Opinion
No. 1D21-1821
02-15-2023
Fayez SHAMIEH and Amal Shamieh, Appellants, v. HCB FINANCIAL CORP., as successor in interest to First NBC Bank, as successor in interest to Central Progressive Bank by acquisition of assets from the FDIC, as receiver for Central Progressive Bank, and Estephan D. Daher, Appellees.
David B. Pleat, Pleat & Perry, P.A., Destin, for Appellants. Steven B. Bauman and Shiraz A. Hosein, Anchors Smith Grimsley, PLC, Fort Walton Beach, for Appellee Daher.
David B. Pleat, Pleat & Perry, P.A., Destin, for Appellants.
Steven B. Bauman and Shiraz A. Hosein, Anchors Smith Grimsley, PLC, Fort Walton Beach, for Appellee Daher.
B.L. Thomas, J.
This is an appeal of an order denying Fayez and Amal Shamieh's motion for summary judgment and granting summary judgment in Estephan Daher's favor. We reverse and remand with instructions.
The Shamiehs and Daher executed a mortgage and promissory note to purchase real property in Okaloosa County, Florida, with Central Progressive Bank in 2006. HCB Financial Corporation eventually acquired the note and mortgage as a successor in interest. The Shamiehs and Daher were jointly and severally liable under the mortgage. But neither the mortgage nor the note addressed their right to seek contribution from each other should either party default. The parties ultimately defaulted on the loan in 2012. HCB brought a foreclosure action against them.
HCB's foreclosure action is one of three different cases that preceded the case on appeal. The Shamiehs filed a civil case in Louisiana state court against HCB and Daher. And HCB filed an involuntary bankruptcy suit against Daher in the Northern District of Florida.
The Shamiehs are Louisiana residents. The Shamiehs sought recission of the note and mortgage alleging that the Central Progressive Bank employees committed fraud. The Shamiehs added HCB as a defendant because it acquired the note and mortgage. The Louisiana Court of Appeals held that "no court ha[d] jurisdiction" over the Shamiehs’ claim because they failed to exhaust their administrative remedies under the Financial Institution Reform, Recovery, and Enforcement Act of 1989. See generally Shamieh v. First NBC Bank Holding Co. , 202 So. 3d 1103 (La. App. 3 Cir. 7/27/16).
In 2015, Daher and HCB settled. Under the settlement agreement, HCB agreed to release all its claims against Daher, including dismissing the bankruptcy case. HCB also agreed to pay Daher's counsel $7,500. In exchange, Daher admitted to the enforceability of the note and mortgage and agreed to cooperate with HCB in the Louisiana and Okaloosa County litigation.
In 2019, the Shamiehs and HCB settled. Under that settlement agreement, the Shamiehs agreed to pay $1 million and transfer title of the Okaloosa County property to HCB. In exchange, HCB released them from its claims arising from the note and mortgage.
The Shamiehs filed a crossclaim and brought an equitable contribution claim seeking $500,000 from Daher—half of the settlement amount. The Shamiehs filed a motion for summary judgment, and Daher filed an affidavit opposing the motion arguing that his settlement with HCB severed his and the Shamiehs’ common obligation. After a hearing, the trial court denied the Shamiehs’ motion for summary judgment and entered summary judgment in Daher's favor. This appeal followed.
This Court reviews a trial court's ruling on a motion for summary judgment de novo. Dudowicz v. Pearl on 63 Main, Ltd. , 326 So. 3d 715, 718 (Fla. 1st DCA 2021). "The [trial] court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fla. R. Civ. P. 1.510(a). Here, the issue before the trial court was a question of law: whether Daher's settlement agreement with HCB severed the parties’ common obligation thereby negating the Shamiehs’ equitable contribution claim.
The trial court entered its summary judgment order after May 1, 2021. Thus, the Florida Supreme Court's amendments to the Florida Rules of Civil Procedure adopting the federal summary judgment standard applied. See In re: Amendments to Florida Rule of Civil Procedure 1.510 , 317 So. 3d 72, 77–78 (Fla. 2021).
"The doctrine of equitable contribution is applied to prevent one of two, or more, joint obligors [from] being required to pay more than his [or her] share of a common burden[ ] ...." Lopez v. Lopez , 90 So. 2d 456, 458 (Fla. 1956) (citation omitted). "The doctrine of equitable contribution is grounded on principles of equity and natural justice .... The [doctrine] attempts to distribute equally among those who have a common obligation, the burden of performing that obligation .... While the [doctrine] arose in equity, it is generally enforceable in actions at law." Fletcher v. Anderson , 616 So. 2d 1201, 1202 (Fla. 2d DCA 1993) (citations omitted). The law presumes that co-obligors are equally liable for a proportion of the guaranteed obligation. See Desrosiers v. Russell , 660 So. 2d 396, 398 (Fla. 2d DCA 1995).
