Filing # 63783634 E-Filed 11/06/2017 09:44:08 AM

IN THE CIRCUIT COURT OF THE 15TH

JUDICIAL CIRCUIT IN AND FOR
PALM BEACH COUNTY, FLORIDA

CASE NO. 502016CA009292XXXXMB(AH)

FIRST AMERICAN BANK,

Plaintiff,

vs.

LAURENCE S. SCHNEIDER,
STEPHANIE L. SCHNEIDER, et al.

Defendants.
________________________________/

DEFENDANTS’ MEMORANDUM OF LAW IN SUPPORT OF

MOTION TO STAY PENDING APPEAL

Pursuant to Florida Rule of Appellate Procedure 9.310(a), Defendants Laurence S.

Schneider (“Mr. Schneider”) and Stephanie L. Schneider (“Mrs. Schneider”) (collectively,

“Defendants”) file their memorandum of law in support of Defendants’ Motion to Stay Pending

Appeal. In support, Defendants state:

I. INTRODUCTION AND BACKGROUND

This is a foreclosure action arising out of a Home Equity Line of Credit (“HELOC” or the

“Loan”) Defendants obtained from Plaintiff First American Bank’s (“FAB”) predecessor in

interest. The credit agreement associated with the HELOC was secured by a mortgage on

Defendants’ residential property located at 17685 Circle Pond Court, Boca Raton, Florida 33496-

1002 (the “Property”).

On May 1, 2017, the Court entered an Order Granting the Motion to Withdraw of

Defendants’ prior counsel. (D.E. 96, Order Granting Mot. to Withdraw.) While attempting to

retain new counsel, Defendants proceeded pro se in this matter.

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 On May 25, 2017, FAB filed a Motion for Summary Judgment. (D.E. 108, FAB’s Mot.

for Summary J.) On June 26, 2017, the Court held a hearing on FAB’s Motion for Summary

Judgment. Defendants were not present at that hearing due to a scheduling conflict, of

which they had notified FAB’s counsel. After hearing argument from FAB only, on June 26,

2017, the Court granted FAB’s Motion and entered two separate judgments in favor of FAB,

both captioned “Final Judgment.” One judgment is against Mr. Schneider only and for damages

only; it ordered that: (1) FAB is due $1,625,072.71, bearing interest at the rate of 5.05% per year;

and (2) FAB is entitled to reasonable attorneys’ fees, costs, and expenses, with the Court

retaining jurisdiction to determine the amount of same (“Damages Judgment”). (D.E. 125, Final

J.) The other judgment is against Mr. Schneider, Mrs. Schneider, and The Oaks at Boca Raton

Property Owners’ Association, Inc., and was for both damages and foreclosure; among other

things, it ordered that: (1) FAB is due principal in the amount of $1,488,554.76, interest from

March 16, 2016 through the date of the Judgment in the amount of $69,646.52, and property

taxes in the amount of $66,870.93, for total damages of $1,625,072.21, bearing interest at the

rate of 5.05% per year; (2) FAB holds a lien on the Property; (3) if the total damages and interest

were not paid, the Clerk was to auction the Property on August 10, 2017; and (4) FAB is entitled

to reasonable attorneys’ fees, costs, and expenses, with the Court retaining jurisdiction to

determine the amount of same (“Foreclosure Judgment”). (D.E. 126, Final J. of Foreclosure.)

On June 30, 2017, the Court entered an Amended Final Judgment, apparently meant to

replace the original Damages Judgment, bearing additional identifying information for Mr.

Schneider, and otherwise containing the same orders as the original Damages Judgment

(“Amended Damages Judgment”). Ex. C, Am. Final J.

 Defendants, still proceeding pro se, filed numerous motions seeking post-judgment relief,

including: (1) an Emergency Request for a Temporary Restraining Order, dated August 7, 2017;

and (2) an Emergency Motion for Stay of Execution of Judgment Pending Appeal and Request to

Extend Injunction, dated September 6, 2017 (“Motion for Stay”). (D.E. 159, Emergency Mot.;

D.E. 176, Emergency Mot.) On October 2, 2017, after the September 8, 2017 hearing on the

motions did not go forward due to Hurricane Irma, the Court entered an Order resetting the

evidentiary hearing on those two motions for November 6, 2017. (D.E. 195, Order Resetting.)

On November 1, 2017, immediately after Defendants retained him, undersigned counsel

filed a Notice of Appearance and a Motion to Continue the Evidentiary Hearing. (D.E. 201, Not.

of App.; D.E. 203, Mot. to Cont. Eviden. Hrg.)

II. LEGAL STANDARD

Florida Rule of Appellate Procedure 9.310(a) provides:

[A] party seeking to stay a final or non-final order pending review shall file a
motion in the lower tribunal, which shall have continuing jurisdiction, in its
discretion, to grant, modify, or deny such relief. A stay pending review may be
conditioned on the posting of a good and sufficient bond, other conditions, or
both.

Fla. R. App. P. 9.310(a). Subsection (b)(1) of that rule provides:

If the order is a judgment solely for the payment of money, a party may obtain an
automatic stay . . . , without the necessity of a motion or order, by posting a good
and sufficient bond equal to the principal amount of the judgment plus twice the
statutory rate of interest on judgments on the total amount on which the party has
an obligation to pay interest.

