Opinion
Case No. 2D18-5124
02-07-2020
BMG REALTY GROUP, LLC, Appellant, v. U.S. BANK NATIONAL ASSOCIATION as trustee successor in interest to Bank of America National Association as trustee successor by merger to LaSalle Bank National Association as trustee for Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2007-OA1 Trust ; Paul F. Shuman a/k/a Paul Fredrick Shuman; Sheila P. Shuman a/k/a Sheila Phillips Shuman a/k/a Sheila Phillips West; Captiva Cay Homeowners Association, Inc. ; and Captiva Cay Condominium Association, Inc., Appellees.
Marshall A. Adams and Jarad A. Gibson of Lubell & Rosen, LLC, Ft. Lauderdale, for Appellant. Nancy M. Wallace of Akerman LLP, Tallahassee; William P. Heller of Akerman LLP, Fort Lauderdale; and Eric M. Levine of Akerman LLP, West Palm Beach, for Appellee U.S. Bank. No appearance for remaining Appellees.
Marshall A. Adams and Jarad A. Gibson of Lubell & Rosen, LLC, Ft. Lauderdale, for Appellant.
Nancy M. Wallace of Akerman LLP, Tallahassee; William P. Heller of Akerman LLP, Fort Lauderdale; and Eric M. Levine of Akerman LLP, West Palm Beach, for Appellee U.S. Bank.
No appearance for remaining Appellees.
SILBERMAN, Judge.
In July 2016, U.S. Bank National Association initiated the mortgage foreclosure lawsuit that gave rise to this appeal. BMG Realty Group, LLC (BMG), was named as a defendant because in January 2016 it had purchased the mortgaged property at a judicial sale resulting from a foreclosure action by a junior lienholder. In defending the current litigation, BMG asserted that U.S. Bank's foreclosure action was untimely filed and barred under the applicable statute of limitations. BMG contended that the statute of limitations began to run when Paul and Sheila Shuman (the Borrowers) surrendered the property in April 2011 to U.S. Bank as part of their chapter 13 bankruptcy proceeding and that the statute of limitations had expired before U.S. Bank filed its mortgage foreclose suit. Following a nonjury trial, the trial court rejected BMG's argument and entered a foreclosure judgment in favor of U.S. Bank. BMG now appeals the foreclosure judgment, again arguing that the statute of limitations began to run upon the Borrowers' surrender of the property and expired before U.S. Bank filed suit. As did the trial court, we reject this argument and affirm.
We conduct a de novo review on the legal issue concerning the statute of limitations in a foreclosure action. Desylvester v. Bank of N.Y. Mellon, 219 So. 3d 1016, 1019 (Fla. 2d DCA 2017) ; see also Can Fin., LLC v. Krazmien, 253 So. 3d 8, 10 (Fla. 4th DCA 2018). An action to foreclose a mortgage is subject to a five-year statute of limitations. § 95.11(2)(c), Fla. Stat. (2016).
"As this court has repeatedly held, alleging ‘a continuing state of default at the time of the filing of the complaint [is] sufficient to satisfy the ... statute of limitations.’ " U.S. Bank, N.A. v. Gonzales, 244 So. 3d 407, 409 (Fla. 2d DCA 2018) (alteration in original) (quoting Huntington Nat'l Bank v. Watters, 228 So. 3d 595, 596 (Fla. 2d DCA 2017) ); see also Desylvester, 219 So. 3d at 1020. In dealing with whether the statute of limitations had run in a subsequent action when a prior foreclosure action had been dismissed, the Florida Supreme Court stated that "with each subsequent default, the statute of limitations runs from the date of each new default providing the mortgagee the right, but not the obligation, to accelerate all sums then due under the note and mortgage." Bartram v. U.S. Bank Nat'l Ass'n, 211 So. 3d 1009, 1019 (Fla. 2016).
U.S. Bank's complaint, filed on July 16, 2016, alleges a continuing state of default by asserting the failure to make the October 1, 2011, payment "and all subsequent payments." U.S. Bank also exercised its right to accelerate all sums due when it "declare[d] the full amount payable under the Note and Mortgage to be due."
BMG argues that Florida's statute of limitations in this foreclosure action runs from the date of the bankruptcy court's Order Confirming Chapter 13 Plan entered on April 21, 2011 (the Surrender Order), thus rendering the complaint filed in July 2016 time-barred. The surrender order provides that "[s]urrender is deemed effective immediately upon entry of this Order." The surrender order also allows for secured creditors of surrendered property to seek in rem relief.
The provisions of a chapter 13 plan address "the disposition of each piece of property, including whether the debtor will surrender a property." Fischer v. HSBC Bank USA, Nat'l Ass'n, 257 So. 3d 512, 515 (Fla. 2d DCA 2018) (quoting In re Scott, 567 B.R. 847, 851 (Bankr. S. D. Fla. 2017) ). A surrender of property in bankruptcy prohibits the debtor from contesting a foreclosure of the property. Lewis v. Innova Inv. Grp., LLC, 279 So. 3d 876, 877 (Fla. 2d DCA 2019) ; In re Failla, 838 F.3d 1170, 1177 (11th Cir. 2016). However, "a creditor must take some legal action to recover real property—namely, a foreclosure action." Failla, 838 F.3d at 1177 ; see also Fischer, 257 So. 3d at 515 ("Although 'debtors who surrender their property can no longer contest a foreclosure action,' the creditor must still take the legal action of a foreclosure proceeding to recover the property." (quoting Failla, 838 F.3d at 1177 )).
A bankruptcy discharge extinguishes only the debtor's personal liability, not the in rem liability. See Krazmien, 253 So. 3d at 11. In Krazmien, the borrower did not exercise the usual options of surrendering the property, redeeming the property, or reaffirming the debt. See id. Rather, she "exercised a de facto fourth option by simply ceasing payments" after her discharge in bankruptcy. Id. The trial court had found that there was no evidence the creditor had accelerated the loan. Thus, the appellate court determined that because the creditor "alleged a default date within five years of the date that it filed its complaint, the trial court erred in finding the action was barred by the statute of limitations." Id. The court could locate "no authority for the proposition that the bankruptcy discharge ‘acted as the acceleration of the debt for foreclosure purposes.’ " Id.
Florida courts have recognized in the situation of a suit by a junior lienholder "that a ‘prior mortgagee may elect for himself the time and manner of enforcing his security.’ " Garcia v. Stewart, 906 So. 2d 1117, 1120 (Fla. 4th DCA 2005) (quoting Cone Bros. Constr. Co. v. Moore, 141 Fla. 420, 193 So. 288, 290 (Fla. 1940) ). U.S. Bank has a contractual right under the mortgage to opt to accelerate the debt, and the Borrowers cannot control U.S. Bank's decision on when to proceed to enforce its security. The fact of surrender through the bankruptcy court does not begin the statute of limitations because the surrender does not have the effect of accelerating the debt. In Failla the court determined that a surrender prohibits a debtor from defending a foreclosure suit, 838 F.3d at 1177, but the court did not suggest that a surrender affects a state statute of limitations. The parties have not cited to us and we have not located anything in state law or bankruptcy law that says that a surrender is equivalent to acceleration of the debt so as to trigger a state's statute of limitations. We decline BMG's request that we extend the law to hold that surrender of the property in bankruptcy has the effect of accelerating the debt and triggering the statute of limitations.
Because the surrender order did not start the five-year limitations period, U.S. Bank's complaint was not time-barred. Therefore, we affirm the final judgment of foreclosure.
Affirmed.
NORTHCUTT and BLACK, JJ., Concur.