The doctrine applies to cases involving joint contractual obligations when the parties’ agreement does not address their rights to seek contribution. Helmet House Corp. v. Stoddard , 861 So. 2d 1178, 1179–80 (Fla. 4th DCA 2003) ; Schrank v. Pearlman , 683 So. 2d 559, 561 (Fla. 3d DCA 1996). Parties share a common obligation if they are guarantors on a promissory note that provides for their joint and several liability. See Meckler v. Weiss , 80 So. 2d 608, 608–09 (Fla. 1955) ; see also Helmet House Corp. , 861 So. 2d at 1180 (first citing Fletcher , 616 So. 2d at 1202 ; and then citing Curtis v. Cichon , 462 So. 2d 104, 105–06 (Fla. 2d DCA 1985) ). Thus, the general rule is that when one co-obligor "pays more than his [or her] fair share of [a] debt owed by both, the payer is entitled to contribution from the other[ ] ...." Meckler , 80 So. 2d at 609 ; see also Campbell v. Gordon , 674 So. 2d 783, 788 (Fla. 1st DCA 1996) ; Desrosiers , 660 So. 2d at 399.
Here, the trial court found Florida's Uniform Contribution Among Tortfeasors Act, section 768.31, Florida Statutes (2020) to be "highly persuasive." Specifically, it found that section 768.31(5)(b) "clearly demonstrates that Florida has codified the concept that the release of a co-obligor from a joint obligation effectively severs the common obligation ...." The trial court also found that ruling in the Shamiehs’ favor would frustrate the public policy favoring settlement agreements because it would discourage co-obligors like Daher from entering settlement agreements.
The trial court's rationales are flawed. First, Florida's Uniform Contribution Among Tortfeasors Act does not apply because the underlying action was not a tort. See Helmet House Corp. , 861 So. 2d at 1179 ("Both parties agree that [Florida's] Uniform Contribution Among Tortfeasors Act ... does not apply because the parties were sued under a contract theory."). Thus, the trial court erred by relying on that statute. Second, the public policy favoring settlement agreements does not apply either. The Shamiehs’ equitable contribution claim does not threaten the enforceability of Daher's settlement agreement with HCB. See Robbie v. City of Miami , 469 So. 2d 1384, 1385 (Fla. 1985) ("[S]ettlements are highly favored and will be enforced whenever possible ." (citations omitted) (emphasis added)).
Daher's settlement agreement with HCB did not sever his common obligation to the Shamiehs. The Second District Court of Appeals’ decisions in Fletcher and Desrosiers are persuasive here.
In Fletcher , the petitioner and the respondents were guarantors on a promissory note and entered a guaranty agreement with a bank. 616 So. 2d at 1201. The petitioner and respondents were jointly and severally liable under the agreement. Id. The parties defaulted on the loan, and the bank sued the guarantors. Id. The bank secured a judgment against all solvent guarantors, but the bank's judgment went unsatisfied. Id. at 1201–02. In a post-judgment agreement, the petitioner agreed to pay the bank $220,000 in exchange for the bank releasing its claims against the petitioner. Id. at 1202. "The respondents [also] paid [the bank] $50,000 and each entered into separate release and settlement agreements with [the bank]." Id. The petitioner then filed an equitable contribution claim against the solvent guarantors and demanded a jury trial. Id. Pursuant to the respondents’ motion, the trial court struck the petitioner's demand for a jury trial. Id. The petitioner filed a petition for writ of certiorari challenging the order. Id. at 1201. The appellate court granted the petition and quashed the trial court's order striking the petitioner's demand for a jury trial on his equitable contribution claim. Id. at 1202. It held that "[t]o the extent that petitioner seeks an aliquot share of contribution, the circuit court departed from the essential requirements of law in striking [the] petitioner's demand for jury trial." Id.
In Desrosiers , four men entered a joint business venture. 660 So. 2d at 397. Two of the men, the appellees, executed a promissory note to establish a line of credit at a bank. Id. All four men personally guaranteed the loan. Id. The two other men, the appellants, later withdrew from the business venture. Id. The appellants notified the bank, who had disbursed over $140,000 under the note, about their impending withdrawal. Id. The bank demanded the appellants pay the $140,000. Id. at 398. The appellants paid, the bank released them from their guaranties, and the appellants sought reimbursement from the appellees. Id. The court held that nothing in the agreement "overc[ame] the presumption that the four guarantors [were] equally liable for a proportion of [the] debt guaranteed." Id. at 399. And the court held that because the appellants "paid more than their share of the amount owed, [they were] entitled to contribution from" the appellees. Id.
Here, based on the undisputed facts before the trial court, Daher's settlement agreement with HCB did not sever his common obligation with the Shamiehs under any legal or equitable theory. Thus, because Daher's settlement agreement with HCB did not sever the common obligation, he was not entitled to summary judgment as a matter of law. And here, because the Shamiehs paid more than their pro rata share of the common obligation in their settlement agreement with HCB, they had a right to demand contribution from Daher. Meckler , 80 So. 2d at 609 ; Desrosiers , 660 So. 2d at 399.
