Opinion
No. 3D18-1177
03-04-2020
Ruth P. LAW, Appellant, v. Benjamin F. LAW, Appellee.
Lawrence H. Liebling, P.A., and Lawrence H. Liebling (Safety Harbor), for appellant. Mitchell J. Cook, P.A., and Mitchell J. Cook, Ramrod Key, for appellee.
Lawrence H. Liebling, P.A., and Lawrence H. Liebling (Safety Harbor), for appellant.
Mitchell J. Cook, P.A., and Mitchell J. Cook, Ramrod Key, for appellee.
Before EMAS, C.J., and SALTER and FERNANDEZ, JJ.
PER CURIAM.
I. INTRODUCTION
Ruth P. Law ("Ruth") appeals the denial of her post-judgment motion for indemnification against her former husband, Benjamin F. Law ("Benjamin"), pursuant to a debt assumption and hold harmless provision in their mediated settlement agreement ("MSA") incorporated in the Final Judgment of Dissolution of Marriage. For the following reasons, we reverse and remand for further proceedings.
II. BACKGROUND
a. The loan agreements
On May 18, 2010, Benjamin executed a mortgage note in favor of David and Rosemary Candler (collectively "the Candlers") for a personal loan in the sum of $100,000.00 ("original note"). Benjamin and Ruth, then married, secured repayment of the original note with a second mortgage on their marital home located in Marathon, Florida. On that same day, Benjamin also executed an agreement pledging up to 6% of his interest in BDI Properties U.S., L.L.C. ("BDI") as additional security for the original note. Thereafter, the Candlers filed a UCC-1 financing statement with the Florida Secured Transaction Registry ("FSTR") listing Mr. Candler as the secured party, Benjamin as the debtor, and a 6% interest in BDI as collateral.
The Candlers are long-time friends of Benjamin, with whom Benjamin has resided since 2012.
On September 1, 2011, Benjamin sought to secure an additional loan in the amount of $20,000.00 from the Candlers. To this end, he executed another mortgage note for $20,000.00—pledging an additional 2% of BDI as security. This time, no financing statement was filed with the FSTR as to the additional 2% of BDI. Both mortgage notes, totaling $120,000.00, matured on May 18, 2012.
b. The dissolution proceedings
On November 3, 2011, Ruth filed a petition for dissolution of marriage in the Circuit Court for the Sixteenth Judicial Circuit for Monroe County, Florida. Lawrence H. Liebling was Ruth's counsel, and David L. Manz was Benjamin's counsel. During the dissolution proceedings, the Laws sold their home and used $146,105.58 in sales proceeds to pay the Candlers. Thereafter, they received a recorded satisfaction of the second mortgage and cancellation of the associated notes. Following the sale of the marital home, Benjamin moved to the Candlers' home in Georgia. On November 20, 2013, the Laws executed a final MSA in the dissolution proceeding. Per the agreement, Ruth received, as lump-sum alimony, 50% of Benjamin's 16.24% interest in BDI and the distributions therefrom. The MSA also provided that Benjamin was to contribute $40,000.00 towards Ruth's attorney's fees in the dissolution proceedings, payable from 50% of Benjamin's remaining 8.12% share of BDI's distributions until paid in full.
In December 2012, Manz withdrew as Benjamin's counsel in the dissolution proceedings.
The final MSA was incorporated in the Final Judgment of Dissolution of Marriage, entered on December 17, 2013. The Final Judgment directed BDI to transmit all distributions payable to Benjamin to Liebling's trust account for disbursal as directed by the Final Judgment and any subsequent order of the court. The Final Judgment also included an injunction prohibiting Benjamin, BDI, and all persons in active concert with them who receive actual notice of the injunction from "selling, transferring, purchasing[,] encumbering [,] ... concealing, [or] dissipating" Benjamin's shares or interest in BDI, and any funds payable to him by BDI. Finally, the Final Judgment incorporated Paragraph "1.E." of the MSA, providing:
E. Debts and Obligations: Except as set forth herein the parties shall be solely liable for any debts and obligations in his or her sole name, holding the other harmless.
The trial court retained jurisdiction to enforce the Final Judgment.
c. The Candlers' collection action
Two days after entry of the Final Judgment, the Candlers sent a certified letter to BDI demanding that it transfer 8% of Benjamin's distributions to them pursuant to the pledge discussed supra. BDI notified the Laws and their counsel of its receipt of the Candlers' demand and its intention to comply. Liebling objected and transmitted copies of the Final Judgment of Dissolution, which included the MSA and injunction, to BDI and Mr. Candler. BDI replied that it had already made quarterly distributions but was holding Benjamin's distribution "due to the current issue of who [should receive the disbursement]. Once settled, [BDI] will disburse to the party that is agreed upon, or court instructed."
