Chuchian v. Situs Investments

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
CHRISTOPHER CHUCHIAN
AND KRISTEN CHUCHIAN,
Appellants,
v. Case No. 5D15-2125
SITUS INVESTMENTS, LLC,
Appellee.
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Opinion filed June 2, 2017
Appeal from the Circuit Court
for Marion County,
David B. Eddy, Judge.
Richard B. Carey and Melva Harris-Rozier,
of Carey Law Group, P.A., West Palm
Beach, for Appellants.
Marquista A. Shipman, of Shipman Law,
P.A., Hollywood, for Appellee.
PER CURIAM
Christopher and Kristen Chuchian (Borrowers) appeal the summary final
foreclosure judgment entered against them by the trial court in favor of Situs Investments,
LLC (Bank). The trial court awarded Bank $118,323.12, including $89,235 in unpaid
principal. Because Bank was entitled to at most $30,000 in unpaid principal, this was
error.
Borrowers entered into a revolving credit agreement and disclosure (Credit
Agreement) with Ocala National Bank in 2003, for a credit line of up to $30,000, and
secured it with a non-standard mortgage on their property for up to $30,000 in principal
plus interest and costs for taxes, levies, repairs, and insurance. The credit agreement
states that any principal advances in excess of the $30,000 credit limit would not be
secured by the mortgage. A year later, the mortgage was modified1 to increase the credit
line to up to $90,500.2 After a chain of assignments of the original credit agreement and
the original and modified mortgage to various entities, the original credit agreement and
the original mortgage were assigned to Bank. However, the modified mortgage was not
assigned to Bank. Bank filed its original foreclosure complaint on May 5, 2014.
Although the original credit agreement executed by Borrowers was a
nonnegotiable instrument because it was not for a fixed sum, see section 673.1041(1),
Florida Statutes (2003), the owner of a nonnegotiable note may still have enforcement
rights. See OneWest Bank, FSB v. Nunez, 193 So. 3d 13, 14 (Fla. 4th DCA 2016) ("As
a general rule, the assignee of a nonnegotiable instrument takes it with all the rights of
the assignor, and subject to all the equities and defenses of the debtor connected with or
growing out of the obligation that the obligor had against the assignor at the time of the
assignment." (quoting State v. Family Bank of Hallandale, 667 So. 2d 257, 258 (Fla. 1st
DCA 1995))); Holly Hill Acres, Ltd. v. Charter Bank of Gainesville, 314 So. 2d 209, 211
(Fla. 2d DCA 1975). The assignee of a nonnegotiable note obtains the right of the
1 The appellate record does not contain any documents modifying the original
credit agreement.
2 In its affidavit of indebtedness, Bank asserted that Borrowers owed $89,235 in
unpaid principal.
2
assignor to enforce the note and is subject to any defenses the borrower had against the
assignor. See Mason v. Flowers, 107 So. 334, 335 (Fla. 1926); Reddish v. Ritchie, 17
Fla. 867, 870 (Fla. 1880).
Bank established standing to foreclose on the original credit agreement and
mortgage through a special indorsement on the assignment of the credit agreement.
Although that indorsement is undated, Bank filed a notarized certificate of possession
with the original foreclosure complaint stating it had come into possession of the original
credit agreement on February 11, 2014, and the assignment of the original mortgage,
which was also attached to the original foreclosure complaint, states that the credit
agreement was transferred to Bank on that day. This means that Bank had standing
under the original credit agreement for up to $30,000 of the unpaid principal. See Ortiz
v. PNC Bank, Nat'l Ass'n, 188 So. 3d 923, 925 (Fla. 4th DCA 2016); Tomlinson v. GMAC
Mortg., LLC, 173 So. 3d 1121, 1122-23 (Fla. 2d DCA 2015).
However, Bank did not produce any evidence showing that a modified credit
agreement exists, nor has it shown that the mortgage modification was intended to modify
not just the mortgage but also the original credit agreement.3 The original credit
agreement explicitly states that any credit advances in excess of the credit limit are not
secured by the mortgage. Without evidence showing that a modified credit agreement
exists and was assigned to Bank, the modified mortgage is insufficient to establish the
3 Bank has also not produced evidence showing that the modified mortgage
securing the $60,500 increase in the credit limit was assigned to it. However, this failure
is not relevant to the standing analysis as the mortgage follows the note, and an
assignment of the mortgage to the plaintiff in a foreclosure case is insufficient to establish
standing unless the note was also assigned to the plaintiff. See Jelic v. BAC Home Loans
Servicing, LP, 178 So. 3d 523, 525 (Fla. 4th DCA 2015) (citing Lamb v. Nationstar Mortg.,
LLC, 174 So. 3d 1039, 1041 (Fla. 4th DCA 2015)).
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increased amount Bank claims it is owed. See Lamb v. Nationstar Mortg., LLC, 174 So.
3d 1039, 1041 (Fla. 4th DCA 2015) (quoting Tilus v. AS Michai LLC, 161 So. 3d 1284,
1286 (Fla. 4th DCA 2015)); Gorel v. Bank of N.Y. Mellon, 165 So. 3d 44, 46 (Fla. 5th DCA
2015). A modification of the credit agreement was necessary to increase the credit limit.
Thus, there is a genuine issue of material fact concerning Bank's entitlement to enforce
the modified mortgage. See Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308, 309-11
(Fla. 2d DCA 2013); Servedio v. U.S. Bank Nat'l Ass'n, 46 So. 3d 1105, 1107 (Fla. 4th
DCA 2010) (citing TRG-Brickell Point NE, Ltd v. Wajsblat, 34 So. 3d 53, 55 (Fla. 3d DCA
2010)). Consequently, the trial court erred when it awarded more than $30,000 in unpaid
principal to Bank in the summary final judgment.4
REVERSED and REMANDED.
PALMER, ORFINGER and BERGER, JJ., concur.
4 In addition to the unpaid principal, the mortgage permits the trial court to award
interest on the principal plus costs for taxes, levies, repairs, and insurance as well as
interest on those costs.
4