Earlier this month the Sixth DCA reversed a circuit court judge in Lee County who found that a foreclosure brought by Cape Coral Loan Acquisitions (“Cape Coral”) was barred by the statute of limitations despite a settlement agreement which clearly prohibited the mortgagors from raising defenses in any foreclosure proceedings. Cape Coral Loan Acquisitions, LLC v. 924 Del Prado, LLC, No. 6D23-401, 2023 WL 6522743 (Fla. App. 6D Oct. 6, 2023). Cape Coral acquired multiple mortgage loans that 924 Del Prado, LLC and Diplomat Parkway, LLC (collectively “the Borrowers”), took out in 2006 to purchase and develop real property.[i]
After Cape Coral acquired the loans, the Borrowers defaulted by failing to make the payments required by the loans. In May 2013 Cape Coral and the Borrowers executed a settlement agreement which included a waiver of defenses provision, the pertinent portion of which stated: “[The Borrowers] shall not assert any defenses of any nature whatsoever under the Loan documents or to [Cape Coral’s] enforcement of any or all of the Loan Documents…”
In 2018, Cape Coral initiated foreclosure proceedings against the Borrowers because they stopped making the payments required by the settlement agreement. The Borrowers moved for summary judgment in the foreclosure proceedings asserting Cape Coral’s foreclosure was barred under Florida’s five-year statute of limitations[ii]. The lower court agreed and granted the Borrowers’ motion for summary judgment. Cape Coral appealed. The Sixth DCA explained that it reviewed the lower court’s decision “de novo,” meaning the usual deference or presumption of correctness given to the lower court’s decision did not apply.
The Court then pointed out that “[t]he cardinal rule of contractual construction is that when the language of the contract is clear and unambiguous, the contract must be interpreted and enforced in accordance with its plain meaning.”[iii] The Court explained that the statute of limitations was an affirmative defense, so the settlement agreement clearly prohibited Defendants from raising the five-year limitations period as a defense.[iv] The Court elaborated that to allow otherwise would “contradict” and “frustrate” the explicit terms of the settlement agreement.[v]
The Court reversed the summary judgment in favor of the Borrowers and remanded the matter for further proceedings. As discussed in previous articles, since the Sixth DCA is a newly established appellate district, it gets to set all its own precedent as long as (1) there is no prior precedent set by another Florida DCA, the Florida Supreme Court, or the United States Supreme Court, or (2) to the extent there is a conflict between the Florida DCAs. Although this was a relatively straight forward issue, it is encouraging that the new appellate district got it right.
[i] Cape Coral, at *1. All future references and quotations to this case are to this citation unless indicated otherwise.
[iii] Cape Coral, at *1 (quoting Columbia Bank v. Columbia Devs., LLC, 127 So. 3d 670, 673 (Fla. 1st DCA 2013)).
[iv] Cape Coral, at *2.
[v] Cape Coral, at *2 (cited authorities omitted).