No Rachmones: The Dynamics of Florida’s Pay-to-Play Eviction Litigation
Shortly after a landlord and tenant enter into a commercial lease, bad blood develops between them. A dispute about the start of rent commencement culminates in an action for eviction over the nonpayment of rent. After the tenant answers the complaint, the landlord files a motion to determine the amount of rent due under the lease pursuant to F.S. §83.232 — par for the course in nonpayment of rent actions. F.S. §83.232(1) provides that in an eviction action:
[T]he tenant shall pay into the court registry the amount alleged in the complaint as unpaid, or if such amount is contested, such amount as is determined by the court, and any rent accruing during the pendency of the action, when due, unless the tenant has interposed the defense of payment or satisfaction of the rent in the amount the complaint alleges as unpaid. Unless the tenant disputes the amount of accrued rent, the tenant must pay the amount alleged in the complaint into the court registry on or before the date on which his or her answer to the claim for possession is due. If the tenant contests the amount of accrued rent, the tenant must pay the amount determined by the court into the court registry on the day that the court makes its determination….1
In a gesture of civility, the parties forgo a hearing on the motion by agreeing to an order that requires the tenant to deposit the undisputed rent that is due monthly into the court registry “on or by the first day of each month.” Otherwise, the parties prepare for what they expect to be a lengthy lawsuit.
Several months later, the landlord notices that the tenant was two days late with one of its court-ordered payments. The landlord takes advantage of this seeming triviality by invoking F.S. §83.232(5), which states that the tenant’s failure to pay as specified by the order: “[S]hall be deemed an absolute waiver of the tenant’s defenses. In such case, the landlord is entitled to an immediate default for possession without further notice or hearing thereon.”
Accordingly, the landlord submits to the court an ex parte motion for default with a printout of the case docket and a proposed final judgment of possession. Within days, the court enters the judgment for possession. What seemed destined to be resolved through protracted litigation came instead to a swift conclusion due to this tenant’s procrastination. Unable to deposit money into the court registry on the first day of a month that started on a weekend, the hapless tenant waited until the first Monday of the given month. Upon realizing his fatal mistake, the tenant filed an emergency motion to stay the eviction — an act of futility, as the judgment of possession was upheld.
The outcome described above was based on precedent like Park Adult Residential Facility, Inc. v. Dan Designs, Inc., 36 So. 3d 811 (Fla. 3d DCA 2010). The court in Park Adult utilized a word that appears on the title of this article, “rachmones” (Yiddish for “mercy”), to justify what one could consider an unfair ruling: “Although we may have ‘rachmones’ for the tenant…the law is the law. It is not our job to carve exceptions into an otherwise clear and imperative statute.”2 Was such an outcome, in fact, justified? This article explores the uniqueness of F.S. §83.232 and its substantially similar residential counterpart, F.S. §83.60(2), their bright-line application by courts, and practical aspects concerning their use.
The Landlord’s Favorite Law
F.S. §§83.232 and 83.60(2) were enacted to prevent delinquent tenants from unjustly enriching themselves at their landlord’s expense by occupying the premises rent-free while their landlord sues to evict them.3 As one court explained it, “[w]e see no more reason to expect a landlord to continue furnishing housing without rent than to expect an oil supplier to continue furnishing oil without payment during a period of litigation.”4 These statutes preclude a scenario that is all too common in the residential mortgage foreclosure context: While foreclosure lawsuits are pending against them, delinquent mortgagors continue to live in their homes without paying anything, oftentimes for years . As such, these statutes are priceless tools for landlords because they presumably cull the meritorious tenants ( i.e., those that can or are willing to pay the rent) from those that litigate in bad faith ( i.e., those who lack the financial wherewithal or willingness to pay but defend the lawsuit anyway).
The statutes are appropriately nicknamed “pay-to-play” because a tenant must pay some rental money to retain possession of the premises during the eviction action, unless he or she proves that nothing is owed. Irrespective of the merits of the lawsuit, the failure to pay is fatal to the tenant because it thereupon loses the right to defend itself. Such an outcome is generally logical to a landlord, but it can sometimes be downright providential. A landlord that successfully invokes the statutory eviction-by-default can negotiate a favorable settlement of any related claims asserted in the lawsuit, which are typically monetary damages. Conversely, a tenant who may have been eager to litigate may welcome negotiations with the landlord once it is evicted or learns that a writ of possession has issued. Even a financially strong tenant is likely to agree to an unfavorable settlement because an eviction may block him or her from a critical source of revenue and cause liabilities to accrue at an alarming pace.
