GULLIVER v. TEXAS COMMERCE BANK

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Docket Number

No. 5D00-2113.

Attorney(S)

Daniel P. Rock, New Port Richey, for Appellant. Sandra H. W. Hankin and Avi J. Litwin, of Marc A. Ben-Ezra, P.A., North Miami Beach, for Appellee.

Judges

William D. Palmer

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Smart Summary

Factual and Procedural Background

This case arises from a foreclosure action initiated by Texas Commerce Bank (Appellee) against Rosemarie Dinardi Gulliver and others (Appellants) based on an alleged default on a mortgage loan. The bank obtained the mortgage through assignment and claimed the loan was one month in default at that time. Although the bank notified appellants of delinquency in September 1997, it accepted payments thereafter but placed them in a "suspense" account without applying them to the debt or notifying appellants of this treatment.

The bank filed a foreclosure complaint on February 4, 1998, alleging no payments had been made since June 1997. The appellants, represented by attorney Boncek, answered and asserted a meritorious defense that payments had been made up to and after the filing. The bank moved for summary judgment, supporting its motion with affidavits denying payments, while appellants countered with affidavits and partial check copies evidencing payments. The bank later filed a supplemental affidavit admitting receipt of additional payments but maintained there was still a delinquency.

During the proceedings, appellants’ counsel left his firm and moved to a new office. The bank sent notice of the summary judgment hearing to the attorney’s old address and, upon being informed, sent notice directly to appellants. No one appeared for appellants at the summary judgment hearing, and there is no record that appellants received notice of the final judgment or the foreclosure sale date. The trial court denied relief from judgment, finding no meritorious defense and that a deficiency existed justifying foreclosure.

Legal Issues Presented

Whether the appellants were entitled to relief from judgment under Florida Rule of Civil Procedure 1.540(b) based on mistake, inadvertence, surprise, or excusable neglect.
Whether the trial court erred in granting summary judgment despite appellants’ affidavit asserting a meritorious defense of payment.
Whether the lack of proper notice to appellants’ counsel of the summary judgment hearing was fatal to the foreclosure proceeding.
Whether the trial court improperly considered appellee’s untimely supplemental affidavit in ruling on summary judgment.

Arguments of the Parties

Appellants' Arguments

Appellants asserted a meritorious defense that they had made all required payments, supported by affidavits and copies of checks endorsed by appellee.
They contended that the trial court erred in granting summary judgment because disputed facts regarding payments existed and should not have been resolved without a hearing.
Appellants argued that they were deprived of proper notice of the summary judgment hearing and subsequent foreclosure sale, violating procedural requirements.
They sought relief from judgment under Rule 1.540(b) due to mistake, inadvertence, surprise, or excusable neglect, particularly emphasizing the lack of notice and ineffective legal representation.

Appellee's Arguments

Appellee maintained that the mortgage was in default by one month at the time of assignment and that no payments were made after June 1997, as initially sworn.
Appellee acknowledged receipt of some payments after September 1997 but claimed the account remained delinquent.
They argued that notice was properly given to appellants’ counsel by sending it to the law firm’s last known address, fulfilling procedural requirements.
Appellee relied on a supplemental affidavit filed shortly before the summary judgment hearing to support their position that default persisted.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Marlar v. Quincy State Bank, 463 So.2d 1233 (Fla. 1st DCA 1985)	Requirements for filing supplemental affidavits before summary judgment; must have written stipulation or court leave after notice and hearing.	The court adopted the principle that the trial court erred by considering appellee’s untimely supplemental affidavit without proper leave or stipulation, mandating reversal.
Nelson v. Balkany, 620 So.2d 1138 (Fla. 3d DCA 1993)	Policy that opposing party must be given adequate time to respond to supplemental affidavits.	Supported the reasoning that the trial court’s acceptance of the supplemental affidavit without proper procedure was improper.
Coastal Caribbean Corp. v. Rawlings, 361 So.2d 719 (Fla. 4th DCA 1978)	Same as Nelson: ensuring fairness and adequate response time in summary judgment proceedings.	Reinforced the procedural safeguards required before considering supplemental affidavits in summary judgment.

