Opinion
Case No. 8:11-bk-01854-RCT
09-25-2020
In re Suzanne V. Ferry, Debtor.
Chapter 11 ORDER DENYING DEBTOR'S MOTION FOR SUMMARY JUDGMENT
Before the Court is Debtor Suzanne V. Ferry's Cross-Motion for Summary Judgment (the "Motion") to determine distribution of proceeds from the sale of two of her properties: 600 Corey Avenue and 618 73rd Avenue. Relying on the doctrine of equitable estoppel, she argues that lien rights of E-Z Cashing, LLC ("E-Z") should be limited to the amount set forth in an estoppel letter issued by E-Z's predecessor in interest, Bayview Loan Servicing, LLC ("Bayview").
Doc. 524. The Motion was filed in response to the Motion for Summary Judgment by Secured Creditor E-Z Cashing, LLC Regarding Distribution of Proceeds from Sale of Collateral Located at 600 Corey Ave. and 618 73rd Ave. (Doc. 484). E-Z Cashing, LLC later withdrew its motion for summary judgment (Doc. 522).
Recently, the Court granted summary judgment on the distribution of proceeds from the sale of another of Debtor's properties: 550 Corey Avenue. There, Debtor established, as a matter of law, that E-Z was equitably estopped from receiving more than what was stated in the Bayview estoppel letter.
Doc. 500 ("Order Granting Debtor's Motion for Summary Judgment and Denying E-Z Cashing, LLC's Cross-Motion for Summary Judgment" (the "Prior Order")). E-Z appealed the Prior Order, and that appeal is pending.
Here, though the arguments are similar, the facts and the outcome are different.
Undisputed Facts and Procedural History
Debtor filed a Chapter 11 bankruptcy in early 2011. At that time, she owned real property located at 600 Corey Avenue ("600 Corey") and 618 73rd Avenue ("618 73rd"), St. Pete Beach, Florida (together, the "Properties"). Bayview held a note and mortgage secured by the Properties (the "Loan"). Bayview timely filed Proof of Claim 16-1 in the amount of $1,116,326.50.
Doc. 1, Sch. A.
Docs. 9 & 238. The parties sometimes refer to the Loan secured by the Properties as the "600 Corey Loan," or the loan "encumbering 600 Corey Ave. (XXX4040)," without reference to 618 73rd which also served as collateral for the Loan.
In her Fourth Amended Plan of Reorganization (the "Plan"), Debtor proposed to treat the Loan as follows:
Class VI: Class V shall consist of the secured claim of Bayview Loan Servicing , LLC , who holds a mortgage on real property located at 600 Corey Avenue, St. Pete Beach FL and 618 73rd Avenue, St. Pete Beach Florida, who filed claim in the amount of $660,000 secured and $456,326.50 unsecured (Claim #16). The Debtor has obtained an appraisal on this real property having a value of $340,000.00 (the "Secured Claim"). The parties have agreed to a value of $480,000.00.Bayview voted to accept the Plan, and the Plan was confirmed in June 2012.
The secured amount allowed shall be amortized over twenty-four (24) years at 7% interest per annum and the Debtor will pay to this creditor a monthly principal and interest payment of $3,445.25 reflecting the valued amount until the total allowed secured claim is paid in full. Said payments shall commence thirty (30) days from the entry of the confirmation Order or as set forth in the Order determining value of the collateral.
In the event there is a deficiency claim allowed, this portion of the Creditor's claim shall be considered unsecured and will be treated under Class XIII.
Doc. 238 at 5.
Doc. 294.
Doc. 305.
On October 5, 2018, Bayview filed a motion to dismiss, or alternatively, for relief from the automatic stay with respect to the Properties. Bayview alleged that "Debtor has failed to comply with the Confirmation Order as a result of her failure to make payments to Bayview under the terms of the confirmed Plan" and that "payment is due for May 1, 2014, and each month thereafter[.]" On October 30, 2018, the Court entered an agreed order resolving Bayview's motion (the "Stay Order"). The Stay Order provides, in relevant part:
Doc. 374. Bayview also sought stay relief as against properties located at 550 Corey Avenue, St. Pete Beach, Florida and 1130 Pinellas Bayview S., Tierra Verde, Florida, each of which secured a separate loan with Debtor.
Id. ¶ 9.
Doc. 380.
