DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT
VICTORIA S. MAGALDI,
Appellant,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY, As Trustee For
WAMU 2005-AR6,
Appellee.
No. 4D15-1043
[June 15, 2016]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Roger B. Colton, Senior Judge; L.T. Case No.
502009CA015214XXXXMB.
Victoria S. Magaldi, Jupiter, pro se.
Philip E. Rothschild and Brian K. Hole of Holland & Knight LLP, Fort
Lauderdale, for appellee.
CIKLIN, C.J.
Victoria Magaldi appeals the final judgment of foreclosure entered in
favor of Deutsche Bank National Trust Company as Trustee for WAMU
2005-AR6 (“the bank”). We agree with Magaldi that the bank failed to
prove it had standing at the inception of the underlying suit and thus we
reverse.
In 2004, Magaldi executed a promissory note in favor of Washington
Mutual Bank, FA (“the lender”). In 2009, the bank brought a foreclosure
suit against Magaldi. The bank alleged it was the “owner” of the note. It
attached to its complaint a copy of the note made payable to the lender.
The note did not contain any endorsements. In 2014, the bank filed the
original note with the court which contained an undated blank
endorsement by the lender.
At trial, the following exhibits were introduced into evidence: copies
of the original note and mortgage, a pooling and servicing agreement
(“the PSA”), and a post-complaint assignment of the mortgage and note
by JP Morgan Chase Bank to the bank. The bank’s witness, Linda
Kuerzi, was employed by the entity that services the loan for the bank.
She provided testimony about the note, assignment, and the PSA.
This court has explained the process by which standing in a
foreclosure case may be established:
A “person entitled to enforce” an instrument is: “(1) [t]he
holder of the instrument; (2) [a] nonholder in possession of
the instrument who has the rights of a holder; or (3) [a]
person not in possession of the instrument who is entitled to
enforce the instrument pursuant to s[ection] 673.3091 or
s[ection] 673.4181(4).” § 673.3011, Fla. Stat. (2013). A
“holder” is defined as “[t]he person in possession of a
negotiable instrument that is payable either to bearer or to
an identified person that is the person in possession.” §
671.201(21)(a), Fla. Stat. (2013). Thus, to be a holder, the
instrument must be payable to the person in possession or
indorsed in blank. See § 671.201(5), Fla. Stat. (2013).
Murray v. HSBC Bank USA, 157 So. 3d 355, 358 (Fla. 4th DCA 2015)
(alterations in original).
At trial, the bank appeared to proceed as a holder.1 However, none of
the evidence introduced at trial established its standing at the inception
of the suit. The copy of the note attached to the complaint did not
establish standing, as it was not made payable to the bank and did not
contain a special endorsement in the bank’s favor or a blank
endorsement. Although the original note contains an endorsement in
blank, it was filed after suit was brought and thus did not establish
standing at inception of the suit. See McLean v. JP Morgan Chase Bank
Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012).
1 This is confirmed in the bank’s answer brief, in which it explains how it
proved standing as the holder of the note.
The bank relies to some extent on the assignment, but the assignment
was dated 2010—after suit was filed—and does not offer any indication
of whether the bank held the note endorsed in its favor or in blank when
it commenced the subject litigation. To the extent the bank proved,
through the PSA and Kuerzi’s testimony, that the loan was transferred to
the trust in 2005, this does not prove that at the time of the transfer, the
note contained an endorsement in the bank’s favor or in blank. Evidence
of a transfer of the note into a trust is not, standing alone, sufficient to
establish standing at inception of the suit. See Perez v. Deutsche Bank
Nat’l Trust Co., 174 So. 3d 489, 491 (Fla. 4th DCA 2015); Jarvis v.
Deutsche Bank Nat’l Trust. Co., 169 So. 3d 194, 196 (Fla. 4th DCA 2015).
Because the bank did not prove it had standing at inception of the law
suit, we reverse. The remaining issue raised on appeal is moot.
Reversed.
TAYLOR and MAY, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
District Court of Appeal of Florida, First District.
Opinion filed June 9, 2016.
Austin Tyler Brown of Parker & DuFresne, P.A., Jacksonville, for Appellants.
Susan B. Morrison, Tampa, for Appellee.
THOMAS, J.
Appellants, Collier Higgins & Sylvia Higgins, seek review of an order denying their motion for relief from a Final Default Judgment, wherein the trial court determined that Appellants were indebted to Appellee, Dyck-O’Neal, Inc. Appellants argued below and reassert here that the trial court lacked subject matter jurisdiction and thus erred in denying their motion for relief, based in part on our decision in Reid v. Compass Bank, 164 So. 3d 49 (Fla. 1st DCA 2015). Appellants argue that Appellee was precluded from filing an action at law seeking damages based on Appellants’ failure to satisfy their promissory note on the property at issue, because Appellees had filed a prior foreclosure action which included a prayer for a deficiency judgment, and the trial court in that action reserved jurisdiction to enter a deficiency judgment. We agree with Appellants, and for the reasons stated herein, we reverse the trial court’s denial of Appellants’ motion for relief from judgment.
Facts
In 2009, Freedom Mortgage Corporation (Freedom) sued Appellants in Duval County to foreclose the mortgage on Appellants’ property. It is undisputed that in its complaint, Freedom included a request for a deficiency judgment against Appellants, if the proceeds were insufficient to pay Freedom’s claim. In September 2009, the trial court entered a Final Summary Judgment in Foreclosure that retained jurisdiction “for the purpose of making any further orders as may be necessary and appropriate herein, including but not limited to all claims for deficiencies.” (Emphasis added.) After the foreclosure sale, the Judgment and Note was assigned to Appellee.
Almost five years later, Appellee filed a new Complaint in law against Appellants in Duval County, seeking damages as a result of Appellants’ failure to satisfy the promissory note on the property. Appellants did not respond to the Complaint, and Appellee moved for default, which was granted. Appellee filed a motion for final default judgment along with supporting affidavits. The trial court ultimately entered a Final Default Judgment against Appellants, totaling $89,724.15.
Approximately 11 months later, Appellants filed a motion for relief from judgment pursuant to rule 1.540(b), Florida Rules of Civil Procedure, asserting the final judgment was void, as it was entered without subject matter jurisdiction, citing Compass Bank. Appellee filed a memorandum of law in opposition to Appellants’ motion for relief from judgment, asserting in part that our decision in Compass Bank which discussed the relevant issue here was dicta. Following a hearing, the trial court denied Appellants’ motion for relief from judgment, and this appeal followed.
Analysis
Appellants argue here that Appellee was prevented from filing an action at law, based on the prayer for a deficiency judgment in the prior foreclosure action, where the prior foreclosure court unequivocally reserved jurisdiction to enter a deficiency judgment. It is undisputed that the argument on appeal concerns an issue of law, which is reviewed de novo. Compass Bank, 164 So. 3d at 52 (citing Fla. Ins. Guar. Ass’n, Inc. v. Bernard, 140 So. 3d 1023, 1027 (Fla. 1st DCA 2014)).
In addressing the legal issue presented here, we return to the analysis of this court’s decision in Compass Bank:
Prior to June 7, 2013, section 702.06, Florida Statutes, which is entitled “Deficiency decree; common-law suit to recover deficiency,” provided:
In all suits for the foreclosure of mortgages heretofore or hereafter executed the entry of a deficiency decree for any portion of a deficiency, should one exist, shall be within the sound judicial discretion of the court, but the complainant shall also have the right to sue at common law to recover such deficiency, provided no suit at law to recover such deficiency shall be maintained against the original mortgagor in cases where the mortgage is for the purchase price of the property involved and where the original mortgagee becomes the purchaser thereof at foreclosure sale and also is granted a deficiency decree against the original mortgagor.
(Emphasis added). Section 702.06 was amended in 2013 to read:
In all suits for the foreclosure of mortgages heretofore or hereafter executed the entry of a deficiency decree for any portion of a deficiency, should one exist, shall be within the sound discretion of the court; however, in the case of an owner-occupied residential property, the amount of the deficiency may not exceed the difference between the judgment amount, or in the case of a short sale, the outstanding debt, and the fair market value of the property on the date of sale. For purposes of this section, there is a rebuttable presumption that a residential property for which a homestead exemption for taxation was granted according to the certified rolls of the latest assessment by the county property appraiser, before the filing of the foreclosure action, is an owner-occupied residential property. The complainant shall also have the right to sue at common law to recover such deficiency, unless the court in the foreclosure action has granted or denied a claim for a deficiency judgment.
See Ch. 13-137, § 5, Laws of Fla. (Emphasis added).
