Court Opinion

ID: 3218164
Source: CourtListenerOpinion
Date Created: 2016-06-29 15:08:23.468563+00
Date Added: 2024-06-11T12:38:27.610962
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                              FOURTH DISTRICT

                       FALLON RAHIMA JALLALI,
                              Appellant,

                                     v.

  KNIGHTSBRIDGE VILLAGE HOMEOWNERS ASSOCIATION, INC.,
                        Appellee.

                              No. 4D15-2036

                              [June 29, 2016]

  Appeal of a non-final order from the Circuit Court for the Seventeenth
Judicial Circuit, Broward County; Michael Gates, Judge; L.T. Case No.
CACE 12-009353 (12).

   Cyrus A. Bischoff, Miami, for appellant.

    Michael J. Villarosa of Kaye Bender Rembaum, P.L., Pompano Beach,
for appellee.

                          ON MOTION FOR REHEARING

PER CURIAM.

  We grant appellee’s motion for rehearing, withdraw our prior opinion,
and substitute the following opinion in its place.

    Fallon Rahima Jallali appeals a non-final order denying her motion to
vacate the final judgment of foreclosure obtained by her property’s
homeowners’ association, Knightsbridge Village Homeowners Association
(“the Association”). Jallali asserted three reasons for reversal. We affirm
as to all three, but write to distinguish U.S. Bank National Ass’n v.
Quadomain Condominium Ass’n, 103 So. 3d 977 (Fla. 4th DCA 2012). We
hold that the filing of a notice of lis pendens by a first mortgagee does not
bar the foreclosure of an association’s subsequent lien for unpaid
assessments against the owner, although that action is inferior to the
foreclosure of the first mortgage, where the association’s subsequent lien
was imposed under the association’s declaration of covenants recorded
before the first mortgagee recorded its notice of lis pendens.
    In 2007, the holder of the first mortgage on Jallali’s property (“the
Lender”) filed a foreclosure action against Jallali and recorded its notice of
lis pendens against the property. The Lender named the Association as a
defendant. 1 The Association’s Declaration of Covenants and Restrictions
had been recorded in the public records prior to both the first mortgage
and the notice of lis pendens.

   In 2011, while the Lender’s action was still pending, the Association
recorded a claim of lien for delinquent maintenance fees against the same
property. In 2012, the Association sued Jallali to foreclose that lien and
obtained a default final judgment, which this Court affirmed. See Jallali
v. Knightsbridge Vill. Homeowners’ Ass’n, 185 So. 3d 1251 (Fla. 4th DCA
2014). Subsequently, the Lender’s successor obtained a final judgment of
foreclosure. 2

   After the mortgage foreclosure concluded, Jallali filed a motion under
Florida Rule of Civil Procedure 1.540(b)(4) to vacate the Association’s 2012
final judgment of foreclosure. Jallali relied on Quadomain, 103 So. 3d at
978-80, and section 48.23, Florida Statutes (2012). The trial court denied
the motion and this appeal followed.

    The question presented is whether the filing of the notice of lis pendens
by the first mortgage holder constitutes a bar to the Association’s
foreclosure action based upon a claim of lien for unpaid assessments filed
after the notice of lis pendens. Because the Declaration of Covenants,
which included provisions with respect to the Association’s right to lien
and foreclose on the property, was a recorded “interest” at the time of the
filing of lis pendens, we conclude that, even though the lien was inferior to
the mortgage, section 48.23, Florida Statutes, constitutes no bar to the
enforcement of the lien between the Association and Jallali.

   A lis pendens serves two main purposes: (1) to give notice to and
thereby protect any future purchasers or encumbrancers of the property;
and (2) to protect the plaintiff from intervening liens. See Fischer v.
Fischer, 873 So. 2d 534, 536 (Fla. 4th DCA 2004).

1 Before the Lender sued, the Association had obtained a judgment of foreclosure
against Jallali’s property based on its lien for unpaid maintenance fees. The
Lender alleged, and the Association acknowledged, that the Association’s lien was
inferior to the Lender’s mortgage. The Association’s judgment was satisfied in
2008 and is not relevant to this appeal.
2 This Court recently reversed that final judgment for lack of standing of the

plaintiff at the time suit was filed. Jallali v. Christiana Tr., 184 So. 3d 559 (Fla.
4th DCA 2016).

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          One of several purposes underlying the doctrine of lis
      pendens is that, when a suit is filed that could affect title in
      property, some notice should be given to future purchasers or
      encumbrancers of that property. DePass v. Chitty, 90 Fla. 77,
      105 So. 148 (1925). This serves the purposes of protecting
      those purchasers or encumbrancers from becoming embroiled
      in the dispute, and of protecting the plaintiff from intervening
      liens that could impair any property rights claimed and also
      from possible extinguishment of the plaintiff’s unrecorded
      equitable lien. In sum, unlike a typical injunction, a lis
      pendens exists as much to warn third parties as to protect the
      plaintiff; and the procedural requirements associated with lis
      pendens should advance both of these important purposes.

