IN THE SUPREME COURT OF FLORIDA TALLAHASSEE, FLORIDA AQUA-TERRA, INC. OF MARTIN COUNTY, Petitioner, -vs- CASE NO. SC08-1271 LONG BEACH MORTGAGE CORPORATION, GENE BEBBLE, GARY BALDWIN, MICHAEL W. CONNORS, Respondents. / BRIEF OF PETITIONER ON APPEAL On Appeal from the Fourth District Court of Appeal ALONZO LAW OFFICES, P.A. 217 Avenue A Fort Pierce, FL 34950 and BURLINGTON & ROCKENBACH, P.A. 2001 Professional Building/Suite 410 2001 Palm Beach Lakes Blvd. West Palm Beach, FL 33409 (561) 721-0400 (561) 721-0465 (fax) Attorneys for Petitioner geh@flappellatelaw.com
TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES PREFACE ii iii STATEMENT OF THE CASE AND FACTS 1-2 SUMMARY OF ARGUMENT 2 ARGUMENT 3-10 POINT ON APPEAL 2-10 THE FOURTH DISTRICT=S DECISION EXPRESSLY AND DIRECTLY CONFLICTS WITH NUMEROUS DECISIONS FROM THE SECOND DISTRICT COURT OF APPEAL. CONCLUSION 10 CERTIFICATE OF SERVICE 11 CERTIFICATE OF TYPE SIZE & STYLE 12 i
TABLE OF AUTHORITIES PAGE Arlt v. Buchanan 190 So.2d 575, 577 (Fla. 1966) 5 Fernandez v. Suburban Coastal Corp. 489 So.2d 70 (Fla. 4th DCA 1986) 7 Sulkowski v. Sulkowski 561 So.2d 416 (Fla. 2d DCA 1990) 12 United Cos. Lending Corp. v. Abercrombie 713 So.2d 1017 (Fla. 2d DCA 1998) 9 Van Delinder v. Albion Realty & Mortgage, Inc. 287 So.2d 352 (Fla. 3d DCA 1973) 7 Wells Fargo Credit Corp. v. Martin 605 So.2d 531 (Fla. 2d DCA 1992) 6 Wells Fargo Fin. Sys. Fla., Inc., v. GRP Fin. Servs., Corp. 890 So.2d 383 (Fla. 2d DCA 2004) 11 Article V, ' (b)(3), Florida Constitution 4 Article V, '(b)(3), Florida Constitution 5 Fla.R.App.P. 9.030(a)(2)(A)(iv) 5 ii
PREFACE This is Petitioner Aqua-Terra, Inc.=s request for discretionary review of a June 11, 2008 decision of the Fourth District Court of Appeal, reversing an Order declining to set aside a foreclosure sale of a property that Respondent, Long Beach Mortgage Corporation, held a mortgage to. Petitioner Aqua-Terra, Inc. will be referred to as AAqua-Terra@ or APetitioner.@ Respondent will be referred to as ALong Beach@ or ARespondent.@ iii
STATEMENT OF THE CASE AND FACTS Long Beach held a mortgage on real property having a fair market value of $500,000, and the property went into foreclosure (A1). Two law firms represented Long Beach throughout the foreclosure process (A1). Long Beach obtained a final judgment in foreclosure with a credit bid of over $716,000, and a foreclosure sale was set for May 22, 2007 (A1). Two Long Beach representatives were present at the foreclosure sale, including an attorney who corrected the clerk about the amount of the judgment prior to bidding (A2). However, neither representative placed a bid on Long Beach=s behalf, and Aqua- Terra, a disinterested third party, placed a winning bid of $1,000 (A1-2). No one objected to Aqua-Terra=s bid at the sale (A1). Three days later, Long Beach moved to set aside the sale to Aqua-Terra, based on Amiscommunications and mishaps@ by its representatives (A1). The trial judge, noting his discretionary authority, found that Aqua-Terra had engaged in no wrongdoing and declined to set aside the foreclosure sale (A3). The Fourth District reversed this decision, and held that the trial court had grossly abused its discretion in denying the motion to set aside the sale (A3-5). The Fourth District concluded that the purchase price was Aunconscionably inadequate@ in light of the fair market value, and held that the unilateral mistakes by Long Beach 1
agents required the setting aside of the foreclosure sale (A4). Petitioner filed a timely Notice to Invoke this Court=s discretionary jurisdiction. SUMMARY OF ARGUMENT The Fourth District=s conclusion that a trial court grossly abuses its discretion in declining to set aside a foreclosure sale arising from a unilateral mistake by a complaining party cannot be reconciled with decisions from the Second District Court of Appeal. That court has repeatedly held that trial courts have broad discretion to weigh the equities and deny motions to set aside foreclosure sales when the fault or mistake is solely that of the complaining party. The Fourth District believed its decision was not in conflict with one decision from the Second District, based on the Aunconscionably inadequate@ winning bid by Aqua-Terra at the foreclosure sale. However, the Second District has never held that a trial judge=s discretion is eliminated merely because of the price of the winning bid. Rather, the Second District has recognized this is one factor that trial courts may weigh in deciding whether to vacate a foreclosure sale, vis-à-vis the exercise of their discretion. Numerous decisions from the Second District appreciate and recognize the discretionary nature of this decision, and the Fourth District has essentially eliminated this judicial discretion. This Court should find that it has conflict jurisdiction under Art. V., ' (b)(3), of the Florida Constitution. 2
