FLORIDA’S SECOND DCA REVERSES DISMISSAL OF ACTION ON THE NOTE FINDING FACTUAL ISSUES PREVENTED SUMMARY JUDGMENT

Last month Florida’s Second DCA reversed a summary judgment order which dismissed an action on a note filed by multiple lenders (“the Shanks”) against a borrower (“Bergerman”) due to the running of the statute of limitations. Shanks v. Bergerman, 2D20-3431, 2022 WL 257460 (Fla. 2d DCA Jan. 28, 2022). By way of history, in August 2005, the Shanks agreed to lend Bergerman $286,000. The transaction was memorialized by a one-year, interest-only note (“the Note”) which the parties executed on August 23, 2005, and which matured on September 1, 2006.[i]

It was undisputed that Bergerman stopped making payments on the note; however, the parties disputed the date of the last payment. As a result of the default, in January 2013, the Shanks filed a multiple count[ii] complaint against Bergerman which included a count for breach of the Note. The Shanks alleged that Bergerman failed to make the April 2008 payment and that “up until the April 2008 default, Bergerman’s payments and the Shank’s acceptance of such payments constitute[d] assent by the parties of a continuing agreement.” Bergerman countered via an affirmative defense that the Shanks’ action on the Note was barred by the five-year statute of limitations. Bergerman asserted he made his last payment on the Note in September 2006 and that the parties never agreed to extend the maturity date of the Note. Based on these allegations, Bergerman moved for summary judgment seeking dismissal of the Shanks’ action on the Note.

The Shanks opposed summary judgment via an affidavit which included copies of checks from Bergerman which reflected he made payments on the Note between March 2007 and February 28, 2008. The Shanks also asserted the parties agreed to extend the maturity date of multiple loans, including the subject Note. The circuit court conducted a hearing on Bergerman’s summary judgment motion and granted the motion on the basis that “there was no written and recorded agreement extending the maturity date” of the Note.[iii] The Shanks’ appealed that decision to the Second DCA.

The Second DCA explained that the Note was a negotiable instrument governed by chapter 673 [of] Florida’s Uniform Commercial Code.”[iv] That chapter deferred to Chapter 95 of the Florida Statutes as to when an action to enforce a note must be commenced. Chapter 95 “provides that the statute of limitations on a written contract is five years, but…[that period] is tolled for five years from ‘[t]he payment of any part of the principal or interest of any obligations…founded a written instrument.’”[v] The Court explained the limitation period for an action on a note is tolled even if a payment “is made after the maturity date of the note.” Importantly, the Court noted the statute did not require a written agreement to extend the limitation period.

During the summary judgment proceedings, the parties proffered conflicting evidence regarding when Bergerman made his last payment on the Note. The Shanks presented checks – each one for $10,000 – received from Bergerman and claimed those payments were accepted as payment for the Note in question as well as Bergerman’s other loans.  Bergerman argued he made no payments on the Note after September 2006[vi] and the $10,000 checks were to pay a completely different loan. The DCA explained that the conflicting allegations regarding the payments constituted a disputed issue of material fact “for the trier of fact to resolve.”[vii] That disputed fact prevented summary disposition. The Court also concluded that “the trial court’s conclusion that the maturity date of the debt could only be extended via a written and recorded agreement” was “erroneous as a matter of law.” The pertinent statute, § 95.051(1)(f), did not require a written or recorded agreement to extend the maturity date of the Note.

The DCA reversed the summary judgment order to the extent it dismissed the Shanks’ action on the Note. The Court indicated “the trier of fact” would need to determine two factual issues: (1) Whether “payments made beyond the promissory note’s maturity date” pertained to the Shanks’ Note and (2) Whether those payments tolled the statute of limitations. The Court remanded the matter for further proceedings consistent with its holding.

[i] Shanks, at *1. All subsequent citations or quotations from this case are to this cite until indicated otherwise.

[ii] The complaint consisted of twelve counts which pertained to five different promissory notes. Only one of the counts, pertaining to the $286,000 note, is addressed in this article. Shanks, at *1 n1.

[iii] Shanks, at *2. All subsequent citations or quotations from this case are to this cite until indicated otherwise.

[iv] Shanks, at *3. All subsequent citations or quotations from this case are to this cite until indicated otherwise.

[v] § 95.051(1)(f), Florida Statutes.

[vi] Shanks, at *1.

[vii] Shanks, at *4. All subsequent citations or quotations from this case are to this cite until indicated otherwise.