UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF FLORIDA

__________________________________ 

 ) 

In re: ) CASE NO. 22-10385-RAM

 )

6200 NE 2ND AVENUE, LLC, ) CHAPTER 11

 ) 

Debtor. ) JOINTLY ADMINISTERED

 )

ORDER SUSTAINING, IN PART, AND OVERRULING, IN PART, DEBTORS’

AMENDED OBJECTION TO THE CLAIMS OF BENWORTH CAPITAL PARTNERS

Introduction

On November 1, 2022, the Court entered its Amended Order: (1) 

Authorizing Debtors to Proceed With Pre-Auction and Auction Sales 

of Debtors’ Properties; (2) Approving Marketing, Bidding and Sale 

Procedures; (3) Approving Form and Manner of Notice of Sales; (4) 

Reserving § 506(c) Potential Surcharge Rights; and (5) Approving the 

Sale of Debtors’ Interests in Debtors’ Real Properties Free and 

Clear of Liens, Claims and Encumbrances Pursuant to § 363(f) (the 

Robert A. Mark, Judge

_____________________________________________________________________________ United States Bankruptcy Court

ORDERED in the Southern District of Florida on November 21, 2022.

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“Sale Procedures Order”) [DE# 341]. Pursuant to that Order, the 

eight debtors in these administratively consolidated cases are 

selling 17 properties including two parcels owned by Debtor, 5823

NE 2nd Avenue, LLC (the “5823 Properties”), and one parcel owned by

Debtor, 6229 NE 2nd Avenue, LLC (the “6229 Property”).

Benworth Capital Partners, LLC (“Benworth”) services the

mortgage debt encumbering the 5823 Properties and the 6229 Property.

The mortgage debt was reduced to final judgments of foreclosure in 

state court prior to the filing of the relevant bankruptcy cases. 

Specifically, on March 23, 2022, the state court entered a Summary 

Final Judgment of Foreclosure against the 5823 Properties in the 

amount of $844,938.18 (the “5823 Judgment”), and on April 27, 2022, 

the state court entered a Final Judgment of Foreclosure against the 

6229 Property in the amount of $1,061,867.11 (the “6229 Judgment”).

After the filing of these bankruptcy cases, Benworth filed two proofs 

of claim (together, the “Claims”)1 based on the foreclosure 

judgments.

The Sale Procedures Order provides that “Benworth may credit 

bid its secured claim in an amount to be determined by the Court 

prior to the auction.” [DE# 341, p.5, decretal para. 7]. This Order 

determines the amounts Benworth will be permitted to credit bid.

1 The claims are Proof of Claim No. 1 filed by Benworth in Case No. 

22-14331-RAM, In re 6229 NE 2nd Avenue LLC (the “6229 Case”), and 

Proof of Claim No. 2 filed by Benworth in Case No. 22-14767-RAM, In 

re 5823 NE 2nd Avenue, LLC (the “5823 Case”).

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Additional Factual and Procedural Background

Pending before the Court is the Debtors’ Amended Objection (the 

“Amended Objection”) [DE #316] to the two Benworth Claims. The 

Debtors object to the post-judgment interest rate claimed by 

Benworth, to the post-judgment attorney’s fees claimed by Benworth, 

and to Benworth’s failure to offset rents on the 6229 Property

received during the pendency of these bankruptcy cases against the 

total indebtedness claimed. On October 19, 2022, the Court entered 

its Order Setting Filing Deadlines and Evidentiary Hearing on 

Debtors’ Amended Objection to the [Benworth] Claims [DE# 319]. That 

Order scheduled an evidentiary hearing for November 17, 2022, and 

stated that “[f]or purposes of the hearing, the Court presumes that 

there is equity in Benworth’s collateral, and any award of postpetition attorney’s fees or interest will apply for purposes of 

determining the amount of Benworth’s credit bid at the auction sale.” 

[DE# 319, p.3, para. 6].

