UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF FLORIDA

Ft. Lauderdale Division

In re:

Case No. 21-11028-SMG

My FL Management, LLC, Chapter 11

Debtor.

_______________________________/

OBJECTION TO CLAIM OF A&D Mortgage, LLC

PURSUANT TO 11 U.S.C § 502 AND FOR RELATED RELIEF

Debtor and Debtor-in-Possession, My FL Management, LLC (the “Debtor"), by and 

through undersigned counsel, hereby files this Objection to Claim Pursuant to 11 U.S.C. § 502 

and for Related Relief (the “Objection”) against A&D Mortgage, LLC (“A&D”). In support of 

this Objection, Debtor states as follows: 

BRIEF SUMMARY OF OBJECTION

During the height of Covid-19 pandemic restrictions, A&D manufactured a payment 

default and charged hundreds-of-thousands-of-dollars of default interest without providing the 

Debtor notice or an opportunity to cure. 

A&D’s actions not only violated the agreements between the parties, A&D also violated

laws designed to protect consumers from unscrupulous creditor action. 

A&D ought not be allowed to profit from its bad acts. A&D’s claim must be disallowed to 

the extent it seeks default interest, penalties, fees and costs related to the alleged defaults. 

THE PARTIES, JURISDICTION, AND VENUE 

1. Debtor, My FL Management, LLC is a Florida limited liability company, having a 

principal place of business at 3711 N. Ocean Boulevard, Fort Lauderdale, FL 33308.

2. A&D is a limited liability company organized under the laws of the State of Florida

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and doing business in Broward County, Florida.

3. This Court has jurisdiction over this Objection pursuant to 28 U.S.C. §§ 151, 157 

and 1334(b). Venue is proper pursuant to 28 U.S.C. § 1409.

4. The Debtor’s Objection to A&D’s proof of claim is a contested matter under Rule 

9014 of the Federal Rules of Bankruptcy Procedure and Local Rule 9014-1. 

GENERAL ALLEGATIONS

5. On February 2, 2021, (the “Petition Date”), Debtor filed a voluntary petition in 

this Court for relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy 

Code”). Since that time, Debtor has operated as a debtor-in-possession pursuant to Sections 1107 

and 1108 of the Bankruptcy Code. 

6. On March 31, 2021, A&D filed its Proof of Claim No. 6 (the “Claim”) in the abovecaptioned bankruptcy proceeding. 

7. The Debtor operates and manages the Royal Beach Palace Hotel and the restaurant 

located therein, and the Galt Villas. These hotel properties are constituted of, among other things 

6 contiguous parcels of real property owned by the Debtor and certain affiliated entities located at:

• 3711 N. Ocean Blvd., Fort Lauderdale, FL 33301 (owned and managed by 

Debtor).

• 3801 N. Ocean Blvd., Fort Lauderdale, FL 33308 (owned by affiliate Rentals 

Vacation Property LLC and managed by the Debtor).

• 3811 N. Ocean Blvd., Fort Lauderdale, FL 33308 (owned by affiliate MY 

FL 3811 LLC and managed by the Debtor)

• 3821 N. Ocean Blvd., Fort Lauderdale, FL 33308 (owned by affiliate MY 

FL 3821 LLC and managed by the Debtor) (together, the “Royal Beach 

Palace Properties”).

• 3621 N. Ocean Blvd., Fort Lauderdale, FL 33308 (owned by affiliate MY 

FL 3621 LLC and managed by the Debtor).

• 3623 N. Ocean Blvd., Fort Lauderdale, FL 33308 (owned by affiliate MY 

FL 3623 LLC and managed by the Debtor) (together, the “Galt Villas”). 

8. A&D is a mortgage lender and servicer offering conventional and non-qualifying 

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mortgage products. 

9. Debtor and certain of its affiliates, MY FL 3821 LLC, My FL 3811 LLC, and

Rentals Vacation Property, LLC are the borrowers (collectively the “Borrowers”) under a 

promissory note dated September 5, 2017, in the principal amount of $11,000,000 (the 

“Promissory Note”). A true and correct copy of the Promissory Note is attached hereto as Exhibit 

A.

10. A&D is the servicer for Imperial Fund I, LLC, who appears to be the holder of the 

Promissory Note and a mortgage (the “Mortgage”) dated September 5, 2017, which is secured by 

the Royal Beach Palace Properties. A true and correct copy of the Mortgage is attached hereto as 

Exhibit B.

11. The maturity date of the Promissory Note and Mortgage is September 1, 2027

(collectively referred herein as the “Loan Agreement”). 