Thereafter, on March 27, 2014, Benjamin emailed an introductory memorandum to Barton W. Smith that disclosed the court, judges, and attorneys in the settled dissolution action, the lump-sum alimony and attorney's fee award to Ruth, and "the court order in place which conflicts with [Mr. Candler's] rights under the assignment." The memo also stated that Mr. Candler was seeking a modification of the court order, allowing a transfer of some shares covered by the order, or a "friendly default judgment" against Benjamin, which Mr. Candler hoped would supersede the injunction.
Smith represented the Candlers in their collection action against Benjamin.
On April 3, 2014, the circuit court ordered that Manz's charging lien of $10,760.17 be paid from Benjamin's remaining 25% of BDI's distributions until paid in full. In sum, as of April 3, 2014, the family court required Benjamin's 16.24% interest in BDI's distributions to be disbursed as follows: 50% to Ruth; 25% to Liebling, until Ruth's attorney's fees were paid in full; and 25% to Manz, until his charging lien was paid in full.
On October 9, 2014, Smith filed a foreclosure action against Benjamin on behalf of the Candlers in Monroe County Court. The complaint alleged that Benjamin owed $13,893.15 under the mortgage notes that were secured by 8% of BDI. The complaint, however, failed to mention: (1) the repayment to the Candlers upon the sale of the Laws' home, (2) the recorded satisfaction and cancellation of the notes, (3) the family court's attorney's fee awards to Ruth and Manz payable from Benjamin's interest in BDI, and (4) the injunction against transfer of Benjamin's interest in BDI. The civil cover sheet denied the existence of any related case, and no notice of the action was ever served upon Ruth.
Despite the recorded satisfaction, the Candlers claimed that Benjamin owed them $10,440.17 in principal and $3,452.98 in interest on the second loan, which was secured by Benjamin's BDI interest as collateral.
Thereafter, Benjamin and Smith co-signed a consent final judgment of foreclosure to enable the Candlers to obtain Benjamin's 8% of BDI at a sheriff's sale. Mr. Candler then sent the sheriff's bill of sale to BDI with a request to re-title Benjamin's interest in BDI to the Candlers in time for the next quarterly distribution. BDI's attorney then notified Liebling of the sheriff's sale, the Candlers' demand for transfer of shares and distributions, and BDI's intention to deposit Benjamin's funds into the court registry absent agreement between the parties.
As of that date, Ruth's lump-sum alimony was outstanding, $29,051.75 of Liebling's attorney's fees remained unpaid, and $3,064.48 of Manz's charging lien was still due.
Ruth then filed a motion in the county court action to vacate the consent final judgment and sheriff's sale pursuant to Florida Rule of Civil Procedure 1.540(b)(3). The court entered an order setting aside the judgment and sale following an evidentiary hearing, and made the following findings:
Ruth based her claim on collusion, extrinsic fraud, misrepresentation, disregard of the circuit family court's injunction, and injury to her awards.
either [Benjamin] misled the Family Court when he entered into the Mediation Agreement, or he misled this Court when he consented to the instant action without mentioning the Family Court orders or the sale of the residence.... It is, however, abundantly clear that [Benjamin] made serious material omissions that have affected the ability of this, and/or other Courts to handle this situation fairly and reasonably. Not the least of which was to allow the omission of Ruth [ ] as a party to this complaint.
The Candlers appealed, and the appellate division of the circuit court affirmed without opinion.
The Candlers then amended their complaint to include Ruth, Liebling, and Manz as defendants, seeking a ruling that the conflicting interests were inferior to the Candlers' lien. Benjamin again consented to foreclosure by the Candlers; Ruth defended on the merits. The circuit court entered final summary judgment in favor of Ruth, finding that her awards were superior to the Candlers' claim.
The action was thereafter transferred to the circuit court, as the complaint sought damages in excess of the county court's jurisdiction.
Ruth filed a post-judgment motion for indemnification against Benjamin in the dissolution proceedings seeking to recover legal fees and expenses incurred in the Candler litigation. In the motion, Ruth sought to enforce Paragraph "1.E." of the MSA. Following an evidentiary hearing, the trial court denied the motion. In doing so, the family court ruled that Paragraph "1.E." of the MSA "does not support an award of fees and costs to [Ruth] as the prevailing party in the [Candler litigation]." This appeal followed. III. STANDARD OF REVIEW
"A marital settlement agreement entered into by the parties and ratified by a final judgment is a contract, subject to the laws of contract." Ferguson v. Ferguson, 54 So. 3d 553, 556 (Fla. 3d DCA 2011). We review a trial court's interpretation of a contract de novo. Chandler v. Geico Indem. Co., 78 So. 3d 1293, 1296 (Fla. 2011).
