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IN THE CIRCUIT COURT OF THE TWENTIETH JUDICIAL CIRCUIT
IN AND FOR COLLIER COUNTY, FLORIDA
CIVIL ACTION
WELLS FARGO BANK, N.A. as Trustee for
WaMu Mortgage Pass-Through Certificates
Services 2006-PR1 Trust,
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Plaintiff,
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CASE NO. 09-5809-CA :
vs. .
DIJANA FOLEY, et al.,
Defendants.
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SOUTH SHORE VILLAS PROPERTY OWNERS ASSOCIATION, INC.’S
RESPONSE AND LIMITED OPPOSITION TO PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT
COMES NOW, Defendant, SOUTH SHORE VILLAS PROPERTY OWNERS
ASSOCIATION, INC. (the “Association”), by and through its undersigned counsel, and hereby
files its Response and Limited Opposition to Plaintiffs Motion for Summary Judgment and
states as follows:
1. The Association does not oppose the Plaintiff's Motion for Summary Final
Judgment to the extent that it requests foreclosure, an award of attorneys’ fees, and costs.
However, Defendant, SOUTH SHORE VILLAS PROPERTY OWNERS ASSOCIATION, INC.,
objects to the Plaintiffs request for an Order foreclosing over Defendant, SOUTH SHORE
VILLAS PROPERTY OWNERS ASSOCIATION, INC.’S interests.
2. Florida Statutes §720.3085(2)(c), became effective on July 1, 2008. The Statute
provides in pertinent part the following:(2)(a) a parcel owner, regardless of how his or her title to
property has been acquired, including by purchase at a foreclosure
sale or by deed in lieu of foreclosure, is liable for all assessments
that come due while he or she is the parcel owner. The parcel
owner’s liability for assessments may not be avoided by waiver or
suspension of the use or enjoyment of any common area or by
abandonment of the parcel upon which the assessments are made.
(b) A parcel owner is jointly and severally liable with the previous
parcel owner for all unpaid assessments that came due up to the
time of transfer of title. This liability is without prejudice to any
tight the present parcel owner may have to recover any amounts
paid by the present owner from the previous owner.
(c) Notwithstanding anything to 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 proceeding 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 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].
ARGUMENT
I. FLORIDA STATUTES §720.3085(2) IS NOT BEING APPLIED RETROACTIVELY
3. There is no issue as to retroactive application of Florida Statutes §720.3085 in this
case. Rather, title will transfer after July 1, 2008, and therefore if Plaintiff is deemed to be the
holder of the first mortgage and if it takes title, it will be responsible to pay Defendant, South
Shore Villas Property Owners Association, Inc., the lesser of: (a) the mortgaged premises’ unpaid
common expenses and regular periodic or special assessments that accrued or came due during
the twelve (12) months immediately preceding the acquisition of title at the foreclosure sale or by
deed in lieu of foreclosure; or (b) one percent (1%) of the original mortgage debt.
4. Plaintiff contends that Florida Statutes §720.3085, should not be retroactively
applicable to mortgages entered into prior to the amended Statute’s effective date of July 1, 2008,
since they have a superior interest. However, the statutory obligation does not apply to a
mortgage at all and does not affect superiority or priority. Rather, it is a statutory liability
imposed by the legislature and is triggered when, and if, the first mortgagee takes title to the
property at the judicial sale. At this point, the mortgage has been foreclosed and there is no
existing contract to impair and the liability of the new owner is grounded in the Statute, not the
old contract, the Declaration or any lien the association may have had. Indeed, the intention of
the drafters of Senate Bill 1986 (later codified in Fla. Stat. §720.3085) was to apply the Statute’s
liability to first mortgagees provided that title transferred after the amended Statute’s effective
date. Please find a copy of an Affidavit of Mark M. Heinish, Esq., attached hereto as Exhibit
“A.” The Statute, as amended, clarified that statutory liability is imposed when title transfers. Itis not retroactive and does not apply to any existing contract. The amount due to the association
at the time title transfers is imposed by Statute and may be recouped from the first mortgagee up
to the limit established by the Statute.
