               NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
                      MOTION AND, IF FILED, DETERMINED


                                            IN THE DISTRICT COURT OF APPEAL

                                            OF FLORIDA

                                            SECOND DISTRICT


BONITA REAL ESTATE PARTNERS, LLC, )
a Florida limited liability company; ALICO )
RETAIL HOLDINGS, LLC, a Florida limited )
liability company; SCOTT A. CHAPPELLE, )
an individual; and CHARLES W. CROUCH, )
an individual,                             )
                                           )
               Appellants,                 )
                                           )
v.                                         )         Case No. 2D15-5492
                                           )
SLF IV LENDING, L.P., a Texas limited      )
partnership,                               )
                                           )
               Appellee.                   )
                                           )

Opinion filed July 14, 2017.

Appeal from the Circuit Court for Lee
County; John E. Duryea, Jr., Judge.

Christopher D. Donovan of Roetzel &
Andress, LPA, Naples, for Appellants.

Landis V. Curry, III, and Mark M. Wall of
Hill, Ward & Henderson, P.A., Tampa,
for Appellee.


MORRIS, Judge.

             The appellants—the borrowers and guarantors of a commercial real estate

loan—appeal a final judgment entered in favor of the lender, SLV IV Lending, L.P. The
trial court concluded that the parties agreed to apply Texas law to the lender's claim for

deficiency and that under Texas law, the appellants waived their right to challenge the

amount of the deficiency. We agree with the appellants' argument that the trial court

erred in applying Texas law because the loan documents state that Florida law applies

to foreclosures and the claim for deficiency in this case was a continuation of the

foreclosure. Accordingly, we reverse the decision of the trial court in that regard.

              I. Background

              In 2011, appellants Bonita Real Estate Partners, LLC, and Alico Retail

Holdings, LLC, (the borrowers) borrowed $6,100,000 from the lender to develop real

property in Lee County. The borrowers executed a promissory note and a mortgage,

and appellants Scott A. Chappelle and Charles W. Crouch (the guarantors) executed

guarantees by which they agreed to be personally liable for certain "recourse

obligations" under the note.

              The promissory note provided that the note and other loan documents

would be governed by Texas law but that Florida law would govern foreclosure:

              THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL
              BE GOVERNED BY, AND CONSTRUED, APPLIED AND
              ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
              STATE OF TEXAS AND APPLICABLE LAWS OF THE
              UNITED STATES OF AMERICA, WITHOUT REGARD TO
              CONFLICTS OF LAW, EXCEPT THAT THE LAWS OF THE
              STATE WHERE THE PROPERTY IS LOCATED (IF
              DIFFERENT FROM THE STATE OF TEXAS) SHALL
              GOVERN THE CREATION, PERFECTION, PRIORITY AND
              FORECLOSURE OF THE LIENS CREATED BY THE
              MORTGAGE ON THE PROPERTY OR ANY INTEREST
              THEREIN.

(Emphasis added.) The mortgage provides:




                                           -2-
              LENDER SHALL COMPLY WITH THE APPLICABLE LAW
              OF THE STATE OF FLORIDA, TO THE EXTENT
              REQUIRED IN CONNECTION WITH THE FORECLOSURE
              OF THE SECURITY INTERESTS AND LIENS CREATED
              HEREBY; PROVIDED, HOWEVER, THIS
              SUBSECTION SHALL IN NO EVENT BE CONSTRUED TO
              PROVIDE THAT THE SUBSTANTIVE LAW OF THE STATE
              OF FLORIDA SHALL APPLY TO THE OBLIGATIONS
              SECURED BY THIS MORTGAGE WHICH ARE AND
              SHALL CONTINUE TO BE GOVERNED BY THE
              SUBSTANTIVE LAW OF THE STATE OF TEXAS. THE
              PARTIES FURTHER AGREE THAT LENDER MAY
              ENFORCE ITS RIGHTS UNDER THIS MORTGAGE AND
              THE LOAN DOCUMENTS IN ACCORDANCE WITH THE
              LAWS OF THE STATE OF TEXAS.

(Emphasis added.)

              The mortgage and the guarantees also contain waivers of certain

remedies or defenses under Texas law. The mortgage provides that the borrowers

"waive[] all rights, remedies, claims and defenses based upon or related to [s]ections

51.003, 51.004 and 51.005 of the Texas Property Code to the extent the same pertains

or may pertain to any enforcement of the [n]ote, this [m]ortgage or any of the other

[l]oan [d]ocuments." And the guarantees provide that the guarantors "waive . . . any

and all rights under [s]ections 51.003, 51.004 and 51.005 of the Texas Property Code."