In addressing Appellant’s argument, a review of the case law construing section 702.06 is instructive. In Younghusband v. Ft. Pierce Bank & Trust Co., 100 Fla. 1088, 130 So. 725, 727 (1930), the supreme court held that “[i]f no deficiency judgment is entered in foreclosure sale, it is clear that a suit at law for any amount still due is available to the holder.” In Cragin v. Ocean & Lake Realty Co., 101 Fla. 1324, 135 So. 795, 797 (1931), the supreme court set forth that a plaintiff “having applied for and obtained a deficiency decree in their favor in the court of equity, could not, under the act of 1927, go into a court of law and maintain therein suits for the recovery of the balance due on the notes.” In Provost v. Swinson, 109 Fla. 42, 146 So. 641, 643 (1933), a case relied upon by Appellant, the supreme court set forth, “When the complainant filed his bill in equity to foreclose the mortgage and therein prayed for a deficiency decree, he elected that forum in which to have his right adjudicated and became bound by that choice.”
In Belle Mead Development Corp. v. Reed, 114 Fla. 300, 153 So. 843, 844 (1934), another case relied upon by Appellant, the supreme court explained that in August 1928, the appellee executed three promissory notes payable to the McElroys. It was alleged that the notes were assigned and delivered before maturity to the appellant, the plaintiff in the case. Id. The appellant filed suit for the foreclosure of the mortgage, praying for a deficiency decree. Id. A foreclosure decree was obtained, the property was sold, and the proceeds were applied to the payment of the debt. Id. The appellant asked for a deficiency decree which was “resisted” by the “defendant,” and the chancellor refused to enter a deficiency judgment. Id. The appellant subsequently filed an action at law to recover on the promissory notes, and the trial court “struck those pleas.” Id. The supreme court, in affirming, set forth, “In the case at bar there was a special prayer for affirmative relief [for a deficiency decree]. The complainant thereby elected that forum in which to have its rights adjudicated and became bound by that choice.” Id. The supreme court further set forth, “After specifically praying for a deficiency, the complainant may waive the relief prayed for in that regard, but it does not avoid the choice of the forum by not applying for the deficiency decree.” Id.
In Reid v. Miami Studio Properties, 139 Fla. 246, 190 So. 505, 505 (1939), a case relied upon by Appellee in support of its argument that the action at law was permissible, the supreme court noted that the complainant, in his bill to foreclose, prayed for a deficiency decree in the event the property at issue did not bring enough to pay the amount of the indebtedness and costs. The Chancellor did not enter a deficiency decree and did not consider this phase of the prayer for relief. Id. The supreme court explained that the sole question presented was “whether or not under the facts stated the plaintiff Reid can now maintain an action at law to recover the amount of the deficiency judgment which he prayed for in the foreclosure but which prayer was not considered.” Id. The supreme court noted that the defendant contended that the question should be answered in the negative because “the plaintiff in error elected his forum and is bound by the result of his election.” Id. at 505-06. The defendant relied upon Provost and Belle Mead in support of its argument. Id. at 506. The supreme court set forth:
We understand the law to be that where there is no prayer for a deficiency and where one is not sought or entered in the foreclosure proceeding the law courts may be resorted to to recover one. Since the entry of a deficiency decree under Section 5751, Compiled General Laws of 1927, is within the sound discretion of the Chancellor and if entered, the one in whose favor it is entered may resort to a suit at law to recover it, we see no basis for the logic that he is precluded from an action at law to recover one if the chancellor is importuned to enter it and declines to consider the question or to make any ruling thereon.
The cases relied on by defendant in error have been examined. They involve other factual situations affecting deficiencies but we do not consider that they rule the question we have here nor are we convinced that the elements essential to constitute an election of remedies are present.
In fine, we understand Section 5751, Compiled General Laws of 1927, to mean that if a deficiency decree is asked for in a foreclosure and granted, that settles the question of what forum may be sought for relief but if not asked for or if asked for and overlooked or not considered, the right of the claimant is not affected. He may sue at law and recover such portion as he may prove himself entitled to.
Id. (Emphasis added).
In Crawford v. Woodward, 140 Fla. 38, 191 So. 311, 311 (1939), the supreme court, relying on Provost, Cragin, and Belle Mead and finding Reid distinguishable, determined that the plaintiff could not maintain an action at law after the foreclosure where the plaintiff prayed for a deficiency decree, notwithstanding the facts that the plaintiff later stated in the confirmation of the foreclosure sale that “Complainants are not asking for a deficiency decree” and none was rendered by the chancellor.
In Luke v. Phillips, 148 Fla. 160, 3 So.2d 799, 799 (1941), the supreme court addressed the plaintiff’s contention that Reid overruled Belle Mead. The supreme court, without setting forth the facts of the case, set forth, “[T]he instant case is ruled by Reid . . . wherein we pointed out that the facts of that case were distinct from those in the Belle Mead . . . case and that line of cases which were not inferentially or otherwise overruled.” Id.
In McLarty v. Foremost Dairies, 57 So.2d 434, 434 (Fla.1952), the supreme court considered a petition for writ of certiorari to review a judgment of the Duval County Circuit Court which affirmed the judgment of the Civil Court of Record for Duval County. The supreme court explained that the respondent was the owner and holder of a note secured by chattel mortgage and brought suit in Volusia County against the petitioner to foreclose the mortgage. Id. In the suit to foreclose, the respondent prayed for a deficiency decree. Id. No further action was taken with regard to the prayer for deficiency. Id. The personal property mortgaged was sold pursuant to a final decree entered in the foreclosure proceedings and after crediting the proceeds of the sale to the note, there remained due and owing to the plaintiff $1,548.41. Id. “At no time during the entire proceedings was any request made for a deficiency nor was the matter called to the attention of the Court in any way.” Id. The only time or place where the matter of deficiency appeared in the proceedings was the prayer for deficiency contained in the bill of complaint. Id. The respondent “[i]n due course” filed suit in Duval County for the balance due under the note after crediting the proceeds of the foreclosure sale. Id. The petitioner, the defendant below, pleaded as a defense the foreclosure suit and the prayer for deficiency contained in the bill of complaint. Id. It was the contention of the petitioner that the respondent “having prayed for a deficiency without obtaining one, could not sue upon the note to recover the balance due upon the mortgage note.” Id.
The supreme court found that the case was controlled by Reid and Luke and noted the alleged confusion between those cases and the cases of Crawford and Belle Mead. Id. The supreme court explained that although the facts in Luke did not state that a deficiency decree was prayed for, its review of the record in that case showed that the bill to foreclose the mortgage contained a prayer for a deficiency judgment. Id. at 435. It also explained that the facts of the case at hand were identical to the facts of Luke where the “sale of the mortgage property and disbursements were approved and confirmed by the Chancellor but no deficiency decree was entered or requested.” Id. After noting that its holding in Reid was reaffirmed in Luke, the supreme court set forth, “If the opinion in Reid . . . as affirmed in Luke . . . is in conflict with any other holdings with reference to the subject matter, such holdings, or opinions, are over-ruled to the extent of such conflict.” Id. The supreme court found no departure from the essential requirements of the law in the case before it. Id.
Thereafter, in First Federal Savings & Loan Association of Broward County v. Consolidated Development Corp., 195 So.2d 856, 858 (Fla. 1967), the supreme court addressed McLarty, Reid, and Luke. In First Federal Savings, the petitioner brought a foreclosure suit in Palm Beach County and prayed for a deficiency decree if the proceeds of the mortgage sale were less than the amount due on the mortgage. Id. at 857. The final decree of foreclosure expressly reserved jurisdiction in the court for the determination of any motion for a deficiency decree. Id. The petitioner then brought an action to recover the deficiency in Broward County and represented to the foreclosure court in Palm Beach County that inasmuch as no motion had been made there for a deficiency decree, there was no longer a need for retention of jurisdiction of the cause in that court. Id. The foreclosure court entered an order terminating jurisdiction. Id. The Broward County court dismissed the case before it, ruling that the petitioner, after having selected its forum in Palm Beach County, should not be permitted to subject the respondents to further harassment and expense. Id. The dismissal was appealed to the Fourth District Court of Appeal. Id. After noting that the abandonment of jurisdiction in Palm Beach County did not occur until twenty-six days after the action at law was filed in Broward County, the supreme court explained that the Fourth District decided the case “on the principle that a court may not switch its jurisdiction, or power, on and off as one would an electric light.” Id. at 857-58. The supreme court also noted the Fourth District’s determination that “[f]or the purposes of deficiency decrees vel non this power is not for the benefit of the court; hence, it cannot waive its jurisdiction in that regard. It may refuse or refrain from exercising the power, but the chancellor cannot abjure a court of equity of its innate or inborn jurisdiction by mere words of jacitation.” Id. at 858. The Fourth District concluded that the Palm Beach County Circuit Court still had jurisdiction of the subject matter and the question of a deficiency decree and held that the dismissal in Broward County constituted a dismissal without prejudice to the plaintiff’s right to have the question of deficiency determined by the Palm Beach County Circuit Court. Id.
