CREDO LLC

v.

SPEYSIDE INVESTMENTS CORP.

Third District Court of Appeal State of Florida Opinion filed August 15, 2018. Not final until disposition of timely filed motion for rehearing. ________________ No. 3D17-0815 Lower Tribunal No. 13-31175 ________________ Credo LLC, Appellant, vs. Speyside Investments Corporation, Appellee. An Appeal from a non-final order from the Circuit Court for Miami-Dade County, Antonio Marin, Judge. Law Offices of Paul Morris, P.A., and Paul Morris; Roniel Rodriguez, IV, for appellant. Rothman and Tobin, P.A., Michael Rothman, and Ellen Patterson, for appellee. Before LOGUE, LUCK and LINDSEY, JJ.

LINDSEY, J.

A seller of real property appeals an order requiring $3.3 million paid by a buyer at the closing on a sale of real property, intended to satisfy a preexisting mortgage, to be deposited into the court registry pending litigation by the mortgage holder, initiated after the closing, over the payoff amount. We affirm for the reasons set forth below.

I.

BACKGROUND

This case began in August of 2006, when Sally Sawh executed a promissory note in favor of Fairmont Funding, LTD, predecessor-in-interest to Wells Fargo Bank, N.A. (“Wells Fargo”) in the original principal amount of $3,000,000.00. As security for the note, Ms. Sawh and Paolo Dellacassa executed a mortgage on a parcel of real property located at 4575 Sabal Palm Road in Miami, Florida (the “Property”). It is this property that is the subject of yet a second appeal to this Court. In August of 2012, appellant seller, Credo, LLC (“Credo”) obtained a Sheriff’s Deed to the Property in exchange for the payment of $10.00 (ten dollars). In October of 2013, Wells Fargo, the plaintiff below, filed the instant action seeking to foreclose on the mortgage and/or enforce the note naming Ms. Sawh, Mr. Dellacassa and Credo, among others, as defendants herein. While the foreclosure was pending, Credo contracted to sell the Property to appellee buyer, Speyside Investments Corp. (“Speyside”).

5 redeem, i.e., payoff, the mortgage. Id. This Court further stated “[i]n light of this determination, we order Wells Fargo to reimburse Credo any sums paid by it in compliance with the March 10 [Redemption Order].” Id. (emphasis added). On June 17, 2016, the mandate issued directing that such further proceedings in this cause take place. Ten days later, Credo filed an emergency motion in the trial court for contempt for failure to comply with the mandate and for sanctions. Credo alleged it tendered the $3.3 million to Wells Fargo and that, pursuant to the mandate, Wells Fargo should be held in contempt of court for failing to return those funds to Credo.1 Wells Fargo responded two days later with its own motion to enforce the mandate and for entry of an order permitting Wells Fargo to deposit the funds received in connection with the March 10 Redemption Order into the court registry, a law firm trust account or other escrow account.2 Wells Fargo alleged that the March 10 Redemption Order required Credo to pay an incorrect redemption amount, noted that Credo I does not address the sale of the Property by 1 In this motion, Credo makes reference to the language contained in Credo I three times. Therein, Credo incorrectly cites this Court’s language in Credo I as ordering Wells Fargo “to reimburse Credo any sums paid in compliance with the March 10 [Redemption Order].” In fact, the actual language ordered Wells Fargo “to reimburse Credo any sums paid by it in compliance with the March 10 [Redemption Order].” See Credo I, 194 So. 3d at 483 (emphasis added). 2 In this motion, Wells Fargo correctly cites the same language from the Credo I opinion that Credo incorrectly cited in its motion to enforce the mandate.

