       Third District Court of Appeal
                               State of Florida

                        Opinion filed November 23, 2016.
         Not final until disposition of timely filed motion for rehearing.

                               ________________

                               No. 3D15-1802
                         Lower Tribunal No. 12-43765
                             ________________


                       Rolando D. Rodriguez, et al.,
                                   Appellants,

                                        vs.

                              Ocean Bank, etc.,
                                    Appellee.



      An Appeal from the Circuit Court for Miami-Dade County, Antonio Arzola,
Judge.

     Perez & Rodriguez, and Javier J. Rodriguez, Johanna Castellon-Vega and
Freddy X. Muñoz, for appellants.

     Piedra & Associates and Jeremy A. Koss, for appellee.


Before SUAREZ, C.J., and SHEPHERD and SALTER, JJ.

     SALTER, J.
      Rolando D. Rodriguez and Patricia Caballero-Rodriguez appeal a summary

final judgment in favor of Ocean Bank (a) for a deficiency of $196,495.01

following a sale of the Rodriguezes’ property and (b) on the Rodriguezes’

counterclaims against Ocean Bank for wrongfully withholding most of the

insurance proceeds held by the Bank after the residence was damaged in a fire.

Applying the stringent standards of review applicable to summary judgments, we

find that the Rodriguezes’ affirmative defenses and counterclaims presented triable

issues of fact, and we reverse the summary final judgment.

      Factual and Procedural Background

      In 2007, the Rodriguezes purchased a home in Miami Beach. They secured

a residential first mortgage loan from Ocean Bank in the principal amount of

$840,000.00. On November 26, 2008, the home was destroyed by fire. The

Rodriguezes’ homeowner insurance policy with Citizens Property Insurance

Corporation ultimately paid $501,415.24 on the Rodriguezes’ claim. This amount

was paid into an escrow account at Ocean Bank pursuant to the following terms

within paragraph 5 of the mortgage:

      Unless Lender and Borrower otherwise agree in writing, any
      insurance proceeds, whether or not the underlying insurance was
      required by Lender, shall be applied to restoration or repair of the
      Property, if the restoration or repair is economically feasible and
      Lender’s security is not lessened. During such repair and restoration
      period, Lender shall have the right to hold such insurance proceeds
      until Lender has had an opportunity to inspect such Property to ensure
      the work has been completed to Lender’s satisfaction, provided that


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      such inspection shall be undertaken promptly. Lender may disburse
      proceeds for the repairs and restoration in a single payment or in a
      series of progress payments as the work is completed. Unless an
      agreement is made in writing or Applicable Law requires interest to
      be paid on such insurance proceeds, Lender shall not be required to
      pay Borrower any interest or earnings on such proceeds. Fees for
      public adjusters, or other third parties, retained by Borrower shall not
      be paid out of the insurance proceeds, and shall be the sole obligation
      of the Borrower. If the restoration or repair is not economically
      feasible or Lender’s security would be lessened, the insurance
      proceeds shall be applied to the sums secured by this Security
      Instrument, whether or not then due, with the excess, if any, paid to
      Borrower.

      In December 2008, and continuing through August 2011, the Rodriguezes

obtained permits, architectural plans, and contractor bids in order to rebuild their

home. Ocean Bank approved disbursement of a portion of the insurance proceeds

held in escrow by Ocean Bank, approximately $157,000.00, for that purpose.

During this period, the Rodriguezes continued to make the required payments on

the loan.1 Thereafter, however, Ocean Bank’s inspector estimated that the cost of

reconstruction would exceed the remaining insurance proceeds in escrow by

approximately $74,000.00. In a letter in October 2011, Ocean Bank notified the

Rodriguezes that Ocean Bank would not disburse additional funds until this



1 Any delays caused by Ocean Bank during this period resulted in additional
interest charged and collected by Ocean Bank. The interest paid by Ocean Bank
on the escrowed insurance proceeds (and merely added to the restricted account)
was approximately 0.5% per annum, while loan statements in the record indicate
the loan balance was accruing interest at a rate over 6% per annum greater than
that rate.

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alleged shortfall was deposited by them into the escrow account. The Rodriguezes

disagreed that there was a shortfall and declined to make such a payment.