On first examination of the petition for certiorari, the supreme court concluded that argument should be heard on the matter because of apparent conflict with its prior decisions. Id. The supreme court summarized some of its prior decisions, including Reid, McLarty, and Luke. Id. It distinguished Reid because in the case at hand “the request [for a deficiency decree] was made in the complaint and apparently was not immediately considered but was deferred as the court retained jurisdiction to settle any motion for deficiency.” Id. The supreme court set forth, “So it may be said that the request for deficiency was neither considered nor overlooked. Here again on the salient facts the plaintiff was not at this point free to seek an adjudication elsewhere, hence a conflict was not developed.” Id. The supreme court stated of McLarty, “[T]here was a prayer for a deficiency but thereafter request for that relief was ignored.” Id. It found that the holding in Luke was essentially the same as the one in Reid. Id. The supreme court was ultimately unable to discover the conflict that would vest jurisdiction with it because “there appears to be no inconsistency between what was held here and what was decided in the cited cases.” Id. It set forth, “There has been no disturbance of the rule that if a deficiency is sought and the relief is overlooked or not considered, the one entitled to the recovery of the balance of the debt left over after the proceeds of the mortgage sale have been credited may sue for the remainder at law.” Id. at 859. The court found, however, that the “principle would have to be stretched out of form to condone what the plaintiff undertook in this case.” Id. It concluded that the Fourth District’s decision was sound and did not disrupt the law that “appears firmly established.” Id.
In support of its argument on appeal that its action at law was permissible, Appellee relies not only on Reid but also upon the plain language of section 702.06, both before and after the 2013 amendment. While we agree that the plain language of both versions of section 702.06 supports an argument that a party may file an action at law to recover a deficiency so long as a trial court has not actually ruled upon a request for a deficiency judgment in the foreclosure case, cases such as Belle Mead and First Federal Savings suggest otherwise. We note also that any question as to whether Reid permits a party to file an action at law after including a prayer for a deficiency judgment in a foreclosure complaint and after the trial court reserves jurisdiction to consider such a request was resolved by the supreme court in First Federal Savings. There, as here, the foreclosure complaint contained a prayer for a deficiency decree, and the foreclosure judgment expressly reserved jurisdiction to rule upon a deficiency request. As the supreme court noted in First Federal Savings, there was not a reservation of jurisdiction in Reid. As such, Appellee’s reliance upon Reid is misplaced.
Notwithstanding the fact that First Federal Savings supports the argument that a party is not entitled to pursue an action at law on a promissory note where that party includes a prayer for a deficiency judgment in its foreclosure complaint and the trial court reserves jurisdiction to enter a deficiency judgment, we have determined that affirmance is warranted in this case based upon the circumstances presented. Unlike the situation in First Federal Savings where the foreclosure court entered an order terminating its jurisdiction, the trial court in this case granted Appellee’s motion to consolidate the foreclosure case and the action at law. Therefore, in contrast to the Palm Beach County Circuit Court in First Federal Savings, the trial court in this case still had jurisdiction in the foreclosure case. Although Appellant cites case law for the proposition that consolidated cases maintain their independent status with respect to the rights of the parties involved, Appellant does not contend on appeal that the trial court erred in granting Appellee’s motion to consolidate or in denying his motion to dismiss the action at law. We note also that although Appellant moved to dismiss the action at law prior to Appellee moving for consolidation, the record does not contain any argument put forth below by Appellant in opposition to consolidation. As such, any question as to whether consolidation was proper is not before us.
Regardless of whether this prior analysis on the merits of the issue was dicta in Reid, we now adopt this analysis in our holding here. And we disagree with our sister court’s holding in in Garcia v. Dyck-O’Neal, Inc., 178 So. 3d 433 (Fla. 3d DCA 2015), that the revised relevant statutory language compels a different result.
The facts in Garcia are very similar to this current appeal. In 2009, BAC Home Loans Servicing brought a successful foreclosure action against Garcia and others, and the prayer for relief included the court taking jurisdiction for the purpose of a deficiency judgment. 178 So. 3d at 434. The final judgment of foreclosure reserved jurisdiction to adjudicate any claim seeking a deficiency judgment. Id. After the foreclosure sale, the appellee was assigned the judgment and note, and filed a separate action in the same county as the foreclosure action against Garcia seeking the deficiency. Id. Garcia did not respond, the clerk’s default was entered in September 2014, and the appellee moved for entry of a final default judgment. Id. Garcia filed a motion to dismiss, arguing that the trial court lacked subject matter jurisdiction of the deficiency action because BAC sought deficiency relief and the foreclosure court expressly retained jurisdiction to adjudicate the deficiency. Id. The trial court rejected this argument, and Garcia appealed, relying on First Federal Savings and Compass Bank.
The Third District found that the portions of the opinions relied upon by Garcia were dicta and, in relevant part, held:
A. First Federal Savings’ Dicta
In First Federal Savings, the plaintiff obtained a judgment of foreclosure in Palm Beach County; the foreclosure court retained jurisdiction to determine a deficiency judgment. The plaintiff then filed an action in Broward County to recover the deficiency. On plaintiff’s motion, the circuit court in Palm Beach County terminated its jurisdiction. The Broward County circuit court, however, dismissed the case because the Palm Beach County circuit court originally had retained jurisdiction. First Fed. Sav., 195 So.2d at 857.
The Fourth District Court of Appeal held that the Palm Beach County circuit court should not have abandoned its jurisdiction. Initially, the Florida Supreme Court granted certiorari review based on an apparent conflict among the districts. In discharging the writ of certiorari, however, the Florida Supreme Court determined that no conflict existed after all. In its conclusion, the Florida Supreme Court’s glancing reference to the rule for recovering a deficiency judgment does not constitute the holding of the case. First Fed. Sav., 195 So.2d at 859.
. . .
C. Statutory Authority Eclipses Dicta
When the clear and unambiguous language of a statute commands one result, as here, while dicta from case decisions might suggest a different result, we must apply the statute so as to give effect to legislative intent. Citizens Prop. Ins. Corp. v. Perdido Sun Condo. Ass’n, Inc., 164 So.3d 663, 666 (Fla.2015). In determining legislative intent, we first look to the language of the statute. State v. Hackley, 95 So.3d 92, 93 (Fla.2012) (“The first place we look when construing a statute is to its plain language—if the meaning of the statute is clear and unambiguous, we look no further.”).
We need look no further than the plain language of section 702.06. The dicta in First Federal Savings and Compass Bank does not carry the weight of authority of section 702.06 as it is now constituted. The remedial nature of the 2013 amendment to section 702.06 militates against our further interpreting an inconsistent body of case law.
We respectfully disagree with the Third District’s opinion, which does not dissuade us from adopting this court’s analysis in Compass Bank. In particular, we cannot ignore that part of the supreme court’s First Federal Savings’ holding that its certiorari jurisdiction was unadvisedly granted, based on the fact that the Fourth District’s underlying opinion in First Federal Savings did not disrupt the law that appeared firmly established, and the facts of the case were specifically distinguishable from Reid, as that prior Florida Supreme Court opinion did not involve a reservation of jurisdiction like First Federal Savings. Furthermore, we cannot read the statutory language to effect a monumental change in the law, which would allow a mortgagee to sue to foreclose on the mortgaged property, successfully request the court to reserve jurisdiction to enter a deficiency judgment in the event of a shortfall after the sale of the property, and then after the court reserves jurisdiction at the request of the mortgagor (or the successor), then permit the mortgagor to seek a deficiency judgment at common law. The statute expressly prohibits such a result if the original suit in foreclosure results in an order granting or denying the deficiency judgment. In our view, when the original court in foreclosure reserves jurisdiction to grant or deny the deficiency judgment, the statute cannot be logically or fairly read to permit the plaintiff in the original action to disregard the court’s reservation of jurisdiction, and file another action at law. When the court in the foreclosure action has been requested to grant a deficiency judgment and has reserved jurisdiction to do so, the plaintiff is bound by that court’s ultimate exercise of jurisdiction to rule on the matter.