7 trial court entered an order requiring Speyside to post an $80,000.00 bond with the court within 72 hours, and ordering Credo to deposit the $3.3 million into the court registry within 72 hours from the posting of the bond by Speyside. The trial court specifically found: (a) That counsel for SPEYSIDE appeared, along with a representative on behalf of SPEYSIDE, and SPEYSIDE’s expert witness; (b) That counsel for Plaintiff, WELLS FARGO BANK, N.A. appeared, without a representative from Plaintiff or any additional witnesses; (c) That counsel for CREDO appeared, without a representative from Credo or any additional witness; (d) That there is a substantial likelihood that the funds at issue, $3,347,233.21, will ultimately belong to Plaintiff than [sic] CREDO; (e) That the failure to deposit the $3,347,233.21, previously remitted to CREDO, into the Court Registry would result in irreparable harm to SPEYSIDE if the funds are not safe kept, as the realty at issue in this foreclosure action, now owned by SPEYSIDE, remains encumbered by Plaintiff’s mortgage. (f) That the specific funds at issue were generated at closing upon SPEYSIDE’s purchase from CREDO and were intended to be applied towards the payoff of Plaintiff’s mortgage. (g) That the threatened injury, i.e., the possibility that CREDO may not safeguard the $3,347,233.21 and it may otherwise be unavailable when the total redemption amount owed to Plaintiff is determined, highly outweighs the possible harm caused to CREDO; and (h) That the issuance of temporary injunction is equitably justified. See Hullum v. Bre-lew Corp., 93 [So. 2d] 727 ([Fla]. 1957) and Jones v. Carpenter, 90 Fla. 407, 106 So. 127 (Fla. 1925). The trial court based these findings on the following: “the arguments made by

8 counsel for the parties, the case law presented to this Court, this Court’s review of all relevant papers, pleadings and orders and its interpretation of the intent of the Third District Court of Appeal’s Mandate, the proffer of testimony provided on behalf of SPEYSIDE and for all reasons stated on the record[.]” (Emphasis added).⁶ Further, the trial court specifically noted the equitable nature of the underlying action as an additional reason for requiring the funds to be deposited into the court registry. The very next day, Credo filed the instant appeal.

I.

STANDARD OF REVIEW

A trial court is afforded broad discretion in granting, denying, dissolving, or modifying injunctions, and unless a clear abuse of discretion is demonstrated, an appellate court must not disturb the trial court's decision. Jackson v. Echols, 937 So. 2d 1247, 1249 (Fla. 3d DCA 2006) (citing Wise v. Schmidek, 649 So. 2d 336, 337 (Fla. 3d DCA 1995)); Vargas v. Vargas, 771 So. 2d 594, 595 (Fla. 3d DCA 2000). Our review is limited to whether the trial court’s findings are supported by competent substantial evidence. See P & O Ports Fla., Inc. v. Cont'l Stevedoring & Terminals, Inc., 904 So. 2d 507, 510 (Fla. 3d DCA 2005) (an appellate court's review of a trial court's findings on factual matters is limited to whether they are supported by competent substantial evidence). If a legal principle is involved, the standard of review is de novo. City of 6 Neither Credo nor Wells Fargo brought any witnesses to the hearing and neither requested to cross-examine Speyside’s witnesses.

II.

ANALYSIS

A. Entitlement to Injunctive Relief

The situation before the trial court at the conclusion of the evidentiary hearing was: (1) Wells Fargo was holding a pending foreclosure action on its mortgage against the Property wherein it was alleging $4.6 million due and owing; (2) Credo had possession of, and unrestricted access to, the $3.3 million turned over to it by Wells Fargo plus the $1.8 million dollars it had pocketed at the closing on the Property – a property for which it had paid only ten dollars; (3) Credo had no further obligation with respect to the Property because it had sold its interest to Speyside and a warranty deed had been recorded; (4) Speyside was holding legal title to the Property, for which it had already paid $6.15 million, and against which Wells Fargo had a pending foreclosure with $4.6 million alleged to be due and owing; and, (5) Credo did not dispute that it had agreed at the closing