We cannot say, however, that the trial court could grant summary judgment in the Shamiehs’ favor. The Shamiehs sued Daher for half of the $1 million settlement. The Shamiehs assumed that the entire amount they had to pay to settle their claims with HCB constituted the common obligation. This is not necessarily correct.
Daher and the Shamiehs were jointly and severally liable for the principal. They were also jointly and severally liable for other expenses such as accrued interest, late charges, property taxes, and legal fees related to HCB's foreclosure action. The unpaid balance on the principal ($754,951.54) does not appear to be disputed. The unpaid balance on the principal would constitute the common obligation. See Helmet House Corp. , 861 So. 2d at 1180. But it is unclear whether and to what extent these other expenses could also be part of the parties’ common obligation. Given the nature of the preceding litigation, Daher might not be liable for the portion of the $1 million HCB allocated to cover these other expenses. See Meckler , 80 So. 2d at 609 ("[A]ppellant's right of recovery in equity being ‘limited to contribution,’ he is not entitled to fees for services of his attorney in this suit."). First, the Shamiehs unsuccessfully continued the litigation for years in two different states after Daher settled with HCB. Second, the Shamiehs and Daher were adverse in the Louisiana state court suit. Both factors, and possibly others, would affect the amount of the other expenses. And both factors, and possibly others, could affect whether the portion of the settlement HCB allocated to cover these other expenses could be part of the common obligation.
Under the note, HCB was only entitled to attorney's fees in an amount not to exceed 25% of the principal balance due on the loan.
This issue requires further findings of fact. Because the amount the Shamiehs may be entitled to is a question of fact—a question of fact that Daher will likely dispute—they are not entitled to summary judgment in their favor. See Fla. R. Civ. P. 1.510(a). Thus, we remand the case for further fact finding to determine what amount of contribution the Shamiehs may be entitled to.
We REVERSE the trial court's judgment and REMAND with instructions consistent with this opinion.
Nordby J., concurs; Tanenbaum, J., concurs with opinion.
Tanenbaum, J., concurring.
There of course is no dispute that Daher and the Shamiehs all were on the note and mortgage at issue. Apparently, though, Daher and the Shamiehs took different approaches to litigating HCB's foreclosure action, and the Shamiehs seem to have made use of their greater financial resources to execute on a more scorched-earth litigation strategy. This undoubtedly factored into HCB's decision to settle with Daher first, whereby HCB agreed to pay him $7,500 in return for a mutual release, his cooperation against the Shamiehs, and his agreement to allow a default foreclosure judgment regarding the subject property. The Shamiehs would later agree to settle HCB's suit in full—inclusive of the outstanding balance on the note, attorney's fees for all the litigation that the Shamiehs put HCB through, fees, costs, taxes, and interest—for a payment by the Shamiehs of $1 million and their deeding of the subject property to HCB.
The contribution sought by the Shamiehs toward a portion of that payment is an equitable remedy, one "based on a principle of justice and equity, that one person should not be singled out by the creator to pay the whole demand; and where this occurs, the law intervenes and places sureties relatively to each other in a state of equality as to the amount paid, and gives the party paying a remedy by action for contribution." Love v. Gibson , 2 Fla. 598, 618 (1849) (emphasis supplied). Daher in turn should not be let completely off the hook from contributing to the extinguishment of the debt—vis-à-vis the Shamiahs—simply because HCB made a tactical decision to buy him out first to facilitate its suit against the Shamiehs. Put another way, it seems contrary to the equitable principles behind contribution to allow Daher to separately negotiate his way out of paying his fair share on a debt in return for his cooperation against his co-obligors.
HCB certainly was free to negotiate the two settlements in a manner it concluded would most effectively ensure it recovered as much of the debt as it could on the note. Its decision in this respect, though, should not control what a just outcome is as between the joint promisors as part of an equitable true-up. That question is for the trial court to decide in equity. Cf. Meckler v. Weiss , 80 So. 2d 608, 609 (Fla. 1955) ("This result conforms to the general rule applicable to co-obligors that as between them, when one of them pays more than his proportionate share of the debt owed by both, the payer is entitled to contribution from the other ....").
Matters of equity tend to be fact-intensive affairs, and this case is no exception. The primary fact question that the trial court will have to answer on remand is how much of the $1 million paid by the Shamiehs was reimbursement of HCB for the excess attorney's fees it incurred to respond to the Shamiehs’ aggressive litigation approach. It is the trial court's call as to the extent to which equity demands Daher be responsible for that portion of the million-dollar settlement payment, after factoring in the value of the transfer of the property by all three co-obligors to HCB.