On October 28, 2022, Benworth filed a Response to the Debtors’ 

Amended Objection [DE #340; 358]. The Debtors filed a Reply [DE 

#353] on November 4, 2022, and on November 17, 2022, the Court 

conducted an evidentiary hearing on the Debtors’ Amended Objection.

Discussion

Post-Judgment Interest

The relevant facts are not in dispute. The notes do not 

specify the interest rate applicable after issuance of a judgment. 

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The notes identify only the interest rate that should apply upon and 

after a default. The specific provision in the note reads as 

follows:

Upon the occurrence of any event of default as defined 

herein, all sums outstanding under this Promissory Note 

shall thereon immediately bear interest at the highest 

rate allowable by law, without notice to the Maker or any 

guarantor or endorser of this Promissory Note, and without 

any affirmative action or declaration on the part of the 

Lender.

The pre-judgment interest rate established by the above-quoted 

language is 25%, which is the highest interest rate allowable under 

Florida law. Fla. Stat. § 687.071(2). However, the judgments award 

pre-judgment interest at a default rate of 18%. As stated earlier, 

and critical to the Court’s decision, the notes do not state that 

the contract default rate is applicable after entry of a judgment.

The following three witnesses testified at the November 17th 

evidentiary hearing: (i) the Debtors’ defense counsel in the state 

court foreclosure actions, Arnaldo Velez, Esq., (ii) Benworth’s 

counsel in the state court foreclosure actions, Albert D. Rey, Esq., 

and (iii) Benworth’s Comptroller, Mildred Avila. 

Ms. Avila testified regarding Benworth’s servicing of the 

mortgage debt.2 She stated that the state court foreclosure 

judgments award pre-judgment interest at a default rate of 18% 

2 Ms. Avila also testified as to the retention and payment of 

Benworth’s bankruptcy counsel, D. Jean Ryan, Esq., and Benworth’s 

foreclosure counsel, Albert D. Rey, Esq. 

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because of an error by Benworth’s servicing department. Most of 

Benworth’s loans are in amounts less than $500,000.00, and charging 

more than 18% interest for such loans is prohibited under Florida 

law. Fl. Stat. § 687.02(1). 

The loans at issue in this case exceed $500,000.00, and 

applicable usury statutes cap the interest that can be charged for 

such loans at 25%. Fl. Stat. §§ 687.02(1), 687.071. Ms. Avila 

testified that the pre-judgment, default interest rate should have 

been 25%, but the judgments award only 18% because Benworth’s 

servicing department incorrectly concluded that only 18% interest 

was due. Benworth did not attempt to amend the judgements to increase 

the pre-judgment default rate to 25%. However, Benworth is seeking 

allowance of a claim for post-judgment interest at 25%.

Regarding post-judgment interest, both Mr. Rey and Mr. Velez 

testified that the judgments are unambiguous. However, both 

attorneys also testified that they interpret the judgments 

differently. Mr. Rey testified that the judgments clearly impose a 

25% post-judgment interest rate, whereas Mr. Velez testified that 

the judgments clearly impose the Florida statutory judgment rate of 

4.25%. 

The Court found all witnesses to be credible.

If the interest rate language in the state court judgments was 

clear and unambiguous, this Court would likely enforce that rate, 

even if the state court erred in its post-judgment interest

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calculation. See Nicholson v. Shafe, 558 F.3d 1266 (11th Cir. 2009) 

(discussing Rooker-Feldman doctrine’s applicability to state court 

final judgments). But despite Benworth’s attempts to make it so, 

the language does not unambiguously support Benworth’s argument to 

apply a 25% rate. Here is the language in the judgments:

Interest. The grand total amount referenced in Paragraph 

1 shall bear interest from this date forward at the highest 

legal rate of interest pursuant to the terms of the loan 

documents and as set forth in the Note and Florida 

Statutes, for all of which let execution issue.

The meaning of that post-judgment interest award is the crux 

of the parties’ dispute. Benworth argues that the judgment 

unambiguously fixes the post-judgment interest rate at the 25% 

default rate payable under the note. The Debtors argue that the 

Florida judgment rate of 4.25% applies. Fl. Stat. § 55.03(1).

