Wells Fargo Bank, National Association v. Jones et al

Filing 29

RULING granting in part and denying in part 14 Motion to Dismiss Complaint, or Alternatively, Abate the Action, or Transfer Venue. The matter is STAYED and ADMINISTRATIVELY CLOSED, without prejudice, to be re-opened if necessary. Signed by Judge James J. Brady on 5/5/2014. (LLH)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
WELLS FARGO BANK,
NATIONAL ASSOCIATION
CIVIL ACTION
VERSUS
NO. 13-822-JJB-SCR
THEODORE JONES AND
DANIEL FITZPATRICK
RULING
This matter is before the Court on the Defendant Theodore Jones’ Motion (doc. 14) to
Dismiss Complaint, or Alternatively, Abate the Action, or Transfer Venue. The Plaintiff Wells
Fargo Bank, National Association (“Wells Fargo”) opposes the motion. (Doc. 25). Jurisdiction is
based on 28 U.S.C. § 1332.
This case arises out of the foreclosure of a piece of property located in Florida. On
December 16, 2005, the defendants executed a promissory note for $3,747,858.72 in favor of
Wachovia Bank, National Association (“original lender”), which subsequently merged with the
Defendant Wells Fargo. (Doc. 2, p. 2–3). The note had a maturity date of January 14, 2009.
(Doc. 2, p. 3). Furthermore, the note was secured by a mortgage covering and affecting the
defendants’ interest in property located in Okaloosa County, Florida. (Doc. 2, p. 4). However, on
September 15, 2008, the original lender issued a Notice of Intention to Foreclose, based on the
defendants’ failure to pay $99,657.92 in principal and interest. Id. As the defendants failed to
cure the default, the original lender “accelerated the indebtedness owed pursuant to the [n]ote
and [m]ortgage,” and instituted foreclosure proceedings in a Florida state court. (Doc. 2, p. 4–5).
Accordingly, on January 28, 2010, the Okaloosa County property was sold at foreclosure for
$646,400. (Doc. 2, p. 5). At the time of foreclosure, the appraised value of the property was
$1,360,000. (Doc. 2, p. 5).
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Subsequently, the plaintiff instituted the present proceedings, seeking a judgment for the
deficiency balance due on the note. According to the plaintiff, the principal balance on the note
at the date of foreclosure was $3,728,915.26. (Doc. 2, p. 5). The plaintiff claims that the
defendants refused to pay the post-foreclosure deficiency amount of $2,368,915.26, which is the
principal balance owed less the appraised value of the property at the time of foreclosure.
Thereafter, Defendant Theodore Jones filed the pending motion. The defendant’s argument is
primarily based on the fact that in the Florida state court’s document entitled “Summary Final
Judgment of Foreclosure and Reformation of Mortgage and Deed,” the Florida state court
provided that “[j]urisdiction over this action is retained to enter such further orders as may be
necessary and proper, including the entry of a deficiency decree with reasonable attorneys’
fees when and if such deficiency decree shall appear proper.” (Doc. 14-1, p. 13) (emphasis
added). Nevertheless, the plaintiff opposes the motion and avers that the present action is proper
in this Court.
Neither party disputes that Florida law governs this diversity action. Under Florida law, a
court in a suit for foreclosure has the discretion to institute a deficiency decree in those same
proceedings. Fla. Stat. § 702.06. Specifically, the relevant statute provides:
In all suits for the foreclosure of mortgages heretofore or hereafter executed the
entry of a deficiency decree for any portion of a deficiency, should one exist,
shall be within the sound discretion of the court; however, in the case of an
owner-occupied residential property, the amount of the deficiency may not exceed
the difference between the judgment amount, or in the case of a short sale, the
outstanding debt, and the fair market value of the property on the date of sale. For
purposes of this section, there is a rebuttable presumption that a residential
property for which a homestead exemption for taxation was granted according to
the certified rolls of the latest assessment by the county property appraiser, before
the filing of the foreclosure action, is an owner-occupied residential property. The
complainant shall also have the right to sue at common law to recover such
deficiency, unless the court in the foreclosure action has granted or denied a claim
for a deficiency judgment.