ARGUMENT POINT ON APPEAL THE FOURTH DISTRICT=S DECISION EXPRESSLY AND DIRECTLY CONFLICTS WITH NUMEROUS DECISIONS FROM THE SECOND DISTRICT COURT OF APPEAL. Standard of Review This Court has discretionary jurisdiction to review a decision of a District Court of Appeal that expressly and directly conflicts with a decision of another District Court of Appeal on the same question of law. See Art. V., ' (b)(3), Fla. Const.; Fla.R.App.P. 9.030(a)(2)(A)(iv). Argument Petitioner acknowledges that there may be circumstances where a unilateral mistake by a complaining party, coupled with a grossly or inadequate winning bid, constitutes sufficient grounds to set aside a foreclosure sale. Indeed, this Court expressed this point in Arlt v. Buchanan, 190 So.2d 575, 577 (Fla. 1966). 1 However, 1 /This Court noted that, (Arlt, 190 So.2d at 577): The general rule is, of course, that standing alone mere inadequacy of price is not a ground for setting aside a judicial sale. But where the inadequacy is gross and is shown to result from any mistake, accident, surprise, fraud, misconduct or irregularity upon the part of either the purchaser or other person connected with the sale, with resulting injustice to the complaining party, equity will act to prevent the wrong result. 3
the Fourth District has eliminated judicial discretion to determine when and how to weigh the equities when deciding whether to set aside foreclosure sales in these circumstances. In so holding, the Fourth District=s decision conflicts with four decisions from the Second District, three whose facts were not addressed in the Fourth District=s opinion. In Wells Fargo Credit Corp. v. Martin, 605 So.2d 531 (Fla. 2d DCA 1992), the Second District concluded that the trial court exercised its discretion in declining to vacate a foreclosure sale, following a unilateral mistake made by a mortgagee=s agent in failing to bid $115,500 as instructed, but instead bidding $15,500. Id. at 532-33. Though the winning bid of $20,000 was deemed to be grossly inadequate (the fair market value of the property was at least $115,000), and although the result was Aharsh,@ the Second District concluded that, Athis inadequacy, however, occurred due to an avoidable unilateral mistake by an agent of Wells Fargo. As between Wells Fargo and a good faith purchaser at the judicial sale, the trial court had the discretion to place the risk of this mistake upon Wells Fargo.@ Id. at 533 (emphasis added). The Fourth District believed it distinguished Martin, solely because the sale price in that case was deemed Anot as unconscionably inadequate@ as the $1,000 It is not clear from this language if the Acomplaining party@ who moves to set aside a foreclosure sale may be the Aother person connected with the sale@ who commits the mistake that leads to the sale. Uncertainty over that point may explain in part why the Second and Fourth District Court of Appeals have taken different approaches to the discretion afforded to trial judges when faced with motions to set aside foreclosure sales. 4
winning bid/$500,000 fair market value disparity in the instant case (A5). However, the Second District did not declare (nor has it or this Court ever held) that trial judges have discretion to uphold grossly inadequate winning bids, but must set aside unconscionably inadequate winning bids at foreclosure sales. The conflict is apparent when examining the reasons why the Martin Court declined to certify conflict with previous cases that it believed Aarguabl[y]@ were in conflict (605 So.2d at 534). The Second District noted that there were decisions from the Third District and Fourth District affirming trial court rulings setting aside foreclosure sales, following unilateral mistakes by the property owner. See Fernandez v. Suburban Coastal Corp., 489 So.2d 70 (Fla. 4th DCA 1986); Van Delinder v. Albion Realty & Mortgage, Inc., 287 So.2d 352 (Fla. 3d DCA 1973). However, the Martin Court noted that in those cases, the Amortgagee never had an opportunity to bid and the prevailing bid was essentially nominal.@ 605 So.2d at 534 (emphasis added). Thus, to the extent that the Second District agrees that trial courts may or even must set aside foreclosure sales, it is clear that a factor other than the price of the sale alone (the lack of an opportunity by the complaining party to bid) must also be present to deprive judges of the discretion to refuse to vacate a foreclosure sale. This reasoning is not reconcilable with the Fourth District=s holding, which has announced a rule of law that a unilateral mistake by the complaining party and a nominal winning 5