10 on the sale of the Property, that $3.3 million of the $6.15 million Speyside paid to purchase this property was earmarked for disbursement to Wells Fargo to pay off its mortgage. It was against this backdrop that the trial court entered the order that is the subject of this appeal. In order to be entitled to a temporary injunction, the moving party must plead and establish: (1) a likelihood of irreparable harm and the unavailability of an adequate remedy at law; (2) a substantial likelihood of success on the merits; (3) that the threatened injury to the movant outweighs any possible harm to the nonmovant; and, (4) that the granting of a temporary injunction will not disserve the public interest. Reliance Wholesale, Inc. v. Godfrey, 51 So. 3d 561, 564 (Fla. 3d DCA 2010) (quoting Cordis Corp. v. Prooslin, 482 So. 2d 486, 489-90 (Fla. 3d DCA 1986)). On appeal Credo argues that injunctive relief does not lie where there exists an adequate remedy at law. While this is a correct statement of the law, it is not dispositive of this appeal. Speyside responds with the assertion that the $3.3 million paid to Wells Fargo at closing came, not from Credo, but from Speyside. As such, Speyside argues “this is not a case where Speyside is seeking to freeze accounts or assets of Credo, out of concern that it may not be able to collect the funds later.” In reply, Credo argues it has a right to the $3.3 million because this Court, in Credo I, ordered Wells Fargo to refund that amount to Credo.

12 closing by the title agent. The $3.3 million was held by Wells Fargo at all times prior to the issuance of the mandate in Credo I and continued to be held by Wells Fargo up until just after the entry of the trial court’s order forcing Wells Fargo either to accept the $3.3 million in full satisfaction of the Mortgage or to pay it to Credo. Second, while Speyside could certainly sue Credo for return of the $3.3 million, Speyside shouldn’t have to. The $3.3 million at issue herein does not belong to Credo and never has. It either belongs to Wells Fargo or Speyside. Since Speyside, not Credo, paid the $3.3 million to Wells Fargo at closing, it was error to interpret the language in Credo I to require Wells Fargo, as one of two options, to return Speyside’s funds earmarked for the satisfaction of the mortgage to Credo. And, because at that time, Speyside had not been granted leave to intervene, it was unable to argue its opposition to such to the trial court. Finally, the trial court further found that the issuance of a temporary injunction was equitably justified. The Florida Supreme Court noted the court’s equity powers in foreclosure actions in Arsali v. Chase Home Finance LLC stating that: Under Florida law, actions involving foreclosure of property are brought in courts of equity. The Florida Legislature recognized the need for equitable remedies in foreclosure actions and, thus, codified that foreclosure cases involving mortgages will be tried in equity courts. See § 702.01, Fla. Stat. (2010) (Equity) ("All mortgages

13 shall be foreclosed in equity. In a mortgage foreclosure action, the court shall sever for separate trial all counterclaims against the foreclosing mortgagee. The foreclosure claim shall, if tried, be tried to the court without a jury."). 121 So. 3d 511, 517 (Fla. 2013) (first internal citation omitted). Moreover, “[u]nder Florida law, ‘an equitable lien is a right, not recognized by law, to have a fund . . . applied in whole or in part to the payment of particular debt.’” Gendler v. Related Grp., 2009 U.S. Dist. LEXIS 139040, at *16 (S.D. Fla. Sept. 14, 2009) (quoting Hullum, 93 So. 3d at 730 (also cited by the trial court)). Further, “an equitable lien can be imposed if . . . a court declares that the equitable lien is necessary out of general considerations of justice.” Id. at *16-17 (quoting In re Dorado Marine, Inc., 321 B.R. 581, 588 (M.D. Fla. 2005) (citing Jones, 106 So. 127 (also cited by the trial court)). Florida courts have entered injunctions to protect the res of a trust implied by operation of law. See e.g., TJ Mgmt. Group, L.L.C. v. Zidon, 990 So. 2d 623, 625 (Fla. 3d DCA 2008) (holding that “an order freezing funds held in a bank account for further determination on the ownership rights to those funds is in the nature of an injunction properly entered”); Ga. Banking Co. v. GMC Lending & Mortg. Servs. Corp., 923 So. 2d 1224 (Fla. 3d DCA 2006) (finding injunctive relief appropriate to prevent dissipation of specific, identifiable funds that had been collected on behalf of the lender and were being held in trust for the bank); Vargas,

