Filed: Sep. 16, 2020
Latest Update: Sep. 16, 2020
Summary: DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT BARRY M. BRANT, as trustee of THE OKEECHOBEE CC-1 LAND TRUST U/I/D 3/10/04, BARRY M. BRANT, as trustee of THE OKEECHOBEE CC-II LAND TRUST U/I/D 3/17/05, BARRY M. BRANT, as trustee of THE OKEECHOBEE CC III LAND TRUST U/I/D 3/23/05, DIAZ LANDSCAPING & NURSERY, INC., a Florida corporation, LAKESHORE PROPERTIES OF SOUTH FLORIDA, LLC, a Florida limited liability company, OKEECHOBEE FARM LANDS, INC., a Florida corporation, MANUEL DIAZ FA
Summary: DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT BARRY M. BRANT, as trustee of THE OKEECHOBEE CC-1 LAND TRUST U/I/D 3/10/04, BARRY M. BRANT, as trustee of THE OKEECHOBEE CC-II LAND TRUST U/I/D 3/17/05, BARRY M. BRANT, as trustee of THE OKEECHOBEE CC III LAND TRUST U/I/D 3/23/05, DIAZ LANDSCAPING & NURSERY, INC., a Florida corporation, LAKESHORE PROPERTIES OF SOUTH FLORIDA, LLC, a Florida limited liability company, OKEECHOBEE FARM LANDS, INC., a Florida corporation, MANUEL DIAZ FAR..
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DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
BARRY M. BRANT, as trustee of
THE OKEECHOBEE CC-1 LAND TRUST U/I/D 3/10/04,
BARRY M. BRANT, as trustee of
THE OKEECHOBEE CC-II LAND TRUST U/I/D 3/17/05,
BARRY M. BRANT, as trustee of
THE OKEECHOBEE CC III LAND TRUST U/I/D 3/23/05,
DIAZ LANDSCAPING & NURSERY, INC., a Florida corporation,
LAKESHORE PROPERTIES OF SOUTH FLORIDA, LLC,
a Florida limited liability company,
OKEECHOBEE FARM LANDS, INC., a Florida corporation,
MANUEL DIAZ FARMS, INC., a Florida corporation,
MANUEL C. DIAZ, an individual, and
BARBARA DIAZ, an individual,
Petitioners,
v.
METROPOLITAN LIFE INSURANCE COMPANY and
MLIC ASSET HOLDINGS, LLC,
Respondents.
No. 4D20-1207
[September 16, 2020]
Petition for writ of prohibition to the Circuit Court for the Nineteenth
Judicial Circuit, Martin County; Jennifer Alcorta Waters, Judge; L.T. Case
No. 432019CA000495.
Javier A. Lopez and Stephanie M. Gomez, Kozyak Tropin &
Throckmorton, LLP, Miami, for petitioners.
Sylvia H. Walbolt and Dean A. Morande, Carlton Fields, P.A., West Palm
Beach, for respondents.
GERBER, J.
The borrowers petition for a writ of prohibition, seeking to prevent a
Martin County-based circuit court from foreclosing upon a mortgage
encumbering real property in Okeechobee County. The borrowers argue
that under the “local action rule,” providing that “[a] proceeding in rem or
in the nature of a proceeding in rem should be brought in the county where
the land lies,” Ga. Cas. Co. v. O’Donnell, 147 So. 267, 268 (Fla. 1933), the
Martin County-based circuit court lacks subject matter jurisdiction over
the Okeechobee County property.
We deny the petition, because here, the Okeechobee County mortgage
was cross-collateralized with three other mortgages to encumber not only
the Okeechobee County property, but also three properties in Martin
County, and when “a mortgage includes lands . . . lying in two or more
counties, it may be foreclosed in any one of said counties.” § 702.04, Fla.
Stat. (2019).
Procedural History
The borrowers obtained four separate loans from the lenders, secured
by real property described in four separate mortgages. Three of the
mortgages encumbered real property in Martin County. One of the
mortgages encumbered real property in Okeechobee County.
Although each mortgage initially constituted the sole security for its
respective note, the loan agreements were later modified so that all of the
mortgages encumbering all of the properties jointly constituted the
collateral for the borrowers’ entire debt. In other words, the loans became
cross-collateralized. The modified loan agreements further provided that,
in the event of an uncured default under any cross-collateralized loan, the
lenders would be “entitled to collect all of the same in one foreclosure
proceeding brought in respect of all the real and personal property
collateral securing the … Loans.”
