JOHN KORNFELD AND INGLE K. KORNFELD, HIS WIFE, APPELLANTS,
v.
ABELARDO DIAZ AND ROSA DIAZ, HIS WIFE, AND JEN-ROB MARINE, INC., A FLORIDA CORPORATION, APPELLEES
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The Kornfelds obtained a foreclosure judgment against the Diazes for a property sale deficiency. The trial court denied the deficiency judgment based on equitable principles, but the appellate court reversed, holding that even accounting for all claimed credits, a partial deficiency judgment was due and the trial court abused its discretion in denying it entirely.
The trial court abused its discretion in denying the deficiency judgment entirely. Even if all credits claimed by the Diazes were valid, they would reduce but not eliminate the deficiency, leaving at least $27,706.35 owed to the Kornfelds. A deficiency judgment must be entered after proper calculation of credits.
[1] A trial court's discretion to grant or deny a deficiency judgment must be sound and based on the application of legal principles to specific facts.
[2] A total denial of a deficiency judgment is an abuse of discretion when the claimed credits, even if fully awarded, would not eliminate the deficiency entirely.
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Join FLexlaw to unlock all legal intelligence“such discretion must be "sound" — i.e. based on the application of legal principles to specific facts”
Establishes the standard for reviewing trial court discretion in deficiency judgments
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Join FLexlaw to unlock all legal intelligenceThe Kornfelds sold property to the Diazes, who later sold it to a third party. When the third party defaulted on the mortgage, the Kornfelds foreclose…
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FARMER, Judge.
The Kornfelds sold the Diazes a parcel of land that housed rental property. The Diazes in turn sold the property to a third party who assumed their mortgage. When the third party defaulted, the Kornfelds brought a foreclosure suit against the Diazes and obtained a $383,778.73 judgment. The judgment directed the receiver to make a final accounting and pay any remaining funds to the Kornfelds to reduce the foreclosure judgment. The Diazes contested the final accounting, claiming that the Kornfelds had been awarded credits for fees to the receiver and its attorney that, actually, they had never paid.
After purchasing the property at a judicial sale for $350,000.00, the Kornfelds sued the Diazes for the $33,778.33 deficiency — the difference between the foreclosed amount and the fair market value of the property.1 The Diazes sought to reduce that figure by certain credits they claimed were due them for money improperly credited or already refunded to the Kornfelds.
The trial court denied the Kornfelds’ request, finding that a number of the expenditures making up their deficiency claim were either not paid by them or had already been reimbursed to them and not used to reduce the final judgment. • Thus, the court concluded “that when equitable principles are applied to the particular facts and circumstances of this case, an award of a deficiency decree would be inequitable.”
We cannot agree. Although we are aware of the trial court’s discretion to grant or deny a deficiency, we caution that such discretion must be “sound” — i.e. based on the application of legal principles to specific facts. Norwest Bank Owatonna v. Millard, 522 So. 2d 546 (Fla. 4th DCA 1988). See also Trustees of Central States Southeast and Southwest Areas, Pension Fund v. Indico Corp., 401 So. 2d 904, 906-907 (Fla. 1st DCA 1981). Even if the trial court had found that all credits sought by the Diazes were in fact due them, these credits would have merely reduced the deficiency by $6,072.38 but not eliminated it entirely. The Kornfelds would still be owed $27,706.35. We hold that a total denial of a deficiency judgment on these facts is an abuse of discretion. On remand we instruct the trial court to calculate the credits owed and enter a deficiency judgment - accordingly.
REVERSED AND REMANDED WITH DIRECTIONS.
GUNTHER and WARNER, JJ., concur. . No one disputes that the judicial sale price of $350,000.00 represents the fair market value.
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Waqar Ahmad (Mickey) Khan v. Simkins Indus., Inc., 687 So. 2d 16 (Fla. 3d DCA 1996)…one which must be supported by established equitable principles as applied to the facts of the case. Carlson v. Becker, 45 So. 2d 116 (Fla.1950) (finding an abuse of discretion in the determination of the amount of the deficiency); Kornfeld v. Diaz, 634 So. 2d 799 (Fla. 4th DCA 1994) (denial of deficiency on these facts an abuse of discretion); sec. 702.06, Fla.Stat. (1993). The exercise of the trial court’s discretion allows inquiry into the reasonable and fair market value of the property, the reasonablenes…
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Bashar Ahmad v. Cobb Corner, Inc., 762 So. 2d 944 (Fla. 4th DCA 2000)…supported by established equitable principles as applied to the facts of the case, and the exercise of which is subject to review on appeal.” Norwest Bank Owatonna, N.A. v. Millard, 522 So. 2d 546, 547 (Fla. 4th DCA 1988). See also Kornfeld v. Diaz, 634 So. 2d 799, 800 (Fla. 4th DCA 1994). The granting of a deficiency judgment in circumstances where it is clear that the total debt secured by a lien on property is more than the fair market value of that property at the date of the foreclosure sale, as determin…
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Vives v. Wells Fargo Bank, N.A., 128 So. 3d 9 (Fla. 3d DCA 2012)…y note.” See supra p. 18. The dissent is incorrect. A prayer for a deficiency decree is a claim in equity awardable in the "sound judicial discretion” of the trial court. See, e.g., Carlson v. Becker, 45 So. 2d 116, 116 (Fla. 1950); Komfeld v. Diaz, 634 So. 2d 799 (Fla. 4th DCA 1994); Wilson v. Adams & Fusselle, Inc., 467 So. 2d 345 (Fla. 2d DCA 1985) (addressing deficiency judgments). A suit on a promissory note is an action at law. See Mary Dee’s, Inc. v. Tartamella, 492 So. 2d 815 (Fla. 4th DCA 1986); Lear…
Authorities Cited
- Norwest Bank Owatonna, N.A. v. Millard, 522 So. 2d 546 (Fla. 4th DCA 1988)
- The Trs. OF Cent. States Se. & Sw. Areas v. Indico Corp., 401 So. 2d 904 (Fla. 1st DCA 1981)