BROWARD COUNTY — Florida's 4th District Court of Appeal recently reversed a lower court decision that had said a borrower in a foreclosure case had committed a "technical breach."

Summitbridge Credit Investments III LLC (Summitbridge) filed the appeal after the Broward County Circuit Court ruled that the borrower, Carlyle Beach LLC, owed money but that a foreclosure was unfair.

The legal issues for the borrower and lender began when Summitbridge bought Carlyle Beach's commercial loan from the original lender, which had implemented several modifications, in 2012. Carlyle Beach had agreed to certain terms “so long as credit is available under this agreement and until the bank is repaid in full.” The borrower had to prove financial standing with certain documents and statements during the time of the loan. But Carlyle Beach allegedly didn't comply with the agreed-upon terms, so the lender wanted to foreclose.

Carlyle Beach said it didn’t break the contract because the agreement was only in place “so long as credit is available.” Shortly after taking the out the loan, the borrower was told the “credit-line was no longer available.” The lender never asked for more financial proof.

Summitbridge submitted an appeal because it said that there was no cancellation of financial information so an alleged “material breach” was enough to bring foreclosure. It also said the borrower’s late payment of the property taxes should not prevent foreclosure and that the court was incorrect in not allowing “essential discovery” and that the lower court “misapplied equitable concepts” when it dismissed the notion of “relief on its non-equitable claims.” The district court agreed with the trial court on all points except the concerning the “material breach.”

Carlyle Beach argued that the lender didn’t have the proper position to foreclose and that the court was incorrect when it decided that it was guilty of a “technical breach.” The appeals court agreed with the trial court on the borrower’s issue about whether the lender could foreclose but agreed with the borrower on its cross-appeal that the trial court erred when it came to the borrower’s “technical breach,” so it reversed that judgment. 

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