These statutes address deficiency judgments and permit a borrower or a guarantor to

request that the deficiency amount be offset by the fair market value of the property if

the fair market value is greater than the sale price of the property. Tex. Prop. Code

Ann. §§ 51.003, .004, .005 (West 2011). Thus, by waiving their rights under those

Texas statutes, the appellants waived their right to offset the deficiency by the fair

market value of the property, which is permitted under Texas law. See Moayedi v.




                                            -3-
Interstate 35/Chisam Rd., L.P., 438 S.W.3d 1, 6 (Tex. 2014). This is pertinent to the

issue on appeal which we address.

              The borrowers defaulted on the loan, and the lender filed an action in

Florida circuit court against the borrowers and the guarantors. The original complaint

alleged a count against the borrowers to foreclose on the mortgage (count I), a count

against the borrowers seeking money due on the promissory note (count II), and a

count against the guarantors seeking money damages pursuant to the terms of the

guarantees (count III). The trial court entered a judgment of foreclosure in favor of the

lender in the amount of $6,983,325 in May 2012, and in the judgment, the trial court

reserved jurisdiction for the entry of a deficiency judgment. A foreclosure sale was

conducted in June 2012, and the lender purchased the property for $91,200.

              In March 2013, in the same underlying foreclosure action, the lender filed

a motion for deficiency judgment pursuant to section 702.06, Florida Statutes (2012),

claiming that the "fair market value of the [m]ortgaged property on the date of the

foreclosure sale was less than the total indebtedness owed to [the lender] under the

[f]oreclosure judgment." The parties disputed whether the lender had already

foreclosed the development rights to the property, so the lender sought and obtained

permission to file an amended complaint to allege a count to foreclose against the

borrowers' non-real estate interests in the property, i.e., the development rights. The

dispute on that issue was resolved after a bench trial with the trial court concluding that

the development rights had been foreclosed in the prior judgment. Regarding the

lender's claim for deficiency, the appellants amended their answer and affirmative

defenses to argue that the property's value exceeds the indebtedness. The appellants




                                            -4-
asserted that the property was worth $7,550,000, whereas the lender argued that the

property was worth $4,500,000 and that the deficiency was $2,500,000.

              The lender's claims for damages against the borrowers under the note

(count III) and against the guarantors under the guarantees (count IV) were set for trial

in November 2014. In a brief filed before trial, the lender argued for the first time that

Texas law applies to the lender's claims to collect money damages on the debt. The

parties disputed whether Texas law applies to the lender's claims on counts III and IV

and for deficiency. If Texas law applies, the borrowers and guarantors waived their right

under Texas law to have the fair market value of the property considered when

determining the amount of deficiency. See Moayedi, 438 S.W.3d at 6. But if Florida law

applies, the borrowers and guarantors had not waived such right and could present

evidence concerning the property's fair market value. See Vantium Capital, Inc. v.

Hobson, 137 So. 3d 497, 499 (Fla. 4th DCA 2014) ("[O]nce the party seeking a

deficiency judgment introduces evidence of the foreclosure sale price, the burden shifts

to the judgment debtor to present evidence concerning the property's fair market value."

(quoting Liberty Bus. Credit Corp. v. Schaffer/Dunadry, 589 So. 2d 451, 452 (Fla. 2d

DCA 1991))). The appellants argued that Florida law should apply to the deficiency

claim because it is a continuance of the foreclosure and that the lender's reliance on

Texas law was not asserted in a timely manner. The trial court determined that Texas

law applies to the lender's claims for damages based on the language of the documents

and that while Florida law applies to the foreclosure, Texas law applies to the claim for

deficiency. The parties and trial court interpreted that ruling to mean that the appellants

could not present evidence of fair market value to offset the deficiency, since they had




                                            -5-
waived their right to do so in the language of the mortgage and guarantees. The trial

court also rejected the appellants' argument that the lender had waived its claim that

Texas law applies by not asserting it earlier in the proceedings.