15 assets and was intended for the specific purpose of paying off Wells Fargo’s mortgage on the Property. Thus, the trial court’s injunction order, requiring Credo to deposit the $3.3 million into the court registry pending further determination as to the ownership rights to those funds, was properly entered. After careful review, we are not persuaded by the arguments put forward by the dissent. We agree with the law cited by the dissent. We simply do not find it applicable to the somewhat unique facts of this case. First, the dissent places great emphasis on Speyside’s purported failure to appeal the trial court’s erroneous July 19, 2016 order which gave Credo the funds escrowed by Speyside. The dissent argues that “Speyside has not appealed that order. Speyside cannot collaterally attack that non-appealed order in this separate appeal to the injunction order.” The argument misapprehends the record. Speyside could not have appealed that order: Speyside was not a party when that order was entered. Speyside was not granted leave to intervene until August 5, 2016, which was well after the trial court had entered the July 19, 2016. The case cited by the dissent, Marine Midland Bank Cent. v. Cote, 384 So. 2d 658, 659 (Fla. 5th DCA 1980), involved a bank and an individual who were parties to the litigation at the time the non-appealed order was entered. The rule of Marine Midland regarding a party’s failure to appeal an order simply does not extend to a non-party like Speyside who could not have appealed the order.

III.

CONCLUSION

Because the $3.3 million which the trial court ordered to be deposited into

17 the court registry never belonged to Credo, because Credo does not now have, and has not ever had, any legal claim to those funds, and because it would be inequitable to allow Credo unrestricted access to $3.3 million that belongs either to Speyside or to Wells Fargo during the pendency of the underlying litigation, we affirm. Affirmed. LOGUE, J., concurs.

19 once obtained, it will be collectible.’” Lopez-Ortiz v. Centrust Sav. Bank, 546 So. 2d 1126, 1127 (Fla. 3d DCA 1989) (citations omitted). Here, even if Strategica is ultimately successful in establishing entitlement to the $75,000 purported loan or to twenty percent of Sammie’s profits from the sale of the 9 Mile property, it will only be entitled to an award of money damages. Strategica, therefore, has an adequate remedy at law to recover the disputed funds. Accordingly, because the injury Strategica is attempting to prevent is purely monetary and can be cured by money damages, Strategica will not suffer irreparable harm. As this Court stated in Konover Realty Associates, Ltd. v. Mladen: It is entirely settled by a long and unbroken line of Florida cases that in an action at law for money damages, there is simply no judicial authority for an order requiring the deposit of the amount in controversy into the registry of the court, or indeed for any restraint upon the use of a defendant’s unrestricted assets prior to the entry of judgment. The rule has been specifically applied, as on general principles it must be, to an action like this one for the recovery of unsegregated earnest money, and is unequivocally not affected by the claim that recovery upon any subsequently-entered judgment may be made difficult by the dissipation or unreachability of the debtor’s assets. 511 So. 2d 705, 706 (Fla. 3d DCA 1987) (internal citations omitted); see also Leight v. Berkman, 483 So. 2d 476, 477 (Fla. 3d DCA 1986) (citations omitted) (“The law is unequivocally established that an injunction against the disposition of a defendant’s assets simply may not be granted upon the ground that their preservation is required to satisfy a subsequent money judgment.”); De Leon v. Aerochago, S.A., 593 So. 2d 558, 559 (Fla. 3d DCA 1992) (“Injunctive relief may not be used to enforce money damages, or to prevent any party from disposing of assets until an action at law for an alleged debt can be concluded.” quoting Hiles v. Auto Bahn Federation, Inc., 498 So. 2d 997, 998 (Fla. 4th DCA 1986)).

20

V.

