## Facts

- Michael Holland mortgaged his residence to Midfirst Bank under a note and mortgage that allowed the bank, upon default, to accelerate the debt and foreclose.
- Holland later sold the property to Jerry and Catherine McCullen.
- To facilitate the sale, the parties used a purchase-money wraparound second mortgage: the McCullens agreed to make payments to Holland on the wraparound mortgage, and Holland agreed to continue making the payments due Midfirst on the first mortgage.
- The wraparound documents also included a promise by Holland to indemnify and hold the McCullens harmless for losses arising from Holland’s default on the first mortgage.
- Several years later, Holland and Midfirst disputed the meaning and application of the first mortgage’s hazard-insurance requirements.
- Midfirst declared Holland in default, accelerated the loan, and sued Holland and the McCullens to foreclose the first mortgage.
- The McCullens filed crossclaims against Holland seeking damages for breach of contract, enforcement of the indemnity obligation, and damages for civil theft based on allegations that Holland wrongfully retained the McCullens’ payments.
- The parties stipulated that Holland had defaulted on the first mortgage, and the trial court entered a foreclosure judgment for Midfirst.
- The trial court also entered summary judgment in favor of the McCullens on their crossclaims, including civil theft relief (with statutory remedies such as treble damages and attorney’s fees), and Holland appealed.

## Issues

1. Did the stipulation that Holland defaulted on the first mortgage eliminate any genuine dispute of material fact on the McCullens’ contract and indemnification crossclaims arising from the wraparound mortgage arrangement?
2. Was summary judgment proper on the McCullens’ civil theft claim where civil theft requires clear and convincing proof of criminal intent, and the record allowed competing inferences about Holland’s intent in handling the McCullens’ payments during the dispute with Midfirst?

## Decision

- The Second District affirmed summary judgment for the McCullens on the contractual indemnification (and related contract) liability arising from Holland’s default.
- The Second District reversed the summary judgment on the civil theft claim and remanded because the record presented a factual dispute on felonious intent.

## Legal Principles

- Summary judgment is improper when the record permits differing reasonable inferences on a material element of the claim.
- A stipulation that a party defaulted may conclusively establish the contractual “default” condition for related claims tied to that default (including duties under a wraparound mortgage arrangement).
- Contractual indemnity provisions are enforced according to their terms when the triggering event (here, default on the first mortgage and resulting losses) is established.
- Florida civil theft (section 772.11, Florida Statutes) requires proof by clear and convincing evidence that the defendant acted with criminal intent to steal (intent to deprive another of property or to appropriate it to the defendant’s own use).
- Because civil theft is penal in nature and carries extraordinary remedies (including treble damages and attorney’s fees), courts require strong proof of criminal intent and generally do not resolve disputed intent on summary judgment.

## Conclusion

The appellate court treated the parties’ stipulation of Holland’s default on the first mortgage as establishing the condition that triggered Holland’s contractual responsibility to protect the McCullens from losses caused by that default, so summary judgment on indemnification (and related contract liability) was affirmed; however, because civil theft required clear and convincing proof of felonious intent and the evidence allowed conflicting inferences about Holland’s intent in retaining or applying the McCullens’ payments during the insurance dispute with Midfirst, the civil theft summary judgment was reversed and the case was remanded for further proceedings on that claim.


Holland v. McCullen, 764 So.2d 810 (2000)