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Fla. App. Court (3rd DCA) Holds Guarantors Not Joined in Prior Foreclosure Not Estopped, Equitable Defense Available in Guaranty Action

The Third District Court of Appeal of the State of Florida recently reversed a summary judgment award in favor of two noteholders seeking a deficiency judgment against the note guarantors who were not joined in a prior foreclosure action as to the collateral, holding that:

(a) the guarantors were not estopped from challenging the amounts of the deficiency judgments in a later action at law on their guaranties; and

(b) equitable defenses that could have been raised in a mortgage foreclosure action seeking a deficiency can also be raised in a later action against the guarantors to collect the deficiency.

A copy of the opinion in Romagnoli v. SR Acquisitions − Florida City, LLC, et al. is available at:  Link to Opinion.

Two affiliated limited liability companies purchased notes, personal guarantees and mortgages from a bank.  The borrower entities defaulted and the noteholders foreclosed on the properties serving as collateral, but did not join the guarantors in the foreclosure action.

The borrower entities did not defend the foreclosure action, and the noteholders obtained judgments of foreclosure and deficiency judgments against the borrower entities.

The noteholders then filed a separate action at law seeking a monetary judgment for the deficiency against the individual guarantors.

The trial court entered summary judgment in the noteholders’ favor, finding that the guarantors were estopped from challenging the amount of the deficiency judgments and could not raise equitable defenses in the subsequent action on the guaranties. The guarantors appealed.

On appeal, the Third District first held that “there can be no collateral estoppel (also known as judicial estoppel) under Florida law because the required identity of the real parties in interest is missing since the [g]uarantors were not parties to the foreclosure.”

In addition, the Court also held the guarantors were not estopped from challenging the amounts of the deficiency judgments in subsequent actions at law on their guarantees.  In so ruling, the Third District held that “equitable defenses available in a foreclosure action seeking a deficiency are also available in a subsequent legal action to collect the deficiency.”

Accordingly, the Appellate Court reversed the trial court’s summary judgment ruling.


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Hector Lora has substantial experience in all phases of complex commercial litigation, including motion practice, written discovery, depositions, mediations, bench and jury trials, and appellate practice. For more than a decade, his practice has focused extensively on the defense of civil enforcement actions filed by the FTC, as well as real estate litigation, and contested mortgage and condominium lien foreclosures and foreclosure of security interests under UCC Article 9. Hector also has substantial experience in advising a variety of types of businesses regarding their compliance with applicable federal and state laws, including the Federal Trade Commission Act, the Telephone Consumer Protection Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, the Telemarketing Sales Rule, the Controlling the Assault of Nonsolicited Pornography and Marketing Act of 2003, and Florida laws governing telephone solicitation and communication. Hector received his Juris Doctor from the Georgetown University Law Center, and his undergraduate degree with honors from the University of Florida.

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