We agree with the federal district court in Wells Fargo Bank, N.A. v. Jones, 2014 WL 1784062 (M.D. La. May 5, 2014), that to interpret this statute as read by the Third District and asserted by Appellee would permit forum shopping and contravene the Florida Supreme Court case law to the contrary, which the statute does not specifically abrogate. In Jones, like here, the lender had sought a deficiency judgement in the original foreclosure action, that court had reserved jurisdiction to render such relief, but the lender then sought a deficiency judgment at common law in federal court, disregarding its earlier request for relief in the Florida state court which still retained jurisdiction to grant relief. The court in Jones stated: “This Court finds that the Florida law providing the lender with `the right to sue at common law to recover such deficiency’ was never meant to apply to the present situation.” We agree, and further note that the statute cannot be reasonably read to allow a lender to seek a deficiency judgment in the original foreclosure action, where the court is granted the discretion to deny such relief, and retains jurisdiction to do so, and then grant the lender the right to forum shop and file yet another action based on contract principles where the subsequent court is not authorized to deny relief in common law, absent unusual circumstances. Absent specific direction from the legislature, such a reading is not justified. Rather, we read the revised statutory language as simply clarifying and reiterating long-standing judicial holdings that if the original foreclosure court ignores a claim for a deficiency judgment, or one is not sought there, the lender may seek relief at common law.
As we acknowledged in Compass Bank, “While we agree that the plain language of both versions of section 702.06 supports an argument that a party may file an action at law to recover a deficiency so long as a trial court has not actually ruled upon a request for a deficiency judgment in the foreclosure case, cases such as Belle Mead and First Federal Savings suggest otherwise.” 164 So. 3d at 56 (emphasis added). We now hold that while the statutory language may “support” such an argument, it does not persuade us that the legislature intended to actually overrule Florida Supreme Court decisions that address the issue more specifically and hold to the contrary. Thus, we fully agree with our prior opinion that Appellee’s reliance on Reid is misplaced, and we hold that a party is not entitled to pursue an action at law on a promissory note where that party includes a prayer for a deficiency judgment in its foreclosure complaint and the trial court reserves jurisdiction to enter a deficiency judgment. Accordingly, we reverse the trial court’s denial of Appellants’ motion for relief from judgment and remand for the trial court to void the default judgment.
REVERSED and REMANDED.
LEWIS, J., CONCURS; MAKAR, J., DISSENTING WITH OPINION.
MAKAR, J. dissenting.
A final judgment of foreclosure entered against Sylvia and Collier Higgins resulted in their home being sold at auction. Dyck-O’Neal, Inc., which was assigned the judgment and underlying note, sued in a separate proceeding to collect the deficiency between the amount due on the note and the property’s value. A final judgment of default was entered against the Higgins because they failed to respond in the deficiency proceeding. A year later, the Higgins sought to void the default judgment, claiming the trial court lacked jurisdiction because the foreclosure court had reserved jurisdiction to consider a request for a deficiency judgment in that proceeding.
The trial court properly denied the Higgins’ request because the Legislature had just recently enacted a clearly worded statute that established a “right to sue” for a deficiency judgment “unless the court in the foreclosure action has granted or denied a claim for a deficiency judgment.” § 702.06, Fla. Stat.; Ch. 2013-137, Laws of Fla. Because the “court in the foreclosure action” had neither “granted” nor “denied” the claim for a deficiency judgment in that proceeding, Dyck-O’Neal had a clear statutory “right to sue” separately for a deficiency judgment. The statute contemplates this precise situation, i.e., where a foreclosure court has been presented, but not acted upon, a request for a deficiency judgment; in such a case, the complainant has the “right to sue” to recover the deficiency. The statute doesn’t say the complainant must sue in the same court as the foreclosure action; instead, the plain words of the statute envision the possibility of two separate proceedings, perhaps in two different courts.
The plain, unambiguous language of the statute has not escaped judicial notice. Every Florida court addressing the issue of whether section 702.06 jurisdictionally bars a separate suit for a deficiency judgment has said unequivocally that it does not. Instead, the only statutory jurisdictional bar is if the “court in the foreclosure action has granted or denied a claim for a deficiency judgment.” § 702.06, Fla. Stat. The Third District, in two cases with facts like this one, have viewed the 2013 statutory language as “clear,” “plain,” and “unambiguous.” Dyck-O’Neal, Inc. v. Weinberg, 41 Fla. L. Weekly D329 (Fla. 3d DCA Feb. 3, 2016) (reversing an order dismissing for lack of jurisdiction based on “unambiguous” and “plain language of the statute”); Garcia v. Dyck-O’Neal, Inc., 178 So. 3d 433, 436 (Fla. 3d DCA 2015) (“When the clear and unambiguous language of a statute commands one result, as here, . . . we must apply the statute so as to give effect to legislative intent.”); see also Cheng v. Dyck-O’Neal, Inc., 41 Fla. L. Weekly D1076b (Fla. 4th DCA May 6, 2016) (agreeing with Third District decisions “that section 702.06, Florida Statutes, is unambiguous”). As summarized by the Third District in Garcia:
According to the statute, unless the foreclosure court has granted or has declined to grant a deficiency judgment, a plaintiff may pursue deficiency relief in a separate action. In the instant case, the foreclosure court did not grant or decline to grant the deficiency judgment claim; therefore, the trial court below had jurisdiction to consider Dyck-O’Neal’s deficiency claim.
178 So. 3d at 436. Likewise, the Fourth District in Cheng concluded that the “foreclosure judgment’s reservation of jurisdiction does not preclude a separate suit to recover the deficiency where the foreclosure court has not granted or denied a claim for a deficiency judgment.” Cheng, 41 Fla. L. Weekly D1076b. The clarity of the 2013 statutory language decides this case; affirmance is required.
Two additional points are warranted. First, the lengthy discussion of erstwhile caselaw in Reid v. Compass Bank, 164 So. 3d 49, 57 (Fla. 1st DCA 2015), is dicta, immaterial, and misplaced. Because it is dicta, it has only persuasive value; but it has failed to persuade both the Third and Fourth Districts. It is immaterial because the 2013 statutory language at issue trumps whatever perceived inconsistency the panel in Reid may have imagined with prior precedents. See Garcia, 178 So. 3d at 436 (“Statutory Authority Eclipses Dicta”). In addition, the caselaw recited cannot be said to be inconsistent with the 2013 revision. Rather, though the older caselaw is not entirely consistent, it appears that a complainant had the right to pursue an action at law for a deficiency judgment if a deficiency is not sought or entered in the foreclosure proceeding. See Reid v. Miami Studio Props., 190 So. 505, 506 (Fla. 1939); see also First Fed. Sav. & Loan Ass’n of Broward Cnty. v. Consol. Dev. Corp., 195 So. 2d 856, 859 (Fla. 1967) (“There has been no disturbance of the rule that if a deficiency is sought and the relief is overlooked or not considered, the one entitled to the recovery of the balance of the debt left over after the proceeds of the mortgage sale have been credited may sue for the remainder at law.”).
Second, whatever disagreement may exist about the efficiency of allowing a separate proceeding to pursue a deficiency judgment is best left to the Legislature, which has recently addressed and settled the matter. As the Third District said: “In our view, the Legislature drafted a clear statute that resolved the courts’ struggle with the issue in this case.” Garcia, 178 So. 3d at 436. If the statutory “right to sue” in section 702.06 results in significant problems—which appears unlikely given the right in some form has existed for over 75 years—the legislative branch may wish to address them.
NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED.
A proposed nationwide class of home buyers have accused Bank of America Corp., Countrywide Financial Corp. and appraisal firm LandSafe Inc. of conducting phony appraisals in an attempt to secure more loans, filing a lawsuit in California federal court on Thursday stemming from previously settled whistleblower claims.
Home buyers in California and Florida allege Countrywide, now owned by Bank of America, used its wholly-owned appraisal firm LandSafe to rip off loan applicants in violation of the Racketeer Influenced and Corrupt Organizations Act. The complaint says the alleged…
Background
Document Custodians must verify certain information contained in the Notes and related documents for the Mortgages sold to Freddie Mac and certify those verifications and that the documents are original. We refer to this process as “certification” or “certifying” the Notes.
This chapter details our requirements for certifying Notes delivered to Freddie Mac, including those sold with a Concurrent Transfer of Servicing. For information on Subsequent Transfers of Servicing, see Guide Section 7101.1 and Chapter 5 of this Handbook. Unless the Document Custodian receives a copy of the Purchase Documents between the Seller/Servicer and Freddie Mac, (including the first page with the Seller/Servicer number, the pages with the exceptions detailed, and the signature pages), the Document Custodian must not deviate from the requirements of this Handbook or the Guide.
