Regents Park Investments, LLC v. Bankers Lending Services, Inc.

Third District Court of Appeal
State of Florida
Opinion filed July 20, 2016.
Not final until disposition of timely filed motion for rehearing.
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No. 3D16-529
Lower Tribunal No. 15-18141
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Regents Park Investments, LLC,
Appellant,
vs.
Bankers Lending Services, Inc.,
Appellee.
An appeal from a non-final order from the Circuit Court for Miami-Dade
County, John Schlesinger, Judge.
Arnaldo Velez, P.A. and Arnaldo Velez, for appellant.
Garbett, Allen & Roza, P.A. and David S. Garbett and B. Elizabeth Interthal,
for appellee.
Before SUAREZ, C.J., and WELLS and SALTER, JJ.
SUAREZ, C.J.
Appellant Regents Park Investments, LLC (“Regents”) appeals an Order
discharging a lis pendens which it recorded on certain parcels of real property in
connection with its suit for specific performance. We reverse.
Regents was the buyer and Appellee Bankers Lending Services, Inc.
(“Bankers”) was the seller in a contract for five parcels of land in Miami-Dade
County. The sales contract was amended with eight addenda. Addendum Number
2 contained an agreement that any liens and claims would not render the title
unmarketable or preclude closing and that instead the parties could escrow funds
from the proceeds pending release of the liens. Paragraph 7 of Addendum Number
8 provided the option to escrow $50,000 at closing until resolution of the liens.
Paragraph 7 also required the escrow agreement to be acceptable to Old Republic
National Title Insurance Co., Regents’ title insurer. The Old Republic National
Title Insurance Company Commitment required lot clearing liens to be released,
but did not provide for escrow in lieu of the release of those liens.
It is undisputed that the properties in question were encumbered with lot
clearing liens in favor of the City of Miami. Bankers attempted to obtain release of
the existing lot clearing liens by way of a suit against the lienholders. Bankers
eventually entered into a settlement agreement with the lienholders under which it
paid an agreed amount for release of the liens. The parties to that action also
agreed to a joint stipulation and proposed order for release of the liens. The joint
stipulation and proposed order were submitted to the court for approval and
signature, but, as of the date of the closing, the stipulation had not been approved
and the final order had not been signed by the trial court.
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In light of the fact that the order was unsigned and the lot clearing liens
were, therefore, still in place, Bankers was willing to have $50,000 of the purchase
price placed into escrow at the closing and communicated that willingness to
Regents. Bankers also attempted to establish a time for the closing of the sale.
However, Old Republic Insurance Company was unwilling to agree to the escrow
arrangement in lieu of release of the liens, so Regents did not proceed with the
closing. After the date for closing lapsed, Bankers sent Regents a notice stating
that it had been ready willing and able to close on the closing date and that
Regents, as buyer, had failed to close.
Shortly thereafter, Regents filed the present suit for specific performance
and recorded the lis pendens at issue here. After discovery was undertaken,
Bankers moved to discharge the lis pendens. After hearing on the motion, the trial
court granted the motion for discharge. In its oral ruling the trial court stated that
the correct standard for the trial court to use was “….the one that’s articulated in
the Golden Shores1 case []. Under the circumstances, there’s a colorable case
1 In Golden Shores Properties, LLC. v. Santopietro, 792 So. 2d 644 (Fla. 3d DCA
2001), this Court cited the language of Florida Statute Section 48.23(3) which
states that when an action is not founded on a duly recorded instrument “the court
shall control and discharge the recorded notice of lis pendens as the court would
grant and dissolve injunctions.” Relying on that language this Court stated that
that at a hearing on the motion to dissolve, “the party seeking the injunction [] has
the burden of establishing a prima facie case to support the injunctive relief.”
Golden Shores, 792 So. 2d at 645.
With respect to the statutory language, the Florida supreme court stated in
Chiusolo v. Kennedy, 614 So. 2d 491 (Fla. 1993):
[T]he statutory reference to injunctions exists merely to
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certainly, but I don’t think clear and convincing evidence has been presented to the
court sufficient to overcome the motion to discharge or dissolve the lis pendens.”
The trial court then dissolved the lis pendens. Regents argues, and we agree, that
clear and convincing was not the proper standard for the trial court to use.
