WILMINGTON SAVINGS FUND SOCIETY, FSB, d/b/a CHRISTIANA TRUST, ETC. v. GULFSTREAM OF LAS OLAS CONDOMINIUM ASSOC. INC.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

WILMINGTON SAVINGS FUND SOCIETY, FSB, d/b/a CHRISTIANA
TRUST, NOT INDIVIDUALLY BUT AS TRUSTEE FOR PRETIUM
MORTGAGE ACQUISITION TRUST,
Appellant,

v.

GULFSTREAM OF LAS OLAS CONDOMINIUM ASSOCIATION, INC.,
Appellee.

No. 4D20-1443

[December 22, 2021]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Keathan B. Frink, Judge; L.T. Case No. CACE18-
010075.

Tyler E. Mesmer of Topouzis & Associates, P.C., Aventura, for appellant.

Michael D. Bogen of the Bogen Law Group, P.A., Coral Springs, for
appellee.

LEVINE, J.

Wilmington Savings Fund Society, FSB, d/b/a Christiana Trust
(“Christiana Trust”), appeals an order granting rehearing and reinstating
an equitable lien in favor of Gulfstream of Las Olas Condominium
Association (“Association”) for receivership fees. The trial court found that
Christiana Trust was not entitled to safe harbor protection under section
718.116(1)(b)(1), Florida Statutes (2020), and that Christiana Trust failed
to intervene in the receivership action within thirty days of the recording
of notice of lis pendens.

The issue for our consideration on appeal is whether a receiver
appointed at the request of a condominium association pursuant to
section 718.111(5), Florida Statutes (2020), is subject to the safe harbor
provision of section 718.116(1)(b)(1), which limits liability for past due
condominium assessments. We find that the plain language of the safe
harbor statute applies to the receiver for all past due assessments. Thus,
we find that the trial court erred in granting rehearing. Christiana Trust
was entitled to safe harbor protection and was not required to intervene
since the mortgage was recorded thirteen years before lis pendens was
recorded.

The Association filed a petition for appointment of a receiver to repair
and rent a vacant unit. The Association recorded a notice of lis pendens
in 2018. The trial court appointed a receiver over the objection of the
mortgagee, Ditech Financial LLC (“Ditech”).

During the pendency of the receivership action, Ditech filed a complaint
to foreclose on its mortgage, which had been recorded in 2005. After an
assignment of mortgage, Christiana Trust was substituted as party
plaintiff in the foreclosure action. The trial court entered a final judgment
of foreclosure in favor of Christiana Trust. Christiana Trust was the
highest bidder at the foreclosure sale and was issued a certificate of title.

After the final judgment of foreclosure, the receiver sought an equitable
lien in the receivership action, seeking to recover $38,656.86 in funds
expended for repair and maintenance of the property. The motion and
notice of hearing were served on Ditech, but not on Christiana Trust. The
trial court granted the motion, establishing an equitable lien in favor of the
receiver for $38,656.86.

Thereafter, Christiana Trust moved to intervene, to determine amounts
due and owing, to terminate receivership, and to vacate the equitable lien.
Christiana Trust argued that because it took title by foreclosure of its first
mortgage lien, it was entitled to the safe harbor protection of section
718.116(1)(b)(1). The trial court initially agreed and entered an order
vacating the equitable lien on the property, terminating the receivership,
and finding that the safe harbor provision applied.

The Association moved for rehearing. The trial court granted rehearing
and vacated its earlier order. The trial court now found that Christiana
Trust failed to intervene within thirty days of the notice of lis pendens, that
Christiana Trust was not protected by the safe harbor statute, and that
the court in the foreclosure action did not have jurisdiction to foreclose on
the mortgage because the court in which the lis pendens was originally
filed had exclusive jurisdiction. From this order, Christiana Trust appeals.

“The construction of a statute is an issue of law subject to de novo
review.” Kelly v. Green Tree Servicing, LLC, 300 So. 3d 244, 245 (Fla. 4th
DCA 2020) (quoting Aramark Unif. & Career Apparel, Inc. v. Easton, 894
So. 2d 20, 23 (Fla. 2004)). In interpreting a statute, a court looks to the
language of the statute and its plain meaning. Id. “When the language of

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a statute is clear and unambiguous, a court may not resort to the rules of
statutory construction.” Id.

This case presents an issue of the interplay between section
718.116(1)(b)(1), which limits the liability for past due assessments, and
section 718.111(5), which permits recovery for the expenses incurred by a
receiver. The safe harbor provision of section 718.116(1)(b)(1) limits the
liability of a first mortgagee, and its successors and assigns, for past due
condominium assessments. Specifically, the statute states:

(b)1. The liability of a first mortgagee or its successor or
assignees who acquire title to a unit by foreclosure or by deed
in lieu of foreclosure for the unpaid assessments that became
due before the mortgagee’s acquisition of title is limited to the
lesser of:

a. The unit’s unpaid common expenses and regular periodic
assessments which accrued or came due during the 12
months immediately preceding the acquisition of title and for
which payment in full has not been received by the
association; or

b. One percent of the original mortgage debt. The provisions
of this paragraph apply only if the first mortgagee joined the
association as a defendant in the foreclosure action. Joinder
of the association is not required if, on the date the complaint
is filed, the association was dissolved or did not maintain an
office or agent for service of process at a location which was
known to or reasonably discoverable by the mortgagee.

Id. (emphasis added).

In 2014, the Florida Legislature enacted section 718.111(5), which
allows a condominium association to petition a court to appoint a receiver
to lease out an abandoned unit and permits recovery of expenses incurred
by the receiver. Ch. 2014-133, Laws of Fla. Section 718.111(5)(b), Florida
Statutes (2020), states, in relevant part:

3. Any expense incurred by an association pursuant to this
paragraph is chargeable to the unit owner and enforceable as
an assessment pursuant to s. 718.116, and the association
may use its lien authority provided by s. 718.116 to enforce
collection of the expense.