IV. ANALYSIS
Paragraph "1.E." of the MSA incorporated in the Final Judgment of Dissolution of Marriage provides:
E. Debts and Obligations: Except as provided herein the parties shall be solely liable for any debts and obligations in his or her sole name, holding the other harmless.
Here, Ruth argues that the family court misinterpreted this paragraph as being a "prevailing party attorney's fees" provision. We agree.
A hold harmless agreement is another form of an indemnification agreement. See Sanislo v. Give Kids the World, Inc., 157 So. 3d 256, 272-73 (Fla. 2015) (Lewis, J., dissenting); see also 42 C.J.S. Indemnity § 23 (2014) ("The term ‘hold harmless’ means to fully compensate the indemnitee for all loss or expense, and an agreement to hold harmless is a contract of indemnity that requires the indemnitor to prevent loss to the indemnitee or to reimburse the indemnitee for all losses suffered from the designated peril."). "Indemnification may be arranged by contract, whereby ‘the promisor agrees to protect the promisee against loss or damages by reason of liability to a third party.’ " Claire's Boutiques v. Locastro, 85 So. 3d 1192, 1198 (Fla. 4th DCA 2012) (quoting Dade Cnty. Sch. Bd. V. Radio Station WQBA, 731 So. 2d 638, 643 (Fla. 1999) ).
A contract of indemnity differs from a prevailing party attorney's fee provision in one important way: the duty to indemnify is enforceable regardless of whether the indemnitee prevails. Shannon v. Kaiser Aluminum & Chem. Corp., 749 F.2d 689, 690-91 (11th Cir. 1985) ("Under Florida law, the general rule is that an indemnitee under an indemnification agreement is entitled to recover reasonable attorney's fees and legal costs which he is compelled to pay as a result of suits brought against him relating to matters for which he is entitled to be indemnified. This rule is equally applicable whether the indemnitee is successful in his defense of the suit or not." (internal citation omitted)).
As noted previously, the trial court found that "Paragraph ‘1.E.’ of the Mediation Agreement, adopted and incorporated into the Final Judgment of Dissolution of Marriage, [did] not support an award of fees and costs to [Ruth] as the prevailing party. " (Emphasis added). However, Ruth was not seeking indemnification based on her status as the prevailing party in the Candler litigation action. Rather, she sought to be indemnified for all expenses incurred in the litigation to set aside the sheriff's sale and consent final judgment, defend the Candlers' appeal, and secure final summary judgment against the Candlers. Because of this, Ruth's status as a prevailing party is irrelevant to the determination of whether Benjamin is obligated to indemnify her for her participation in the Candler litigation. Instead, the only determinative factor is the applicability of Paragraph "1.E." of the MSA as incorporated in the Final Judgment of Dissolution of Marriage. We find, and the record supports, that the provision required Benjamin to indemnify Ruth for her expenditures in defending her alimony and attorney's fees award in the Candler litigation, where Benjamin failed to do so. It bears noting that we are likewise unpersuaded by Benjamin's argument that the phrase "except as set forth herein" in Paragraph "1.E" operates to exclude alimony and attorney's fees from indemnification. This interpretation is contrary to the clear contractual language. "When a contract is clear and unambiguous, ‘the actual language used in the contract is the best evidence of the intent of the parties, and the plain meaning of that language controls.’ " Anthony v. Anthony, 949 So. 2d 226, 227 (Fla. 3d DCA 2007) (quoting Maher v. Schumacher, 605 So. 2d 481, 482 (Fla. 3d DCA 1992) ). Again, the provision states: "... the parties shall be solely liable for any debts and obligations in his or her sole name, holding the other harmless." The debt at issue here is Benjamin's personal loan from the Candlers. It so happens that Benjamin's debt is payable from the same source as Ruth's alimony and fee awards—Benjamin's interest in BDI. However, that does not mean that Ruth's alimony and fee awards, which are debts set forth within the MSA, are the debts that Ruth seeks to be held harmless from. Rather, Ruth sought to be indemnified for having to litigate and defend the BDI distributions from being re-titled to satisfy Benjamin's personal debt to the Candlers. Because this falls squarely within the hold harmless provision, we find that Ruth is entitled to indemnification.
Equally without merit is Benjamin's suggestion that Ruth was required to initiate a new action. The record clearly shows that the family court reserved jurisdiction to enforce the MSA as incorporated in the Final Judgment of Dissolution of Marriage. Thus, Ruth properly enforced the hold harmless provision in Paragraph "1.E" by filing a motion for indemnification in the family court. See Blann v. Blann, 971 So. 2d 135 (Fla. 1st DCA 2007) (enforcing an indemnification provision of a settlement agreement via a motion to enforce related to a dissolution of marriage).
V. CONCLUSION
For the foregoing reasons, we reverse the trial court's denial of Ruth's motion for indemnification and remand for further proceedings consistent with this opinion.
Reversed and remanded.