CONCLUSION

Because Strategica has suffered no irreparable injury that cannot be cured by money damages and an adequate remedy at law is available, we reverse the trial court’s order granting Strategica’s motion for temporary injunctive relief and remand for further proceedings consistent with this opinion. Sammie Investments, LLC v. Strategica Capital Assocs., Inc., No. 3D17-2052, 2018 WL 2122792, at *3 (Fla. 3d DCA May 9, 2018). I wasn’t on the Sammie Investments panel, but I fully concur. Here, the trial court’s finding of irreparable harm is the same as the one the Sammie Investments court found to be legally insufficient. Our trial court found that “the threatened injury, i.e., the possibility that CREDO may not safeguard [the money] and it may otherwise be unavailable when the total redemption amount owed to Plaintiff is determined, highly outweighs the possible harm caused to CREDO.” The Sammie Investments trial court found that “if Sammie does not ‘have any other assets based on the only testimony provided, then there would be irreparable harm because there would be nowhere else from where to gain that money.’” 2018 WL 2122792, at *2. As we have explained, “[t]he test for unavailability of an adequate remedy at law, under these requirements, is ‘whether a judgment can be obtained, not whether, once obtained, it will be collectible.’” Lopez-Ortiz, 546 So. 2d at 1127.

23 trial. No two cases are alike, and each variation on the age-old bait-and-switch scheme does not change three decades of precedent. Reason 3. The injunction was equitably justified under the trial court’s equity powers in foreclosure. The majority opinion reasons that because the case between Speyside and Credo “involve[s] a foreclosure action,” and foreclosure is an equitable remedy, then the temporary injunction was “equitably justified.” There are two problems with this reasoning. First, the dispute between Speyside and Credo was not a foreclosure action. Speyside intervened for the purpose of filing a counterclaim against Credo for breach of the title warranties and unjust enrichment seeking return of the money paid for the property. Speyside’s counterclaim against Credo did not seek to foreclose on the property, and Speyside cannot seek relief it did not request.10 Second, even if this was a foreclosure action, the trial court’s “equity powers in foreclosure actions” do not extend so far as to grant a preliminary injunction without meeting the necessary requirements (like irreparable harm and no adequate remedy at law). I know of no case, and the majority opinion does not cite any, that 10 The majority opinion cites the earlier appeal as evidence that this case involves a foreclosure action, but the earlier appeal was between Wells Fargo and Credo. Speyside was not a party to the first appeal, and wasn’t even a party in the underlying case when the first appeal was filed and decided. After the first appeal was decided, Speyside intervened and filed its counterclaims for breach of title warranties and unjust enrichment against Credo, followed by the motion for injunctive relief.

24 allows the trial court to grant a Florida Rule of Civil Procedure 1.610 preliminary injunction in a foreclosure case without the movant having to prove she was irreparably harmed or did not have an adequate remedy at law.¹¹ The cases cited by the majority opinion deal with equitable liens but Speyside did not plead an equitable lien claim and, even if it did, an equitable lien is not available where there’s an adequate remedy. See Johns v. Gillian, 184 So. 140, 145 (Fla. 1938) (“But there is no such lien where the expenditures are made with knowledge of the real state of the title; nor will such a lien arise where there is an adequate remedy at law.” (quotation omitted)). Speyside has an adequate remedy at law – this breach of title warranties lawsuit against Credo. Reason 4. The Florida courts have entered injunctions to protect the res of a trust. Speyside has not pled a claim for constructive or resulting trust that would trigger this exception to the irreparable harm requirement. Again, Speyside’s claims were for breach of title warranties and unjust enrichment. The court – this one and the trial court – cannot grant relief where it has not been pled.12 See 11 The “equity powers” case cited by the majority opinion, Arsali v. Chase Home Finance LLC, 121 So. 3d 511 (Fla. 2003), did not involve an injunction. (Arsali was about objections to a foreclosure sale.) Likewise, the two cases cited by the trial court in support of its equitable justification, Hullum v. Bre-lew Corp., 93 So. 2d 727 (Fla. 1957) and Jones v. Carpenter, 106 So. 127 (Fla. 1925), did not involve injunctions. (They reversed motions to dismiss equitable lien claims.) 12 In the cases relied on by the majority opinion explaining the res exception, unlike here, the party seeking an injunction pled constructive trust. See, e.g., Vargas v. Vargas, 771 So. 2d 594, 596 (Fla. 3d DCA 2000) (“If the assets are taken outside the court’s jurisdiction, the corpus of any possible constructive trust would