Case Name: Eugene SIMS and Christine Sims, Appellants, v. NEW FALLS CORPORATION, Appellee
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 2010-05-26
Citations: 37 So. 3d 358
Docket Number: No. 3D08-133
Parties: Eugene SIMS and Christine Sims, Appellants, v. NEW FALLS CORPORATION, Appellee.
Judges: Before COPE, SHEPHERD, and ROTHENBERG, JJ.
Reporter: Southern Reporter, Third Series
Volume: 37
Pages: 358–365

Head Matter:
Eugene SIMS and Christine Sims, Appellants, v. NEW FALLS CORPORATION, Appellee.
No. 3D08-133.
District Court of Appeal of Florida, Third District.
May 26, 2010.
Rehearing Denied July 7, 2010.
Allan B. Kaiser, for appellants.
Haley, Sinagra, Paul & Toland and J.T. Haley, for appellee.
Brigham Moore and John W. Little III, West Palm Beach, Goldman Felcoski & Stone and Robert W. Goldman, Naples, for The Real Property Probate & Trust Law Section of The Florida Bar, as amicus curiae.
Before COPE, SHEPHERD, and ROTHENBERG, JJ.

Opinion:
SHEPHERD, J.
The question in this case is whether a choice of law provision contained in a mortgage, expressly stating it governs that document alone, also governs a separate suit on a promissory note executed simultaneously as part of the same transaction. In the balance lies the validity of a money judgment obtained on the promissory note by the current note holder, New Falls Corporation, against the original borrowers and appellants here, Eugene and Christine Sims. Application of the choice of law provision mandated by the mortgage, Georgia, will result in an affirmance of the final judgment. The alternative choice, Florida law, necessitates reversal of the final judgment. Our study of the promissory note and mortgage documents, in conjunction with the applicable law, leads us to conclude Florida law applies to the action brought by New Falls and that under Florida law, the plaintiffs' action is barred by that state's statute of limitations.
Eugene and Christine Sims ("the borrowers") are Florida residents, who, in 1998, executed a promissory note in the' sum of $50,000, secured by a second mortgage on property owned by the borrowers in Alpharetta, Georgia. Within a short time thereafter, the Sims defaulted on both the first and second mortgage loans. The first mortgagee foreclosed on its mortgage and, on February 1, 2000, the property was sold to satisfy the first mortgage lien. The lien of the second mortgage was extinguished. On April 21, 2001, New Falls, the assignee of the original lender on the promissory note and mortgage, accelerated the payments due on the note. On January 4, 2007, New Falls brought suit on the note in the Miami-Dade County Circuit Court. Soon thereafter, the parties filed cross-motions for summary judgment on the dispositive choice of law issue.
The appellee, New Falls, does not dispute there are two instruments involved in this case. Nor can there be any dispute that while the subject matter of those instruments was the same, namely a $50,000 loan to Sims, there actually were two entirely separate transactions. On the one hand, there was a mortgage involving real property. On the other hand, there was a promissory note involving money. See Jones v. Greenlee Constr. Co., 526 So.2d 1012, 1013 (Fla. 2d DCA 1988) (noting an agreement for a deed and promissory note were separate obligations). It follows that upon the Sims' default, New Falls (or its predecessor) enjoyed the option of either foreclosing on the Georgia collateral or separately seeking a money judgment on the promissory note. Mellor v. Goldberg, 658 So.2d 1162, 1163 (Fla. 2d DCA 1995). In this case, the lender elected to stand mute and allow its collateral for the loan to be extinguished by the first mortgage in the Georgia foreclosure action. As assign-ee to the promissory note, New Falls then filed a perfectly permissible action against Sims for the sum due on the promissory note. Id. Notably, the promissory note was the only document attached to New Falls' complaint.
An examination of the promissory note clearly shows it is silent as to the applicable choice of law. Recognizing, on cross-motions for summary judgment, that because Florida follows the doctrine of lex loci contractus to the choice of law issue, Florida choice of law rules potentially would lead to the extinguishment of the action on the promissory note, New Falls resurrected the abandoned mortgage instrument and argued the following choice of law provision in the mortgage also governs the note:
13. Governing Law; Severability. The state and local laws applicable to this Deed shall be the laws of the jurisdiction in which the Property is located. The foregoing sentence shall not limit the applicability of federal law to this Deed. In the event that any provision or clause of this Deed or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Deed or the Note which can be given effect without the conflicting provision, and to this end the provisions of this Deed and the Note are declared to be severable.
(emphasis added). In order to impute this provision to the promissory note, providing Georgia law as the applicable choice of law, New Falls relies on the one reference to the security deed in the promissory note which states, "In addition to the protections given to the Note Holder under this Note, a Security Deed, dated February 5, 1998, protects the Note Holder from possible losses which might result if I do not keep the promises which I make in this Note."
For two reasons, such an imputation of Georgia law into the promissory note is erroneous. First, the express unambiguous language of the choice of law provision states it applies only to the security deed and, secondly, the doctrine of mutual construction—urged upon us by New Falls—cannot be invoked when the express agreement of the parties is clear and unambiguous.
New Falls relies on the first sentence of the governing law provision in the security deed to argue Georgia law applies to this Florida case. To use this sentence to import Georgia law into the promissory note, one necessarily must ignore the two highlighted words, "this Deed," by which the parties expressly stated that the provision applies only to the security deed.
