgment in order to assert its right to redeem, while
Royals paid nothing and was awarded title to the nine-and-a-half acres free and clear.
Therefore, we reverse the final judgment of foreclosure and underlying order on
Bankers’ motion to redeem to the extent that they prohibit Bankers from foreclosing on
the entire ten acres.
REVERSED.
SAWAYA, BERGER and WALLIS, JJ., concur.
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