CHRISTOPHER
CATHCART ATTORNEY AT LAW REPORTED CASES
Case 4
671 So.2d 885
21 Fla. L. Weekly D972
(Cite as: 671 So.2d 885)
WAREHOUSES OF FLORIDA, INC., Appellant,
v.
Richard L. HENSCH and Susan L. Hensch, Appellee.
No. 95-1560.
District Court of Appeal of Florida, Fifth District.
April 19, 1996. |
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*886 Appeal from
the Circuit Court for Orange County, Jeffords D. Miller,
Judge.
Christopher C. Cathcart, Orlando, for Appellant.
Clayton D. Simmons of Stenstrom, McIntosh, Colbert, Whigham & Simmons,
P.A., Sanford, for Appellees.
ANTOON, Judge.
In this mortgage
foreclosure case the primary issue is whether the trial
court erred in entering a deficiency judgment in favor
of the mortgagees, Richard and Susan Hensch (Hensches).
The appellant, Warehouses of Florida, Inc. (Warehouses),
contends that entry of the deficiency was error because
the Hensches bid the entire amount of the final judgment
of foreclosure at the foreclosure sale. We agree and
therefore reverse.
The Hensches held
a second mortgage on commercial property owned by Warehouses.
When Warehouses defaulted on the mortgage by failing
to make the required payments, the Hensches filed an
action to foreclose the mortgage. After a non-jury
trial, the trial court determined that the Hensches
were entitled to relief as a matter of law, and awarded
them a judgment of foreclosure which included the principal
balance due on the note, accrued interest on the balance,
costs, and attorneys' fees, totaling $336,343.91.
At the foreclosure
sale which followed, the Hensches were the sole bidders
on the property. They purchased the property by bidding
the entire amount of their judgment of foreclosure.
Thereafter, they filed a petition for entry of a deficiency
judgment. The trial court granted the petition. Included
in the deficiency judgment were $44,271.85 in first
mortgage payments made by the Hensches to preclude
foreclosure by the owner of the first mortgage; $14,375.02
in delinquent 1992 property taxes; $9,733.00 in prorated
1993 property taxes; and $8,500.00, representing a
security deposit paid to Warehouses by a tenant during
Warehouses' possession by a tenant. The trial court
added these sums to the balance due on the first mortgage
and the foreclosure judgment. The court then subtracted
that total from a fair market value of $700,000.00
to arrive at $139,037.20, the amount of the deficiency
judgment.
In support of their
contention that they are entitled to the deficiency
judgment, the Hensches cite section 45.031(8), Florida
Statutes (1991), which provides in pertinent part:
If the case is one
in which a deficiency judgment may be sought and application
is made for a deficiency, the amount bid at the sale
may be considered by the courts as one of the factors
in determining a deficiency under the usual equitable
principals.
The Hensches contend
that this provision authorizes a trial court to consider
awarding a deficiency judgment even in those cases
where the mortgagee bids the full amount of the judgment
obtained in the foreclosure suit. They argue that they
are entitled to a deficiency decree even though they
bid the entire amount of the judgment at the foreclosure
sale because the amount of the bid is merely one of
the factors to be considered. This argument is premised
on the Hensches' *887 view that they bid too much at
the foreclosure sale.
The issue of whether
a mortgagee who purchases property at a foreclosure
sale by bidding the entire amount of the judgment was
first addressed in Provident National Bank v. Thunderbird
Associates, 364 So.2d 790 (Fla. 1st DCA 1978). Provident
National, the second mortgagee, obtained a judgment
against Thunderbird, the mortgagor, in a foreclosure
action and bid the entire amount of that judgment to
purchase the property at the foreclosure sale. The
court upheld the trial court's finding that, once the
amount owed on the mortgage and note was determined
by the final judgment of foreclosure, Provident National
was entitled to a deficiency only to the extent that
the amount of the judgment exceeded the sale price
at foreclosure sale. Id. at 795-797. It thus followed
that, since Provident National bid the entire amount
of the judgment, there could be no deficiency decree
in its favor. Like the Hensches, Provident had made
payments on the first mortgage to avoid default on
the first mortgage, and the terms of the second mortgage
secured these payments. The first district agreed with
the trial court that, since the payments were not included
in the final judgment of foreclosure, they could not
form the basis of a deficiency judgment. Id. at 796.
This has been the law in Florida ever since.
In Patron v. American
National Bank of Jacksonville, 382 So.2d 156 (Fla.
5th DCA 1980), this court, citing Provident with approval,
held that because the mortgaged property was sold at
foreclosure sale to the mortgagee for the full amount
of the final judgment of foreclosure, the judgment
was satisfied in full. The court reasoned that the
mortgagee, having elected not to reduce its bid by
the amount of the delinquent property taxes, assumed
responsibility for the taxes. "The bargain the mortgagee
made by its successful bid was to give up its entire
judgment for the property as encumbered. It was error
for the trial court to enhance that bargain by forcing
someone other than the purchaser to be responsible
for the taxes." Id. at 158.
The Hensches suggest
that First Union National Bank of Florida v. Goodwin
Beach Partnership, 644 So.2d 1361 (Fla. 5th DCA 1994),
rev. denied, 659 So.2d 271 (Fla.1995), supports the
entry of a deficiency judgment because, in that case,
the majority concluded that delinquent taxes could
be considered when determining the fair market value
of the property for purposes of calculating a deficiency.
We conclude that there is no conflict between Patron
and Goodwin in this regard. In Goodwin, the mortgagee
did not purchase the mortgaged property by bidding
the entire amount of its final judgment of foreclosure,
butrather, the mortgagee bid a token amount of $1,000.
Judge Cobb, writing for the majority, clearly explained
the distinction:
The case of Patron
... has no applicability to the instant issue for the
simple reason that it involved a mortgagee's purchase
of property at foreclosure sale for the full amount
of its final judgment, thereby satisfying that judgment
in full. Hence, no deficiency was possible.
644 So.2d at 1367,
n. 1.
Thus, the established
law in this district is that when a mortgagee purchases
the foreclosed property by bidding the full amount
of the final judgment of foreclosure, the mortgagee's
judgment is satisfied in full and a deficiency judgment
is not possible. This principle makes sense. No other
purchaser could purchase the property at a foreclosure
sale and later claim that delinquent taxes, payments
on other mortgages, or tenants' deposits should be
included in a judgment against the mortgagor. Why should
the mortgagee have such an advantage? See Hatton v.
Barnett Bank of Palm Beach County, 550 So.2d 65 (Fla.
2d DCA 1989). The deficiency judgment is vacated.
VACATED.
GOSHORN and GRIFFIN, JJ., concur.
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