      When the parties disagreed regarding Ocean Bank’s estimate and demand

for additional deposits to the escrow account, they began negotiations toward a

modification of the loan terms. Early in the negotiations, Ocean Bank’s legal

counsel and legal managing attorney noted in an email that the preliminary

negotiations were for settlement purposes only, and that nothing would be binding

“unless and until there is a written agreement between us which is executed by you

and your wife and by an officer of Ocean Bank.”

      On February 5, 2012, the parties entered into a Loan Modification

Agreement (the “LMA”) providing the following terms pertinent to this appeal:

      1. From October 2011, and for a period of three years, Ocean Bank was to

      reduce the interest rate on the loan to a fixed rate of 4.25% per annum.

      2.    The Bank would apply the entire remaining escrow balance,

      $348,794.20, to reduce the loan balance.2

      3.   The LMA provided “[e]xcept as stated herein, all of the terms,

      conditions, specific clauses, and paragraphs of the [mortgage] shall remain

      in full force and effect and are hereby ratified and confirmed,” and

2 Ocean Bank was to apply $340,000.00 to reduce principal and $8,794.20 to
reduce unpaid interest. The Rodriguezes were required to make a further payment
of outstanding interest from their own funds by January 1, 2012, and they made
that payment as well.

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        “[n]othing in this Agreement shall be understood or construed to be a

        satisfaction or release in whole or in part of the Note and [mortgage].”

What it did not include, however, was any waiver of claims, affirmative defenses,

or counterclaims by the Rodriguezes relating to the delays and demands made by

Ocean Bank regarding the escrowed insurance proceeds and the alleged cost to

complete construction.

        The LMA did not resolve the disagreements between the parties regarding

the path forward—whether to list the mortgaged property, including the permits

and construction documents, for sale,3 and whether Ocean Bank would seek a

deficiency judgment if the sale produced net proceeds insufficient to pay the

remaining balance of the loan in full. When further negotiations were unavailing,

the Rodriguezes began efforts to sell the property but stopped making interest

payments to Ocean Bank. Ocean Bank commenced an action to foreclose the

mortgage and to collect any deficiency under the promissory note in November of

2012.

        The following month, and without a waiver of rights by either side,4 the

Rodriguezes sold the property for $365,000.00, and Ocean Bank applied the net

3  A “short sale” ordinarily involves a consensual sale for a net proceeds amount
acknowledged by the lender and borrower/owner to be less than the outstanding
loan balance. Such agreements may or may not include an agreement by the lender
to waive any resulting deficiency.
4   The Bank approved the sale after obtaining a signed “Acknowledgment of

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proceeds to reduce the principal balance of the loan to approximately $150,000.00.

Ocean Bank then voluntarily dismissed its mortgage foreclosure count, but

continued to prosecute a deficiency claim under Count II, its claim under the note.

      In response, the Rodriguezes raised affirmative defenses and counterclaims

based on Ocean Bank’s alleged failure to mitigate damages, breaches of contract,

estoppel, and misrepresentation.

      Ocean Bank and the Rodriguezes filed cross-motions for summary judgment

and affidavits in opposition. In July 2015, the trial court heard the motions,

granted Ocean Bank’s motion, denied the Rodriguezes’ motion, and entered a final

summary judgment against the Rodriguezes for a total of $196,495.01.5 This

appeal followed.

      Analysis

      “In ruling on a motion for summary judgment, the trial court (and this Court

in its de novo review) must construe all the evidence, and draw every possible

inference therefrom, in a light most favorable to the non-moving party.” JVN



Borrower(s)” in which the Rodriguezes agreed that Ocean Bank was not waiving
any rights to claim a deficiency judgment against them following the sale.
Importantly, however, the “Acknowledgment” did not include any term whereby
the Rodriguezes released or waived any of their rights or remedies against Ocean
Bank.
5The final summary judgment also denied any relief to the Rodriguezes under their
counterclaims.

                                         6
Holdings, Inc. v. Am. Constr. & Repairs, LLC, 185 So. 3d 599, 600 (Fla. 3d DCA

2016).

      The affidavits of the Rodriguezes in opposition to Ocean Bank’s motion for

summary judgment provide a chronology of Ocean Bank’s control over their

insurance proceeds: the Bank’s early determination that the rebuilding effort was

economically feasible and disbursement of limited funds from the restricted escrow

account; the alleged incorrectness of the Bank’s inspector’s construction cost

estimates; the allegedly improper demand for the Rodriguezes to deposit additional

funds to the restricted account before any disbursements would be allowed; the

effect of Ocean Bank’s delays on the mounting loan balance; and the Rodriguezes’

ultimate loss of their own personal funds used to keep interest current and to fund

preconstruction expenses that were not released by Ocean Bank from the restricted

escrow account.

