Dude v. Congress Plaza, LLC

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT, S & J PROPERTY HOLDINGS' MOTION TO DISCHARGE LIS PENDENS OR, IN THE ALTERNATIVE. REQUIRE PLAINTIFFS TO POST A BOND [DE 77]

          WILLIAM MATTHEWMAN, UNITED STATES MAGISTRATE JUDGE.

         THIS CAUSE is before the Court upon Defendant, S & J Property Holdings' ("Defendant") Motion to Discharge Lis Pendens or, in the Alternative, Require Plaintiff to Post a Bond ("Motion") [DE 77]. Plaintiff, Dietmar Dude ("Plaintiff), filed a Response [DE 90], and Defendant filed a Reply [DE 100]. This matter was referred to the undersigned by United States District Judge Kenneth A. Marra for appropriate disposition. See DE 82. The undersigned held an evidentiary hearing on December 12, 2017. This matter is now ripe for review.

         Background

         Defendant is moving under section 48.23, Florida Statutes, and Local Rule 7.1 to discharge the Notice of Lis Pendens ("Lis Pendens") filed and recorded by Plaintiff. [DE 77]. In the alternative, Defendant is moving to require Plaintiff to post a bond in an amount in excess of $ 1.6 million in support of the Lis Pendens. Id. Plaintiff, on the other hand, requests that the Lis Pendens be extended through trial. [DE 90]. Plaintiff also argues that the law requires a bond be considered, but does not require that a bond actually be imposed. Id.

         Evidentiary Hearing

         The undersigned held an evidentiary hearing on December 12, 2017. Defendant called Lawrence W. Smith, Esq., as its sole witness to establish the amount of the bond that Plaintiff should be required to post. Mr. Smith, an attorney with Gary, Dytrych & Ryan, P.A., testified that he represented Defendant in May and June of 2016, prior to Plaintiffs filing of the Lis Pendens, with regard to a financial transaction. Mr. Smith was instructed to use two properties-the first of which is the three parcels that Defendant purchased from Congress Plaza in October 2012 and the second of which is a property unrelated to this case and owned by an entity other than Defendant-to secure a single loan on behalf of Defendant's owner, John Staluppi. The deal was for a total loan of $6, 095 million.

         Mr. Smith further testified that, in February 2016, he received handwritten correspondence from Dietmar Dude asserting a claim on the three parcels purchased from Congress Plaza. Mr. Dude did not mention any unrecorded mortgage. Mr. Smith received a second letter from Mr. Dude's attorney also asserting a claim to the three parcels purchased from Congress Plaza on Mr. Dude's behalf, but similarly with no mention of any unrecorded mortgage. Thereafter, a different attorney retained by Defendant filed a claim with the title insurance policy based on the claim asserted in the two letters. Because of the Dietmar Dude claim and the title policy insurance claim, Mr. Smith excluded the property purchased from Congress Plaza from the financing deal. The total loan secured by Mr. Smith on behalf of Defendant's owner using the unrelated property as security was $4, 735 million.

         Mr. Smith further testified that he believed that Mr. Dude's and Mr. Kaufman's letters pertained to a January 2010 mortgage on the three parcels because that was the last recorded document regarding the property. He explained that now that he understands that Mr. Dude and Mr. Kaufman were referring to a claim involving an unrecorded mortgage, he believes that he could currently finance the property for $1.36 million ($6, 095 million less $4, 735 million) but for existence of the Lis Pendens. The essence of Mr. Smith's testimony was that, even though the three parcels of property purchased from Congress Plaza were previously excluded from being used as security for the loan solely due to the Dietmar Dude claim and title insurance policy claim made on the property, which preceded the filing of the Lis Pendens in this case, he now believes that the pre-Lis Pendens claims would no longer preclude the use of the three parcels as security for a loan. However, according to Mr. Smith, the Lis Pendens does preclude use of the three parcels as security for a loan.

         Defendant additionally introduced five exhibits, and Plaintiff introduced one exhibit. See DE 127. The Court has carefully reviewed all of the exhibits.

         Finally, at the hearing, Plaintiff and Defendant stipulated that the amount of attorney's fees at issue with regard to the bond is between $150, 000 and $250, 000.

         Analysis

         The Court has carefully reviewed the evidence, testimony, argument of counsel, and the entire docket in this case. The Court addresses each relevant issue below.

         a. Fair Nexus

         First, since Defendant conceded at the December 12, 2017 hearing that there is a fair nexus between the apparent ownership of the property and the dispute embodied in the lawsuit, Defendant thereby abandoned its argument that the Lis Pendens should be discharged. Moreover, the Court has independently reviewed the facts of this case and finds that a fair ...