The information in this chapter is intended to help you fulfill your responsibilities as an approved Document Custodian. This Handbook is a reference tool that complements Freddie Mac’s Single-Family Seller/Servicer Guide. It does not replace the requirements in the Guide, and in the event of a conflict, the Guide controls.
Before you may accept a delivery of Notes from a Seller, Freddie Mac must approve you as a Document Custodian for the Servicer that will service the Mortgages. Refer to Chapter 1 of this Handbook for additional information on becoming an approved Document Custodian.
Sellers may use independent delivery agents, particularly for bulk or seasoned loan portfolio sales. If such an agent contacts you or you receive loan data with respect to the Mortgages from a third party, you must ask to see written evidence of its relationship with the Seller, such as a copy of the first and signature pages of their contract with the Seller or the paragraph in the Freddie Mac Master Commitment that recognizes the agency arrangement. You may rely on the representations of such an agent as if the Seller made them, as the Seller remains liable for the accuracy and completeness of all data. Contact Freddie Mac if you have any questions regarding delivery by an agent. See Guide Directory 9.
Three bankers in New York, London and Siena, Italy, died within 17 months of each other in 2013-14 in what authorities deemed a series of unrelated suicides. But in each case, the victim had a connection to a burgeoning global banking scandal, leaving more questions than answers as to the circumstances surrounding their deaths.
The March 6, 2013, death of David Rossi — a 51-year-old communications director at Monte dei Paschi di Siena, the world’s oldest bank — came as the institution teetered on the brink of collapse.
Rossi was found dead in an alleyway beneath his third-floor office window in the 14th-century palazzo that served as the bank’s headquarters.
These Job Aids provide additional detailed information regarding what is required for institutions that are providing document certification and custody services on behalf of Fannie Mae. These Job Aids supplement the Fannie Mae Requirements for Document Custodians (RDC) and the Fannie Mae Selling and Servicing Guides.
We recommend that you print these Job Aids and provide a copy to your staff.
Job Summary: Provides assistance in demonstrating the Investor has the appropriate legal authority to initiate actions through a complete Chain of Title, by recognizing and preparing the required documents to complete the Note with applicable Endorsements, along with any Assignments and other necessary legal documents. Can work independently with the Investor, Client, Custodian, and Attorney Network to resolve any document exceptions in a professional and timely manner.
________________________________________
Principal Duties:
1. Facilitates document requests in a timely manner
2. Comprehensive understanding of proving up all Chain of Title requirements
3. Resolves document exceptions through collaborative efforts with areas outside the Department
4. Conducts training for new and existing employees
5. Assist in gathering required documents for all audits
Minimum Qualifications:
1. Detail oriented
2. Document processing experience
3. Excellent written and verbal communication skills
4. Ability to lift boxes weighing 25 lbs
5. Proficient in Microsoft Office (Excel and Word)
Preferred Qualifications:
1. Experience in Loan Servicing, with emphasis in Bankruptcy and Foreclosure
2. Timeline management
3. Operating imaging hardware/software
4. Records Management
5. Experience with Microsoft Office tools (Access and SQL)
Select Portfolio Servicing an Equal Opportunity Employer and do not discriminate against any employee or applicant for employment because of race, color, sex, age, national origin, religion, sexual orientation, gender identity, status as a veteran, and basis of disability or any other federal, state or local protected class.
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
MICAH SCHNALL,
Appellant,
v.
DEUTSCHE BANK NATIONAL TRUST
COMPANY, MORTGAGE UNPUBLISHED OPINION
ELECTRONIC REGISTRATION en
SYSTEMS, and JOHN DOES, inclusive
1 through 20,
Respondents.
FILED: June 6, 2016
Schindler, J. — Under the Deeds of Trust Act, chapter 61.24 RCW, only a
properly appointed trustee may conduct a nonjudicial foreclosure. Where the trustee
named in the deed of trust is replaced by a successor trustee, the successor trustee is
“vested” with the powers of the original trustee only upon recording the appointment
with the county auditor.1 In this case, Deutsche Bank National Trust Company
appointed a successor trustee to initiate nonjudicial foreclosure. The purported
successor trustee transmitted the notice of default to the borrower. Because the
appointment of the successor trustee was not recorded, the successor trustee was not
properly appointed nor vested with the powers of the original trustee. We reverse the
order of summary judgment and remand for further proceedings.
RCW 61.24.010(2).
No. 73522-5-1/2
FACTS
In 2006, Micah Schnall borrowed $460,000 from Quicken Loans Inc. Schnall
executed a promissory note dated October 30, 2006. The promissory note designates
Quicken Loans as the “Lender” and “Note Holder.” The promissory note requires
Schnall to make periodic payments. The failure to make payments accelerates the
maturity of the debt. The promissory note was secured by a deed of trust on Schnall’s
residential property in Redmond, Washington. The deed of trust is dated October 30,
2006 and signed by Schnall. The deed of trust identifies Quicken Loans as the lender
and Stewart Title as the trustee.
At some point, Quicken Loans sold the loan to a securitized trust known as
“IndyMac INDX Mortgage Loan Trust 2006—AR39, Mortgage Pass-Through
Certificates, Series 2006-AR39.”2 Deutsche Bank National Trust Company serves as
the trustee. On December 7, 2006, Deutsche Bank obtained the original promissory
note. Because the original promissory note is indorsed in blank, Deutsche Bank
became the holder of the note.
On August 1, 2009, Schnall stopped making payments on the promissory note.
On March 8, 2010, Deutsche Bank executed a limited power of attorney
document giving loan servicer OneWest Bank FSB the authority to appoint a successor
trustee. On August 19, 2010, OneWest Bank appointed Regional Trustee Services
Corporation (RTS) as the successor trustee. Five days later on August 24, RTS
transmitted a notice of default to Schnall.
2See Schnall v. Deutsche Bank Nat’I Trust Co.. 177 Wn. App. 1033, 2013 WL 6097013, at *1.
Althoughthepartiesdonotdisputethatthisoccurred,therearenodocuments intherecordrelatedtothis
transfer.
No. 73522-5-1/3
On September 24, a month after RTS transmitted the notice of default to Schnall,
the document appointing RTS as successor trustee was recorded with the King County
Auditor’s Office. On the same day, RTS recorded a notice of trustee’s sale that set a
sale date in December 2010. The sale did not occur in December. RTS recorded a
second notice of trustee’s sale with a February 2011 sale date.
After Schnall filed for bankruptcy, the court stayed the February 2011 sale. The
bankruptcy court denied Schnall’s petition. Schnall then filed a lawsuit in June 2011
against Deutsche Bank and others (collectively Deutsche Bank).
On August 19, RTS recorded a third notice of trustee’s sale setting a sale date in
November 2011. RTS conducted the nonjudicial foreclosure sale of Schnall’s property
on December 2, 2011.3
RTS recorded a trustee’s deed in favor of Deutsche Bank on December 12,
2011. On December 20, the trial court granted Deutsche Bank’s CR 12(b)(6) motion
and dismissed Schnall’s lawsuit. We reversed the dismissal of Schnall’s Deeds of Trust
Act claim under CR 12(b)(6).4
On remand, the parties filed cross motions for summary judgment. Schnall
claimed the notice of default was not transmitted by the beneficiary or a properly
appointed successor trustee as required under former RCW 61.24.030(8) (2009).5
Deutsche Bank argued that because it is the holder of the promissory note, it had the
authority to conduct the nonjudicial foreclosure, and to the extent that the notice of
default was defective, such defects were “non-prejudicial technicalities.”
3The record does not indicate why the November 2011 sale was postponed.
4 Schnall, 2013 WL 6097013, at *5. We affirmed dismissal of Schnall’s claims under the
Consumer Protection Act. Schnall. 2013 WL 6097013, at *5.
5 Laws OF 2009, ch. 292, § 8.
No. 73522-5-1/4
The trial court entered an order denying Schnall’s motion for summary judgment.
The court entered an order granting summary judgment in favor of Deutsche Bank. The
court concluded Deutsche Bank “had possession of the Note throughout the non-judicial
foreclosure of the Property” and was “the holder of the Note and beneficiary of the Deed
of Trust with the requisite authority to appoint RTS to effectuate the non-judicial
foreclosure.” The court concluded “any defects in the Notice of Default” were “technical
errors” and “non-prejudicial.” Schnall appeals.
ANALYSIS
Representing himself pro se on appeal, Schnall contends that because the
successor trustee was not properly appointed when it commenced the foreclosure
process by transmitting the notice of default, the successor trustee did not have the
statutory authority to conduct the nonjudicial foreclosure sale.
