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IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF FLORIDA

PANAMA CITY DIVISION

VISION BANK

Plaintiff,

vs. CASE NO. 5:10cv45/RS-MD

JOHN K. LUKE and

GENE VENESKY,

Defendants.

________________________________________/

IMAGE PROPERTIES, LLC,

Intervenor Plaintiff,

v.

VISION BANK,

Defendant.

_________________________________________/

ORDER

Before me is Plaintiff Vision Bank‟s motion to dismiss Intervenor Plaintiff

Image Properties‟ Complaint in Intervention (Doc. 40). 

I. STANDARD OF REVIEW
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In order to overcome a motion to dismiss, a plaintiff must allege enough 

facts to state a claim to relief that is plausible on its face. See Bell Atlantic Corp. v. 

Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007). Granting a motion to dismiss is 

appropriate if it is clear that no relief could be granted under any set of facts that 

could be proven consistent with the allegations of the complaint. Hishon v. King & 

Spalding, 467 U.S. 69, 104 S. Ct. 2229, 2232 (1984). I must construe all

allegations in the complaint as true and in the light most favorable to the nonmoving party. Shands Teaching Hosp. and Clinics, Inc. v. Beech Street Corp., 208 

F.3d 1308, 1310 (11th Cir. 2000), citing Lowell v. American Cyanamid Co., 177 

F.3d 1228, 1229 (11th Cir. 1999). 

II. BACKGROUND

In 2004, Vision Bank(“Vision”) extended a loan in the amount of 

$1,046,000.00 to John K. Luke and Gene Venesky to purchase a residential lot in 

Santa Rosa Beach, Florida. Luke and Venesky executed a promissory note as 

evidence of the loan. Image Properties (“Image”) contemporaneously executed a 

mortgage on the lot to secure the loan.1 The promissory note was renewed twice. 

On March 4, 2010, following a default in payment, Vision filed suit against Luke 

and Venesky for breach of contract under the most recent renewal note. Vision did 

 

1 Luke and Venesky are managing members of Image Properties. 
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not seek to foreclose the mortgage on the property and made no claim against 

Image.

Image has entered into a contract to sell the mortgaged property to a third 

party for $530,000.00. It has offered to use the net proceeds of the sale to partially 

pay the loan if Vision would provide a complete satisfaction of the mortgage in 

exchange for the partial payment. Vision has refused to satisfy the mortgage for 

partial payment. 

On May 7, 2010, I granted Image‟s Motion to Intervene. Image‟s complaint 

in intervention (Doc. 26) alleges five claims against Vision. Vision has moved to 

dismiss all five counts.

III. ANALYSIS

Count I

Count One of Image‟s complaint seeks a declaration that Vision‟s refusal to 

provide a release of the mortgage to Image constitutes an unreasonable restraint on 

alienation. “The test which should be applied with respect to restraints on 

alienation is the test of reasonableness.” Iglehart v. Phillips, 383 So.2d 610, 614 

(Fla. 1980). “The validity or invalidity of a restraint depends upon its long-term 

effect on the improvement and marketability of the property. Once that effect is 
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determined, common sense should dictate whether it is reasonable or 

unreasonable.” Id. 

In the instant case, the terms of the promissory note plainly do not contain 

any restraints on alienation. Furthermore, it is common practice and well settled 

law that a lender may first pursue a judgment on a promissory note, and then later 

file a separate action to foreclose the mortgage securing the note if the judgment is 

not satisfied. Junction Bit & Tool Co. v. Village Apartments, Inc., 262 So.2d 659, 

660 (Fla. 1972). Mortgages on real properties are commonly used instruments and 

do not in themselves constitute unreasonable restraints on alienation, despite the 

fact that that they place a cloud on the title of the property. Therefore, count one of 

Image‟s complaint fails as a matter of law.

Count II

Count two of Image‟s complaint in intervention seeks a declaration that 

Vision has waived its rights or is estopped from asserting its rights against Image 

under the mortgage, since it has elected to sue on the promissory note rather than 

foreclose on property. Again, it is long established that election to sue on a note 

does not bar a subsequent suit for foreclosure of a mortgage, because an unsatisfied 

judgment does not constitute a remedy. Junction Bit & Tool Co. at 660. Therefore, 

as a matter of law Vision has not waived any rights against Image under the 
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mortgage, and Vision will not be estopped from asserting these rights at a later 

date, should it choose to pursue such an action. 