Fla. R. App. P. 9.310(b)(1).

III. DISCUSSION

Defendants’ Motion for Stay should be granted based on conditions other than posting of

a full bond due to FAB’s misrepresentations or fraud in the obtaining and inflating the Amended

Damages Judgment and the Foreclosure Judgment.

 Florida’s District Courts of Appeal are split two-to-one as to whether 9.310(a) may be

used to stay a judgment solely for money. 1 The Fourth District does not appear to have ruled on

this issue. However, the First District’s recent, well-reasoned opinion in Silver Beach Towers

held that pursuant to Rule 9.310(a), a trial court has the authority to enter stay of monetary

judgment upon conditions other than bond, explaining that the provision of Rule 9.310(b)(1) are

merely an alternative means of staying a monetary judgment that divests the trial court of

authority to alter the bond amount. See 2017 WL 672138, at *1. The Second District has reached

the same conclusion. See id. at *1 (citing cases). Thus, in Silver Beach Towers, the First District

affirmed the trial court’s condition of a stay pending appeal on appellant’s posting of a $175,000

bond, even though the judgment and pre-judgment interest totaled $2,119,869.52. See id.

Here, the Court should not condition a stay pending appeal on Defendants posting a bond

in the full amount of the damages set forth in the Foreclosure and Amended Damages Judgments

due to FAB’s misrepresentations in obtaining the Judgments. Florida Rule of Civil Procedure

1.540(b) provides that a court may relieve a party from final judgment based on fraud,

misrepresentation, or misconduct of an adverse party. Given that Florida courts have the

authority to consider a prevailing party’s fraud or misrepresentation in determining whether to

grant the opposing party relief from judgment, it seems appropriate for a court to also consider

those factors in determining what conditions should apply to a stay of a judgment pending

appeal. Additionally, in deciding whether to grant a stay pending appeal, factors courts consider

include “the moving party’s likelihood of success on the merits, and the likelihood of harm

should a stay not be granted.” Perez v. Perez, 769 So. 2d 389, 291 n.4 (Fla. 3d DCA 1999)

1 See Silver Beach Towers E. Condo. Ass’n, Inc. v. Silver Beach Invs. Of Destin, LC, Case No. 1D16-4555, -- So. 3d

--, 2017 WL 672138, at *2 (Fla. 1st DCA Feb. 21, 2017) (certifying conflict). The Third District has held they must
be followed; the First and Second Districts have reached the opposite conclusion. See id. at *1 (citing Mellon United
Nat’l Bank v. Cochran, 776 So. 2d 964, 964 (Fla. 3d DCA 2000); Platt v. Russek, 921 So. 2d 5, 7-8 (Fla. 2d DCA
2004); Waller v. DSA Group, Inc., 606 So. 2d 1234, 1235 (Fla. 2d DCA 1992)) (agreeing with Second District).
(citations omitted). As more fully set forth below, FAB committed either fraud or a

misrepresentation in obtaining and inflating the Amended Damages Judgment and the

Foreclosure Judgment. Moreover, Defendants’ due process rights were violated by the inclusion

of unliquidated damages as part of the Judgments without providing Defendants notice and an

opportunity to be heard as to the appropriate amount of these damages. These two factors greatly

increase Defendants’ likelihood of success on appeal, and therefore support Defendants’ request

for a stay pending appeal.

In support of its Motion for Summary Judgment, FAB submitted an Affidavit of

Indebtedness, dated May 25, 2017 and sworn to by Garry Smith (“Smith”), Senior Vice

President of First American Bank (“Smith Affidavit”). (See FAB’s Mot. for Sum. J. Ex. 4.) In his

Affidavit, Smith swore that the outstanding principal of the loan at that time was $1,488,554.76;

the outstanding interest of the loan at that time was $64,304.08; and FAB had paid taxes on the

subject property totaling $66,870.83 at that time. (Id. ¶ 14.) As support for these amounts, Smith

cited a sworn copy of the Loan History for the subject loan, also dated May 25, 2017 and sworn

to by Smith; that Loan History is attached as Exhibit F to the Smith Affidavit. (Id. ¶ 16, Ex. 4F.)

In addition to these amounts, Smith further swore that FAB had “retained the law firm of Keller

& Bolz, LLP to represent it in this matter and is obligated to pay reasonable fees for services

(including fees of attorneys and other professionals)[,] expenses and costs.” (Id. ¶ 17.)

Closer examination of the Loan History, however, demonstrates that Smith, on behalf of

FAB, committed either a fraud or a misrepresentation in the Smith Affidavit in that FAB’s

attorney’s fees were already included in the principal of the loan, as “loan expense fees.” This is

evident when comparing the Loan History to the billing records of Keller & Bolz, LLP (“Bolz’s
 While unpaid principal and interest generally are considered liquidated damages in a

foreclosure action, reasonable attorney’s fees are not, and an evidentiary hearing is required to

determine the appropriate amount. Zumpf v. Countrywide Home Loans, Inc., 43 So. 3d 764, 766

(Fla. 2d DCA 2010). “Absent an evidentiary hearing, the fee award will be reversed . . . .” Id.

