Case Name: ALAFAYA SQUARE ASSOCIATION, LTD., etc., Appellant, v. GREAT WESTERN BANK, etc., et al., Appellee
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 1997-09-02
Citations: 700 So. 2d 38
Docket Number: No. 96-445
Parties: ALAFAYA SQUARE ASSOCIATION, LTD., etc., Appellant, v. GREAT WESTERN BANK, etc., et al., Appellee.
Judges: DAUKSCH,-GOSHORN and THOMPSON, JJ., concur.
Reporter: Southern Reporter, Second Series
Volume: 700
Pages: 38–44

Head Matter:
ALAFAYA SQUARE ASSOCIATION, LTD., etc., Appellant, v. GREAT WESTERN BANK, etc., et al., Appellee.
No. 96-445.
District Court of Appeal of Florida, Fifth District.
Sept. 2, 1997.
Rehearing Denied Oct. 8, 1997.
Margaret A. Wharton of Margaret A. Wharton, P.A., Oviedo, for Appellant.
Jeffrey Gilbert of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quental, P.A., Fort Lauderdale, and Elliot H. Scherker of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., Miami, for Appellees WHC-One Investors, L.P., WHC-One Investors, Inc., and General Electric Capital Corporation.
No appearance for Appellee Great Western Bank.

Opinion:
ON MOTION FOR REHEARING AND/OR EN BANC REVIEW
ANTOON, Judge.
Appellees have filed a motion for rehearing and/or en banc review of our opinion dated February 7,1997. We grant the motion, and accordingly withdraw our previous opinion and issue this opinion in its stead.
In this mortgage foreclosure case, Alafaya Square Association, Ltd. (Alafaya), appeals the trial court's order appointing a receiver. We reverse because there was no showing that Alafaya wasted or impaired the secured real property.
Alafaya owns a shopping center in Seminole County. The property is encumbered by a mortgage in favor of the appellee, WHC-One (WHC). In an agreement modifying the original mortgage, Alafaya agreed to the appointment of a receiver in case of default. When the loan matured, Alafaya failed to pay the balance on the note and WHC sued to foreclose the mortgage'. The foreclosure complaint included a request for the appointment of a receiver.
After the foreclosure suit was filed, WHC moved the trial court to sequester the rents received from the tenants of the shopping center. In March of 1995, the trial court granted the motion pursuant to section 697.07, Florida Statutes (1995). Since then, all rents have been deposited into an escrow account and monthly accountings of income and expenses have been provided to WHC. The record does not reveal any objection to the monthly accountings. Importantly, Ala-faya lost power as a result of the order to expend funds from the escrow account without the approval of the trial court.
In August of 1995, Alafaya contacted WHC following a request for repairs by Publix, the anchor tenant, and requested use of funds from the escrow account to paint the shopping center and to repair the parking lot. Having received no response, Alafaya filed a motion with the trial court seeking permission to expend the requested funds. Thereafter, Alafaya requested WHC's consent to withdraw funds from the escrow account to pay the real estate taxes on the property. Again no answer was received from WHC.
In response to Alafaya's motion to expend funds for repair and maintenance, WHC filed a motion for appointment of receiver alleging an "apparent waste to the property."
At the hearing on the motion for appointment of receiver, Monte Morrow, asset manager for the mortgaged property, testified on behalf of WHC:
Q: Are you aware that they requested [Alafaya] to do some work at the Center?
A: Yes, I am.
Q: What work was, to your knowledge, has Publix requested [Alafaya] to perform at the Center?
A: They have requested some painting; and I guess some repair on the outside, exterior of the structure, as well as repair the parking . the parking lot.
Q:' Are you aware from correspondence that [Alafaya] has provided to us when Publix first requested those repairs?
A: I think originally it was in April, 1995.
.
Q: Has [Alafaya] notified J.E. Robert Companies that Publix is requesting repairs of the supermarket at the Shopping Center?
A: Yes.
Q: What has [Alafaya] notified you that Publix wanted done?
A: [Alafaya] has notified us that they need repair of the parking structure or parking lot; and painting and patching of the front of the exterior building.
Q: Are you aware . or has [Alafaya] done anything about that, to your knowledge?
A: To my knowledge, no.
}¡? #
A: Is there any other detrimental effect to the property?
Q: Yes.
A: Well, upon my inspection today I found the property very poorly maintained overall; not just specifically for the Publix Grocery Store and the parking lot, but the overall appearance of the building, it was very poor. The landscaping was not being well kept up. I saw rust stains on the outer edges of the building, I mean there was a large amount of deterioration.