              The appellants moved for reconsideration of the issue of whether Texas

law applies to the deficiency, and the trial court denied the motion. The trial judge then

granted the appellants' motion to disqualify her, and a new judge was assigned to the

case. The appellants asked the successor judge to reconsider the issue of whether

Texas law applies, and after two hearings, the judge denied the appellants' motion for

reconsideration, confirming the earlier ruling that Texas law applies.

              The lender then moved for partial summary judgment on counts III and IV,

claiming that Texas law applies to the damages portions of those claims and that the

appellants waived their right under Texas law to offset the fair market value against the

total indebtedness owed. The lender acknowledged that whether the appellants were

liable based on a recourse event would need to be determined at a trial. The trial court

entered an order granting partial summary judgment on the damages portions of counts

III and IV, concluding that pursuant to Texas law, the deficiency should be calculated as

the difference between the amount of the judgment of foreclosure and the bid price, with

the difference being $6,892,125.

              The trial court conducted a trial on whether recourse events had occurred

that would render the appellants liable, and the trial court found in favor of the lender on

those events. The trial court entered a forty-nine-page judgment detailing the full

recourse events and limited recourse events establishing liability on the part of the

appellants. The trial court found the appellants jointly and severally liable for the




                                            -6-
amount of $6,892,125 plus interest in the amount of $1,117,562.79, for a total

"deficiency" of $8,009,687.79.1

              II. Analysis

              The appellants argue that the trial court erred in applying Texas law to the

lender's claim for deficiency because the loan documents provide for the application of

Florida law to foreclosure and a claim for deficiency is a continuation of a claim for

foreclosure.2 The lender responds that it was pursuing its legal claims on the note and

guarantees and that its claims were not for a deficiency judgment. The lender also

argues that the parties agreed that its claims on the note and guarantees would be

governed by Texas law.

              We must first determine whether the final judgment entered is a deficiency

judgment. Typically, a judgment of foreclosure and the resulting sale of the property

encompass both the remedy at law and the equitable remedy of mortgage foreclosure.

Aluia v. Dyck-O'Neal, Inc., 205 So. 3d 768, 773 (Fla. 2d DCA 2016) (recognizing that

"the note and mortgage merge into the foreclosure judgment where the foreclosure suit

is both an action at law for the balance due under the note and an action in equity to

foreclose the mortgage"). But here, the count for foreclosure resulted in a judgment of

foreclosure in May 2012 and a foreclosure sale in June 2012, while the count on the

note did not proceed to trial until two years later, resulting in a final judgment exceeding

$8 million.


              1
                 The trial court also found that the appellants are liable for limited recourse
events in the amount of $192,943.53. The appellants do not challenge this amount or
the trial court's findings regarding the recourse events.
              2
                  We find no merit in the three other issues raised by the appellants on
appeal.


                                              -7-
              A party "has the right to pursue both a claim for foreclosure of the

mortgage and a claim for damages on the note." Hammond v. Kingsley Asset Mgmt.,

LLC, 144 So. 3d 673, 675 (Fla. 2d DCA 2014). However, "[i]t is axiomatic that a party

can only recover once on the same debt." Id. (quoting Century Grp., Inc. v. Premier Fin.

Servs. E., L.P., 724 So. 2d 661, 662 (Fla. 2d DCA 1999)); see Royal Palm Corp. Ctr.

Ass'n v. PNC Bank, N.A., 89 So. 3d 923, 933 (Fla. 4th DCA 2012) (recognizing that it is

impermissible for a judgment to "simultaneously allow[] the plaintiff to execute on the

money judgment and foreclose on the subject property"). Once the party has obtained

a foreclosure sale of the property, it cannot collect on the note other than to pursue the

appropriate deficiency amount. See Hammond, 144 So. 3d at 676.

              "A deficiency decree is one for the balance of the indebtedness after

applying the proceeds of a sale of the mortgaged property to such indebtedness."

L.A.D. Prop. Ventures, Inc. v. First Bank, 19 So. 3d 1126, 1127 (Fla. 2d DCA 2009)

(quoting Commercial Bank of Ocala v. First Nat'l Bank of Gainesville, 87 So. 315, 316

(Fla. 1920)). The lender in this case filed a motion for deficiency under section 702.06,

which authorizes a trial court to enter a deficiency decree "[i]n all suits for the

foreclosure of mortgages." Thus, while a judgment of foreclosure is a final order, " 'the

law contemplates a continuance of the proceedings for entry of a deficiency judgment'

as a 'means of avoiding the expense and inconvenience of an additional suit at law to

obtain the balance of the obligation owed by a debtor.' " Id. (quoting Timmers v. Harbor

Fed. Sav. & Loan Ass'n, 548 So. 2d 282, 283 (Fla. 1st DCA 1989)); see Grace v.