Playing with Fire
The plain language of F.S. §§83.232 and 83.60(2) dictates a stern penalty to tenants who violate pay-to-play orders. To comply with them is a condition for maintaining, as opposed to merely raising, defenses to an eviction action. Upon a violation, the trial court “has no discretion other than to enter an immediate default for possession without further notice or hearing thereon.”5 Missed or late payments will waive all defenses, substantive and procedural alike. It may preclude tenants from arguing that the statute even applies. A popular defense raised by tenants, for example, is that a landlord has failed to comply with a condition precedent to suit because it served a defective presuit notice.6 To assert this defense, however, the tenant must comply with a pay-to-play order for as long as it remains in effect.7 (In 2013, the legislature amended F.S. §83.60(2) to specifically say so, but left F.S. §83.232 unchanged).8 Not even allegations of fraudulent inducement9 or counterclaiming for damages can avoid the application of these statutes, as F.S. §83.232(4) clearly provides that the “filing of a counterclaim for money damages does not relieve the tenant from depositing rent due into the registry of the court.”
Indeed, courts treat violations of pay-to-play orders like blown jurisdictional deadlines, such as for filing notices of appeal10 or moving for rehearings or new trials.11 One appellate court considered it a “ministerial duty” for a trial court to issue a judgment and writ of possession for the landlord if a tenant’s payment is late.12 As a matter of fact, trial courts have been admonished that they cannot even “consider the reasons why the deposit was not timely made”13 even if a case presents “unusual circumstances.”14 Although F.S. §83.232(1) allows extensions of time for making payments before a deadline has passed, it “does not allow for a procedure whereby a trial court may excuse the tenant’s noncompliance with its prior order” as stated in 214 Main Street Corp. v. Tanksley, 947 So. 2d 490, 492 (Fla. 2d DCA 2006).
F.S. §§83.232(5) and 83.60(2) also obviate any arguments sounding in equity that tenants might advance to justify their noncompliance with a pay-to-play order. Attempts by counsel to set aside a statutory default on grounds that their own neglect “should not be held against the client” have been fruitless.15 The statute, quite simply, does not contemplate that tenants be allowed even to explain what happened because the entry of a judgment of possession by default is required to be automatic. In Kosoy Kendall Associates, LLC v. Los Latinos Restaurant, Inc., 10 So. 3d 1168 (Fla. 3d DCA 2009), for example, the court held that the hearing held on landlord’s motion for default “was itself unauthorized.” In Courthouse Tower, Ltd. v. Manzini & Associates, 683 So. 2d 215 (Fla. 3d DCA 1996), the court held that a trial court “may not decline to follow controlling law on ground it considers its application ‘inequitable’ in [a] particular case.”16 The court in 214 Main Street, in fact, specifically held that it was error for a trial court to have set aside a default upon the finding that a late payment was the result of excusable neglect.17
Pay-to-Play on Appeal
On appeal, the adjudication of pay-to-play controversies is consistent with the swift relief required by F.S. §§83.232 and 83.60(2) at the trial level. Pursuant to Fla. R. App. P. 9.130(a)(3)(C)(ii), orders that deny a landlord’s motion for relief under either statute are immediately appealable because they determine the right to immediate possession of property.18 Orders related to either statute may be immediately appealable even if they do not determine the parties’ right to possession, such as when an order provides that a tenant is not required to pay rents into the registry.19
Certiorari review has generated interesting caselaw that invokes the unforgiving text of F.S. §83.232(5). The tenant in Poal Wk Taft, LLC v. Johnson Medical Center Corp., 45 So. 3d 37 (Fla. 4th DCA 2010), for instance, violated a statutory order because it failed to pay timely, but the trial court deferred ruling on the landlord’s motion for default “pending an evidentiary hearing.”20 Not satisfied with this delay, the landlord petitioned the Fourth District Court of Appeal for a writ of mandamus. The district court made it clear that when a tenant violates these orders, a trial court “exercises no discretion” but to issue a writ of possession.21
Notably, the district court in Poal Wk Taft declined to issue the writ of mandamus because it reasoned that the trial court would act in accordance with its opinion “and issue the writ of possession to the landlord.”22 But the Third District Court of Appeal has been less deferential to trial courts in similar situations. In City of Miami v. Smith, 698 So. 2d 320 (Fla. 3d DCA 1997), a circuit court sitting in its appellate capacity denied an application to review a trial court’s refusal to issue a writ of possession under the statute. The Third District considered this a clear departure “from the essential requirements of the law resulting in an injustice to the landlord” and ordered “the circuit court forthwith to order the county court to issue such a writ immediately.”23 To eliminate any doubts, it added that its order was effective immediately “and without regard to the pendency or disposition of any motion for rehearing in this court or any other proceeding in either of the lower courts.”24
Practical Considerations for the Tenant
A pay-to-play hearing may be the first hearing in an eviction case, but it is arguably one of the most important ones. When a tenant contests the amount of money to be placed into the registry, a hearing regarding this dispute is limited to the factual or legal issues concerning: “(a) Whether the tenant has been properly credited by the landlord with any and all rental payments made; and (b) What properly constitutes rent under the provisions of the lease.”25
The residential statute lacks this level of detail, but an initial hearing thereunder is likely to take into account the same factors.