It is settled law in Florida that a court may resort to the process of interpretation only when the words used in a contract are unclear. McGhee Interests, Inc. v. Alexander Nat'l Bank, 102 Fla. 140, 135 So. 545, 547 (1931) ("Ambiguities should arise from the words used in a contract before this court may resort to interpretation or construction to ascertain the intention of the parties to it."); Great Am. Ins. Cos. v. Souza, 855 So.2d 187, 189 (Fla. 4th DCA 2003); Boat Town U.S.A., Inc. v. Mercury Marine Div. of Brunswick Corp., 364 So.2d 15, 17 (Fla. 4th DCA 1978) (citing Bd. of Pub. Instruction of Dade County v. Fred Howland, Inc., 243 So.2d 221 (Fla. 3d DCA 1971)). This is as true of notes and mortgages as it is of other types of contracts. Brumick v. Morris, 131 Fla. 46, 178 So. 564 (938); see also 37 Fla. Jur. 2d Mortgages and Deeds of Trust § 93 (2004) ("A mortgage is generally governed by the same rules of interpretation that apply to written instruments or contracts generally and to deeds particularly.") (footnotes omitted). The words used in the choice of law provision in the mortgage in this case admit no ambiguity and, therefore, the provision is inapplicable to the promissory note.
It also is urged upon this Court that "the doctrine of mutual construction" permits the importation of the sentiment of the choice of law provision in the second mortgage into the promissory note. The doctrine provides that "two documents executed by the same parties as part of a single transaction regarding the same subject matter must be read and construed together...." 37 Fla. Jur. 2d Mortgages and Deeds of Trust § 94 (2004). However, it may not be invoked to override the clear and unambiguous expression of agreement of the parties to a transaction. See McGhee, 135 So. at 548. There is no ambiguity, latent or otherwise, in the documentation we have been asked to review.
Our decision that there exists no lawful vehicle to transport the choice of law provision in the second mortgage into the promissory note is finally supported by an opinion of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation (FNMA/FHLMC), the drafter of both documents, graciously supplied to us with an amicus brief filed at our invitation by the Real Property Probate & Trust Law Section of the Florida Bar. The FNMA and FHLMC letter to the Section, reads in full as follows:
We received a copy of the Court's communication dated October 14, 2008, requesting that the Florida Bar file an amicus curiae brief in the above case. To assist you in responding to the Court's request for an explanation as to why the Note identified as FNMA/ FHLMC Uniform Instrument — Georgia Second Mortgage (the "Note") is silent on choice of law while the Security Deed identified as FNMA/FHLMC Uniform Instrument — Georgia Second Mortgage (the "Security Deed") contains a choice of law provision, we can provide some insight.
The choice of law provision in the Security Deed was inserted with the expectation that enforcement of the mortgage loan would occur through a foreclosure action in which the Note reflecting the indebtedness and the Security Deed reflecting the security for repayment of that indebtedness would be considered together as an integrated contract and that the choice of law provision in the Security Deed would govern the enforcement of the Note. We intended that if a suit to enforce the Note were maintained separately from an action to foreclose on the property under the terms of the Security Deed, the applicable law would be determined by the choice of law provisions of the forum jurisdiction.
If you have any further questions about the Uniform Instruments, please feel free to call .
(emphasis added). The suit filed by New Falls in this case is indisputably "a suit to enforce the note . separately from an action to foreclose on the property under the terms of the Security Deed." Application of the guidance received from FNMA/ FHLMC and Florida's choice of law rules requires the application of Florida law to the issue before us. Thus, Florida's statute of limitations prohibits New Falls' prosecution of this case.
Reversed and remanded with directions to enter judgment for the borrowers.
ROTHENBERG, J., concurs.
. The mortgage is entitled "SECURITY DEED" and bears the following notation at its foot: "GEORGIA — SECOND MORTGAGE— 1/80 — FNMA/FHLMC UNIFORM INSTRUMENT." For ease of reference we will refer to it as the second mortgage. An identically worded notation appears at the foot of the promissory note.
. If the Florida statute of limitations applies, this suit is time-barred. § 95.1 l(2)(b), Fla. Stat. (2007) (providing a five-year statute of limitations period for "a legal or equitable action on a contract, obligation, or liability founded on a written instrument"). If the Georgia statute of limitations applies, this suit will be timely. § 9-3-24, Ga.Code (2007) (providing a six-year statute of limitations period for "all actions upon simple contracts in writing").
. Under the doctrine of lex loci contractus, "in the absence of a contractual provision specifying governing law, a contract, other than one for performance of services, is governed by law of the state in which the contract was made." Shaps v. Provident Life & Accident Ins. Co., 826 So.2d 250, 254 n. 3 (Fla.2002) (citation and internal quotation marks omitted); Lanoue v. Rizk, 987 So.2d 724, 727 (Fla. 3d DCA 2008) ("For contract cases, lex loci contractus will determine the applicable statute of limitations."). The Sims were Florida residents at the time of the execution of the note and mortgage. Although they actually signed the documents while traveling to New Jersey, there is no contention made that the place of contract was New Jersey.
. It should be initially noted that this statement in the promissory note does not incorporate the security deed into the promissory note, but merely references the security deed. See Holly Hill Acres, Ltd. v. Charter Bank of Gainesville, 314 So.2d 209, 211 (Fla. 2d DCA 1975).
. We also solicited an amicus brief from FNMA/FHLMC. Apparently, the FNMA/ FHLMC chose to respond through the Section. We thank both the Section and FNMA/ FHLMC for their assistance in this case.