Kahama VI, LLC v. Formoso et al

Filing 55

ORDER granting in part and denying in part 44 Motion for Default Judgment; adopting in part and rejecting in part 50 Report and Recommendations.. Signed by Judge Roy B. Dalton, Jr. on 9/17/2015. (VMF)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
KAHAMA HOLDINGS, LLC,
Plaintiff,
v.

Case No. 6:14-cv-496-Orl-37GJK

FORMOSO FAMILY LIMITED
PARTNERSHIP; VITA FORMOSO;
CACIOPPO & SON OF FLORIDA, INC.;
GIACINTO FORMOSO,
Defendants.
ORDER
This cause is before the Court on the following:
1.

Plaintiff’s Amended Verified Motion for Final Default Judgment (Doc. 44),
filed January 26, 2015;

2.

U.S. Magistrate Judge Gregory J. Kelly’s Report and Recommendation
(Doc. 50), filed May 19, 2015;

3.

Plaintiff’s Objections to the Report and Recommendations of the Magistrate
Judge (Doc. 51), filed June 3, 2015;

4.

Plaintiffs’ Notice of Its Corrections to its [sic] Objections to the Report and
Recommendations [sic] of the Magistrate Judge (Doc. 52), filed June 5,
2015;

5.

Plaintiffs’ Notice of Pending Amended Motion for Default Final Judgment
(Doc. 53), filed July 22, 2015; and

6.

Plaintiffs’ Second Notice of Pending Amended Motion for Default Final
Judgment (Doc. 54), filed September 1, 2015.

BACKGROUND
Plaintiff is an assignee of numerous notes and mortgages (“Instruments”), which
are secured by properties that it eventually purchased during foreclosure sales ordered
by the Circuit Court for the Seventh Judicial Circuit in and for Volusia County, Florida
(“State Court”). Plaintiff initiated this action to recover deficiency judgments against
Defendant Cacioppo & Son of Florida, Inc.—the debtor of the Instruments—and
Defendants Formoso Family Limited Partnership, Vita Formoso, and Giacinto Formoso—
the personal guarantors of the Instruments—resulting from the foreclosure sales of the
mortgaged properties. (Doc. 13.)
The operative pleading is Plaintiff’s sixteen-count Third Amended Complaint.
(Doc. 13.) After Defendants failed to answer the Third Amended Complaint, Plaintiff
moved for and received a clerk’s entry of default. 1 (Docs. 28–35.) Plaintiff now moves for
a final default judgment, asserting that it is entitled to a deficiency judgment against
Defendants because the fair market value of the properties at the time of the foreclosure
sales is less than the amount that Plaintiff is entitled to recover pursuant to the foreclosure
judgments. (Doc. 44 (“Motion”).) The Motion was referred to U.S. Magistrate Judge
Gregory J. Kelly, who recommends granting default judgment as to Counts 1–11, 13, and
16 2 and awarding Plaintiff a total of $1,685,762.87. (Doc. 50 (“R&R”).) Plaintiff objects to
the R&R. 3 (Doc. 51.)

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Plaintiff provided proof of service as to each Defendant. (See Docs. 19–22.)
Plaintiff withdrew its demand for a deficiency judgment as to Count XII, and thus
only seeks a deficiency judgment as to fifteen of the sixteen counts.2
3 Plaintiff does not object to Magistrate Judge Kelly’s recitations of the factual
allegations, which the Court adopts. (Doc. 50, pp. 1–3.)
2

2

STANDARDS
I.

R&R

When a party objects to a magistrate judge’s findings, the district court must “make
a de novo determination of those portions of the report . . . to which objection is made.”
28 U.S.C. § 636(b)(1). The district court “may accept, reject, or modify, in whole or in part,
the findings or recommendations made by the magistrate judge.” Id. The district court
must consider the record and factual issues based on the record independent of the
magistrate judge’s report. Ernest S. ex rel. Jeffrey S. v. State Bd. of Educ., 896 F.2d 507,
513 (11th Cir. 1990).
II.

Final Default Judgment

Pursuant to Federal Rule of Civil Procedure 55(b), the Court is authorized to enter
a final judgment of default against a party who has failed to plead in response to a
complaint. Fed. R. Civ. P. 55(b). By default, the defendants admit the plaintiff’s wellpleaded allegations of fact. Buchanan v. Bowman, 820 F.2d 359, 361 (11th Cir. 1987);
Nishimatsu Constr. Co. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).
However, the defendants are “not held to admit facts that are not well-pleaded or to admit
conclusions of law.” Buchanan, 820 F.2d at 361. Therefore, in considering a motion for
default judgment, the Court must “ensure that the well-pleaded allegations in the
complaint, which are taken as true due to the default, actually state a substantive cause
of action and that there is a substantive, sufficient basis in the pleadings for the particular
relief sought.” Tyco Fire & Sec., LLC v. Alcocer, 218 F. App’x 860, 863 (11th Cir. 2007).
“A default judgment must not differ in kind from, or exceed in amount, what is demanded
in the pleadings.” Fed. R. Civ. P. 54(c).