Although landlords typically convene pay-to-play hearings, the statutes require tenants to deposit the amount of rent demanded in the complaint within five days of being served with process or as soon as they answer the complaint; alternatively, they can contest and seek to establish the amount due.26 Tenants, therefore, should prioritize this the moment they are served. They must consider any contractual terms that define the “rent,” which in the commercial context can include not just periodic rent payments, but also sales taxes, real estate taxes, common area maintenance charges, prior year reconciliations, and other charges. Rent escalation clauses must be carefully monitored by both parties especially if the lawsuit is filed prior to a lease term anniversary; changes in the amount of rent due entitle either party to adjust a previously entered pay-to-play order. Typically, tenants must also address any outstanding balances that exist at the time the lawsuit is filed. Such outstanding balances may be large and tenants may be required to cancel it immediately by depositing a corresponding amount into the court registry (which amount must be distinguished and is separate from the future, periodic rent payments). In fact, tenants should be prepared to pay monies into the court registry on the same day of a hearing and should, therefore, become familiar with the local clerk of court’s payment preferences.
The manner and formality with which trial judges handle pay-to-play hearings is unique to each individual. Some judges may hear testimony while others simply consider argument of counsel or consult the docket of the case. When a judge’s procedure is unknown, the most prudent approach is to appear at the hearing with witnesses that can address key lease provisions and provide an accounting of what is owed. Utmost care is needed in phrasing the pay-to-play order. If a party is or becomes dissatisfied with an order, it should timely request the court to amend it.
The prudent tenant, finally, should make all payments well in advance of any court-ordered deadline to account for the unexpected. The tenant in Park Adult can attest to this advice. There, the tenant was represented by the law firm of Rothstein Rosenfeldt Adler, P.A. (RRA), which would soon become infamous for its role in a massive Ponzi scheme.27 Pursuant to an order dated October 29, 2009, a rent payment was due on November 3, 2009.28 On Sunday, November 1, 2009, law enforcement closed RRA as the investigation of the Ponzi scheme began.29 Because RRA no longer had an ability to issue trust account checks, on November 2, 2009, the tenant obtained two cashier’s checks for the appropriate amount.30 On November 3, 2009, the tenant provided these checks to RRA. One of RRA’s couriers was supposed to deposit the checks with the court. Later that day, however, RRA’s employees were notified that they would no longer be paid, so, many employees, including the aforesaid couriers, walked off the job.31
On November 4, 2009, after the tenant’s attorney learned that the checks were not deposited, he personally attempted to deposit them with the court registry, but the clerk of court refused to accept them because they were late.32 On November 9, 2009, the attorney successfully moved the court to accept payment of the rent into the registry. Ultimately, the Park Adult court held that the late payment violated the plain language of F.S. §83.232(5), and remanded for the issuance of a writ of possession.33
The lesson from Park Adult is that if the tenant had timely discovered that it could not make a deposit by the court-ordered deadline, it would have had good cause to make a timely motion for additional time. Because it failed to do so, however, it was powerless to prevent its own eviction.
A Unique Statutory Proceeding
F.S. §§83.232 and 83.60(2) can provide relief so quickly and definitively that they make motions for summary judgment and the summary procedure statute, F.S. §51.011, seem cumbersome by comparison.34 Although F.S. §51.011(1) requires that pleadings be answered within five days of service, it may ultimately have a minimal impact on the duration of litigation if an answer is filed. A pay-to-play violation, however, may jettison an eviction action to the final judgment stage and obviate the need for discovery, motion practice, and trial.