See supra notes 4 & 8.
| 2. The Debtor and Creditor, Bayview Loan Servicing, LLC (collectively the "Parties") have agreedthat the Debtor owes Creditor the following sums on the three (3) mortgage loans (collectively the"Loans"):1 | |
| Mortgage loan encumbering 600 Corey Ave. (XXX4040) | $895,078.56 |
| . . . | |
| 3. The Parties have agreed to treat the Loans as follows: | |
| Mortgage loan encumbering 600 Corey Ave. (XXX4040) | $3,445.25/mos. |
| . . . | |
| 4. In addition to the above referenced monthly Loan payments, the Parties have agreed that theDebtor shall pay the Creditor the sum of $10,000.00 per month to account for the arrears owed on eachLoan as a result of Debtor's default under the confirmed plan. | |
| 5. All three Loans shall mature in 13 months, with the total indebtedness owed to Creditor beingpaid by the Debtor on the 13th month following entry of this Order. | |
| . . . | |
| 1 The Parties are continuing their negotiation as to the full indebtedness owed on the Loans. In the event the fullindebtedness owed under the Loans is re-calculated, the Parties will submit a revised order. Notwithstanding this,the Debtor shall pay the Creditor based on the payment terms set forth in paragraphs 3, 4 and 5 of this Order, withthe Loans maturing in month 13 following entry of this Order. |
Bayview provided monthly billing statements for the Loan to Debtor. The monthly billing statements for May 14, 2019 and September 13, 2019 contain the following information:
Doc. 525 (Verified Statement in Support of Debtor's Cross-Motion for Summary Judgment ("Ferry Aff.")), Ex. D.
| Statement Date | 05/14/2019 | Statement Date | 09/13/2019 | |
|---|---|---|---|---|
| Loan Number | XXXX4040 | Loan Number | XXXX4040 | |
| Payment Due Information | Payment Due Information | |||
| Payment Due Date | 07/01/2014 | Payment Due Date | 11/01/2014 | |
| Interest Rate | 7.000% | Interest Rate | 7.000% | |
| P&I Payment | $206,416.20 | P&I Payment | $206,416.20 | |
| Escrow Payment | $159,281.40 | Escrow Payment | $159,281.40 | |
| Reserve Payment | $0.00 | Reserve Payment | $0.00 | |
| Optional Ins. Payment | $0.00 | Optional Ins. Payment | $0.00 | |
| Assistance | $0.00 | Assistance | $0.00 | |
| Total Payments Due | $365,697.60 | Total Payments Due | $365,697.60 | |
| Late Charges | $1,204.07 | Late Charges | $1,892.11 | |
| Unapplied Suspense | $0.00 | Unapplied Suspense | $0.00 | |
| Payment Amount Due | $366,901.67 | Payment Amount Due | $367,589.71 | |
| Current Principal Balance* | $461,273.84 | Current Principal Balance* | $458,249.47 | |
| *This is your Principal Balance only, not the amount required to pay your loan in full. Please contactCustomer Service for your exact payoff balance. In the event you are in default or foreclosure, you mustcontact 1.800.457.5105 for pay information. |
Bayview provided Debtor with a Loan History Summary dated September 26, 2019. Per the Loan History Summary, sometime around April 30, 2013, Bayview made the following entry in its records:
Ferry Aff. ¶ 8 & Ex. E.
Ferry Aff. Ex. E.
| PAYMENT CHANGE | NEW INT RATE: 7% | NEW P&I: $3440.27 | NEW ESC PMT: $2654.69 |
|---|
| PAYMENT CHANGE | NEW INT RATE: 7% | NEW P&I: $3440.27 | NEW ESC PMT: $2654.69 |
|---|
Id.
In mid-August 2019, Debtor entered into a sales contract with Adam Kestenbaum ("Kestenbaum") to sell 600 Corey for $899,000. Approximately one month later, the parties signed an addendum to the sales contract that reduced the sales price to $880,000. Debtor also agreed to provide Kestenbaum with seller financing in the amount of $355,000. Closing was to occur on or before October 3, 2019.
Ferry Aff. ¶ 4 & Ex. A.
Id.
By letter dated September 17, 2019, Debtor requested a payoff letter from Bayview for the Loan. In response, Bayview sent Debtor a payoff letter dated September 25, 2019 showing a total payoff amount of $745,603.58 as of October 31, 2019, itemized as follows:
Ferry Aff. ¶ 5 & Ex. B.