Count III

Count three of Image‟s complaint in intervention seeks rescission or 

cancelation of the mortgage as a result of frustration of purpose, or, in the 

alternative, because Vision is has waived or is estopped from enforcing its rights 

under the mortgage.2 “„Frustration of purpose‟ refers to that condition 

surrounding the contracting parties where one of the parties finds that the purpose 

for which he bargained, and which purposes were known to the other party, have 

been frustrated because of the failure of consideration, or impossibility of 

performance by the other party.” Crown Ice Machine Leasing Co. v. Sam Senter 

Farms, Inc., 174 So.2d 614, 617 (Fla. 2d DCA 1965). 

Image has alleged no specific actions by Vision to frustrate the purpose of 

the mortgage. Furthermore, the fact that the property has declined in value does

not support a claim of frustration of purpose. Courts “have been careful not to find 

commercial frustration if it would only result in allowing a party to withdraw from 

a poor bargain.” Valencia Center, Inc. v. Publix Super Markets, Inc., 464 So.2d 

1269, 1269 (Fla. 3d DCA 1985). The doctrine of commercial frustration “is 

predicated upon the premise of giving relief in situation where the parties could not 

 

2 The issue of waiver and estoppel is addressed supra, and as a matter of law Vision has not waived any rights 

against Image under the mortgage. 
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provide themselves by the terms of the contract against the happening of 

subsequent events, but it does not apply where the intervening event was 

reasonably foreseeable and could and should have been controlled by provisions of 

such contract.” Hilton Oil Transport v. Oil Transport Co., S.A., 659 So.2d 1141, 

1147 (Fla. 3d. DCA 1995). 

Finally, “the law is well settled that a condition precedent to the granting of 

the remedy of rescission is that the other party will be returned to his status quo.” 

Royal v. Parado, 462 So.2d 849, 856 (Fla. 1st DCA 1985). “Generally, a contract 

will not be rescinded even for fraud when it is not possible for the opposing party 

to be put back into his pre-agreement status quo condition.” Id. Image argues that 

it has not received any benefit from Vision, and therefore this requirement does not 

apply. To argue that receipt of a $1,046,00.00 loan by Image‟s managing members

is not a benefit is simply not plausible and is not sufficient to satisfy this 

requirement of the law. Therefore, Image‟s claim for rescission of the mortgage 

fails as a matter of law. 

Count IV

Count four of Image‟s complaint in intervention seeks injunctive relief 

requiring Vision to provide Image with a release of the mortgage upon sale of the 

property to the third party purchaser. “Permanent injunctive relief requires three 

elements: (1) success on the merits; (2) continuing irreparable injury; and (3) no 
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adequate remedy at law.” Kenner v. Convergys Corp., 342 F.3d 1264, 1270 (11th 

Cir. 2003). 

Image argues that without a release of the mortgage, the downturn in the 

economy might make sale of the property in the immediate future difficult. 

However, this difficulty is not a permanently “irreparable” harm. Furthermore, the 

repayment of the promissory note by Defendants Luke and Venesky could alleviate 

the problem of the mortgage on the property. Thus, Image has failed to allege an 

irreparable harm for which an injunction is necessary. In addition, Image has 

failed to successfully allege any other legal causes of action against Vision, making 

success on the merits impossible. Therefore, count four fails as a matter of law. 

Count V

Count five alleges a breach of the implied covenant of good faith and fair 

dealing for Vision‟s failure to agree to satisfy the mortgage on the property with 

the proceeds from the sale of the property, or transfer its lien from the property to 

the net proceeds of the sale. A claim for breach of the implied covenant of good 

faith and fair dealing cannot be maintained under Florida law in the absence of a 

breach of an express term of a contract. Centurion Air Cargo, Inc. v. United 

Parcel Service Co., 420 F.3d 1146, 1152 (11th Cir. 2005). Image‟s complaint fails 

to allege any specific terms of the mortgage contract that Vision has violated. 

Furthermore, Image fails to cite any authority that would require Vision to satisfy 
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the mortgage for less than the full amount. Therefore, under no set of facts can 

Vision be found to be in breach of the implied covenant of good faith and fair 

dealing, and count five fails as a matter of law.

IV. CONCLUSION

Vision‟s motion to dismiss Image‟s complaint in intervention (Doc. 40) is 

granted. The complaint in intervention (Doc. 26) is dismissed.

ORDERED on June 29, 2010.

/s/ Richard Smoak 

RICHARD SMOAK

UNITED STATES DISTRICT JUDGE