Court's Reasoning and Analysis

The court identified multiple procedural and substantive errors in the trial court’s handling of the foreclosure matter. First, it held that the lack of proper notice to appellants’ counsel was fatal because notice to the client alone does not substitute for required notice to counsel, especially in summary judgment proceedings where the client typically does not appear. The court emphasized that appellee’s knowledge of counsel’s new address imposed a duty to send notice there.

Second, the court found that the summary judgment was premature and inappropriate because there was a genuine dispute of material fact regarding whether payments had been made, constituting a meritorious defense. The appellants’ sworn affidavit that they were not in default conflicted with appellee’s affidavits, and such factual conflicts are not resolved by summary judgment.

Third, the concurring opinion stressed that the trial court improperly considered appellee’s supplemental affidavit filed shortly before the hearing without proper leave or stipulation, violating procedural rules designed to ensure fairness. This procedural error alone justified reversal.

Overall, the court concluded that the trial court abused its discretion by denying relief from judgment under Rule 1.540(b) and by granting summary judgment without proper notice and without resolving factual disputes in favor of appellants.

Holding and Implications

REVERSED.

The court reversed the summary judgment and the denial of relief from judgment, thereby restoring appellants’ opportunity to defend against foreclosure on the merits. The decision underscores the necessity of proper notice to counsel, adherence to procedural rules regarding affidavits in summary judgment proceedings, and the requirement that disputed factual issues be resolved at trial rather than on summary judgment. No new legal precedent was established; rather, the court applied established principles to correct procedural and substantive errors in this case.

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Rosemarie Dinardi GULLIVER, etc. et al., Appellant, v. TEXAS COMMERCE BANK, National Association, Appellee.

HARRIS, J.

This is a case in which bad lawyering, no lawyering and a lack of notice resulted in appellants losing their property to foreclosure. Appellants appeal the refusal of the court to give them relief from judgment due to "mistake, inadvertence, surprise, or excusable neglect." Rule 1.540(b), Fla. R. Civ. P.

Appellee obtained the mortgage herein through assignment. At the time of the assignment, appellee claims, the mortgage was one month in default. Appellee notified appellants of the delinquent status of the loan by letter in September, 1997. However, appellee admits receiving (and retaining in a "suspense" account) payments subsequent to that date without notifying appellants that their payments were being accepted for deposit but not applied to the debt.

On February 4, 1998, the bank filed a complaint to foreclose on the property secured by the mortgage. It alleged under oath that no payments had been made on the account since the June 1997 payment. Appellants retained Lawyer Boncek to represent them and he answered the complaint and alleged the affirmative defense of payment of all monthly obligations up to and following the filing of the foreclosure action.

Appellee moved for summary judgment swearing that no payments had been made since the June payment. Appellants responded with their affidavit disputing this allegation and set out the payments made by them, attaching copies of several of the checks sent to appellee showing appellee's endorsement. Appellee then filed a "supplemental" affidavit admitting that while some additional payments had been made, the account was always delinquent by a month or so. This affidavit reveals thatmany payments were received from appellants and retained by the bank in a "suspense" account. It also reveals that while appellee "attempted to contact the borrower," its calls were not returned. Therefore, instead of sending notice (as it did the default notice) by mail, it merely continued to deposit the payments made by appellants.

We agree with the concurring opinion that the supplemental affidavit filed shortly before the hearing should not have been considered. It is not clear, however, whether that affidavit was material in the court's decision. It is true that the court referred to the supplemental affidavit in stating that even if appellants' affidavit were taken as true, still payments were missed based on appellants' attachments. But the failure of appellant to attach proof of all their claimed payments was sufficiently clear from the record without the supplemental affidavit.

During this period of time, Boncek left the firm formerly representing appellants and took the file with him to south Florida. Appellee learned of this move and had contact with Boncek at his new office. However, when appellee filed its notice of the summary judgment hearing, it sent notice to Boncek at "an old address." When notified that the notice should be sent to Boncek's new address, appellee responded by sending a copy of the notice directly to appellants. No one appeared for appellants in proceedings regarding the motion for summary judgment. And there is no indication in the record that a copy of the final summary judgment or the notice setting the sale date were provided to appellants. A copy of the judgment was sent to Boncek's "old address", but it is uncertain whether the "Notice of Foreclosure Sale" was sent with the judgment.