We review of the trial court’s order granting summary judgment de novo. Lvbbert
v. Grant County, 141 Wn.2d 29, 34, 1 P.3d 1124 (2000). We view the facts and all
reasonable inferences in the light most favorable to the nonmoving party. Lvbbert, 141
Wn.2d at 34. Summary judgment is proper if there is no genuine issue of material fact
and the moving party is entitled to judgment as a matter of law. CR 56(c); Lvbbert, 141
Wn.2d at 34; Trimble v. Wash. State Univ., 140 Wn.2d 88, 93, 993 P.2d 259 (2000).
As an initial matter, we note Deutsche Bank does not respond to the substance
of Schnall’s argument. Instead, Deutsche Bank takes the position that Schnall “cannot
raise this issue for the first time on appeal” because although he raised this precise
issue in his motionfor summary judgment, Schnall did not oppose Deutsche Bank’s
motion for summary judgment on this ground. We disagree. In its motion for summary
No. 73522-5-1/5
judgment, Deutsche Bank acknowledged the Deeds of Trust Act requires “lenders must
strictly comply” with statutory procedures and the appointment of a successor trustee
was recorded a month after RTS transmitted the notice of default.6
Statutory Authority of Trustee to Conduct Nonjudicial Foreclosure
Under the plain and unambiguous provisions of former RCW 61.24.030(8), at
least 30 days before the notice of trustee’s sale is recorded, transmitted, or served,
“written notice of default shall be transmitted by the beneficiary or trustee to the
borrower.”7 Here, RTS, not Deutsche Bank, transmitted the notice of default.
The authority of RTS to act as successor trustee is governed by former RCW
61.24.010 (2009).8 Former RCW 61.24.010(2) sets forth the requirements to appoint a
successor trustee to replace the entity named as trustee in the deed of trust. Former
RCW 61.24.010(2) provides, in pertinent part:
The trustee may resign at its own election or be replaced by the
beneficiary. … If a trustee is not appointed in the deed of trust, or upon
the resignation, incapacity, disability, absence, or death of the trustee, or
the election of the beneficiary to replace the trustee, the beneficiary shall
appoint a trustee or successor trustee. Only upon recording the
appointment of a successor trustee in each county in which the deed of
trust is recorded, the successor trustee shall be vested with all powers of
an original trusteed
6The motion for summary judgment states, in pertinent part:
On August 19, 2010, the Trust appointed Regional Trustee Services Corporation (“RTS”)
as successor trustee under the Deed of Trust. . . . The appointment of successor trustee
was recorded with the King County Auditor’s Office on September 24, 2010 as Ins.
No. 20100924001361.
7We note the current version of RCW 61.24.030(8) includes the same language.
8 LAWS OF 2009, ch. 292, § 7.
9(Emphasis added). We again note this language is unchanged in the current version of RCW
61.24.010(2).
No. 73522-5-1/6
“The only reasonable reading of [former RCW 61.24.010(2)] is that the successor
trustee must be properly appointed to have the powers of the original trustee.” Bavand
v. OneWest Bank. FSB. 176 Wn. App. 475, 487, 309 P.3d 636 (2013). The statute
makes clear that (1) the beneficiary may appoint a successor trustee if it elects to
replace the trustee named in the deed of trust and that (2) only upon recording in the
relevant county is the successor trustee “vested” with the powers conferred upon the
trustee by the deed of trust. Bavand, 176 Wn. App. at 486-87.
Here, RTS issued the notice of default on August 24, 2010. But the record
shows the appointment of a successor trustee was not recorded until a month later on
September 24, 2010.
As the parties acknowledge, “lenders must strictly comply with the statutes and
courts must strictly construe the statutes in the borrower’s favor.” Albice v. Premier
Mortg.Servs.ofWash., 174 Wn.2d 560, 567, 276 P.3d 1277 (2012); Rucker v.
NovaStarMortg., Inc., 177 Wn. App. 1, 14,311 P.3d 31 (2013). It is well established
that only a lawfully appointed beneficiary has authority to conduct a nonjudicial
foreclosure. Walker v. Quality Loan Serv. Corp. of Wash., 176 Wn. App. 294, 306, 308
P.3d 716 (2013); Rucker, 177 Wn. App. at 14; Bavand, 176 Wn. App. at 490. A
procedural irregularity that divests the trustee of statutory authority invalidates a
trustee’s sale. Albice, 174 Wn.2d at 576 (Stephens, J., concurring).
For instance, in Albice, homeowners who fell behind in payments on a loan and
received a notice of trustee’s sale negotiated a forbearance agreement to make seven
monthly payments. Albice, 174 Wn.2d at 564. Even though each payment was late,
the trustee named in the deed of trust continued the date of the foreclosure sale each
No. 73522-5-1/7
time a payment was made. But when the seventh and last forbearance agreement
payment was made late, the trustee proceeded with the sale. Albice, 174 Wn.2d at 564.
Our Supreme Court addressed whether the trustee’s sale was invalid because it took
place beyond the permitted 120 days for a sale under RCW 61.24.040(6). Albice, 174
Wn.2d. at 566. In construing the Deeds of Trust Act, the court considered the three
basic objectives of the act: (1) to further an efficient and inexpensive nonjudicial
foreclosure process, (2) to ensure interested parties have an adequate opportunity to
prevent wrongful foreclosure, and (3) to promote stability of land titles. Albice, 174
Wn.2d at 567. The Albice court noted that lenders must strictly comply with the
statutory provisions and that “[procedural irregularities, such as those divesting a
trustee of its statutory authority to sell the property, can invalidate the sale.” Albice, 174
Wn.2d at 567. The court held, “When a party’s authority to act is prescribed by a statute
and the statute includes time limits, .. . failure to act within that time violates the statute
and divests the party of statutory authority.” Albice, 174 Wn.2d at 568. The court
concluded, “Without statutory authority, any action taken is invalid . .. and . . . under this
statute, strict compliance is required.” Albice, 174 Wn.2d at 568.
A year after the decision in Albice, this court decided two cases concerning the
appointment of a successor trustee, Rucker and Bavand. In Rucker, the borrowers
argued the nonjudicial foreclosure sale was invalid because NovaStar Mortgage Inc.,
the purported beneficiary of the deed of trust, did not hold their promissory note and did
nothavethepowertoappointthesuccessortrustee, Quality Loan ServiceCorporation
of Washington (QLS). Rucker, 177 Wn. App. at 14-15. We held there were genuine
No. 73522-5-1/8
issues of material fact about whether the successor trustee conducted the nonjudicial
foreclosure sale without the authority to do so. Rucker, 177 Wn. App. at 17.
Ifit is determined at trial that NovaStar was not acting as the agent of a
true beneficiary, then the appointment of QLS was improper, and it follows
that QLS had no statutory authority to conduct the trustee’s sale. As in
[Schroederv. Excelsior Mgmt. Grp., LLC, 177 Wn.2d 94, 297 P.3d 677
(2013),] and Albice, in such circumstances, vacation of the sale is a proper
remedy.
Rucker, 177 Wn. App. at 17.
In Bavand, we reversed a postsale challenge to a nonjudicial foreclosure.
Bavand, 176 Wn. App. at 501. In Bavand, OneWest Bank FSB, a self-proclaimed
beneficiary at the time it appointed a successor trustee, relied on an assignment of the
deed of trust that was executed the day after it appointed the trustee. Bavand, 176 Wn.
App. at 482-83. We concluded the defective appointment of a trustee could not be
cured where the entity was not a proper beneficiary under the Deeds of Trust Act.
Bavand, 176 Wn. App. at 488. The successor trustee’s lack of authority was “a material
procedural defect and not a mere technicality.” Bavand, 176 Wn. App. at 490. We held:
Without a proper appointment, [the successor trustee] did not
succeed to any of the original trustee’s powers under the deed of trust.
Specifically, it had no power to conduct a nonjudicial foreclosure and
trustee’s sale of Bavand’s property. This is a material failure to comply
with the provisions of the Deeds of Trust Act.
Bavand, 176 Wn. App. at 490.
Consistent with the decisions in Albice, Rucker, and Bavand, we conclude the
failure of Deutsche Bank to comply with former RCW 61.24.010(2) was material and
RTS did not have the statutory authority to conduct the nonjudicial foreclosure sale on
8
No. 73522-5-1/9
December 2, 2011. We reverse and remand to set aside the December 2, 2011
nonjudicial foreclosure sale.10
WE CONCUR:
J~S.-/ ^gctfetP,
10 In light of our disposition, we do not address Schnall’s other arguments or his appeal of the
denial of summary judgment. An order denying summary judgment is not a final appealable order. See
RAP 2.2(a).