As a special statutory proceeding, pay-to-play litigation supplants several rules of procedure.35 Instead of a traditional motion for extension of time under Fla. R. Civ. P. 1.090, for example, F.S. §83.232(3) allows tenants to seek additional time to make a payment only if they do so prior to the date the money is due. Conversely, it prohibits mechanisms for obtaining relief from judgment like those provided by Fla. R. Civ. P. 1.540, in which excusable neglect is usually a factor. Furthermore, unlike a default under Fla. R. Civ. P. 1.500, which states that a party “shall be served with notice of the application for default,” if it has filed or served any paper in the action, a tenant who violates a pay-to-play order is not entitled to notice of a motion for default even if it is — and they often are — actively defending the action.36 Indeed, the policy of liberality in setting aside defaults in favor of trials on the merits, which the Florida Supreme Court historically extolls, is not taken into account in this context.37
The most distinctive feature of these statutes is their ex parte relief mechanism, which does not require a bond. Bonds are generally required to obtain relief without notice, as is the case with procuring writs of attachment,38 pre-judgment garnishment,39 and replevin40 and most injunctive relief.41 But F.S. §§83.232 and 83.60(2) actually condone the lack of notice irrespective of the reason or nature of the pay-to-play violation. This is why trial judges are sometimes hesitant to enforce the plain language of these statutes.
Although Florida has other pay-to-play laws that contemplate court deposits and the waiver of defenses, they lack an ex parte provision. F.S. §723.063(2), for example, which deals with actions for possession of mobile home park lot tenancies, states that the mobile home owner:
[S]hall pay into the registry of the court that portion of the accrued rent, if any, relating to the claim of material noncompliance as alleged in the complaint, or as determined by the court….The failure of the mobile home owner to pay the rent, or portion thereof, into the registry of the court as required herein constitutes an absolute waiver of the mobile home owner’s defenses other than payment, and the park owner is entitled to an immediate default.
F.S. §718.401(1)(d)1, which deals with condominium leaseholds, provides that if a unit owner or the association initiates any action or interposes any defense other than payment of rent under the lease:
[T]he unit owner or the association shall, upon service of process upon the lessor, pay into the registry of the court any allegedly accrued rent and the rent which accrues during the pendency of the proceeding, when due. If the unit owner or the association fails to pay the rent into the registry of the court, the failure constitutes an absolute waiver of the unit owner’s or association’s defenses other than payment, and the lessor is entitled to default.
F.S. §719.401(1)(d)1, which deals with cooperative leaseholds, is nearly identical to F.S. §718.401(1)(d)1. None of these statutes, however, dispense with the requirement to provide notice to the offending party and none of them have generated a body of caselaw comparable to what the landlord-tenant statutes have generated.
Finally, the absence of similar legislation in other large states, including those affected by the recent real estate downturn, such as California,42 New York,43 Illinois,44 Texas,45 Arizona,46 and Michigan,47 confirm that Florida’s eviction statutes are unique. Nevada does have an eviction law that is similar to Florida’s. Section 118A.490 (4) of the Nevada Revised Statutes provides, in relevant part, that if a tenant fails to deposit with the court any court-ordered rent payment: “[W]ithin 24 hours after the original hearing…the tenant relinquishes the right to a hearing and the court shall at that time grant a judgment for eviction without further hearing.”48
However, the Nevada statute has not generated a body of caselaw similar to what Florida’s district courts of appeal have generated when addressing F.S. §§83.232 and 83.60(2). The lack of Nevada appellate caselaw hinders a fruitful comparison between the states’ court’s interpretations of these laws. At the same time, it tacitly confirms the unique nature of Florida’s pay-to-play eviction statutes.
The case discussed in the beginning of this article was not about the tenant’s ability to pay. Under its lease, a late payment would have been penalized with a late fee, but the pay-to-play statute effectuated a swift eviction. Was the landlord prejudiced because a deposit was two days late, especially when it never invoked financial hardship? And what if a tenant timely makes a deposit but a court employee incorrectly records it as untimely? In the context of an untimely filed notice of appeal, the appellant would be entitled to refute the court’s time stamp on the notice as presumptive evidence of the date it was filed.49 But the hapless tenant in the pay-to-play context does not have such a luxury. Many scenarios can be imagined in which a force majeure or malfeasance by the landlord may prevent a timely payment. But under the present state of the law, tenants do not get the opportunity to explain those facts to the court.
If the intent of F.S. §§83.232 and 83.60(2) is to ensure that freeloading tenants do not abuse their landlord or the judicial system,50 then the statutes may be rightly criticized for effectuating unjust evictions when something other than the prompt payment of rent is the reason for a pay-to-play violation. It would not unduly emasculate either statute if they contemplated alternative outcomes for violations, depending on their degree of seriousness, such as a two-strike rule or the imposition of fees, as a substitute for automatic evictions for any violation. Until that day comes, however, any violations of pay-to-play orders will come as a delight to any landlord engaged in a lawsuit for possession.