The lenders later filed a circuit court complaint in Martin County,
alleging the borrowers had defaulted on the notes. The lenders sought
damages for the defaults, and sought to foreclose upon the mortgages
encumbering the Martin County and Okeechobee County properties.
The borrowers filed an amended motion to dismiss the complaint’s
Counts I and V pertaining to the Okeechobee County note and the
mortgage encumbering the Okeechobee County property. The motion
argued, among other things, that under the local action rule, the Martin
County-based circuit court lacked subject matter jurisdiction over that
portion of the action seeking to foreclose on the Okeechobee County
property.
The Martin County-based circuit court entered an order denying the
borrowers’ amended motion to dismiss. The court reasoned that the cross-
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collateralized mortgages should be construed as one instrument, and thus
the court had subject matter jurisdiction over the entire Martin County-
based action, including the mortgage encumbering the Okeechobee
County property.
This petition followed. Relying on this court’s decision in Hudlett v.
Sanderson, 715 So. 2d 1050 (Fla. 4th DCA 1998), the borrowers argue that
even with cross-collateralized loans, a circuit court presiding over an
action filed in one county lacks subject matter jurisdiction to foreclose
upon a mortgage encumbering real property in another county. Thus, the
borrowers argue, under the local action rule, the Martin County circuit
court lacked subject matter jurisdiction over the Okeechobee County
property.
In response, the lenders acknowledge that Florida’s local action rule
requires a foreclosure action be brought in the county where the property
is located. However, quoting section 702.04, Florida Statutes (2019), the
lenders argue when “a mortgage includes lands . . . lying in two or more
counties, it may be foreclosed in any one of said counties.” Further, relying
on Frym v. Flagship Community Bank, 96 So. 3d 452 (Fla. 2d DCA 2012),
the lenders argue that where multiple mortgages jointly constitute the
collateral for a debt, the mortgages are construed as a single instrument
pursuant to section 702.04. Thus, the lenders argue, the Martin County-
based circuit court properly exercised subject matter jurisdiction over the
entire action, including the mortgage encumbering the Okeechobee
County property.
Our Review
We agree with the lenders that this case is more similar to Frym, and
distinguishable from Hudlett. We analyze each case in turn.
In Frym, the borrower executed a note secured by two mortgages: one
encumbering real property in Pinellas County and the other encumbering
real property in Hillsborough County. 96 So. 3d at 453. The lender later
filed a circuit court complaint in Pinellas County seeking to foreclose on
both mortgages.
Id. The borrower filed a motion to dismiss, arguing that,
under the local action rule, the Pinellas County-based circuit court lacked
subject matter jurisdiction to foreclose on the mortgage encumbering the
Hillsborough County property.
Id.
The Pinellas County-based circuit court denied the borrower’s motion
to dismiss.
Id. The court found the case involved only one transaction,
that is, the single note secured by two mortgages encumbering land in two
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separate counties. Id. at 454. Thus, the court reasoned, the two
mortgages should be construed as one instrument.
Id.
The borrower filed a petition for writ of prohibition, requesting the
Second District to prevent the Pinellas County-based circuit court from
exercising subject matter jurisdiction over the Hillsborough County
property.
Id. at 453.
The Second District denied the petition.
Id. at 454. Our sister court
agreed with the Pinellas County-based circuit court’s reasoning, and
further held that the case fell under section 702.04’s exception to the local
action rule, that is, “[w]hen a mortgage includes lands ... lying in two or
more counties, it may be foreclosed in any one of said counties, and all
proceedings shall be had in that county as if all the mortgaged land ... lay
therein.”
Id. at 453 (quoting § 702.04, Fla. Stat. (2006)). Our sister court
further noted that section 702.04’s exception can apply to both contiguous
and noncontiguous real properties.
Id. (citing Penton v. Intercredit Bank,
N.A.,
943 So. 2d 863, 864-65 (Fla. 3d DCA 2006)).
The instant case is similar to Frym because here, once the loans became
cross-collateralized, that is, when the loan agreements were modified so
that all of the mortgages constituted the collateral for the borrowers’ entire
debt, the loans essentially became a single debt, secured by the mortgages
encumbering both the Martin County and Okeechobee County properties.
Thus, section 702.04’s exception to the local action rule permitted the
lenders to foreclose “in any one of said counties,” and allowed all
proceedings to be had “in that county as if all the mortgaged land ... lay
therein.” § 702.04, Fla. Stat. (2019).
Hudlett, on the other hand, is distinguishable because there, the
property located in the circuit court’s home county was no longer part of
the action when the circuit court exercised subject matter jurisdiction over
a property in another county.