Ferry Aff. ¶ 7 & Ex. C.
| The current Unpaid Principal Balance is: | $458,249.47 |
| Interest through 10/31/2019 | $163,142.10 |
| Statement Fees | $100.00 |
| Late Charges/NSF Fees | $1,892.11 |
| Recoverable Fees | $0.00 |
| Prepayment Consideration | N/A |
| Lockout | $0.00 |
| Release Fees | $250.00 |
| Legal Fees | $0.00 |
| Default Interest | $0.00 |
| Corporate Advances | $895.19 |
| Other funds owed by Borrower | $105,446.90 |
| Loss Draft Balance | $0.00 |
| Unapplied funds owed to Borrower | $0.00 |
| Escrow Shortage and Property Inspection | $15,627.81 |
| Notice Fee Amount | $0.00 |
| **TOTAL AMOUNT DUE TO PAYOFF LOAN IN FULL** | $745,603.58 |
Interest will accrue at $89.10 per day from 11/1/2019 to the date sufficient funds are received in this office.
Page two of the payoff letter stated:
A. YOU MUST CALL THE NUMBER LISTED BELOW TO UPDATE FIGURES PRIOR TO REMITTING FUNDS, AS FIGURES ARE SUBJECT TO CHANGE WITHOUT NOTICE.(the "Estoppel Letter").
B. Note holder reserves the right to adjust these figures and refuse any funds which are insufficient to pay the loans in full or for any reason, including but not limited to error in calculation of payoff amount, previously dishonored check or money order, or additional disbursements made by this note holder between the date of this payoff statement and receipt of funds.
On or about September 27, 2019, Debtor entered into a sales contract with Brian Kamilar ("Kamilar") to sell 618 73rd for $1,050,000. Debtor agreed to provide Kamilar with seller financing in the amount of $500,000. Closing was to occur on or before October 27, 2019.
Ferry Aff. ¶ 9 & Ex. F.
On October 17, 2019, Debtor filed a motion to administratively reopen her bankruptcy case to seek approval of the sales of the Properties. The Court granted Debtor's motion to reopen the same day. Debtor promptly filed motions to approve the sales of the Properties.
Doc. 405.
Doc. 414.
Docs. 408 & 411.
On October 25, 2019, following an emergency hearing at which Bayview did not appear, the Court entered orders authorizing Debtor to sell the Properties free and clear of liens (the "Sale Orders"). The Sale Orders provided that the sales, which included the sale of a third property, were conditioned, in part, on the sale proceeds producing "sufficient funds" to satisfy Bayview's lien "in the amount of $745,603.58."
Docs. 420 & 421.
Docs. 420 ¶ 4 & 421 ¶ 4.
Four days later, on October 29, 2019, E-Z acquired Bayview's interest in the Properties. That same day, E-Z's counsel sent an email to Debtor's counsel stating that E-Z purchased the Loan, and that E-Z "disavows/withdraws" the Estoppel Letter and the loan balance it reflected. The email stated in relevant part:
Doc. 548 (Declaration of Joel Weiser Regarding Loan Secured by Collateral Located at 600 Corey Ave. and 618 73rd Ave., St. Pete Beach, FL, sworn to June 26, 2020 (the "Weiser Decl.")) ¶ 3& Ex. 1.
My name is David Neal Stern and my firm represents E-Z Cashing, LLC , which recently purchased the loan previously held by Bayview Loan Servicing, LLC and secured by mortgages against properties located at 600 Corey Avenue North and Country and 618 773rd Avenue (the "Collateral").
Our client has learned that Bayview provided the Debtor with correspondence purporting to reflect the current loan balance, that the Debtor referenced such correspondence in her recent motion to sell the Collateral [Docket Entry], and that the Debtor caused such amount to be referenced in the Order Granting Verified
Motion to Approve Sale of Property and Request for Emergency Hearing (DOC. 408) [Docket Entry 421] (the "Sale Order") even though the underlying motion did not seek and could not have properly sought a determination as to the amount owed under the loan documents.
I am writing to put the Debtor on notice that the referenced correspondence and Order do not accurately account for all amounts currently owed under the loan and that my client expressly disavows/withdraws such correspondence and purported balance amount. My client reserves its lien rights with respect to all amounts it is entitled to recover through the mortgages including amounts well in excess of that suggested by the prior correspondence referenced above.
Weiser Decl. ¶ 7 & Ex. 6.
