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Initiating Foreclosure Does Not Constitute Irreparable Harm, Fourth DCA Rules

  • Initiating Foreclosure Does Not Constitute Irreparable Harm, Fourth DCA Rules

    Initiating Foreclosure Does Not Constitute Irreparable Harm, Fourth DCA Rules

    Recently, the Florida Fourth District Court of Appeals ruled against a case involving a collateral mortgage, stating that initiation of foreclosure proceedings does not count as “irreparable harm” that is needed to justify a temporary injunction. The ruling came in a case involving the lender, Bautista REO U.S. LLC, and borrower, ARR Investments Inc. ARR made the claim that Bautista incorrectly assigned the property to a successor, and that successor then went and increased the payoff amount to nearly double its original value.
    ARR originally borrowed $1.55M from Doral Bank, the predecessor to Bautista. That loan was secured with a traditional mortgage as well as a collateral mortgage on a piece of real estate found in Pembroke Pines. Part of the collateral mortgage secured a $250,000 demand note, plus interest. In 2011, ARR refinanced the loan with City National Bank of Florida, but eventually defaulted on their debt, leading City National Bank to file foreclosure against the real estate. In response, ARR attempted a sale to a third, outside party.
    During these proceedings, It was noticed that Doral Bank had not released the collateral mortgage to City National Bank at the time of the refinance, but assigned it to Bautista along with the loan. When ARR found this out, they asked for an accounting of the debt, and Bautista totaled the amount at around $478,500 instead of the original $250,000.
    ARR filed a complaint against Bautista for violating Florida mortgage statutes and interfering with a contract. ARR also sought an injunction preventing Bautista from interfering with the sale to the third party, and ordered them to place the value of the debt at the original $250,000. The lower courts ruled in ARR’s favor and required Bautista to release the collateral mortgage to allow the sale to go through, while also making ARR deposit the original debt of $250,000. The court then denied Bautista’s motion to stay the injunction.
    However, this was overturned by the Fourth DCA. In its decision, the Court decided that “the initiation of foreclosure proceedings does not constitute irreparable harm,” as ARR was contesting in their complaint. As well, in their unsigned decision, the Court stated that “because ARR failed to prove that it would incur irreparable harm with no adequate remedy on appeal, the court erred in granting the temporary injunction.”