bid require the vacating of a foreclosure sale, even when the complaining party had an opportunity to place a bid. 2 Also significantly, the Martin Court explained that it declined to certify conflict with Fernandez and Van Delinder because the trial judges in these other cases had merely Aaffirmed trial courts= discretionary decisions, as we do here.@ Martin, 605 So.2d at 534. While the Second District rejected the notion that a unilateral mistake could never support a trial judge=s decision to set aside a foreclosure sale, it also recognized it had never reversed an order denying a motion to aside a judicial sale based on the complaining party=s unilateral mistake. Id. at 533. 3 It is this same appreciation for the discretionary vantage point of trial judges which was rejected by the Fourth District in the instant case. Second, the Fourth District=s opinion conflicts with another decision from the Second District, United Cos. Lending Corp. v. Abercrombie, 713 So.2d 1017 (Fla. 2d DCA 1998), a case whose facts were not discussed by the Fourth District in the case sub judice. In Abercrombie, the Second District noted that the complaining party had 2 /In the instant case, Long Beach had an opportunity to place a bid, where its agent and attorney were both present at the foreclosure sale, especially since the attorney corrected the amount of the judgment immediately preceding the sale (A1-3). 3 /Sixteen years later, the Second District, and indeed no other appellate court besides the Fourth District, has done so. 6
committed a unilateral mistake, deprived itself of the opportunity to bid at the sale, and the prevailing bid of $1,000 for a property worth at least $125,000 was nominal. Id. at 1018-19. The trial court, believing it had no discretion to set aside the sale when the complaining party was solely at fault, upheld the foreclosure sale. The Second District reversed this decision, noting that there is no rule depriving trial judges of the discretion to set aside the foreclosure sale under these circumstances. Significantly however, the Second District did not adopt the Fourth District=s approach, as it did not conclude the trial judge would grossly abuse its discretion if it were to uphold the foreclosure sale. Instead, while the fact that the winning bid was nominal and the fact the complaining party made a mistake was Anotable,@ this was Anot necessarily determinative@ of the decision to be reached upon remand to the trial court. Id. at 1019. As the Second District elaborated, (713 So.2d at 1019) (emphasis added): Rather than restricting the discretion of trial courts, [Martin] exemplified the breadth of the courts= discretion to weigh the equities of individual cases when deciding whether to set aside judicial sales. In one set of circumstances, the fact that the inadequate sale price was caused by the complaining party=s own mistake might tip the balance of equities in favor of the successful bidder; in another case, it might not. The Abercrombie court=s decision to remand the case for an evidentiary hearing, rather than to set aside the foreclosure sale, necessarily means that the Second District reached an opposite conclusion from the Fourth District. The same factors which the 7
Fourth District relied on as depriving trial judges of discretion, are factors that Amight@ (or might not) tip the balance of equities in the Second District. Furthermore, while the Fourth District believed its outcome was consistent with Martin because Aqua-Terra=s bid was more Aunconscionably inadequate@ than the Agrossly inadequate@ bid in Martin, obviously the approach in Abercrombie reveals no such harmony between the two district court of appeals. The winning bid of $1,000 in Abercrombie was nominal; yet the Second District authorized the trial judge to exercise its discretion and weigh the equities to determine whether the token bid, along with a unilateral mistake by the complaining party, justified the setting aside of the foreclosure sale. Third, the Fourth District=s opinion also conflicts with