The Servicing Guide has been updated to include changes related to the following:
?
Retirement of Delinquency Counseling Requirements for Community Lending Mortgage Loans
?
Fannie Mae HAMP Modification Termination
?
Foreclosure Title Costs
?
Further Reduction of Servicing Requirements for Florida Acquired Properties
?
Property Insurance Reimbursement Limits
?
Mortgage Release Policies and Procedures
?
Miscellaneous Revision Each of these updates is described below. The servicer must review each topic in the
Servicing Guide in its entirety to gain a full understanding of the policy change(s)
Cities are arguing that they, too, were damaged by risky loans, and that they should be able to take the lenders to court to regain their losses.
The Atlantic-
In the wake of the housing crisis, surprisingly few people or institutions have been held accountable for the risky lending practices that nearly wrecked the U.S. economy. That’s partly because the people who were most damaged by the foreclosure crisis—the people who lost their homes—don’t have the resources to bring lawsuits.
But the families who lost their homes weren’t the only ones hurt by the foreclosure crisis. So there’s an argument to be made that they shouldn’t be the only ones who can go after the lenders. Cities, for example, lost tax revenue when homes sat vacant, and saw property values within their boundaries decrease when vacant and boarded-up homes sat empty. Cities had to pay for police and fire protection to keep those homes from being vandalized and to respond to reported break-ins and criminal activity at the houses.
the process by which something, typically a word or expression, is changed from its original use or meaning to one that is regarded as erroneous or debased.
Florida’s attorney general, Pam Bondi, has confirmed that she personally solicited a political contribution from Donald Trump at the time her office was considering prosecuting Trump University for fraud, the Associated Press reports. A Trump family foundation gave a nonprofit controlled by Bondi $25,000, and Bondi dropped the case.
In September 2013, the Orlando Sentinel ran a story asking why Bondi’s office wasn’t investigating Trump University. (New York attorney general Eric Schneiderman had just filed a lawsuit against the enterprise.) Bondi said that she would look into the matter.
Three days later, And Justice for All, the committee supporting her re-election campaign, received the check from the Donald J. Trump Foundation. Bondi’s office nixed the lawsuit, citing insufficient grounds to proceed. At the time, Trump refused to answer questions about why he was contributing to the Florida AG, but in a statement he called Bondi “a fabulous representative of the people” and Schneiderman “a political hack.”
District Court of Appeal of Florida, Fourth District.
June 1, 2016.
Brian Korte, Scott J. Wortman and Daniel Bialczak of Korte & Wortman, P.A., West Palm Beach, for appellant.
Sarah T. Weitz of Weitz & Schwartz, P.A., Fort Lauderdale, for appellee.
KLINGENSMITH, J.
Abraham Segall appeals from a final judgment of foreclosure in favor of Wachovia Bank, N.A. as trustee for J.P. Morgan Mortgage Trust 2005-A8. Among several issues raised on appeal, we write solely to address Segall’s claim that Wachovia failed to prove its standing to foreclose. We agree and reverse.
Segall and his wife signed a promissory note and mortgage with J.P. Morgan Chase Bank, N.A. (“Chase Bank”). Chase Bank later transferred the original note to Chase Home Finance, LLC (“Chase Home”), as evidenced by an allonge attached to the note reflecting a specific endorsement from Chase Bank to Chase Home. Chase Home subsequently merged into Chase Bank.
On the same day that Wachovia filed its foreclosure complaint against Segall, it acquired the note and mortgage by way of an assignment of mortgage from Chase Bank. In the initial complaint, Wachovia asserted that it was entitled to enforce the note as a holder of the instrument.
Segall contested Wachovia’s standing, arguing that the chain of ownership of the note belied Wachovia’s status as holder because the special endorsement indicated that Chase Home, not Chase Bank, was the most recent holder. Therefore, Segall argued that because Chase Home was the true owner of the note and mortgage, Chase Bank could not have assigned its ownership rights to Wachovia.
Wachovia’s witness testified that while the note was specially endorsed from Chase Bank to Chase Home, the two companies merged in 2007 to become one entity. When Wachovia’s counsel moved to offer the assignment into evidence, defense counsel objected based on best evidence, speculation, and lack of predicate, arguing that “[t]here’s been no documentation evidence showing that there was a merger between [Chase Home] and [Chase Bank],” and that the special endorsement indicated they were separate entities. The trial court overruled the objection, and later denied Segall’s motion for involuntary dismissal, in which he argued that Wachovia lacked standing to foreclose. The trial court ultimately rendered final judgment of foreclosure in favor of Wachovia.
Section 607.1106 provides that in the event of a merger between corporations, “[e]very other corporation party to the merger merges into the surviving corporation and the separate existence of every corporation except the surviving corporation ceases.” § 607.1106(1)(a), Fla. Stat. (2007). Additionally, the title to or any interest in property “owned by each corporation party to the merger is vested in the surviving corporation without reversion or impairment.” § 607.1106(1)(b). The surviving corporation becomes “responsible and liable for all the liabilities and obligations of each corporation party to the merger,” and “[a]ny claim existing or action or proceeding pending by or against any corporation party to the merger may be continued as if the merger did not occur or the surviving corporation may be substituted in the proceeding for the corporation which ceased existence.” § 607.1106 (1)(c)-(d). In short, the surviving corporation succeeds to all of the rights, privileges, immunities, and property of the other entities party to the merger by operation of law, without the necessity of either a bill of sale or other assignment.
Section 655.417(1), which concerns the effect of merger, consolidation, conversion, or acquisition, provides:
Even though the charter of a participating or converting financial entity has been terminated, the resulting financial entity is deemed to be a continuation of the participating or converting financial entity such that all property of the participating or converting financial entity, including rights, titles, and interests in and to all property of whatsoever kind, whether real, personal, or mixed, and things in action, and all rights, privileges, interests, and assets of any conceivable value or benefit which are then existing, or pertaining to it, or which would inure to it, are immediately vested in and continue to be the property of the resulting financial entity, by act of law and without any conveyance or transfer and without further act or deed; and such financial entity has, holds, and enjoys the same in its own right as fully and to the same extent as the same was possessed, held, and enjoyed by the participating or converting financial entity; and, at the time of the taking effect of such merger, consolidation, conversion, or acquisition, the resulting financial entity has and succeeds to all the rights, obligations, and relations of the participating or converting financial entity.
§ 655.417(1), Fla. Stat. (2007).
Therefore, if Wachovia presented sufficient evidence proving that the alleged merger occurred, then Chase Bank, as the surviving corporation, would have succeeded to Chase Home’s status as owner and holder of the promissory note by operation of law, and would have had the authority to transfer the note to Wachovia via assignment of the mortgage. See, e.g., Tilus v. AS Michai LLC, 161 So. 3d 1284, 1286 (Fla. 4th DCA 2015) (stating that a party can prove standing to foreclose via an assignment of mortgage executed prior to the inception of the lawsuit, so long as the assignment reflects an intention to transfer both the note and the mortgage).
The analogous federal law applicable specifically to the merger of banks provides:
The corporate existence of each of the merging banks or banking associations participating in such merger shall be merged into and continued in the receiving association and such receiving association shall be deemed to be the same corporation as each bank or banking association participating in the merger. All rights, franchises and interests of the individual merging banks or banking associations in and to every type of property (real, personal, and mixed) and choses in action shall be transferred to and vested in the receiving association by virtue of such merger without any deed or other transfer. The receiving association, upon the merger and without any order or other action on the part of any court or otherwise, shall hold and enjoy all rights of property, franchises, and interests, including appointments, designations, and nominations, and all other rights and interests as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver and committee of estates of lunatics, and in every other fiduciary capacity, in the same manner and to the same extent as such rights, franchises, and interests were held or enjoyed by any one of the merging banks or banking associations at the time of the merger, subject to the conditions hereinafter provided.
12 U.S.C. § 215a(e) (2006).
These statutes make it clear that a foreclosing party can establish standing to foreclose based upon a merger. However, achieving standing via merger also requires that the surviving entity prove that it “acquired all of [the absorbed entity’s] assets, including [the] note and mortgage, by virtue of the merger.” Fiorito v. JP Morgan Chase Bank, Nat’l Ass’n, 174 So. 3d 519, 521 (Fla. 4th DCA 2015).