Chiusolo v. Kennedy, 614 So. 2d 491, 492 (Fla. 1993) (footnote omitted).

   Jallali relies on Quadomain as standing for the proposition that the
association’s foreclosure against her is barred because the association did
not comply with section 48.23, Florida Statutes. In Quadomain, the bank
holding a first mortgage on a condominium unit filed a foreclosure action,
recorded a notice of lis pendens, and obtained a final judgment. 103 So.
3d at 978. Because ownership of the unit had changed before the final
judgment, the bank obtained leave to supplement its complaint to
foreclose on the new owners. Id. It also filed a supplemental notice of lis
pendens. Id. Thereafter, the association that managed the condominium
recorded a claim of lien for unpaid fees against the bank, as the bank had
obtained a certificate of title during the initial foreclosure. Id. The
association filed a foreclosure action, obtained a default judgment against
the bank, and the property was sold. Id. The bank moved to vacate,
arguing the association’s lien foreclosure was barred, because it was filed
after the bank filed its notice of lis pendens. Id. The trial court denied the
motion and the bank appealed. Id.

   The issue on appeal in Quadomain was whether the bank’s
supplemental lis pendens divested the trial court of jurisdiction to
adjudicate the association’s lien. Id. This Court quoted from section
48.23, Florida Statutes. Id. at 979. That statute, last amended effective
July 1, 2009, 3 provides in part as follows:

3 Previously, language similar to that now appearing in section 48.23(1)(d)
appeared in section 48.23(1)(b), but the period of time for intervening was only
twenty days. § 48.23(1)(b), Fla. Stat. (2008).

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   (a) An action in any of the state or federal courts in this state
   operates as a lis pendens on any real or personal property involved
   therein or to be affected thereby only if a notice of lis pendens is
   recorded in the official records of the county where the property is
   located and such notice has not expired pursuant to subsection (2)
   or been withdrawn or discharged.

   ....

   (d) Except for the interest of persons in possession or easements of
   use, the recording of such notice of lis pendens, provided that
   during the pendency of the proceeding it has not expired pursuant
   to subsection (2) or been withdrawn or discharged, constitutes a
   bar to the enforcement against the property described in the
   notice of all interests and liens, including, but not limited to,
   federal tax liens and levies, unrecorded at the time of recording
   the notice unless the holder of any such unrecorded interest or
   lien intervenes in such proceedings within 30 days after the
   recording of the notice. If the holder of any such unrecorded
   interest or lien does not intervene in the proceedings and if such
   proceedings are prosecuted to a judicial sale of the property
   described in the notice, the property shall be forever discharged
   from all such unrecorded interests and liens. If the notice of lis
   pendens expires or is withdrawn or discharged, the expiration,
   withdrawal, or discharge of the notice does not affect the validity of
   any unrecorded interest or lien.

§ 48.23(1), Fla. Stat. (emphasis altered).

   Based on that statute and similar cases, this Court concluded in
Quadomain that the jurisdiction of the court conducting the mortgage
foreclosure proceeding was exclusive:

   [T]he only way to enforce a property interest that is unrecorded at
   the time the lis pendens is recorded is by timely intervening in the
   suit creating the lis pendens—all other actions are barred.
   Therefore, the court presiding over the action which created the lis
   pendens has exclusive jurisdiction to adjudicate any encumbrance
   or interest in the subject property from the date the lis pendens is
   recorded to the date it enters final judgment.

   Accordingly, the court in the Association’s lien foreclosure action
   did not have jurisdiction to foreclose the lien. If the Association
   wanted to recover its unpaid Association fees, it was statutorily

                                      4
   required to intervene in the re-foreclosure action as prescribed in
   section 48.23(1)(d).

Quadomain, 103 So. 3d at 979-80 (citations omitted).

   In this case, Jallali relies on the language of Quadomain, suggesting
that the final foreclosure judgment which the Association obtained in the
2012 case was void, because the trial court lacked jurisdiction at that time.
Jallali contends that exclusive jurisdiction to foreclose on the property was
with the circuit court conducting the Lender’s foreclosure action in the
2007 case.

    The dicta of Quadomain does appear to preclude an association from
filing a foreclosure action and lis pendens based on a lien filed after a
lender with a superior interest has filed a foreclosure action and recorded
a lis pendens. But the case is distinguishable on its facts for two reasons:
(1) the association in Quadomain was attempting to foreclose its lien
against the bank’s interest, as well as that of the homeowner, unlike the
present case where the Association only foreclosed against the delinquent
homeowner; and (2) the association’s lien in the present case was imposed
under the association’s declaration of covenants recorded before the
Lender recorded its notice of lis pendens.