Hendricks, 140 So. 790, 794 (Fla. 1932) ("The order for deficiency judgment is so

dependent on, and merely ancillary to, the foreclosure and sale . . . ." (quoting City Bank




                                             -8-
of Portage v. Plank, 124 N.W. 1000 (Wis. 1910))). Indeed, a deficiency does not exist

without a foreclosure judgment and sale. See, e.g., Singleton v. Greymar Assocs., 882

So. 2d 1004, 1007 (Fla. 2004) ("[A] necessary predicate for a deficiency is an

adjudication of foreclosure." (quoting Capital Bank v. Needle, 596 So. 2d 1134, 1134

(Fla. 4th DCA 1992))); Chrestensen v. Eurogest, Inc., 906 So. 2d 343, 345 (Fla. 4th

DCA 2005) ("[T]here can be no action for a deficiency where there has been no

foreclosure judgment and sale.").

              We note that section 702.06 provides in relevant part that a party "shall

also have the right to sue at common law to recover [a] deficiency." The lender in this

case filed a motion for deficiency—and obtained a determination of deficiency—in the

same underlying foreclosure suit. Thus, it is clear in this case that "[t]he motion for

deficiency was a continuance of the foreclosure proceedings." L.A.D. Prop. Ventures,

Inc., 19 So. 3d at 1128; see also Timmers, 548 So. 2d at 283-84 (holding that "motion

for a deficiency was part in parcel to the foreclosure proceedings"). Thus, the final

judgment on the note in this case must be treated as a deficiency determination. This is

consistent with how the trial court treated the lender's claim for monetary damages,

referring to the amount as the "deficiency." The language of the note and the mortgage

provide that Florida law governs the foreclosure of the lien created by the mortgage,

and we conclude that this includes the lender's claim for deficiency. Thus, the trial court

erred in applying Texas law to the deficiency determination, and we reverse the portion

of the final judgment that determines the deficiency.

              The lender argues that its claims on the note and guarantees did not arise

out of the foreclosure. As discussed above, because the lender had already obtained a




                                            -9-
foreclosure and had purchased the property at a foreclosure sale, its claim for damages

on the note was limited to the amount of the deficiency.3 We recognize that the

borrowers' liability on the note had not been determined prior to the 2014 trial, which

resulted in the 2014 final judgment. But to the extent that the final judgment awards the

lender an amount due on the note, representing a difference between the sale price and

the indebtedness, that portion of the final judgment operates as a deficiency judgment.

Even if the final judgment were not considered a deficiency judgment or determination,

the final judgment in this case is the continuation of the lender's claim for "foreclosure,

which encompassed both a remedy at law and the equitable remedy of mortgage

foreclosure," Aluia, 205 So. 3d at 773, because the lender proceeded on the mortgage

and note and had already obtained a foreclosure judgment and sale. Either way, the

lender's claim on the note is part of the foreclosure in this case.

              We recognize that a party may pursue a claim on a guaranty along with a

foreclosure claim as long as the party has not received full satisfaction of either claim.

See Gottschamer v. August, Thompson, Sherr, Clark & Shafer, P.C., 438 So. 2d 408,

409 (Fla. 2d DCA 1983). However, the language of the guarantees in this case make

clear that the guarantees were made in connection with the note and mortgage and that

the guarantors are liable for the borrowers' "obligations . . . to [l]ender under the [n]ote,

[m]ortgage, and all other [l]oan [d]ocuments with respect to, and to the full extent of, any

and all losses, damages, costs, expenses, liabilities, claims or other obligations of, to,

incurred or suffered by [l]ender." On remand, the parties will have an opportunity to



              3
                 While the mortgage contained a waiver under Texas law of the borrowers'
right to offset the deficiency by the fair market value of the property, the note did not
contain such a waiver.


                                            - 10 -
address how a new determination on the issue of deficiency under Florida law affects

the lender's claims on the guarantees.

              Affirmed in part, reversed in part, and remanded for proceedings

consistent with this opinion.




LUCAS and BADALAMENTI, JJ., Concur.




                                         - 11 -