12. The Promissory Note bears an interest rate of 5.75%.

13. Under the schedule of monthly payments of the principal and corresponding interest

rate of 5.75%, the first monthly payment under the Promissory Note came due on October 1, 2017 

in the amount of $68,201.70, and every month thereafter, regular monthly payments in the amount 

of $69,201.70 each came due.

14. Paragraph 12.4 on page 4 of the Promissory Note, is entitled No Amendment or 

Waiver Except in Writing.

15. Paragraph 12.4 on page 4 of the Promissory Note provides that the Promissory Note 

may be amended or modified only by a writing duly executed by Debtor and A&D. 

16. In connection with and as part of the closing of the Loan Agreement, the Debtor 

executed a written Automated Clearing House form (the “ACH Authorization”). 

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17. The most recent version of the ACH Authorization was executed on November 21, 

2019. A true and correct copy of the ACH Authorization is attached hereto as Exhibit C.

18. Each of the monthly payments required under the Loan Agreement was withdrawn 

by A&D via electronic ACH payment pursuant to the ACH Authorization. 

19. The ACH Authorization authorizes A&D to automatically withdraw from Debtor’s 

account sufficient sums to pay monthly payments under the Loan Agreement.

20. The ACH Authorization is on A&D letterhead and was provided to the Debtor by 

A&D.

21. The ACH Authorization states, among other things, “Please specify the payment 

date most convenient for you, which must be within the applicable grace period. If a payment date 

is not specified, or your loan is a daily simple interest loan, payments will be deducted on your 

current loan due date.”

22. The ACH Authorization further provides that the payments should be deducted on 

the “1st day of each month”.

23. A&D did not terminate the ACH Authorization at any time prior to March 2020.

24. A&D did not obtain Debtor’s written or verbal consent to stop the automatic ACH 

withdrawals that A&D had been routinely doing on the first day of each month pursuant to the 

ACH Authorization. 

25. A&D failed to inform the Debtor that it had removed the ACH Authorization linked 

to Debtor’s bank account.

26. Without cause, direction or notice, A&D unilaterally stopped its ACH withdrawals 

required under the ACH Authorization on or about March 1, 2020.

27. A&D did not withdraw funds under the ACH Authorization for the month of March 

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2020 or thereafter.

28. A&D did not provide notice to the Debtor that it was not going to withdraw funds 

pursuant to the ACH Authorization as had been its ordinary course of conduct. 

29. At all relevant times, Debtor held sufficient sums in its bank account to make the 

required monthly payment. 

30. Had A&D continued to electronically and automatically draw via ACH as it had 

done previously, no payment would have been missed. 

31. A&D was required to provide the Debtor notice and an opportunity to cure defaults 

prior to acceleration and accrual of default interest.

32. Paragraph 2.02 of the Mortgage provides the following: 

If a Default shall have occurred and be continuing, the Lender may upon providing 

Borrower with ten (10) day written notice to cure default, declare the entire 

principal amount of the Note then unpaid and the interest accrued thereon to be due 

and payable immediately, and upon such declaration such principal and interest 

shall forthwith become and be due and payable, together with any prepayment fees 

that may be due and payable in full as fully and completely as if the said aggregate 

sum of said indebtedness was originally stipulated to be paid in full on such date,

anything in the Note or this Mortgage to the contrary notwithstanding.

(emphasis added).

33. The term “Default” as defined in Section 2.01 of the Mortgage, includes the 

following phrase “that is not cured within any applicable cure or grace period” (with respect to 

payment failures; Mortgage, 2.01(a)), and “that is not cured within any applicable cure or grace 

period as set forth in the Loan Agreement or other applicable document” (with respect to 

covenants, conditions or other agreements; Mortgage, 2.01(b)).

34. In the State Court Lawsuit (hereinafter defined), A&D claimed to have satisfied its 

obligation to provide written notice and an opportunity to cure through a certain letter dated May 

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13, 2020 (the “Demand Letter”).

1 A true and correct copy of the Demand Letter is attached hereto 

as Exhibit D.

35. On May 13, 2020, A&D sent the Demand Letter to certain of the guarantors (not 

the Debtor).

36. Paragraph 3.02 of the Mortgage provides the following: 

(a) Borrower. Any notice, demand or other instrument authorized by this Mortgage 

to be served on or given to the borrower may be served on or given to the Borrower, 

at: THE BORROWER'S ADDRESS AS INDICATED ON PAGE ONE HEREOF 

or at such other address as may have been furnished in writing to the Lender by the 

Borrower.

. . .