The Court agrees with the Debtors.

Had the judgments expressly stated that the total judgment 

award would bear interest at a rate of 25% per annum, the Court 

would enforce the judgments as written. But that is not what the 

judgments state. 

Had the notes expressly stated that the default rate of interest 

of 25% would apply to any judgment award, the Court would find that 

the judgments bear interest at the rate of 25% per annum. But that 

is not what the notes state. The notes are silent regarding the 

interest rate applicable post-judgment. The word “judgment” is 

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wholly absent from the note provisions that dictate the applicable 

interest rate.

In Whitehurst v. Camp, the Supreme Court of Florida held that 

under the doctrine of merger, the statutory judgment rate applies 

to judgment awards if the note on which the judgment is based is 

silent with respect to the interest rate that should apply postjudgment. The court’s holding is clear: “[B]ecause a judgment is

an obligation separate from the underlying contractual debt, to 

contractually set the rate of post-judgment interest the parties 

must expressly provide that the agreed interest rate also applies 

to any judgment or decree entered on the underlying debt.” 699 So.2d 

679, 682 (Fla. 1997) (quoting Whitehurst v. Camp, 677 So.2d 1361, 

1362-63 (Fla. 1st DCA 1996)) (emphasis omitted). 

The Court finds that the interest rate language in the judgments 

is ambiguous. As such, the Court must interpret the judgments to 

reach the result mandated by Florida law. Therefore, the Court 

interprets the state court judgment awards of post-judgment interest 

“at the highest legal rate of interest” to mean “at the highest 

legal rate of interest applicable to judgments” as opposed to “the 

highest legal rate of interest applicable to loans.” In the absence 

of express language to the contrary in either the note or the 

judgment, that rate is 4.25%.

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Attorney’s Fees

The Debtors object to Benworth’s claim for attorney’s fees

incurred after entry of the state court judgments. Those amounts 

include fees charged by Benworth’s state court counsel, Mr. Rey, and 

by Benworth’s bankruptcy counsel, Ms. Ryan. Some of the fees cover 

services rendered after issuance of the judgments but prior to 

commencement of these bankruptcy cases. The rest of the fees cover 

services rendered after the filing of these bankruptcy cases.

Paragraphs 4 and 11 of the mortgages contain the following 

provisions regarding entitlement to attorney’s fees:

4. ATTORNEY’S FEES AND COSTS. The Mortgagee shall recover 

from the Mortgagor, and this Mortgage shall secure payment 

of, all and singular the costs, charges and expenses, 

including but not limited to, reasonable trial, appellate 

and bankruptcy attorneys’ fees, because of the failure on 

the part of the Mortgagor to perform, comply with, and 

abide by, each and every of the stipulations, agreements, 

conditions and covenants of the Note and this Mortgage, 

or either, whether or not suit is brought, and every such 

payment made by the Mortgagee shall bear interest from the 

date thereof at the maximum rate permitted by law.

11. DEFENSE OF MORTGAGED PROPERTY AND MORTGAGE: If any 

action or proceeding shall be commenced by any person 

other than the Mortgagee, and Mortgagee is made a party, 

or in which it shall become necessary for Mortgagee to 

defend or take action to uphold or defend the lien of this 

Mortgage, all sums paid or incurred by the Mortgagee for 

the expense of any litigation, including court costs and 

attorneys’ fees incurred in any trial, appellate, and 

bankruptcy proceedings, to prosecute or defend the rights 

and liens created by this Mortgage shall be paid by the 

Mortgagor, together with interest thereon at the maximum 

rate permitted by law from the date thereof, and any such 

sum and interest thereon shall be a claim upon the 

Mortgaged Property, attaching or accruing subsequent to 

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the lien of this Mortgage, and shall be secured by the 

lien of this Mortgage.

(Emphasis added).

 The Debtors argue that the above-quoted attorney’s fee 

provisions do not support an award of fees incurred after entry of 

the foreclosure judgments because the word “collection” is not 

contained in the provisions. The Court disagrees. The fee 

provisions refer to bankruptcy proceedings which, like here, often 

occur after entry of a foreclosure judgment. Therefore, Benworth 

is entitled to post-judgment fees under the loan documents.