another opinion from the Second District, Wells Fargo Fin. Sys. Fla., Inc., v. GRP Fin. Servs., Corp., 890 So.2d 383 (Fla. 2d DCA 2004), a case not cited by the Fourth District below. In GRP, a company purchased a property at a foreclosure sale for a trivial winning bid of $100. Id. The complaining party failed to attend the foreclosure because of its own unilateral mistake, and then moved to set aside the sale. The trial court believed it had no discretion to set aside the sale because of the unilateral mistake. The Second District reversed this decision; however the appellate court did not hold that the sale had to be set aside. Instead, the appellate court reasoned that the trial judge had erred when he believed he could not set aside the sale on account of the 8
unilateral mistake. Id. The case was remanded to the trial judge to exercise his discretion and decide whether to vacate the foreclosure sale. The conflict is again clear; the Second District was presented with a nominal winning bid and was presented with a unilateral mistake by a complaining party who had the opportunity to appear at the foreclosure sale. Yet the Second District did not set aside the foreclosure sale, nor rule that the trial judge would grossly abuse his discretion if he refused to set aside the foreclosure sale. 4 The Fourth District reached the exact opposite conclusion in this case, in ordering the trial judge to set aside the foreclosure sale. Finally, the Fourth District Court=s opinion also conflicts with an earlier case from the Second District, Sulkowski v. Sulkowski, 561 So.2d 416 (Fla. 2d DCA 1990), a case also not addressed by the Fourth District here. In Sulkowski, the Second District reversed the trial court=s decision to set aside a foreclosure sale, reasoning that, AEven assuming that the bid [by innocent third parties] at the judicial sale was grossly inadequate, there is no factual basis in the record to conclude that this inadequate price was the result of any mistake, accident, surprise, fraud, misconduct, 4 /There would have been no reason for the Second District to remand the case to the trial judge to decide whether he would set aside the foreclosure sale under the proper legal standard, if the Second District believed that this trial judge would grossly abuse his discretion if he declined to set aside the foreclosure sale. This point alone reveals conflict. 9
or irregularity on their part@ (561 So.2d at 418) (emphasis in original). There is no way to reconcile that decision with the Fourth District=s decision here. From a public policy perspective, jurisdiction should be taken by this Court, to clarify the circumstances in which unilateral mistakes by complaining parties may, or must result in the setting aside of foreclosure sales. While surely not intended, the Fourth District=s decision has brought uncertainty to the foreclosure bidding and foreclosure sale process across the State. Two winning bids made under similar factual circumstances in different parts of the State will be subject to different judicial interpretation, merely on the happenstance on where the foreclosure sale is conducted. This inconsistency will reduce the likelihood that bids will be placed in the first instance, a process which does not benefit the public. Particularly in these difficult economic times, the foreclosure market needs certainty in the bidding process. CONCLUSION It is respectfully requested that this Court accept jurisdiction to resolve the conflict between the Second and Fourth District Courts of Appeal, concerning the exercise and availability of discretion to trial judges when evaluating whether to set aside foreclosure sales arising from unilateral mistakes by complaining parties. 10
CERTIFICATE OF SERVICE I HEREBY CERTIFY a true copy of the foregoing was furnished to HINDA KLEIN, ESQ., 3440 Hollywood Blvd., 2d FL, Hollywood, FL 33021, by mail, on July 17, 2008. Edmond Alonzo, Esq. ALONZO LAW OFFICES, P.A. 217 Avenue A Fort Pierce, FL 34950 and BURLINGTON & ROCKENBACH, P.A. 2001 Professional Building/Suite 410 2001 Palm Beach Lakes Blvd. West Palm Beach, FL 33409 (561) 721-0400 (561) 721-0465 (fax) Attorneys for Petitioner geh@flappellatelaw.com By: PHILIP M. BURLINGTON Florida Bar No. 285862 By: ANDREW A. HARRIS Florida Bar No. 10061 F:\PMB\AQUA\P\SCT.wpd\GG 11
CERTIFICATE OF COMPLIANCE Petitioner hereby certifies that the type size and style of the Brief of Petitioner on Jurisdiction is Times New Roman 14pt. ANDREW A. HARRIS Florida Bar No. 10061 12