On October 31, 2019, Brenda Rojas of Westchase Title, the title agent handling the sales of the Properties, contacted Bayview by phone to request an updated payoff letter prior to the scheduled closing. Bayview instructed Ms. Rojas to send a written request via facsimile. Later that same day, as directed, she faxed a written request for an updated payoff letter. In the payoff request, Ms. Rojas advised Bayview that "[w]e expect to close on or before November 22, 2019."
Doc. 526 (Verified Statement in Support of Debtor's Cross-Motion for Summary Judgment ("Rojas Decl."), ¶8.
Rojas Decl. ¶ 9 & Ex. B.
Rojas Decl. Ex. B.
On November 4, 2019, Ms. Rojas called Bayview because she had not received an updated payoff letter. Paul Petti, an Asset Manager with Bayview, informed Ms. Rojas that the loan had been assigned to E-Z and told her to contact Joel Weiser, E-Z's manager. That same day, Ms. Rojas sent an email to Mr. Weiser requesting a payoff letter. She wrote:
Rojas Decl. ¶ 10.
Rojas Decl. ¶ 11.
Hello Mr. Wiser, your contact has been given to me by Paul Petty from Bayview as we are set to close on November 15th. We would like to obtain a payoff from you and also negotiate the balance of what has been provided to us by Bayview. We cannot close due to the payoff being so high. Please contact me as soon as possible as this is still with the Bankruptcy Court and proceeds of the sale is to be placed with the Bankruptcy Attorney. I am trying to negotiate this before it goes to them. It is my understanding that an Assignment of all the Mortgage, Assignment of Rents, etc. is being recorded. I will need a copy of this assignment as well.Mr. Weiser responded the next day, stating in pertinent part:
Hi Brenda,
Pls forward me the title report (as well as preliminary HUD statements if u generated it already) for 600 corey and 618 73rd. I need to understand where these numbers are coming from.
Thanks[.]
Rojas Decl. ¶ 12 & Ex. C.
Rojas Decl. Ex. C.
On November 8, 2019, E-Z filed a Motion for Reconsideration by Senior Mortgage Holder to Correct Loan Balance Miscalculation Reflected in Sale Orders, and Request for an Emergency Hearing (the "Motion for Reconsideration"). With regard to the Loan, E-Z alleged an amount owed of at least $1,033,780.31 as of October 31, 2019. E-Z included a "Loan Balance Summary" that broke-down the amount due as follows:
Doc. 426.
Id. ¶ 19 & p.16.
| Total Debt Owed as of Stay Relief Order Entry (11/8/2018) | $895,078.56 |
| Subsequent Interest/Default Interest | $136,406.12 |
| Subsequent Expenses (escrow/advances, legal fees, etc.) of no less than | $22,967.13 |
| Less Subsequent Debtor Payments | ($20,671.50) |
| MINIMUM LOAN BALANCE as of October 30, 2019 | $1,033,780.31 |
|---|
On November 22, 2019, after three hearings, the Court entered the parties' Agreed Order (A) Granting in Part and Denying in Part Motion for Reconsideration [D.E. 426] Regarding Prior Sale Orders [D.E.420 & 421], (B) Vacating Such Prior Sale Orders, and ( C) Granting Underlying Sale Motions [D.E. 408 & 411] (the "Agreed Order"). Through the Agreed Order, the Sale Orders were vacated but the sales of the Properties were reauthorized subject to certain new agreed terms and conditions, including that the "lien rights of E-Z shall automatically attach to the proceeds of the sale[s]." Debtor stipulated that E-Z was owed at least $745,603.45. Accordingly, the Agreed Order directed that amount to be disbursed to E-Z at closing. The remainder of the sale proceeds were to be held in trust by Debtor's counsel.
Doc. 434.
Id. ¶ 8.
Id.
Later that same day, Debtor closed on the sales of the Properties. E-Z did not provide Debtor or Ms. Rojas with an updated estoppel letter in advance of the closings.
Ferry Aff. ¶ 15.
Summary Judgment Standard
Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The existence of a factual dispute will not defeat a properly supported motion for summary judgment. "Only the existence of a genuine issue of material fact will preclude summary judgment."
Fed. R. Civ. P. 56(a) made applicable here by Fed. R. Bankr. P. 7056.
Koehler v. Waypoint Res. Grp, LLC, No. 8:18-cv-2017-T-60AAS, 2019 WL 5722117, at *1 (M.D. Fla. Nov. 5, 2019) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)).
Id.