However, the proper standard of proof is not entirely obvious under existing case
law. Therefore, we must first examine what is the proper standard.
As stated in Chiusolo v. Kennedy, 614 So. 2d 491 (Fla. 1993), a “lis pendens
cannot be dissolved if, in the evidentiary hearing on request for discharge, the
proponent can establish a fair nexus between the apparent legal or equitable
ownership of the property and the dispute embodied in the lawsuit. . . . The
relevant question is whether alienation of the property or the imposition of
intervening liens, if either actually occurred, conceivably could disserve the
purpose for which lis pendens exists.” Id. at 492.
The question in this case is how that “fair nexus” can be shown and what
burden of proof the proponent of the lis pendens bears. On this issue the court in
Chiusolo stated only that “the quantum of proof necessary” was not “as severe” as
the substantial likelihood on the merits standard which had been imposed by the
permit property holders to ask in an appropriate case that
the plaintiff post a bond where needed to protect the
former from irreparable harm.
Id. at 493. That language clarifies that the burden of proof is not actually clear and
convincing evidence, as indicated by the trial court.
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Fifth Circuit in its ruling. Id. at n. 2. In addition, in Acapulco Construction, Inc.
v. Redavo Estates, Inc., 645 So. 2d 182 (Fla. 3d DCA 1994) this Court held that
the burden was not “the greater weight of the evidence.” See also Christian v.
Sanderhoff, 731 So. 2d 804, 805 (Fla. 4th DCA 1999).
In Nu-Vision, LLC v. Corporate Convenience, Inc., 965 So. 2d 232 (Fla. 5th
DCA 2007) the Court addressed a claim in which a tenant/proponent of a lis
pendens sought review of an order granting discharge where it claimed to have an
option to purchase the real property which was the subject of its lease and of an
eviction action against it. In upholding the discharge order, the Court there stated:
[E]stablishing a ‘fair nexus’ between a claim in litigation
and the property’s title requires a little more than simply
pleading a theoretical nexus.
To establish a fair nexus requires the showing of a good
faith, viable claim. In this case, [tenant] cannot make
that showing because the December 16, 2004 letter
cannot support an action for specific performance as a
matter of law.
***
[W]ith respect to the specific performance count, we find
that the complaint fails to state a cause of action, and
could not therefore support a finding of a ‘fair nexus’ as a
matter of law.
***
In our view, [] Chiusolo simply left unanswered the
question as to the quantum of proof required of a lis
pendens proponent to succeed in defending against a
motion to dissolve the lis pendens. The Court stated only
that ‘the burden of proof rests on the proponent’ and that
the ‘quantum of proof is not as severe as’ the substantial
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likelihood of success on the merits standard necessary to
maintain a temporary injunction under Florida law. The
Court would not have needed to place the burden of
proof on either party if there was nothing to prove –
which would be the case if any allegation in a pleading
that states a theoretical connection to the title in real
property was sufficient to maintain a lis pendens
throughout the litigation.
In our view, it would also be contrary to sound public
policy to allow a lis pendens proponent to tie up real
property belonging to another person when the proponent
cannot even make a minimal showing that there is at least
some basis for the underlying claim. And requiring the
proponent to show that he or she has a good faith basis to
allege facts supporting a claim and that the facts alleged
would at least state a viable claim, if true, is completely
consistent with Chiusolo. . . .
For these reasons, we have elected to follow the
definition of ‘fair nexus’ adopted by the Third and Fourth
Districts after Chiusolo, which requires the proponent to
demonstrate a good faith, viable claim.
Id. at 234-236.
Citing similar language Bankers argues that because the proponent of a lis
pendens must make an evidentiary showing of “a good faith, viable claim” Regents
was required to establish that its claim for specific performance was “viable” --
i.e. that it could establish all the necessary elements of that claim – at the hearing
on the motion for discharge. We think Bankers goes too far because such a
standard would have required Regents to fully prove its underlying claim in a
preliminary “mini trial.”
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As this Court stated in Invego Auto Parts, Inc. v. Rodriguez, 34 So. 3d 103,
105 (Fla. 3d DCA 2010):
In order to invoke the remedy of specific performance, . .