In Hudlett, the seller sold real property in Palm Beach County to the
buyer. 715 So. 2d at 1050. The buyer financed the purchase via three
notes, each secured by a separate mortgage.
Id. One mortgage
encumbered the Palm Beach County property.
Id. Another mortgage
encumbered real property in Lee County.
Id. Yet another mortgage
encumbered real property in Broward County.
Id. Those three notes and
mortgages were cross-collateralized such that if the buyer defaulted on any
of the notes, the buyer defaulted on all of the notes.
Id. at 1051. In other
words, although the transaction was structured to appear as three
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separate loans secured by three separate mortgages, it was in fact a single
loan secured by all three mortgages. Id.
When the buyer defaulted on the notes, the seller filed a circuit court
complaint in Palm Beach County to foreclose upon the mortgages
encumbering the Palm Beach County and Broward County properties, but
not the Lee County property.
Id. Then, during the litigation, the seller
released its lis pendens on the Palm Beach County property.
Id. Thus,
when the seller later moved for summary judgment, it sought, and
obtained, a foreclosure upon only the mortgage encumbering the Broward
County property.
Id. at 1052.
The buyers appealed the summary judgment to this court.
Id. We
reversed, concluding that because the Palm Beach County-based circuit
court ultimately had foreclosed upon only the mortgage encumbering the
Broward County property, the Palm Beach County-based circuit court
lacked subject matter jurisdiction and section 702.04’s exception to the
local action rule was not applicable.
Id. Consequently, even though the
loan in Hudlett was cross-collateralized by the mortgages encumbering the
properties in three different counties, the Hudlett foreclosure action
ultimately was based upon only the mortgage encumbering the Broward
County property, thus depriving the Palm Beach County-based circuit
court of subject matter jurisdiction to foreclose upon that mortgage.
Id.
In the instant case, on the other hand, the foreclosure action was based
upon all four mortgages encumbering the three Martin County properties
and the Okeechobee County property. As a result, section 702.04’s
exception to the local action rule was applicable, thus giving the Martin
County-based circuit court subject matter jurisdiction over not only the
Martin County properties, but also the Okeechobee County property.
Conclusion
Based on the foregoing, we affirm the Martin County-based circuit
court’s order denying the borrowers’ amended motion to dismiss. As the
court found, the cross-collateralized mortgages should be construed as
one instrument, and thus the court had subject matter jurisdiction over
the entire action, including the mortgage encumbering the Okeechobee
County property. 1
1 In reaching our conclusion, we note this case is distinguishable from both
Frym and Hudlett in that, in those cases, the circuit courts were seeking to
exercise subject matter jurisdiction over real property not just in another county,
but in another judicial circuit. See Frym, 96 So. 3d at 453-54 (Sixth Circuit judge
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Petition denied.
MAY and KLINGENSMITH, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
based in Pinellas County sought to exercise subject matter jurisdiction over real
property in Thirteenth Circuit-based Hillsborough County); Hudlett, 715 So. 2d
at 1050-51 (Fifteenth Circuit judge based in Palm Beach County sought to
exercise subject matter jurisdiction over real property in Seventeenth Judicial
Circuit-based Broward County). Here, however, the Nineteenth Circuit judge
based in Martin County sought to exercise subject matter jurisdiction over real
property in Nineteenth Circuit-based Okeechobee County.
The foregoing “intercircuit” versus “intracircuit” distinction does not alter our
conclusion in this case, which we have affirmed for the reasons stated above.
Nevertheless, we use this case as an opportunity to remind attorneys practicing
in this field that the concept of subject matter jurisdiction, as used in the context
of local action rule cases like Frym, Hudlett, and the instant case, is not the same
as the county-based concept of venue. See Hudlett, 715 So. 2d at 1052 (“The
local action rule is one of subject matter jurisdiction, not venue.”) (emphasis
added); Bd. of Trustees of Internal Improvement Trust Fund of State v. Mobil Oil
Corp.,
455 So. 2d 412, 415 (Fla. 2d DCA 1984), approved in part, quashed on
other grounds in part, Coastal Petroleum Co. v. Am. Cyanamid Co.,
492 So. 2d 339
(Fla. 1986) (“Where the cause of action is in rem … the court involved has subject
matter jurisdiction only if it has 1) jurisdictional power to adjudicate the class of
cases to which the cause belongs and 2) jurisdictional authority over the land
which is the subject matter of the controversy.”) (emphasis added).
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