5. Moreover, a mortgage contract does not give a mortgagee rights to the title of the
property. United of Fla., Inc. v. Illini Fed. Sav. & Loan Assoc., 341 So. 2d 793, 794 (Fla. 2d
DCA 1977). Although this occurred at common law, Florida has never subscribed to this
jurisprudence. Id.; Watson v. Vafides, 212 So. 2d 358, 361 (Fla. Ist DCA 1968). Rather, Florida
has long recognized that a mortgage is simply an executory contract that gives the mortgagee a
lien on the property to secure a debt. § 697.02, Fla. Stat. (2007); Fla. Nat’] Bank & Trust Co. of
Miami v. Brown, 47 So. 2d 748, 760 (Fla. 1949). A lien, and by definition the mortgage, is
simply a contract giving a right to a foreclosure cause of action to satisfy a defaulted debt. The
right that is vested is the right to foreclose on the property, not necessarily the right to title. City
of Gainesville v. Charter Leasing Corp., 483 So. 2d 465, 467 (Fla. 1st DCA 1986). Rather, title
to the property is transferred through an auction contract to the highest bidder after a court has
ruled favorably on the first mortgagee’s contractual right to a foreclosure cause of action.
6. Although these distinctions are often blurred because the first mortgagee generally
forecloses on the property and ultimately purchases the title, the transactions are indeed separate
and distinct. The first involves a mortgage contract, which gives a mortgagee the right to
foreclose, and the second involves an auction contract, which gives a purchaser the right to the
property’s title. Perry Trading Co. v. City of Tallahassee, 174 So. 854, 857 (Fla. 1937)
(explaining that “an auction was merely an offer to sell goods at public outcry to the highest
bidder, in which transaction both the auctioneer and the bidder might withdraw the proposition tosell or buy before the completion of the sale”); Rohlfing v. Tomorrow Realty & Auction Co.,
Inc., 528 So. 2d 463, 466 (Fla. 5th DCA 1988) (explaining that a sale is completed when “the
auctioneer signifies his acceptance of the highest bid by the fall of his hammer...whether the
subject of the sale is personal or real property”).
Florida Statutes §720.3085(2) does not affect the first contract. It does not impair a first
mortgagee’s right to successfully litigate a foreclosure cause of action. Rather, Florida Statutes
§720.3085(2) only affects future foreclosure auction contracts by holding those future title
holders jointly and severally liable for all accrued assessments and the first mortgagee liable
within the limits proffered by Florida Statutes §720.3085.
If. THE APPLICATION OF FLORIDA STATUTES §720.3085 WILL NOT
IMPERMISSIBLY IMPAIR THE CONTRACT
7. Assuming arguendo, that there is a retroactive application of Florida Statutes
§720.3085. The legislature is well within its rights to apply a provision retroactively as long as
it does not impermissibly impair an existing contract. Presently, under the circumstances
presented, the application of Florida Statutes §720.3085 will not impermissibly impair the
contract. The Supreme Court of Florida in Pompanio v. Claridge of Pompano Condominium,
Inc., 378 So. 2d 774 (Fla. 1979), adopted the approach enacted by the United States Supreme
Court in Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978). Impairment of a contract
is determined by balancing the degree of impairment against both “the source of authority under
which the state purports to alter the contractual relationship and the evil which it seeks to
remedy.” Pompanio at 779. The Florida Supreme Court determined that the first inquiry in anycontract impairment issue must be whether the state law has, in fact, operated as a substantial
impairment of a contractual relationship. A minimal alteration of a contractual obligation may
end the inquiry at its first stage while severe impairment requires a careful examination of the
nature and purpose of the state legislation to include a balancing test of: 1) whether the law was
enacted to deal with a broad, generalized economic or social problem; 2) whether the law
operated in an area already subject to state regulations when the parties entered into the contract,
or does it invade into an area never before subject to regulation by the states; and 3) whether the
law caused a temporary change of the contractual relationship or a severe, permanent, immediate,
and irrevocable change in the contract. Id.