(c) Delivery of Notice. All notices shall be in writing and shall be delivered by 

certified mail, return receipt requested or be delivered via overnight mail service. 

All notices shall be deemed made when delivery is first attempted at the address or 

addresses required hereunder.

37. The Demand Letter was not addressed to the Debtor.

38. The Demand Letter was not delivered to the Debtor.

39. The Demand Letter did not provide the Debtor an opportunity to cure any claimed 

defaults. 

40. The Demand Letter does not satisfy the notice and opportunity to cure conditions 

of the Mortgage. 

41. The Demand Letter claimed, among other things, that (i) a default under the Loan

Agreement and Mortgage had already occurred, (ii) default interest had already been assessed, and 

(iii) the loan had already been accelerated. 

42. The Demand Letter required, among other things, immediate payment of 

$437,718.00 in default interest at the default rate of 25% and unpaid fees to “reinstate” the

1 See paragraph 20 of the Defendant, A&D Mortgage LLC’s Answer and Affirmative Defenses, Renewed Motion to 

Strike Jury Trial Demand, and Counterclaim, filed on December 10, 2020 in the State Court Lawsuit (hereinafter 

defined).

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Promissory Note and Mortgage.

23. The Demand Letter required approximately $300,000.00 more than what would 

have been a cure amount. 

24. A&D failed to comply with, among others, paragraphs 2.02 and 3.02 of the 

Mortgage.

25. By, among other things, (i) failing to timely withdraw funds pursuant to ACH

Authorization; (ii) failing to provide adequate notice; (iii) failing to provide an opportunity to cure; 

(iv) demanding an exorbitant “reinstatement” fee; and (iv) failing to comply with material 

provisions of the Mortgage, A&D breached the Loan Agreement, its duty of good faith and fair 

dealing and violated FDUPTA (defined herein).

26. On June 30, 2020, Debtor and certain affiliates and insiders brought suit against 

A&D in the circuit court of Broward County, Florida, for (i) breach of contract; (ii) violation of 

Florida’s deceptive and unfair trade practices act; (iii) fraud by omission; (iv) negligent 

misrepresentation; (vi) breach of good faith and fair dealing; and (vii) declaratory relief. The case 

caption is My FL 3821, LLC et. al. v. A&D Mortgage, LLC, Case No. CACE-20-010533 (the 

“State Court Lawsuit”). 

27. On November 20, 2020, the state court entered an order denying A&D’s motion to 

dismiss the State Court Lawsuit.

28. On December 10, 2020, A&D filed its answer and affirmative defenses, and 

counter-claimed, among other causes of action, for (i) foreclosure of the Mortgage secured by the 

Royal Beach Palace Properties; and (ii) for breach of the Promissory Note. 

29. Debtor — facing the effects on the hospitality industry prompted by Covid-19 and 

A&D’s alleged claims to foreclose on the Royal Beach Palace Properties — filed its voluntary 

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petition for relief under Chapter 11 of the Bankruptcy Code on February 2, 2021, seeking to 

reorganize its financial affairs including a resolution of the underlying dispute with A&D.

OBJECTION TO CLAIM

(11 U.S.C. § 502)

30. Debtor incorporates and re-alleges the allegations contained in Paragraphs 1 

through 29 as if fully set forth herein. 

31. On March 31, 2021, A&D Mortgage, LLC filed the Claim in the total amount of 

$12,705,334.24, secured by the Mortgage on Debtor’s Royal Beach Palace Properties. 

32. A&D seeks to (i) accelerate and enforce the outstanding principal amount of the 

Promissory Note in the amount of $10,469,232.14; (ii) collect interest payments on the Promissory 

Note calculated at the default rate of 25% for a total amount of $2,231,982.10 for the monthly 

periods of April 1, 2020 to February 1, 2021 (“Default Interest”); and (iii) to recover attorney’s 

fees and costs for the State Court Lawsuit in the amount of $4,120.00. 

33. Section 502(b)(1) of the Bankruptcy Code provides that a proof of claim shall be 

disallowed if “such claim is unenforceable against the debtor and property of the debtor, under 

any agreement or applicable law for a reason other than because such claim is contingent or 

unmatured.”

34. The Default Interest and attorney fees of the Claim are not allowed under the 

subject agreements and applicable law. 

35. Accordingly, the Default Interest and attorney fee components of the Claim ought 

to be disallowed. 

A. Failure of Condition Precedent – No Notice

a. No Notice of Default/Acceleration or Opportunity to Cure

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36. Debtor objects to A&D’s Claim amount because A&D failed to provide requisite 

notice of the alleged default or opportunity to cure same.