. . the plaintiff must prove that ‘as a condition precedent
to specific performance it either paid the contract sum;
tendered it; was ready willing and able to do so; or was
excused from so doing.’ [internal citations omitted]
In the case below, the parties disagree about whether Regents can satisfy any one
of the four alternative means of proving the condition precedent. Bankers alleges
that Regents cannot prove any of the alternatives and Regents argues that the
evidence will show (once fully developed and once the matter is ripe for trial) that
it was either ready, willing and able to close or that it was excused from doing so.
As this case demonstrates, it is impracticable to require a proponent of a lis
pendens to fully prove each element of its claim in an evidentiary hearing where
the case has not been noticed for trial and the parties may not even have completed
discovery. Consequently, we agree with the Court in Nu-Vision, that to establish a
“fair nexus” between the plaintiff’s claim and the property or properties subject to
a lis pendens by way of a “good faith, viable claim,” the proponent of the lis
pendens must make “a minimal showing that there is at least some basis for the
underlying claim [a]nd … show that he or she has a good faith basis to allege facts
supporting a claim and that the facts alleged would at least state a viable claim.”
Nu-Vision, 965 So. 2d at 236.
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This is essentially the standard applied in Eurohome di Soleil, LLC v. The
Oaks Group, Inc., 912 So. 2d 1271 (Fla. 4th DCA 2005), where the parties
disagreed about the timing of a deposit due under the contract. In finding that the
lis pendens was proper, the court there stated:
[a]lthough it may turn out that the parties intended that
the second deposit was to be made in five days, the
contract fails to specify when the second deposit is to be
delivered. The court accordingly erred in dissolving the
lis pendens on the ground that the buyer was in default, at
this stage of the proceeding.
Id. at 1272. Other cases in which that minimal burden has been established include
Von Mitschke-Collande v. Kramer, 869 So. 2d 1246 (Fla. 3d DCA 2004), where
heirs showed that funds acquired through a breach of trust were used to purchase
the property at issue and so demonstrated a potential constructive trust in the
specified property, and J.B.J. Investment of South Florida, Inc. v. Maslanka, 163
So. 3d 726, 728 (Fla. 5th DCA 2015), where the proponent of the lis pendens
presented “substantial evidence” which demonstrated that the subject property was
intended to be included in a mortgage or that it was entitled to an equitable lien on
the property.
There are many cases in which the proponent of the lis pendens has been
found unable to meet even the minimal burden described in Nu-Vision. For
example, in Blue Star Palms, LLC v. LED Trust, LLC, 128 So. 3d 36 (Fla. 3d
DCA 2012) the court declined to enforce the lis pendens because the claims
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alleged were against a subsidiary corporation and not the condominiums subject to
the lis pendens. As the court there stated:
A complaint which will not support a claim against the
specific property at issue cannot provide a basis for tying
it up by a filing of notice of lis pendens. … When a
plaintiff can be afforded complete relief on a claim
without reference to the title to the real property, a lis
pendens cannot be maintained. Under the Florida cases a
lis pendens is proper only when the required relief might
specifically affect the property in question. [internal
citations and quotations omitted].
Id. at 38-39. See also, Nobe Bay Holdings, LLC v. Garcia, 140 So. 3d 693 (Fla. 3d
DCA 2014) (holding the claim was unprovable because the plaintiff had agreed to
limit his claim to money damages); India America Trading Co. v. White, 896 So.
2d 859 (Fla. 3d DCA 2005) (finding claim for specific performance was
unprovable because it was based on an oral contract which was unenforceable
under the statute of frauds).
Applying the standard of a minimal showing that there is at least some basis
for the underlying claim and a good faith basis to allege facts that would at least
state a viable claim, we conclude that Regents met that standard. Regents’
showing that its claims arose out of a written contract for sale of the subject
properties established a “fair nexus” to the properties and its Interrogatory answers
swearing that it was ready, willing and able to close on the closing date, together
with evidence that Bankers was not able to close because of the outstanding lot
clearing liens against the property,
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provided a sufficient minimal basis to support either a claim that Regents could
have performed or that its performance was excused. Consequently, we find that
the trial court should not have discharged the lis pendens and reverse with
instructions that it be reinstated. We add that this opinion concerns solely the issue
of the discharge of the lis pendens. We do not address, nor should it be inferred
that we have reached any conclusion about, Regents’ ultimate ability to sustain its
claim for specific performance. These are two entirely different issues.
Reversed and remanded with instructions to reinstate the lis pendens.
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