3

DISCUSSION
Plaintiff objects to three portions of the R&R, specifically the recommendations that
this Court: (1) deny the relief requested in Count 14; (2) deny the relief requested in Count
XV; and (3) limit Plaintiff’s recovery under Count XVI to his demand of $28,000.00 rather
than grant him the full deficiency of $110,000.00. 4 (Doc. 51.) The Court addresses each
objection below.
I.

Count 14
As to Count 14, Plaintiff seeks a deficiency judgment in the amount of

$569,291.30. 5 (Doc. 44, p. 16.) In support of its request, Plaintiff submits: (1) the subject
mortgage of Count 14 (Doc. 47-1 (“Count 14 Mortgage”)), which was secured by five
properties (“Count 14 Properties”); (2) the State Court foreclosure judgment as to the
Count 14 Mortgage in the amount of $1,663,291.30 (Doc. 47-4 (“Count 14 FJ”)); and
(3) alleged appraisals of the fair market value of the Count 14 Properties at the time of
the foreclosure sale, which Plaintiff erroneously contends total $1,100,000.00 in the
aggregate 6 (Docs. 47-5 to 47-9 (“Count 14 Appraisals”)).

4

The Court independently reviewed the non-objected to portions of the R&R
relating to Counts 1–11 and 13 for fairness and finds that they are due to be adopted.
See Fed. R. Civ. P. 72(b); 28 U.S.C. § 636(b)(1) (suggesting that a de novo review is only
required when a party objects to the proposed findings and recommendations); see also
Thomas v. Arn, 474 U.S. 140, 150–51 (1985) (concluding that R&Rs without objection
should be reversed only for clear error).
5 A deficiency judgment typically equals “the total amount listed in the final
judgment of foreclosure minus the fair market value of the property as of the foreclosure
sale date.” (Doc. 44, p. 16); see also Beach Cmty. Bank v. First Brownsville Co.,
85 So. 2d 1119, 1122 (Fla. 1st DCA 2012 (citing Morgan v. Kelly, 642 So. 2d 1117, 1117
(Fla. 3d DCA 1994)).
6 The Count 14 Appraisals actually total $1,078,000.00. (See Docs. 47-5–47-9.)
Plaintiff’s error resulted from a $24,000.00 overstatement as to the appraised value of
one of the Count 14 Properties. (Compare Doc. 44, p. 16, with Doc. 47-6, p. 1.)

4

Upon careful consideration of Plaintiff’s submissions, the Court agrees with
Magistrate Judge Kelly that three of the five legal property descriptions in the Count 14
Appraisals are inconsistent with the Count 14 Property descriptions in the Count 14
Mortgage and the Count 14 FJ. (Doc. 50, pp. 11, 14–15; compare Docs. 47-1, p. 1, and
47-2, p. 1, and 47-4, pp. 2–3, with Docs. 47-7, p. 2, and 47-8, p. 2, and 47-9, p. 2.) Plaintiff
objects on the ground that the appraisals are “undisputed, credible, logical and
reasonable.” (Doc. 51, p. 11.)
Even if Plaintiff’s characterization of the Count 14 Appraisals is accurate, Plaintiff’s
objections fail to address the underlying rationale of the R&R (see id. at 9–16), which is
that the differing property descriptions prevent the Court from determining the fair market
value of three of the five Count 14 Properties and, consequently, from determining the
deficiency. Thus, the Court rejects Plaintiff’s objection and agrees with Magistrate Judge
Kelly that Plaintiff’s Motion is due to be denied as to Count 14.
II.

Count 15
As to Count 15, Plaintiff seeks a deficiency judgment in the amount of

$1,078,092.36. (Doc. 44, p. 18.) In support of its request, Plaintiff submits: (1) the subject
mortgage of Count 15 (Doc. 47-11 (“Count 15 Mortgage”)), which was secured by five
properties (“Count 15 Properties”), (2) the State Court foreclosure judgment as to the
Count 15 Mortgage in the amount of $1,492,092.36 (Doc. 47-13 (“Count 15 FJ”)); and
(3) alleged appraisals of the fair market value of three of the Count 15 Properties at the
time of the foreclosure sale, which total $414,000.00 in the aggregate (Docs. 47-14 to
47-16 (“Count 15 Appraisals”)). 7
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The State Court judge noted that Plaintiff “holds a lien for the total sum due [under