      Regarding the question of whether the 2012 LMA amounted to a release or

waiver of the Rodriguezes’ claims, affirmative defenses, and counterclaims against

the Bank, the Rodriguezes’ affidavits denied any intention to release or waive their

rights, and they pointed to the terms of the LMA which left Ocean Bank in the

same position (i.e., not waiving or releasing Ocean Bank’s claims or defenses vis-

à-vis the Rodriguezes).




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         In contrast, the Ocean Bank officer’s affidavit in support of Ocean Bank’s

motion for summary judgment conceded the central chronology of facts pertaining

to the escrowed insurance proceeds and the refusal to make further disbursements.

In support of Ocean Bank’s “release or waiver” position, the officer’s affidavit

referred to and attached emails “making three settlement proposals.” Any such

proposals were not, of course, admissible6 or eligible for consideration as

“summary judgment evidence” under Florida Rule of Civil Procedure 1.510(c).

Moreover, and as already noted, the Bank’s legal counsel and legal managing

attorney had noted at the outset of those email communications that the

preliminary negotiations were for settlement purposes only, and that nothing would

be binding “unless and until there is a written agreement between us which is

executed by you and your wife and by an officer of Ocean Bank.”

         Turning next to the central question—whether the LMA or short sale

“Acknowledgment of Borrower(s)” effected a release or waiver of the

Rodriguezes’ claims, affirmative defenses, and counterclaims, it is apparent that

they did not. “[W]aiver is the intentional or voluntary relinquishment of a known

right.” Popular Bank of Fla. v. R.C. Asesores Financieros, C.A., 797 So. 2d 614,

619 (Fla. 3d DCA 2001). In order to constitute an express waiver of rights in a

contract, the language must be clear and unambiguous, or sufficient to lead to no


6   § 90.408, Fla. Stat. (2012).

                                          8
other conclusion. De Campos v. Ferrara, 90 So. 3d 865, 869 (Fla. 3d DCA 2012).

Waiver by conduct, on the other hand, is an issue for the finder of fact on a record

such as this. Popular Bank, 797 So. 2d at 619; Clear Channel Metroplex, Inc. v.

Sunbeam Television Corp., 922 So. 2d 229, 232 (Fla. 3d DCA 2005).

      Typically, a loan modification, forbearance, or so-called “workout

agreement” like the LMA includes explicit waiver and release provisions

signifying that the borrowers are abandoning any claims and defenses that relate to

acts and omissions pre-dating the agreement. See In re Holywell Corp., 49 B.R.

694 (Bankr. S.D. Fla. 1985). In the present case, however, Ocean Bank was

careful to preserve its pre-existing rights under the loan documents, and it did not

require the Rodriguezes to waive or release their own claims relating to pre-LMA

matters.   Each side agreed to certain terms in order to reduce the sum in

controversy and eliminate certain issues, but each side also preserved its respective

right in the future to prosecute a deficiency claim (Ocean Bank) or to oppose that

claim and seek damages for prior wrongful acts (the Rodriguezes).

      Lender liability for the wrongful refusal to disburse funds, imposition of

extra-contractual conditions, or delay of construction is now an established feature

of Florida law. See generally Florida Real Property Litigation §§ 8.32, 8.42, 8.44

(6th ed. 2011); Lentz v. Cmty. Bank of Fla., Inc., 41 Fla. L. Weekly D629 (Fla. 3d

DCA Mar. 9, 2016). Although we express no opinion regarding the merits of the



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Rodriguezes’ affirmative defenses and counterclaims, those pleadings are not

insufficient as a matter of law,7 they were supported by competent affidavits in

opposition to the Bank’s motion for summary judgment, and they establish genuine

issues of material fact for resolution at trial.

       The summary final judgment is reversed and remanded for further

proceedings consistent with this opinion.




7  The trial court denied Ocean Bank’s motion to strike five of the Rodriguezes’
eight amended affirmative defenses and denied Ocean Bank’s motion to dismiss as
to all three of their counterclaims.

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