On cross-examination, Morrow acknowledged that WHC had not authorized payment of the delinquent 1995 taxes.
The trial court also heard the testimony of Charles Mitchell, a professional property manager, who stated that he had observed that the property was in good shape and had an average rate of occupancy. Finally, the trial court heard from Harvey Taylor, one of Alafaya's principals, who testified that he had requested WHC's consent to expend escrow funds but had received no response. Based upon review of this evidence, the trial court granted WHC's motion for the appointment of a receiver.
On appeal, Alafaya challenges this ruling, arguing that the evidence failed to establish that Alafaya had caused the property to be wasted or impaired and therefore was insufficient to support the appointment of a receiver. In response, WHC first maintains that there was sufficient evidence of waste. Secondly, it argues that the mortgage modification agreement provided for the appointment of a receiver upon default, thereby creating a presumption of entitlement to a receiver which could be overcome only by a showing that the value of the mortgaged property was in excess of the amount owed and that Alafa-ya failed in this regard.
The appointment of a receiver in a foreclosure action is not a matter of right. Rather, it is an extraordinary remedy which must be exercised with caution as it is in derogation of the legal owner's fundamental right to possession of his or her property. Barnett Bank of Alachua County v. Steinberg, 632 So.2d 233, 234 (Fla. 1st DCA 1994). The role of a receiver is to preserve the value of the secured property. Id. at 235. Although the appointment of a receiver is within the discretion of the trial court, it is an abuse of discretion to make such an appoint ment in the absence of a showing that the secured property is being wasted or otherwise subject to serious risk of loss. Atco Construction & Development Corp. v. Beneficial Savings Bank, 523 So.2d 747, 750 (Fla. 5th DCA 1988).
We agree with Alafaya that the evidence in this case does not constitute waste or impairment. The only possible waste referred to in the testimony was the disrepair to the parking lot and the exterior paint on the building. The record demonstrates, however, that Alafaya took reasonable and timely action in requesting that WHC release sequestered funds from the escrow account for these needed repairs. Ironically, WHC asserts that Alafaya's failure to make the necessary repairs constitutes waste. We reject this argument as spurious since such failure was a direct result of WHC's refusal to authorize use of the sequestered rent.
With regard to the real estate taxes, the record establishes that the rental payments from Publix contained a pro rata share of real estate taxes. These funds had been deposited in the escrow account and therefore the only impediment to the payment of the taxes was WHC's refusal to consent.
As noted above, WHC also argues that in the mortgage modification agreement Alafaya agreed to the appointment of a receiver upon default, and therefore, Alafaya had the burden of proof with regard to appointment of a receiver. WHC further argues that in order for Alafaya to meet its burden, Alafaya must show that the value of the property exceeds the entire debt. This is an accurate statement of the law; however, it applies only when the mortgagor is receiving rent which would otherwise serve as additional security for the loan. See Florida Reinvestment Corp. v. Cypress Savings Association, 509 So.2d 1352 (Fla. 4th DCA 1987). In the instant case, the rents have been sequestered leaving Alafaya with no control over the incoming rents. Moreover, Alafaya did not refuse to apply the rents to the mortgage balance. Under these circumstances, Alafaya is not required to establish that the value of the property exceeded the debt in order to avoid the appointment of a receiver.
The facts of this case do not justify the extraordinary remedy of receivership. The rents have been sequestered by separate order and there is no evidence that the mortgaged property is being wasted. Accordingly, we reverse.
REVERSED.
DAUKSCH,-GOSHORN and THOMPSON, JJ., concur.
PETERSON, J., concurs specially with opinion.
HARRIS, J., dissents with opinion, in which GRIFFIN, C.J., and COBB and W. SHARP, JJ., concur.
. This court has jurisdiction under Florida Rule of Appellate Procedure 9.130(3)(D).
. This standard was announced in Carolina Portland Cement Co. v. Baumgartner, 99 Fla. 987, 128 So. 241 (1930), which the parties agree is the leading case regarding the appointment ol receivers in mortgage foreclosure actions. Baum-gartner does not support WHC's position. It merely provides:
When the rents and profits are expressly made a part of the security, and the mortgagor is receiving them, but refusing to apply them to the mortgage debt, which he is allowing to go in default, thus dissipating a part of the security while allowing the debt to increase, a court of equity should appoint a receiver unless the mortgagor makes it clear that the real property covered by the mortgages will sell for enough to pay the debt and charges due the mortgagee and thus affords ample and entirely adequate security.
Id. at 249. (Emphasis added).