8. Here, the imposition on the first mortgagee to pay the association, should it take
title, the lesser of 1% of the note or the past twelve months assessments is not a substantial
impairment of a contractual relationship. The liability of the first mortgagee was limited by the
enactment of the 2008 statute which reduced the amount owed by the first mortgagee from 100%
of the past due assessments to the lesser of 1% of the note or 12 months of assessments. As
such, the legislature’s intent in amending the statute in 2008 from its prior version is to limit the
liability imposed on first mortgagee which takes title in a foreclosure hearing. This amounts to a
minimal alteration of a contractual obligation and is constitutional.
9. Moreover, the Statute was enacted to combat a severe economic effect which has
been caused by the recent insurmountable number of mortgage foreclosures. The objective was
to ameliorate the burden of unpaid assessments on other homeowners due to these foreclosures.
The payment of assessments allows the association to carry out its responsibilities for the
management and operation of the association property and common elements. The lender who
becomes the new parcel owner by purchase at a foreclosure sale or by deed in lieu of foreclosurebenefits from the association being able to carry out its responsibilities as it protects the value of
its property and the community within which it is located.
10. | Homeowners’ associations are controlled by Florida Statutes Chapter 720.
Florida Statutes §720.303(1) states in pertinent part that “the powers and duties of an association
include those set forth in this chapter and, except as expressly limited or restricted in this chapter,
those set forth in the governing documents.” If the association’s documents conflict with
Chapter 720, the Statute prevails.
11. In many ways, Chapter 720 mirrors the highly regulated Condominium Statute,
Chapter 718. Specifically, much of the language contained in Florida Statutes §718.116(1)
(Florida .Statutes 2000) is reflected in Florida Statutes §720.3085. Florida Statutes §718.116
regulates condominiums within Florida and limits the liability of a first mortgagee or its
successors or assignees who acquire title to a condominium unit by foreclosure or by deed in lieu
of foreclosure for the unpaid condominium assessments that became due prior to the mortgagee’s
acquisition of title to the lesser of 1) the unpaid expenses which accrued during the 6 months
prior to acquisition of title or 2) one percent of the original mortgage debt. The application of
Florida Statutes §718.116, although challenged, was never declared unconstitutional.
12. Finally, Florida Statutes §720.3085 only affects a first mortgagee in the event it
actually takes title, and then only if there is no additional equity in the subject property in which
the association may draw from. Further, the liability of a first mortgagee for past due
assessments is limited by the express language of the Statute. Accordingly, any obligations that
the lender incurs as the new parcel owner are minuscule and the lender may always avail itself to
the protections contained in the Statute by enforcing its remedies against the previous owner for
whom it is jointly and severally liable with. The legislature provided further protection to themortgage company by providing that it may recover those previous 12 months assessments (or
1% of the original mortgage debt) from the previous owner.
13. The Florida Supreme Court stated, “[courts] are not at liberty to add words to
statutes that were not placed there by the Legislature.” Knowles v. Beverly Enterprises, 898 So.
2d 1, 11 (Fla. 2004). Further, courts are “without power to construe an unambiguous statute in a
way which would extend, modify, or limit its express terms.” Holly v. Auld, 450 So. 2d, 219
(Fla. 1984).
WHEREFORE, Defendant, SOUTH SHORE VILLAS PROPERTY OWNERS
ASSOCIATION, INC., hereby respectfully requests that this Court enter a Final Summary
Judgment containing language that is without prejudice to the entitlement of Defendant, SOUTH
SHORE VILLAS PROPERTY OWNERS ASSOCIATION, INC., after the judicial sale held in
this cause to its rights provided by Section 720.3085, Florida Statutes, and any other such further
relief that this Court deems just and proper.
Respectfully submitted,
Roetzel & Andress, LPA
Attomeys for Defendant
By: h
Ashley D. Lupo, Esq
Florida Bar No. 0157783
Braden J. Montierth, Esquire
Florida Bar No. 015522
850 Park Shore Drive
Naples, Florida 34103
(239) 649-6200CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true copy of the foregoing has been sent via regular U.S.
mail, postage prepaid, on this 5 Chay of [i O Vem by 2009, to: Victoria S. Anderson,
Esq., Shapiro & Fishman, LLP, 10004 N. Dale Mabry Highway, Suite 112, Tampa, FL 33618.
Ashley D. Lupo
604155.01.081965.0003