37. The Mortgage requires A&D to provide Debtor 10 day’s written notice and an 

opportunity to cure claimed defaults.

38. A&D failed to provide sufficient notice to the Debtor of any alleged Default.

39. A&D failed to provide Debtor an opportunity to cure any alleged default. 

40. Accordingly, A&D’s Claim for Default Interest and attorney’s fees is 

unenforceable against the debtor and property of the debtor under the subject agreements and

applicable law.

41. A&D’s Claim should not be allowed to the extent it seeks Default Interest and 

attorney’s fees for attempting to collect same. 

b. No Notice of A&D’s Unilateral Cancellation of the ACH Authorization

42. Debtor objects to A&D’s Claim amount because A&D was responsible for the 

alleged default of the Loan Agreement. 

43. Entry into the ACH Authorization constituted a modification of the Loan 

Agreement by written instrument.

44. The ACH Authorization modified the payment obligations under the Loan 

Agreement by authorizing and requiring A&D to deduct sufficient sums on a monthly basis to pay 

all obligations owed by the Debtor on account of the Loan Documents.

45. A&D’s failure to comply with the ACH Authorization which provides, in relevant 

part, that payments “will be” timely and automatically deducted by A&D constitutes a breach of 

the agreement.

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46. A&D’s unilateral cancellation of the ACH Authorization without notice to the 

Debtor constitutes an impermissible modification of the Loan Documents. 

47. By failing to withdraw funds as required under the ACH Authorization, A&D 

induced Debtor’s Default.

48. Such conduct constitutes, among other things, a breach of the terms and provisions 

of the Loan Agreement.

49. Because A&D failed to provide notice to the Debtor that it would not honor the 

ACH Authorization, A&D would be precluded from accelerating the Promissory Note and

charging the Default Interest and related attorney’s fees under the subject agreements and 

applicable law. 

50. Accordingly, A&D’s Claim for Default Interest and attorney’s fees is 

unenforceable against the debtor and property of the debtor under the subject agreements and

applicable law.

51. A&D’s Claim should not be allowed to the extent it seeks Default Interest and 

attorney’s fees for attempting to collect same. 

B. Set-off and Recoupment

47. Debtor objects to A&D’s Claim because Debtor has claims against A&D that setoff 

and/or recoup amounts claimed by A&D. Debtor’s setoff and recoupment claims sound in breach 

of contract, breach of covenants of good faith and fair dealing, violation of Florida Unfair and 

Deceptive Trade Practices Act, and in equity (unclean hands). 

a. Breach of Contract and Covenants of Good Faith and Fair Dealing

48. A&D failed to comply with the Promissory Note and ACH Authorization.

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49. The ACH Authorization imposed an affirmative obligation upon A&D to timely 

withdraw sufficient funds from Debtor’s account to satisfy all payments required by the Loan 

Agreement.

50. A&D failed to timely withdraw sufficient funds from Debtor’s account to satisfy 

all payments required by the Loan Agreement.

51. On account of A&D’s failure, the Debtor was harmed and suffered damages in the 

form of, among other damages, default interest and A&D’s attorney’s fees and Debtor’s own 

attorney’s fees. 

52. A&D’s failure constitutes a first (or prior) breach of the terms of the Loan 

Agreement and ACH Authorization.

53. Importantly, A&D also failed to comply with paragraphs 2.02 and 3.02 of the 

Mortgage because it failed to provide Debtor with 10-day written notice of the alleged default and 

an opportunity to cure same. 

54. Instead, the Demand Letter required immediate payment of $437,718.00 in Default 

Interest at the maximum rate of 25% and unpaid fees to “reinstate” the Promissory Note and 

Mortgage.

55. Due to A&D’s failure to honor and faithfully perform under the terms of the Loan 

Agreement, including the ACH Authorization, A&D committed a material breach of same.

56. At all material times, Debtor was ready, willing, able, and had sufficient sums in 

its bank account to satisfy the Loan Agreement’s monthly installment payments.

57. Moreover, Florida law recognizes an implied covenant of good faith and fair 

dealing in every contract.

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58. This covenant is intended to protect the reasonable expectations of the contracting 

parties in light of their express written agreement(s).

59. Debtor executed the ACH Authorization for the purpose of allowing A&D to 

automatically withdraw the monthly installment payments from Debtor’s bank account. 

60. Debtor never authorized or directed A&D to cease making its automatic 

withdrawals of the monthly installment payments from Debtor’s bank account.

61. When A&D unilaterally elected to stop withdrawing its automatic ACH payments, 

the alleged defaults occurred.

