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Atkins North America, Inc. v. Tallahassee MH Parks, LLC

Florida Court of Appeals, First District

August 29, 2019

Atkins North America, Inc., Appellant,
Tallahassee MH Parks, LLC and Tallahassee Real Estate Holdings, LLC, Appellees.

         Not final until disposition of any timely and authorized motion under Fla. R. App. P. 9.330 or 9.331.

          On appeal from the Circuit Court for Leon County. Karen A. Gievers, Judge.

          Karl E. Pearson of Pearson Doyle Mohre & Pastis, LLP, Maitland, for Appellant.

          James M. Durant, Jr. of Boyd & Durant, P.L., Tallahassee, for Appellee Tallahassee MH Parks, LLC; Kyle L. Shaw and Daniel E. Manausa of Manausa Law Firm, P.A., Tallahassee, for Appellee Tallahassee Real Estate Holdings, LLC.

          Kelsey, J.

         Atkins North America appeals a final judgment foreclosing three mortgages held by Tallahassee MH Parks (TMHP) as assignee of the original mortgagee. Atkins is a lienholder with a recorded money judgment against the mortgagor, Tallahassee Real Estate Holdings (TREH). Atkins raises four issues on appeal, one of which we affirm with no further comment. We reverse because we find merit in the other three issues: the mortgage reformation improperly prejudiced Atkins's rights; the amount of the debt was not supported by competent, substantial evidence; and the amount of the debt and corresponding bid credit incorrectly included funds on which the evidence failed to prove the payment of required intangible and documentary stamp taxes.


         In 2005, TREH obtained three loans from Farmers & Merchants Bank to buy three "crime-ridden mobile home parks with a plan to turn them into affordable housing communities," in the words of TREH's manager and now sole member, Daniel Manausa. The loans were memorialized in three separate notes and secured with three mortgages.

         In 2009, Atkins obtained and recorded a final money judgment against TREH for services Atkins provided in the first apartment project, which turned out to be the only one that was completed. Every year from 2006 through 2012, one or more of the notes was renewed; and although there were sporadic capital payments or other decreases in principal, the principal amount of each note was increased at least once and up to three times. In 2013, the bank consolidated the three original notes into two new notes. In 2015, the bank assigned its interests in the new notes and the original mortgages to TMHP.

         In 2016, TMHP filed a foreclosure action and asked the court to reform one of the mortgages to include a parcel, Lot 45, that allegedly was omitted from the original mortgage description by mutual mistake of the original parties, TREH and the bank. The foreclosure complaint identified nine persons or entities with recorded liens against the mortgaged properties, but TMHP claimed its interests were superior to the claims of all other lienholders. Atkins was the only defendant that answered the complaint. It denied that its lien was inferior.

         At the bench trial, no representative of the bank testified. Mr. Manausa was the sole witness. He testified in support of the mortgage reformation claim that the original parties, TREH and the bank, had intended to add another parcel of land, Lot 45, under one of the mortgages as additional security, but by mutual mistake had failed to document the intention. Over Atkins's objection due to its being prejudiced by such a retroactive modification of the mortgage, the trial court granted reformation.

         Regarding the total amount due at foreclosure, Mr. Manausa deferred to the loan documents themselves and a loan summary document created by TMHP. Those documents reflected the principal balance as of the loan consolidation, but not the balance due at foreclosure. The trial court nevertheless set the amount of damages at the unpaid balance of the three original notes on the date they were consolidated in the two successor notes.

         With respect to whether intangible and documentary stamp taxes were paid on all new money, Mr. Manausa admitted that his personal knowledge was limited, and deferred to the loan documents, which he authenticated. He testified that he believed the bank lent TREH new money only twice, and all required taxes were paid; and that any other principal advances were used to pay property taxes or insurance, on which no taxes were due.

         The loan documents, however, flatly contradict this testimony. The documents show that the notes were renewed multiple times, and additional principal was advanced in connection with at least six of those renewals. However, none of the advances was designated for tax-exempt payment of taxes or insurance on the properties. On the contrary, two advances were for renovations, one was to rezone twenty-five acres for apartments, and another was for "seven new units." Although any tax payments would be evidenced on the documents ...

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