The concurring opinion concludes that since Boncek responded on behalf of his law firm, it was the law firm and not Boncek which was counsel of record and that unless there was a substitution of counsel properly filed then notice to the firm would be sufficient even if plaintiff's lawyer knew that Boncek had gone on his own and taken the client with him. Fla. R. Civ. P. 1.080(b) requires that service be made to the attorney's "last known address." In this case, there is no question that plaintiff's counsel knew that the law firm no longer represented the client and had actually had contact with Boncek's office at his new location.

The lack of notice is fatal in this case. The mere fact that a copy of a notice of hearing is sent to a represented client does not relieve the adverse party from notifying counsel of the hearing. A represented party rarely attends a hearing on summary judgment. Therefore, notice to the client is not an acceptable substitute for the required notice to opposing counsel.

Even without the notice problem, this case simply was not ripe for summary judgment. The court denied relief apparently for two interrelated reasons. First, there was no showing of a meritorious defense; two, the evidence presented (some of the alleged payments were not evidenced by copies of the checks) convinced the court that there existed a deficiency in the account justifying foreclosure. The judge overlooked the meritorious defense pleaded and asserted by affidavit at the time of the hearing on summary judgment. Having made all payments of the monthly obligations is a meritorious defense. The sworn testimony (affidavit) before the judge at the time of the hearing was "[t]he defendants . . . have made all payments and are NOT in default of the terms and conditions of the note and mortgage herein." The fact that copies of only some of the checks were attached to the affidavit does not defeat the factual issue of payment raised herein. Obviously appellants' sworn statement that they were not in default conflicts with the initial sworn statement of appellee's witness that no payment had been made since June 1997 and with appellee's supplemental affidavit that although it indeed received additional payments, a default still existed. Disputed facts are not to be resolved by summary judgment. Had appellants' attorney been notified of the hearing and attended, he might well have pointed this out to the court. Further, since the court improperly decided to weigh the evidence at this summary judgment hearing, had appellants' counsel been present he might have brought copies of the missing checks and money orders with him. Because we find that the trial court abused it discretion in not granting relief in this matter, we reverse the summary judgment.

REVERSED.

THOMPSON, C.J., concurs.

PALMER, J., concurs specially, with opinion.

PALMER, J., concurring specially.

Although I agree with the majority that the trial court erred in denying appellant's motion for relief from judgment, I do not agree that the lack of notice is fatal to the case. Rather, in my view, what mandates reversal is that, in denying appellant's motion, the trial court improperly considered appellee's untimely filed supplemental affidavit.

With regard to the notice issue, the original appearance on behalf of appellant was made by "Law Offices of Dale L. Burnstein By Attorney Edward Boncek, Esq." No substitution of counsel or change of address was filed with the trial court at any time prior to the entry of its final summary judgment. As a result, the law office of record received notice of the summary judgment hearing. Accordingly, relief from judgment was not warranted on the notice issue.

The fatal flaw mandating reversal emanates from the trial court's decision to enter summary judgment based upon information set forth in appellee's supplemental affidavit, filed five days before the summary judgment hearing. Although Florida Rule of Civil Procedure 1.510(e) states that the trial court "may permit affidavits to be supplemented" by further affidavits, the rule does not set forth a time frame or procedure for doing so. In Marlar v. Quincy State Bank, 463 So.2d 1233 (Fla. 1st DCA 1985), the First District held that "under the rule a movant may file supplemental affidavits less than twenty days prior to the summary judgment hearing only upon written stipulation and agreement by the adverse party affected or upon leave of court granted by written order after written application, notice to the adverse party, and the opportunity for hearing." Id. at 1234 (emphasis added). This construction of the phrase "may permit supplemental affidavits" properly advances the policy that a party opposing summary judgement must be given adequate time to respond. See Nelson v. Balkany, 620 So.2d 1138 (Fla. 3d DCA 1993);Coastal Caribbean Corp. v. Rawlings, 361 So.2d 719 (Fla. 4th DCA 1978). Here, the trial court's consideration of the appellee's supplemental affidavit was improper because no written stipulation was submitted, and no leave of court was granted by written order after written application. Accordingly, the trial court erred in denying appellant's motion for relief from judgment.