62. A&D’s bad act created the alleged default.

63. Having created the alleged non-payment default on or around March 1, 2020, A&D 

did not provide notice of any kind until May of 2020.

64. At which time, A&D demanded nearly $300,000.00 in default interest to reinstate 

the Promissory Note. 

65. A&D did this at a time when the Debtor was facing unprecedented challenges 

presented by the Covid-19 Pandemic.

66. A&D acted in bad faith and with unclean hands.

67. In doing so, A&D breached the covenant of good faith and fair dealing and acted 

without clean hands.

68. For these reasons, A&D’s Claim should be disallowed and reduced/setoff/recouped

to the extent of the damages the suffered by the Debtor on account of A&D’s actions. 

b. Violation of Florida Deceptive and Unfair Trade Practices Act

69. Debtor objects to A&D’s Claim because of A&D’s actions constitute violations of 

Florida’s Deceptive and Unfair Trade Practices Act (“FDUPTA”).

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65. FDUPTA, Section 501.201, et seq., Florida Statutes, prohibits “unfair methods of 

competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the 

conduct of any trade or commerce.” Fla. Stat. § 501.204.

66. Debtor is a “consumer” as that term is defined in section 501.203(7) of FDUPTA.

67. A&D engaged in and continues to engage in unconscionable acts or practices and 

engaged in unfair or deceptive acts in the conduct of its trade and/or commerce by unilaterally 

stopping its automatic ACH withdrawals from Debtor’s account, without any written or verbal 

direction from Debtor, thereby unfairly and deceptively inducing alleged defaults that would not 

have otherwise occurred.

68. A&D exacerbated its unconscionable acts by failing to provide Debtor an

opportunity to cure the claimed defaults.

69. Finally, A&D’s acts are particularly heinous in the context that the Debtor is a hotel 

owner and operator and A&D’s actions took place during the height of government imposed 

Covid-19 restrictions (and at a time when most lenders were offering forbearance to similarly 

situated borrowers). 

70. The policies, acts and practices by A&D, as set forth herein, were intended to result 

and did result in creating alleged defaults of Debtor’s Loan Agreement. 

71. A&D’s actions directly led it to assert a claimed default, claim the Default Interest, 

acceleration and attorney’s fees to the detriment of the Debtor.

72. At all times material hereto, A&D knew our should have known that (i) while 

Debtor’s cash flows were challenged on account of the Covid-19 restrictions; (ii) that A&D’s claim 

was over-secured and acceleration and accrual of default interest was particularly harmful to the 

Debtor on account of the pandemic. 

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73. A&D unfairly stopped its automatic ACH withdrawals from Debtor’s bank 

account, which was the only source used by Debtor to make the monthly Loan Agreement 

payments. 

74. A&D stopped its withdrawals without written or verbal notice to Debtor and/or 

written or verbal consent from Debtor to do so. A&D’s conduct violates FDUTPA and was

conceived, devised, planned, implemented, approved, and executed with approval from A&D’s

owners and/or authorized agents in an attempt to unlawfully extort additional monies from Debtor.

75. A&D’s conduct of inducing Default and then deceitfully, unfairly and deceptively 

choosing not to provide Debtor with written notice or an opportunity to cure the alleged default 

within a reasonable period of time also violates FDUTPA and was conceived, devised, planned, 

implemented, approved, and executed by A&D and its owners and/or authorized agents.

76. Debtor has sustained damages as a direct and proximate result of A&D’s unfair and 

unconscionable practices.

77. Debtor has suffered and will continue to suffer irreparable harm if A&D continues

to engage in such deceptive, unfair, and unreasonable practices.

78. As a result, Debtor suffered damages, which damages should be setoff and/or 

recouped thereby reducing A&D’s claim amount. 

79. For these reasons, A&D’s Claim should be disallowed and reduced/setoff/recouped

to the extent of the damages the suffered by the Debtor on account of A&D’s actions. 

80. Debtor also seeks an award of attorney’s fees and costs in connection with this 

Objection and all claims herein in the form of a further reduction and disallowance of A&D’s 

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Claim.

Respectfully submitted on April 15, 2021.

EDELBOIM LIEBERMAN 

REVAH OSHINSKY PLLC

Counsel for the Debtor

20200 W. Dixie Highway, Suite 905

Miami, FL 33180

Telephone: (305) 768-9909

Facsimile: (305) 928-1114

Email: brett@elrolaw.com

By:/s/ Brett Lieberman

Brett D. Lieberman (FBN 69583)

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Exhibit “A” 

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Exhibit “B” 

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Exhibit “C” 

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Exhibit “D” 

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