At trial, Benworth introduced Benworth’s Exhibits B10 [DE# 366-

1] and B12 [DE# 369-1]. These itemized billing statements prepared 

by the Ryan Law Firm, P.A. (“Ryan”) detail Ms. Ryan’s services in 

the 6229 and 5823 bankruptcy cases. Benworth’s Comptroller, Mildred 

Avila, testified at trial that Benworth had no objection to the 

invoices. The Debtors initially questioned the 7 hours of estimated 

time for each case that was included in the invoices, but once Ms. 

Ryan explained that her actual hours have already exceeded the 

estimate, the Debtors did not argue for any reduction in Ms. Ryan’s 

fees. Therefore, Benworth’s claim for credit bid purposes in the 

6229 Case will include $55,548.65 in fees and costs for Ryan’s 

services. Benworth’s claim for credit bid purposes in the 5823 Case 

will include $45,660 in fees and costs for Ryan’s services. 

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Ms. Avila also testified that Benworth had no objection to the 

hours logged by Albert Rey, Esq., Benworth’s state court foreclosure 

counsel, for services Mr. Rey provided after entry of the foreclosure 

judgements. These hours are detailed in Benworth’s Ex. B8 [DE# 365-

3]. At an agreed rate of $450/hour, Mr. Rey’s fees total $9,184.50 

in the 6229 Case, and $5,845.50 in the 5823 Case. The attorney’s 

fees in each case, after adding Ms. Ryan’s fees and Mr. Rey’s fees, 

total $64,733.15 in the 6229 case and $55,548,65 in the 5823 Case.

Offset for Rents Received

The parties agree that the total amount of Benworth’s claim in 

the 6229 Case should be reduced by $5,400 in rents that Benworth

received after entry of the foreclosure judgment. Therefore,

Benworth’s claim in the 6229 Case must be reduced by this amount and 

by any additional post-judgment rents it receives prior to the 

auction.

Therefore, and for the additional reasons stated on the record 

at the November 17th hearing, it is -

ORDERED as follows:

1. The Debtors’ Amended Objection is sustained, in part, and 

overruled, in part, as set forth below.

2. The post-judgment interest rate applicable to the Benworth 

Claims is 4.25%.

3. For credit-bidding purposes in the auction sale of the 

6229 Property, Benworth’s claim in the 6229 Case shall be comprised 

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of (1) the 6229 Judgment; (2) interest at 4.25% from the date of the 

judgment through the date of the auction; and (3) $64,733.15 in 

post-judgment attorney’s fees. This total must then be reduced by 

the amount of rent collected post-judgment on the 6229 Property. 

The post-judgment interest must also be reduced slightly to account

for the rents that reduced the Judgment amount as received.3

For credit-bidding purposes in the auction sale of the 5823 

Properties, Benworth’s claim in the 5823 Case shall be comprised of 

(1) the 5823 Judgment; (2) interest at 4.25% from the date of the 

Judgment through the date of the auction; and (3) $55,548.65 in 

post-judgment attorney’s fees.

###

COPIES TO:

Geoffrey S. Aaronson, Esq.

Steven L. Beiley, Esq.

Jordi Guso, Esq.

Donald R. Kirk, Esq.

Tamara D. McKeown, Esq.

UST

Chad P. Pugatch, Esq.

Robin J. Rubens, Esq.

D Jean Ryan, Esq.

Steven D. Schneiderman, Esq.

Jason Slatkin, Esq.

3 As discussed at the November 17th hearing, this adjustment in postjudgment interest will be relatively small, and Benworth and the 

Debtor shall agree on a number without billing any additional 

attorney’s fees. The Court suggests simply applying the rents at 

the mid-point of the post-judgment, pre-auction period, and 

calculating interest on the full amount for the months prior to the 

mid-point, and on the reduced judgment amount in the months 

thereafter.

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