Thus, the Amended Damages Judgment contains at least $211,067.80 in damages that cannot be

liquidated, as an evidentiary hearing is required to determine the reasonable amount of attorney’s

fees. Zumpf, 43 So. 2d at 766. 4

Here, the terms of the Mortgage purport to give FAB the right to assess attorneys’ fees

“that in [FAB’s] opinion are necessary at any time for the protection of its interest or

enforcement of its rights,” but this provision is unenforceable as contrary to Florida law, as more

fully set forth above. (See FAB’s Mot. for Summ. J. Ex. 3 at 4.) Moreover, these attorneys’ fees

cannot be considered liquidated damages. “Damages are liquidated when the proper amount to

be awarded can be determined with exactness from the cause of action as pleaded, i.e., from a

pleaded agreement between the parties, by an arithmetical calculation or by application of

definite rules of law.” Asian Imports, Inc. v. Pepe, 633 So. 2d 551, 552 (Fla. 1st DCA 1994)

(citations omitted). “However, damages are not liquidated if the ascertainment of their exact sum

requires the taking of testimony to ascertain facts upon which to base a value judgment.” Id.

(citations omitted). Due process rights require notice and an opportunity to be heard, at which

evidence on the appropriate amount of unliquidated damages can be presented and evaluated —

i.e., an evidentiary hearing. Id.; see also Zumpf, 43 So. 2d at 766. Thus, Defendants were entitled

4
While the court in Zumpf found the mortgagor had waived her right to an evidentiary hearing on the award of
attorney’s fees by failing to raise the issue until after judgment was entered, see Zumpf, 43 So. 3d at 767, that portion
of the case is distinguishable. First, Defendants were not present at the hearing on FAB’s Motion for Summary
Judgment. Cf. id. at 766 (noting the mortgagor “participated in the final hearing before the trial court”). Second,
FAB’s submission of the Smith Affidavit swearing entitlement to both the principal, which included attorneys’ fees
it had assessed on the loan, and a separate obligation to pay its attorneys’ fees constituted either fraud or a
misrepresentation, a fact not present in Zumpf.
to an evidentiary hearing on the amount of the attorneys’ fees improperly assessed toward the

principal of the loan, as those attorneys’ fees were unliquidated damages. Failure to provide this

evidentiary hearing is a violation of Defendants’ due process rights.

Additionally, FAB apparently seeks to proceed with both the foreclosure sale and

simultaneously collect purely on the money judgment without first obtaining a deficiency

judgment. This, it may not do. Florida law permits a mortgagee to pursue its legal remedy of

damages and equitable remedy of foreclosure simultaneously to collect money owed on a note

secured by real property until the debt is satisfied. Hammond v Kingsley Asset Mgmt., LLC, 144

So. 3d 673, 675 (Fla, 2d DCA 2014). However, once a judgment is obtained, if the mortgagee

proceeds with the foreclosure sale, it cannot then seek to collect purely on the money judgment

without first obtaining a deficiency judgment. Id. Accordingly, FAB is not permitted to both seek

and obtain a foreclosure sale pursuant to the Foreclosure Judgment and simultaneously seek to

collect on the Amended Damages Judgment without first obtaining a deficiency judgment.

Because FAB either made a material misrepresentation or committed fraud in obtaining,

and inflating, the Amended Damages Judgment and the Foreclosure Judgment, Defendants

should not be required to post a full bond as a condition of stay. Additionally, the inclusion of

FAB’s attorneys’ fees in both the Amended Damages Judgment and Foreclosure Judgment is

wholly improper, as Defendants were not provided with due process in the judicial determination

of the amount of those unliquidated damages.

WHEREFORE, Defendants respectfully request that this Court enter an Order Granting

their Motion to Stay Pending Appeal on conditions other than posting of a full bond, and for such

other and further relief as the Court deems just and proper.
 CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished on
November 6, 2017, via transmission of a notice of electronic filing generated by the Florida
Courts E-Filing Portal to Henry H. Bolz, III, Esq., Counsel for Plaintiff, Keller & Bolz, LLP, 121
Majorca Ave., Suite 200, Coral Gables, FL 33134 (hbolz@kellerbolz.com) and Jay S. Levin,
Esq., Counsel for Oaks at Boca Raton, Sachs, Sax, Caplan, 6111 Broken Sound Pkwy., NW,
Suite 200, Boca Raton, FL 33487 (foreclosures@ssclawfirm.com).

SHAPIRO, BLASI, WASSERMAN & HERMANN, P.A.

Attorneys for Laurence S. Schneider and Stephanie L.
Schneider
7777 Glades Rd., Suite 400
Boca Raton, FL 33434
Tel: (561) 477-7800
Fax: (561) 477-7722

By: s/ Ryan D. Gesten

RYAN D. GESTEN, ESQ.
Florida Bar No. 240760
Primary E-Mail: rgesten@sbwh.law
Secondary E-Mail: rdgservice@sbwh.law
Tertiary E-Mail: nlewis@sbwh.law