5

Judge Kelly recommends that the Court decline to enter a deficiency judgment
because, “[w]ithout additional evidence regarding the value of [the non-appraised Count
15 Property for which Plaintiff holds a lien], the Court cannot accurately calculate the
deficiency.” (Doc. 50, p. 15.) Plaintiff objects on the ground that it did not request a
deficiency for the non-appraised property because it “sought no relief on the two
properties for which appraisals were omitted” since the Count 15 Mortgage was satisfied
as to those two properties. (Doc. 51, pp. 16–18.) Plaintiff, however, has not provided any
documentation evidencing the alleged release or satisfaction of the non-appraised
properties. It’s objection is, therefore, due to be overruled.
Alternatively, Plaintiff’s Motion as to Count 15 is due to be denied because only
two of the three Count 15 Appraisal property descriptions match the legal descriptions in
the Count 15 Mortgage and the Count 15 FJ. (Compare Docs. 47-11, p. 1, and 47-13,
p. 2, with Docs. 47-14, 47-15; compare Docs. 47-11, p. 1, and 47-13, p. 2, with
Doc. 47-16, p. 2.). Thus, Plaintiff’s request as to Count 15 suffers the same fatal flaw as
its request as to Count 14 because the Court cannot determine the appropriate amount
of the deficiency. Thus, the Motion is due be with denied with respect to Count 15.
III.

Count 16
As to Count 16, Plaintiff seeks a deficiency judgment in the amount of $28,000.00.

(Doc. 44, p. 18–19.) In support of its request, Plaintiff submits: (1) the subject mortgage
of Count 16 (Doc. 47-18 (“Count 16 Mortgage”)), which was secured by six properties
(“Count 16 Properties”), (2) the State Court foreclosure judgment as to the Count 16
Mortgage in the amount of $596,550.22 (Doc. 47-20 (“Count 15 FJ”)); and (3) appraisals

the Count 15 FJ]” on only four of the five Count 15 Properties. (Doc. 47-13, p. 2.)

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of the fair market value of the Count 16 Properties at the time of the foreclosure sale,
which total $485,000.00 in the aggregate (Docs. 47-21–47-23 (“Count 16 Appraisals”)).
Magistrate Judge Kelly correctly concluded that there was an actual deficiency in
the amount of $111,550.22. (Doc. 50, p. 12.) Nonetheless, he recommends limiting
Plaintiff’s recovery to the amount that Plaintiff requested in the Motion—$28,000.00. (Id.
at 12 n.14.) Plaintiff objects, arguing that it is entitled to recover the full amount of the
deficiency and it should not be limited to the amount requested in its Motion. (Doc. 51,
pp. 18–20.)
Plaintiff’s objection is due to be sustained. Although it only requested $28,000.00
in its Motion, Plaintiff alleged in the operative pleading that there is a “deficiency of at
least $133,000.00” with respect to Count 16. (Doc. 13, ¶ 216.) Plaintiff’s demand is only
limited by its pleadings. Fed. R. Civ. P. 54(c). Plaintiff is, therefore, entitled to a deficiency
up to $133,000.00, and the actual deficiency amount of $111,550.22 is well within that
limitation. Thus, Plaintiff is entitled to the full deficiency.
CONCLUSION
Accordingly, it is hereby ORDERED AND ADJUDGED:
1.

Plaintiff’s Objections to the Report and Recommendations of the Magistrate
Judge (Doc. 51) are SUSTAINED IN PART AND OVERRULED IN PART.
a.
b.

2.

Plaintiff’s objection as to Count 16 is SUSTAINED.
In all other respects, Plaintiff’s objections are OVERRULED.

U.S. Magistrate Judge Gregory J. Kelly’s Report and Recommendation
(Doc. 50) is ADOPTED IN PART AND REJECTED IN PART.
a.

Magistrate Judge Kelly’s recommendation that Plaintiff is limited to

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$28,000.00 as to Count 16 is REJECTED.
b.

In all other respects, the R&R is ADOPTED AND CONFIRMED and
made part of this Order.

3.

Plaintiff’s Amended Verified Motion for Final Default Judgment (Doc. 44) is
GRANTED IN PART AND DENIED IN PART.
a.

The Motion is GRANTED with respect to Counts 1–11, 13, and 16 in
the total amount of $1,769,313.09.

b.
4.

The Motion is DENIED with respect to Counts 14 and 15.

The Plaintiff is DIRECTED to submit a proposed final judgment in favor of
Plaintiff, against Defendants in the amount of $1,769,313.09.

5.

The Court reserves jurisdiction for purposes of considering any request for
fees, costs or post judgment interest upon proper motion in that regard.

DONE AND ORDERED in Chambers in Orlando, Florida, on September 17, 2015.

Copies:
Counsel of Record

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