    Quadomain does not discuss whether an association’s declaration of
covenants (or of condominium) constitutes an “interest” under section
48.23(1)(d), Florida Statutes. We hold that such a declaration may qualify
as an “interest.” Therefore, declarations which are recorded not only prior
to the notice of lis pendens, but prior to the mortgage itself, may constitute
a prior recorded interest under section 48.23(1)(d), Florida Statutes, such
that the filing of a lis pendens does not automatically preclude an
association from foreclosing on a lien imposed under the declaration,
although the association’s foreclosure may be subordinate to the
foreclosure of the mortgage.

    This is reflected in section 720.3085, Florida Statutes (2015), which
controls homeowners’ association liens and priority for unpaid
assessments. The statute provides that the lien for unpaid assessments
relates back to the recording of the declaration of community.
§ 720.3085(1), Fla. Stat. However, as to determining superiority over first
mortgages of record, the lien is effective only from the date the claim of lien
is recorded:

      When authorized by the governing documents, the association
      has a lien on each parcel to secure the payment of

                                      5
      assessments and other amounts provided for by this section.
      Except as otherwise set forth in this section, the lien is
      effective from and shall relate back to the date on which the
      original declaration of the community was recorded. However,
      as to first mortgages of record, the lien is effective from and
      after recording of a claim of lien in the public records of the
      county in which the parcel is located.

Id.; see also § 718.116(5)(a), Fla. Stat. (2015) (providing similarly with
regard to association assessments on condominiums).

   The provisions of the Declaration of Covenants recorded by the
Association operate as section 720.3085(1) contemplates. The Declaration
provides for the assessment of fees by the Association for maintenance of
the Association and its properties. It provides that when a lien is imposed
for any unpaid fees, it relates back to the recording of the Declaration,
except that the lien is subordinate to the lien of an institutional mortgage
recorded prior to the time a notice of lien is recorded. Additionally, sale of
the property pursuant to a foreclosure proceeding or deed in lieu of
foreclosure by an institutional mortgagee extinguishes the lien for any
assessments coming due prior to the sale or transfer.

    Essentially, the Declaration serves as a lien to secure future
assessments. Thus, it constitutes an “encumbrance or interest” for
purposes of section 48.23(1)(d), Florida Statutes. Quadomain, 103 So. 3d
at 979-80. Further, the filing dates of any liens incurred under the
Declaration, including the lien at issue, relate back to the date of the
Declaration’s recording. Because the Declaration was recorded prior to
the Lender’s lis pendens, a foreclosure action based upon a claim of lien
filed under its terms is not barred by section 48.23(1)(d).

    This conclusion is not undermined by the Declaration’s exception to
the relation-back provision with regard to first mortgages. This provision
is relevant in determining priority of liens, rather than serving the notice
purposes of section 48.23, Florida Statutes (with its bar to enforcement of
unrecorded property interests by a separate suit). From the outset, the
Association has acknowledged its lien is inferior to the mortgage; its lien
foreclosure action does not purport to affect the Lender’s superior interest.

   That a homeowners’ association can proceed against the homeowner
with foreclosure of its lien for unpaid assessments, imposed under its
declaration recorded before the first mortgagee recorded its notice of lis
pendens, while a mortgage foreclosure proceeding is pending is further
supported by section 720.3085(5)(b), Florida Statutes. Generally, a claim

                                      6
of lien cannot be foreclosed by a homeowners’ association without
providing forty-five days’ notice to the homeowner. § 720.3085(5), Fla.
Stat. However, the association need not provide such notice “if the parcel
is subject to a foreclosure action or forced sale of another party[.]”
§ 720.3085(5)(b), Fla. Stat. This implies that a claim of lien can be
foreclosed even where a mortgage foreclosure proceeding is pending at the
time the claim of lien is filed.

    Moreover, we note that, in the context of this case, a lis pendens
recorded by a mortgage holder serves to protect the mortgage holder from
liens unrecorded at the time of the filing. Although section 48.23(1)(d),
Florida Statutes, creates a “bar to . . . enforcement” and provides for
extinguishment of any unrecorded interests or liens if the case proceeds
to judicial sale, the statute is not designed to protect the delinquent
homeowner. Here, not only does the Association have a prior recorded
interest through its Declaration of Covenants, its action was only against
the delinquent homeowner. Unlike Quadomain, the Association’s suit
did not involve the Lender. See Quadomain, 103 So. 3d at 978.
Significantly, the Lender’s priority is not at issue here, and the Association
acknowledges the Lender’s superior interest. Thus, the purposes of lis
pendens and section 48.23(1)(d), Florida Statutes, are not served by
allowing Jallali to assert these rights against the Association.

    Accordingly, Quadomain does not control the outcome of this
proceeding between the Association and the delinquent homeowner. A
homeowners’ association has the right to proceed in a foreclosure of its
lien for unpaid assessments against the homeowner in accordance with its
declaration and the statutes governing such associations.

   We affirm the order denying Jallali’s motion to vacate the final
judgment.

   Affirmed.

WARNER, GROSS and KLINGENSMITH, JJ., concur.

                            *         *         *

   Not final until disposition of timely filed motion for rehearing.

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