ROBERT W. EDWARDS AND DAVID L. GORMAN, APPELLANTS/CROSS-APPELLEES,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER OF BANK OF SOUTH PALM BEACHES, A DISSOLVED FLORIDA BANKING CORPORATION, APPELLEE/CROSS-APPELLANT
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The Florida Fourth District Court of Appeal affirmed a deficiency judgment against borrowers but reversed and remanded for recalculation because the trial court failed to reduce the property's fair market value by the amount of unpaid ad valorem taxes when determining the deficiency amount.
The court held that unpaid ad valorem taxes must be deducted from the fair market value when calculating a deficiency, and that the trial court must first determine the total potential deficiency before making any equitable reductions. The court affirmed the deficiency judgment in principle but reversed and remanded for proper recalculation.
[1] A deficiency judgment is generally granted unless equitable considerations warrant denial.
[2] The moving party bears the burden of proving the fair market value of property is less than the debt owed.
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Join FLexlaw to unlock all legal intelligence“real estate with an out [*1158] standing tax indebtedness against it is worth less than that same property free and clear of debt”
Establishes the principle that unpaid ad valorem taxes reduce the fair market value of property for deficiency calculation purposes.
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Join FLexlaw to unlock all legal intelligenceThe FDIC, as receiver of a dissolved Florida bank, obtained a deficiency judgment against Edwards and Gorman following a foreclosure. The trial court …
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PER CURIAM.
The appellants appeal the deficiency judgment entered against them. The appellee (“FDIC”) cross-appeals the deficiency amount based on the court’s failure to include the amount of unpaid ad valorem taxes in its deficiency calculation. We affirm in all respects, except we reverse and remand for a recalculation of the deficiency amount.
The FDIC asserts the trial court erred in its determination of the deficiency amount by failing to reduce the fair market value of the property by the amount of unpaid ad valorem taxes. In addition, the FDIC argues that the trial court could not equitably reduce the deficiency without first determining the full deficiency amount. We agree.
The trial court has discretion with respect to granting or denying a deficiency judgment; however, granting a deficiency judgment is more the rule than the exception. See Chidnese v. McCollem, 695 So. 2d 936, 938 (Fla. 4th DCA 1997). The moving party has the burden of proving the fair market value of the property is less than the debt owed, and non-moving parties may then refute the moving party’s evidence by offering their own evidence. See id. Because “real estate with an out standing tax indebtedness against it is worth less than that same property free and clear of debt,” the amount of delinquent taxes should be considered when determining the fair market value. First Union Nat'l Bank v. Goodwin Beach Partnership, 644 So. 2d 1361, 1362 (Fla. 5th DCA 1994); see Chidnese v. McCollem, 696 So. 2d 879, 879-80 (Fla. 4th DCA 1997). “[Ejquitable considerations upon which the trial court might deny a deficiency should be presented after the potential deficiency is determined (amount of judgment on note less fair market value of property). Before that, the trial court would not be able to determine what set-off might be appropriate.” Chidnese, 695 So. 2d at 938.
In the present case, the trial court failed to follow the proper procedure by not including the amount of unpaid ad valorem taxes in its deficiency calculation, i.e., reducing the property’s fair market value by the amount of delinquent taxes. Pursuant to Chidnese, the trial court should have reduced the fair market value by the amount of delinquent taxes, determined the total deficiency, and then made a reduction if equitable. Accordingly, we reverse and remand for a recalculation of the deficiency amount.
AFFIRMED in part, REVERSED in part, and REMANDED.
GUNTHER, KLEIN and STEVENSON, JJ., concur.
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Martinec v. Early Bird Int'l, Inc., 262 So. 3d 205 (Fla. 4th DCA 2018)…y including the entire amount of the foreclosure judgment and also adding $12,824.37 in “delinquent taxes” to the amount of the deficiency judgment. In reaching this conclusion, the court relied on Edwards v. Federal Deposit Insurance Corp., 746 So. 2d 1157 (Fla. 4th DCA 1999), and First Union National Bank of Florida v. Goodwin Beach Partnership, 644 So. 2d 1361 (Fla. 5th DCA 1994). In Edwards, we explained that “[b]ecause ‘real estate with an outstanding tax indebtedness against it is worth less…
Authorities Cited
- First Union Nat'l Bank OF Fla. v. Goodwin Beach P'ship, 644 So. 2d 1361 (Fla. 5th DCA 1994)
- Chidnese v. McCOLLEM, 695 So. 2d 936 (Fla. 4th DCA 1997)
- Chidnese v. McCOLLEM, 696 So. 2d 879 (Fla. 4th DCA 1997)