The initial burden of showing that there are no genuine issues of material fact is borne by the moving party. "When the moving party has discharged its burden, the nonmoving party must then designate specific facts showing the existence of genuine issues of material fact." "If there is a conflict between the parties' allegations or evidence, the nonmoving party's evidence is presumed to be true and all reasonable inferences must be drawn in the nonmoving party's favor."
Id. (citing Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1260 (11th Cir. 2004)).
Id. (citing Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590, 593-94 (11th Cir. 1995)).
Id. (citing Shotz v. City of Plantation, Fla. 344 F.3d 1161, 1164 (11th Cir. 2003)).
Discussion
By the Motion, Debtor seeks to limit E-Z's lien in the proceeds from the sales of the Properties to $745,603.58, the amount disbursed at closing. Invoking equitable estoppel, Debtor asserts that based on the Estoppel Letter, she reasonably believed that figure represented the payoff amount as of the closing date. Debtor contends that she had no reason to question the accuracy of the Estoppel Letter and that she relied, to her detriment, on that amount when she closed on the sales of the Properties.
Debtor offers several arguments to support her position. She argues that because the Estoppel Letter did not include a line item for default interest that E-Z is not entitled to the same. Alternatively, Debtor argues that if default interest should have been included in the Estoppel Letter, then Bayview violated Fla. Stat. § 701.04(1) because it issued an incorrect estoppel letter. Debtor also contends that E-Z's failure to provide her with an updated estoppel letter after Ms. Rojas' November 4, 2019 request violated § 701.04(1). Accordingly, either because the Estoppel Letter failed to include a line item for default interest or because Bayview or E-Z violated § 701.04(1), Debtor argues that E-Z's lien on the sales proceeds must be limited to the payoff amount in the Estoppel Letter.
E-Z rejects Debtor's equitable estoppel claim. Citing, among others, its counsel's October 29, 2019 email disavowing the Estoppel Letter and its Motion for Reconsideration that reflected a loan balance in excess of one-million dollars, E-Z contends Debtor is unable to show, by clear and convincing evidence, that she reasonably relied on the Estoppel Letter to her detriment. E-Z claims that the outstanding balance on the Loan as of June 26, 2020 is either $300,388.59 or $283,748.11, plus legal fees and expenses.
Weiser Decl. ¶¶ 9-10 & Exs. 7 & 8.
Under Florida law, "[i]n order to demonstrate equitable estoppel, the following elements must be shown: 1) a representation as to a material fact that is contrary to a later-asserted position; 2) reliance on that representation; and 3) a change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon." A party claiming equitable estoppel generally must prove the elements of estoppel by clear and convincing evidence.
State Dept. of Revenue v. Anderson, 403 So. 2d 397, 400 (Fla. 1981).
Watson Clinic, LLP v. Verzosa, 816 So. 2d 832, 834 (Fla. Dist. Ct. App. 2002); Castro v. East Pass Enter., Inc., 881 So. 2d 699, 700 (Fla. Dist. Ct. App. 2004). --------
In the Prior Order, the Court determined that Debtor met this standard. The Court found that Debtor had no reason to question Bayview's estoppel letter and it was reasonable, as a matter of law, for her to rely on it in closing on the sale of 550 Corey Avenue. There, Debtor had no notice that any party other than Bayview held the note and mortgage when the sale closed. Bayview took no action to communicate that the estoppel letter did not provide the proper payoff amount. And, the loan history summary and monthly billing statements Bayview provided the Debtor were consistent with the amount listed in the estoppel letter. Indeed, E-Z purportedly acquired the loan secured by 550 Corey Avenue after the property was sold, and the assignment of the loan certainly was recorded after the closing.
Here, the facts are different, and when viewed favorably to E-Z create a triable issue of fact on whether Debtor's reliance on the Estoppel Letter was reasonable. Although E-Z failed to timely update the Estoppel Letter before closing, Debtor had notice that the Loan securing the Properties was sold and the new holder disputed the payoff provided by Bayview. The reasonableness of the reliance on the Estoppel Letter is a disputed issue of material fact and summary judgment is not appropriate.
Accordingly, it is ORDERED that the Motion (Doc. 524) is DENIED, and the Court will set this matter for trial by separate order.
ORDERED.
Dated: September 25, 2020
/s/_________
Roberta A. Colton
United States Bankruptcy Judge Service of the Order other than by CM/ECF is not required. Local Rule 9013-3(b).