Dixon v. Express Equity Lending Group | FL 4DCA - STANDING: SPECIAL ENDORSEMENT FROM THE PLAINTIFF TO A THIRD PARTY

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Dixon v. Express Equity Lending Group | FL 4DCA – STANDING: SPECIAL ENDORSEMENT FROM THE PLAINTIFF TO A THIRD PARTY

Dixon v. Express Equity Lending Group | FL 4DCA – STANDING: SPECIAL ENDORSEMENT FROM THE PLAINTIFF TO A THIRD PARTY

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DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
January Term 2013

LAVERN DIXON,
Appellant,

v.

EXPRESS EQUITY LENDING GROUP, LLLP,
Appellee.

No. 4D12-1381
[June 5, 2013]

MAY, C.J.

A homeowner appeals a Final Judgment of Foreclosure. She argues
the trial court erred in entering the final judgment because the special
indorsement o n th e note refers to a non-party to the foreclosure
proceedings. We agree and reverse.

The homeowner moved to dismiss the Complaint, and then before a
ruling on the motion, answered asserting affirmative defenses. The case
proceeded to a bench trial. At trial, the lender produced the original
note. The note promised “to pay to the order of EXPRESS EQUITY
LENDING GROUP, LLLP, ITS SUCCESSORS AND OR ASSIGNS AS THEIR
INTERESTS MAY APPEAR.” The following language appeared on the
back of the original note:

PAY TO THE ORDER OF:

U.S. Century Bank
7575 West Flagler Street
Miami, Florida 33144

With Recourse,
EXPRESS EQUITY LENDING GROUP, LLLP.

During the bench trial, the lender’s counsel elicited the following
testimony from the lender’s president:

Q: Okay. Could you explain what the [i]ndorsement is; what
it means on the back of the note?
A: Basically, we have a mortgage warehouse agreement
where we—where each note is provided as a collateral to a
separate mortgage warehouse agreement that we have.
Q: Okay.
A: And the loan itself is Express Equity’s, but we have a
separate agreement with our mortgage warehouse, that in
the event that we would default in that separate warehouse
agreement, then they would be able to foreclose on us, and
then eventually foreclose on the real estate. The ownership
is Express Equity’s. What we do is convey a security interest
in that mortgage o n a separate mortgage warehouse
agreement.
Q: Okay. So has Express Equity maintained ownership on
the subject note since its inception?
A: Yes.

On redirect examination, the president offered the following
testimony as to the lender’s standing to foreclose on the mortgage:

Q: Who is the owner and holder of the loan?
A: Express Equity Lending Group.
Q: Okay. You’re testifying to that notwithstanding the stamp
pay to the order of U.S. Century Bank with recourse Express
Equity Lending Group on the back of this note?
A: I’m sorry, I don’t understand the question.
Q: Has ownership of the note ever transferred,
notwithstanding this document?
A: No. As I mentioned before, we’re a mortgage lender.
Under a separate mortgage warehouse lending agreement,
we endorsed that mortgage, okay, or that note I should say,
to pledge a security interest only, not ownership. The intent
is that if we were to default on our mortgage warehouse
lending agreement, then they could in turn enforce and
eventually foreclose on that. However, we would have to be,
in other words, we would have to be in default, like the
current loan is in default, and yet they’re not here raising or
defending or fighting the Plaintiff. Are they? It’s Express
Equity. I brought the note. We’re the owners.

The trial court entered a Final Judgment of Foreclosure in favor of the
lender. The homeowner now appeals.

The homeowner argues that the trial court erred in entering a final
judgment of foreclosure because the lender did not own or hold the note.

The lender did not file an answer brief.

We have de novo review of whether a party has standing to bring an
action. Westport Recovery Corp. v. Midas, 954 So. 2d 750, 752 (Fla. 4th
DCA 2007).

Section 673.2051(1), Florida Statutes (2009), provides, in pertinent
part:

If an indorsement is made by the holder of an instrument,
whether payable to an identified person or payable to bearer,
and the indorsement identifies a person to whom it makes
the instrument payable, it is a “special indorsement.” When
specially indorsed, an instrument becomes payable to the
identified person a n d ma y be negotiated only b y the
indorsement of that person.

“A crucial element of any mortgage foreclosure proceeding is that the
party seeking foreclosure must demonstrate that it has standing to
foreclose.” McLean v. J.P. Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170,
173 (Fla. 4th DCA 2012). “To establish standing, the plaintiff must
submit the note bearing a special [i]ndorsement in favor of the plaintiff,
an assignment from payee to the plaintiff or an affidavit of ownership
proving its status as holder of the note.” Rigby v. Wells Fargo Bank, N.A.,
84 So. 3d 1195, 1196 (Fla. 4th DCA 2012).

Here, the lender did not have standing to foreclose. Although the
lender’s president testified that the lender was the owner and holder of
the note, the special indorsement appearing on the back of the original
note suggests otherwise. Under section 673.2501(1) and Rigby, the
special indorsement stating “pay to the order of U.S. Century Bank”
established that only U.S. Century Bank had standing to bring the
foreclosure action.

We therefore reverse the Final Judgment of Foreclosure and remand
for further proceedings.
Reversed and Remanded.

GERBER and LEVINE, JJ., concur.
* * *
Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Marina Garcia-Wood, Judge; L.T. Case No. 09-63645
CACE.
Peter Ticktin, Josh Bleil and Kendrick Almaguer of The Ticktin Law
Group, P.A., Deerfield Beach, for appellant.
No appearance filed for appellee.
Not final until disposition of timely filed motion for rehearing

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