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 4. The association may petition a court of competent
jurisdiction to appoint a receiver to lease out an abandoned
unit for the benefit of the association to offset against the
rental income the association’s costs and expenses of
maintaining, preserving, and protecting the unit and the
adjoining common elements, including the costs of the
receivership and all unpaid assessments, interest,
administrative late fees, costs, and reasonable attorney fees.

(emphasis added).

We find the trial court was correct the first time and erred when it
granted rehearing. The trial court failed to apply the plain language of the
safe harbor provision. The safe harbor provision expressly limited
Christiana Trust’s liability for “unpaid assessments.” § 718.116(1)(b)(1),
Fla. Stat. The receivership statute provides that receivership expenses
incurred by an association are “enforceable as an assessment.” §
718.111(5)(b)(3), Fla. Stat. Nothing in the language of the receivership
statute operates to prevent the application of the safe harbor provision.
Nor is there any conflict between the safe harbor statute and the
receivership statute. The receivership statute treats receivership expenses
as an assessment, and the safe harbor provision clearly limits liability for
unpaid assessments.

Federal National Mortgage Ass’n v. JKM Services, LLC, for Cedar Woods
Homes Condominium Ass’n, 256 So. 3d 961 (Fla. 3d DCA 2018), is
instructive. In JKM Services, the trial court granted the association’s
petition to appoint a receiver. Id. at 964. The properties at issue were
subject to mortgages recorded years before the receivership. Id. at 965.
The properties were subsequently foreclosed, and the mortgagee
purchased the properties at the foreclosure sale. Id. The receiver sought
an amount greater than the amount dictated by the safe harbor statute.
Id. The mortgagee moved to intervene, to terminate the receivership, and
determine the amounts due. Id. The trial court denied the motion, finding
that the mortgagee waited too long to seek relief and that the safe harbor
limit did not apply. Id.

The Third District reversed and remanded for further proceedings to
compute the amount specified by the safe harbor statute. Id. at 968-69.
The Third District noted that the mortgagee did not move for the receiver’s
appointment and was not a party to the receivership lawsuit. Id. at 967.
Additionally, the mortgagee’s entitlement to the statutory cap was “well-
established.” Id. at 968.

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 Like in JKM Services, here the safe harbor provision applies.
Additionally, Christiana Trust did not move for the receiver’s appointment
and was not a party to the receivership lawsuit. Although the receiver in
JKM Services was appointed before the enactment of section 718.111(5),
that is a distinction without any legal significance. Nothing in section
718.111(5) alters the analysis of JKM Services.

The trial court relied on section 48.23(1)(d), Florida Statutes (2020),
and U.S. Bank National Ass’n v. Quadomain Condominium Ass’n, 103 So.
3d 977 (Fla. 4th DCA 2012), in finding that Christiana Trust was required
to intervene in the Association’s receivership action. Section 48.23(1)(d)
states that the recording of a notice of lis pendens

constitutes a bar to the enforcement against the property
described in the notice of all interests and liens, including, but
not limited to, federal tax liens and levies, unrecorded at the
time of recording the notice unless the holder of any such
unrecorded interest or lien moves to intervene in such
proceedings within 30 days after the recording of the notice
and the court ultimately grants the motion. . . .

In Quadomain, this court stated:

Notices of lis pendens are recorded for two purposes: to protect
future purchasers or encumbrancers of the property from
becoming “embroiled” in the dispute, and to protect the
plaintiff from “intervening liens that could impair any property
rights claimed and also from possible extinguishment of the
plaintiff’s unrecorded equitable lien.”

103 So. 3d at 978-79 (quoting Fischer v. Fischer, 873 So. 2d 534, 536 (Fla.
4th DCA 2004)). Quadomain further stated: “One who purchases property
subject to a lis pendens ‘is bound by the judgment or decree rendered
against the party from whom he makes the purchases as much so as
though he had been a party to the judgment or decree himself.’” Id. at 979
(quoting Greenwald v. Graham, 130 So. 608, 611 (Fla. 1930)).

The trial court’s reliance on section 48.23(1)(d) and Quadomain is
misplaced as demonstrated by CitiMortgage, Inc. v. Flowers, 189 So. 3d
1032 (Fla. 4th DCA 2016). In Flowers, the trial court, relying on
Quadomain, vacated the bank’s final judgment of foreclosure on the
grounds that the trial court lacked subject matter jurisdiction. Id. at 1033.
This court reversed the order that vacated the bank’s final judgment,
explaining that “Quadomain does not control in this case because it applies

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to actions on interests which were unrecorded at the time of the initial lis
pendens.” Id. In Flowers, the bank’s mortgage was recorded years before
the association commenced its action. Id.

Like in Flowers, Quadomain does not apply to the instant case because
the mortgage here was recorded in 2005, which was thirteen years before
the Association commenced its receivership action. Thus, Christiana
Trust was not required to intervene within thirty days after the lis pendens
was recorded, which was before the mortgage had even been assigned to
Christiana Trust. 1

In conclusion, the trial court erred when it granted rehearing. The trial
court got it right initially when it vacated the equitable lien, terminated the
receivership, and found Christiana Trust was entitled to the safe harbor
protection provided for by section 718.116(1)(b)(1). As such, we reverse
the order granting rehearing and remand with directions to reinstate the
original judgment.

Reversed and remanded with instructions.

WARNER and GERBER, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

1 Further, pursuant to Flowers, the trial court erred in finding the foreclosure
court lacked subject matter jurisdiction, to the extent this issue was properly
before the trial court.

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