1 Fla. Stat. §83.60(2), the residential counterpart to Fla. Stat. §83.232, similarly provides that if the tenant interposes any defense other than payment: “[T]he tenant shall pay into the registry of the court the accrued rent as alleged in the complaint or as determined by the court and the rent that accrues during the pendency of the proceeding, when due. The clerk shall notify the tenant of such requirement in the summons. Failure of the tenant to pay the rent into the registry of the court or to file a motion to determine the amount of rent to be paid into the registry within [five] days, excluding Saturdays, Sundays, and legal holidays, after the date of service of process constitutes an absolute waiver of the tenant’s defenses other than payment, and the landlord is entitled to an immediate default judgment for removal of the tenant with a writ of possession to issue without further notice or hearing thereon….”
2 Park Adult, 36 So. 3d at 812, n.1 (internal citation omitted).
3 See Premici v. United Growth Properties, L.P., 648 So. 2d 1241, 1244 (Fla. 5th DCA 1995).
4 K.D. Lewis Enterprises Corp. v. Smith, 445 So. 2d 1032, 1035 (Fla. 5th DCA 1984).
5 Blandin v. Bay Porte Condominium Association, 988 So. 2d 666, 669 (Fla. 4th DCA 2008).
6 See Fla. Stat. §83.20(2).
7 See Stanley v. Quest Intern. Inv., Inc., 50 So. 3d 672, 673-74 (Fla. 4th DCA 2010).
8 See Ch. 2013-136, §12, Laws of Fla.
9 See also First Hanover v. Vazquez, 848 So. 2d 1188, 1190 (Fla. 3d DCA 2003).
10 Fla. R. App. P. 9.110(b) and 9.130(b).
11 Fla. R. Civ. P. 1.530.
12 See Poal Wk Taft, LLC v. Johnson Medical Center Corp., 45 So. 3d 37, 38 (Fla. 4th DCA 2010).
13 Park Adult, 36 So. 3d at 812.
15 Id. at 814-815 (J. Cope, dissenting).
16 Courthouse Tower, 683 So. 2d at 215 (internal citation omitted).
17 214 Main Street, 947 So. 2d at 492.
18 See First Hanover, 848 So. 2d at 1189.
19 See Florida Disc. Properties, Inc. v. Windermere Condominium, Inc., 763 So. 2d 1083, 1084 (Fla. 4th DCA 1999).
20 Poal Wk Taft, 45 So. 3d at 38.
21 Id. at 39.
23 City of Miami, 698 So. 2d at 320.
24 Id. at 321, n.1.
25 See Fla. Stat. §83.232(2).
26 See Fla. Stat. §§83.232(1) and 83.60(2).
27 Park Adult, 36 So. 3d at 813 (“The alleged Ponzi scheme had nothing to do with this tenant, who was a client of the RRA law firm.”).
31 Id. at 814.
33 Id. at 813.
34 Fla. Stat. §51.011 applies to landlord and tenant actions pursuant to Fla. Stat. §83.21.
35 See Fla. R. Civ. P. 1.010 (“The form, content, procedure, and time for pleading in all special statutory proceedings shall be as prescribed by the statutes governing the proceeding unless these rules specifically provide to the contrary.”).
36 See Fla. R. Civ. P. 1.500(b) (“[I]f…such party has filed or served any paper in the action, that party shall be served with notice of the application for default.”).
37 See, e.g., North Shore Hospital, Inc. v. Barber, 143 So. 2d 849, 851-853 (Fla. 1962).
38 See Fla. Stat. §76.12.
39 See Fla. Stat. §77.031(3).
40 See Fla. Stat. §78.068(3).
41 See Fla. R. Civ. P. 1.610(b).
42 See California Civil Code §§1951-1954.1.
43 See Real Property, Art. 7, §§220-238,
Laws of New York.
44 See Illinois Compiled Stat., Ch. 765, §§705-750.
45 See Texas Stat.
Ch. 92 and Ch. 93.
46 See Arizona Revised Stat. Ann.,
Title 33, Ch. 3.
47 See Michigan Compiled Laws §§554.601-554.616.
48 Nevada Rev. Stat. §118A.490(4).
49 See Strax Rejuvenation and Aesthetics Institute, Inc., v. Shield, 49 So. 3d 741, 742 (Fla. 2010) .
50 See Premici, 648 So. 2d at 1243.
Miguel Chamorro is an associate at Lydecker Diaz in Miami, where he represents national and Latin American clients. His practice focuses on business law, complex commercial litigation, and real estate litigation. He is a current member of the Civil Procedure Rules Committee of The Florida Bar.
Christopher G. Berga is a shareholder in the Miami office of Lydecker Diaz. His practice focuses on complex commercial litigation, creditor’s rights, insurance insolvency, and real property litigation, specializing in commercial landlord representation.