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Id. (emphasis added). The plaintiff contends that “[w]hile it did pray for a deficiency judgment in
its complaint filed in the Foreclosure Suit [in Florida], Plaintiff never set the deficiency process
‘in motion’ after the foreclosure sale and the Court never adjudicated said deficiency.” (Doc. 25,
p. 10). Accordingly, the plaintiff contends that it should be allowed to proceed with its deficiency
claim in the present action. In support, the plaintiff analogizes to a Florida Supreme Court case,
where the court analyzed a prior version of the same law and provided that it understood “the
law to be that where there is no prayer for a deficiency and where one is not sought or entered in
the foreclosure proceeding the law courts may be resorted to to recover one.” Red v. Miami
Studio Properties, 190 So. 505, 506 (Fla. 1939). Similarly, the court found that a lender is not
precluded from an action at law to recover a deficiency if “the chancellor is importuned to enter
it and declines to consider the question or to make any ruling thereon.” Id. As a result, the
plaintiff contends that it has the legal ability to proceed with the present action, as the Florida
court that presided over the foreclosure proceedings has not ruled as to the deficiency decree.
Nevertheless, that same Florida Supreme Court also found that:
When the complainant filed his bill in equity to foreclose the mortgage and
therein prayed for a deficiency decree, he elected that forum in which to have
his right adjudicated and became bound by that choice. He was not
compelled to invoke the jurisdiction of the chancery court for a deficiency
decree having the force and effect of a judgment; but, having done so, he
precluded himself from invoking the same or any other jurisdiction to
enforce the payment of the claim upon which he sought that decree, at least
until such time as the chancellor had determined whether or not he would
assume to exercise the jurisdiction of determining whether or not a
deficiency decree should be entered; and, if the chancellor in due course should
assume jurisdiction to determine that issue, and should hold that the complainant
was not entitled to a deficiency decree in any amount, the complainant would be
barred by such decree from attempting to enforce his claim in any other
jurisdiction. Or, if the chancellor, assuming jurisdiction to determine that matter,
should grant a deficiency decree in any amount, the parties would be bound by
that decree, unless it should be reversed on appeal.

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Provost v. Swinson, 146 So. 641, 643 (Fla. 1933). The plaintiff readily admits that it prayed for a
deficiency judgment in the foreclosure suit. (Doc. 25, p. 10). However, it attempts to overcome
this fact by providing that it “never set the deficiency process ‘in motion’ after the foreclosure
sale.” Id. Clearly, this is not a case where the Florida court refused to rule on the deficiency
decree. Instead, this is a situation where the plaintiff initially prayed for a deficiency decree in
the Florida foreclosure proceeding, and the Florida court retained jurisdiction over the entry of a
deficiency decree after rendering the foreclosure judgment.1 At that point, the plaintiff decided to
refrain from putting the deficiency process—which he originally prayed for—“in motion,” and
instead, began to shop for a different forum to render the deficiency decree. See id. This Court
finds that the Florida law providing the lender with “the right to sue at common law to recover
such deficiency” was never meant to apply to the present situation. Fla. Stat. § 702.06. Instead, it
was meant to apply to situations where a Florida court, in its sound discretion, refused to or
failed to consider a deficiency decree. See id. As the Florida Supreme Court previously provided,
the plaintiff chose to pray for a deficiency decree in the Florida foreclosure suit, and as a result, it
“became bound by that choice” and “precluded . . . from invoking the same or any other
jurisdiction to enforce the payment of the claim upon which [it] sought that decree.” Provost,
146 So. at 643. Accordingly, the Court will stay the present proceedings, pending further action
in the Florida foreclosure suit.
Accordingly, the Court GRANTS IN PART AND DENIES IN PART the Defendant
Theodore Jones’ Motion (doc. 14) to Dismiss Complaint, or Alternatively, Abate the Action, or

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The plaintiff argues that this is form language “found in the approved form for final disclosure judgments.” (Doc.
25, p. 11). Regardless, there is no doubt that the language was included in the “Summary Final Judgment of
Foreclosure and Reformation of Mortgage and Deed” document, and just because the language is stock language
does not mean that the Florida court intended it to have no effect.

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Transfer Venue. The matter is STAYED and ADMINISTRATIVELY CLOSED, without
prejudice, to be re-opened if necessary.
Signed in Baton Rouge, Louisiana, on May 5, 2014.

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JUDGE JAMES J. BRADY
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

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