In Fiorito, the plaintiff attempted to prove its standing to foreclose based upon its ownership and possession of a note containing an undated, blank endorsement, which it acquired by way of a merger with the bank that originated the loan. Id. at 520-21. While the plaintiff’s witness testified that a merger had taken place, the witness did not establish that the successor bank acquired the subject note and mortgage by virtue of the merger. Id. at 521. Accordingly, we held that evidence of standing was lacking:
While Chase also could have established standing through its merger with [Washington Mutual Bank, FA (“WAMU”)], the officer’s testimony fell short of establishing that Chase acquired all of WAMU’s assets, including Appellant’s note and mortgage, by virtue of the merger. The officer only testified that Chase merged with, and “took over,” WAMU on September 25, 2008. The officer never testified that Chase acquired all or any of WAMU’s assets, nor did he testify as to when Chase became the owner of the note. Cf. Stone, 115 So. 3d at 413 (bank employee specifically testified that the plaintiff bank acquired all of the prior bank’s assets pursuant to a purchase assumption agreement). Thus, because Chase failed to establish when it became the owner of the note, the trial court erred in finding that Chase had standing to initiate the foreclosure action.
Id. at 521-22.
Similarly in Lamb, which involved a corporate acquisition as opposed to a merger, we found that despite the witness’s testimony that the plaintiff acquired the entity to which the subject note was specially endorsed, standing was not established because there was no evidence that the foreclosing party “acquired [the] particular note which [bore the] special indorsement” to the subsumed entity. 174 So. 3d at 1041.
Other than the bare assertion by Wachovia’s witness at trial, there are no documents in the record indicating that the merger of Chase Home and Chase Bank took place. While the term “merger” is used in common parlance to describe the combination of two corporate entities, it has specific legal meaning for corporations generally, and in the banking industry specifically. A lay witness’s mere use of the term “merger” to describe two companies combining into one entity, without more, could imply a true merger as defined under sections 655.417(1) or 215a(e), but could also imply some other form of corporate consolidation, including but not limited to a purchase and sale of select liabilities and assets.
The consolidation of two distinct financial institutions can be an extraordinarily complex transaction, which may include numerous limitations on the transfer and assumption of assets and liabilities relating to transfers of title, exceptions to what is being transferred, recourse between parties to the deal, and other qualifications in both public and confidential business documents. The intricacies of these details can tax the imagination. It would have been a simple matter for Wachovia to present evidence of a true merger if one had in fact occurred. Wachovia could have readily obtained documentation that may have provided sufficient evidence of the merger, and proved that Chase Bank had the authority to assign the mortgage.
Here, Wachovia did not provide sufficient evidence to enable the trial court to discern the extent of any assets transferred between Chase Bank and Chase Home, or that a merger in accordance with sections 655.417(1) or 215a(e) had taken place. Testimony that a merger had occurred, without more, is insufficient to prove the extent of the consolidation, or that the transfer of the asset in question was included as part of the purported transaction. See Shores v. First Fla. Res. Corp., 267 So. 2d 696, 696 (Fla. 2d DCA 1972) (holding that when a corporation admitted to transferring “some mortgages” to various entities, corporate officers’ “bare affirmation” that the subject note was not assigned along with the other mortgages, without more, failed to establish the claimed nonoccurrence).
Because Wachovia failed to sufficiently prove that Chase Home merged with Chase Bank, and that Chase Bank thus acquired the note, there was no evidence that Chase Bank had the authority to further transfer the note by assigning the mortgage to Wachovia. As such, Wachovia failed to prove that it had standing to foreclose. We therefore reverse and remand this case for entry of an order of involuntary dismissal. Lamb, 174 So. 3d at 1041.
Reversed and Remanded.
CIKLIN, C.J., and WARNER J., concur.
Not final until disposition of timely filed motion for rehearing.
District Court of Appeal of Florida, Fourth District.
June 1, 2016.
Evan M. Rosen of Law Offices of Evan M. Rosen, P.A., Fort Lauderdale, for appellants.
Shaib Y. Rios of Brock & Scott, PLLC, Fort Lauderdale, for appellee.
FORST, J.
Appellants Marlene and Errol Rattigan had their property foreclosed upon by Appellee Central Mortgage Company (“the Bank”). Because the Bank failed to introduce the note that was the basis for the foreclosure, we reverse and remand for the entry of involuntary dismissal.[1]
The best evidence rule, codified at section 90.952, Florida Statutes (2015), says that “[e]xcept as otherwise provided by statute, an original writing, recording, or photograph is required in order to prove the contents of the writing, recording, or photograph.” Id. None of the exceptions to the rule are applicable in this case. When the terms of an agreement are necessary for resolution of an issue brought before a court, the failure to introduce the agreement itself into evidence violates the best evidence rule. J.H. v. State, 480 So. 2d 680, 682 (Fla. 1st DCA 1985). Without the agreement itself in evidence, testimony regarding the contents of the agreement is not permitted. Id.
Here, the original note which was introduced into evidence capped the principal amount that could be owed at $747,500. The Bank sought to, and eventually did, recover approximately $760,000 in principal. To explain this discrepancy, the sole witness at trial testified that the loan had been modified, in writing, in 2012 and that the modification either raised or eliminated the original cap.
The Bank was clearly proceeding under the modified note, i.e., a different note. This written modification was as much a part of the parties’ agreement as the original note itself. The Bank violated the best evidence rule by virtue of its failure to introduce the modification at trial (either the original or a duplicate with an explanation as to why the original note was unavailable, see Deutsche Bank Nat’l Tr. Co. v. Clarke, 87 So. 3d 58, 62 (Fla. 4th DCA 2012)). J.H., 480 So. 2d at 682. Without the introduction of the modification, all testimony regarding the contents of that modification, including the testimony supporting the $760,000 sought, was erroneous. Id. As a result, there is no proper evidence in the record which could support the final judgment.
We therefore reverse the final judgment of foreclosure entered below and remand for the entry of involuntary dismissal.
Reversed.
GROSS and KLINGENSMITH, JJ., concur.
Not final until disposition of timely filed motion for rehearing.
[1] This determination renders moot Appellants’ second argument, regarding the surrender of the modification to the note.
Court: U.S. Court of Appeals for the Third Circuit Docket: 15-2658
Opinion Date: May 27, 2016
Areas of Law: Banking, Civil Procedure, Insurance Law, Real Estate & Property Law
After a foreclosure case, Davis filed various claims against an entity that he calls “Wells Fargo U.S. Bank National Association as Trustee for the Structured Asset Investment Loan Trust, 2005-11” as the purported holder of Davis’s mortgage. Davis also sued Assurant, believing it to be the provider of insurance on his home. His claims arise from damage that occurred to his house after Wells Fargo locked him out of it, which went unrepaired and worsened into severe structural problems. The district court dismissed Davis’s claims against Wells Fargo, on the grounds that claim preclusion and a statute of limitations barred recovery, and claims against Assurant for lack of subject matter jurisdiction. The Court reasoned that Davis lacked standing to bring those claims because he sued the wrong corporate entity, namely Assurant, when he should have sued Assurant’s wholly-owned subsidiary, ASIC. The Third Circuit affirmed dismissal of Wells Fargo, but vacated as to Assurant. Standing is a jurisdictional predicate, but generally focuses on whether the plaintiff is the right party to bring particular claims, not on whether the plaintiff has sued the right party.
Opinion filed May 25, 2016.
Not final until disposition of timely filed motion for rehearing.
No. 3D15-2091
Lower Tribunal No. 13-15087
944 CWELT-2007 LLC and Amelia Guerra,
Petitioners,
vs.
Bank of America, N.A.,
Respondent.
A Writ of Certiorari to the Circuit Court for Miami-Dade County, Jose M.
Rodriguez, Judge.
PA Bravo, P.A., and Paul Alexander Bravo and Ruzy Behnejad, for
petitioners.
Aldridge | Pite, LLP, and Matthew A. Ciccio (Delray Beach), for
respondent.
Before ROTHENBERG, SALTER and SCALES, JJ.
SCALES, J.
Petitioners Amelia Guerra and 944 CWELT-2007 LLC (“CWELT”) seek
certiorari review of the trial court’s order denying a motion to cancel a foreclosure
sale. Because there was a pending rule 1.530 motion for rehearing directed toward
the foreclosure judgment at the time of the foreclosure sale, we grant the petition.
On April 26, 2013, Bank of America, N.A. (the “Bank”) filed a foreclosure
complaint against Guerra and her condominium association, 944 Condominium
Incorporated (the “Association”). The Bank’s foreclosure action sought to
foreclose a mortgage on Guerra’s condominium unit that secured a loan that the
Bank made to Guerra in 2007.
At the time the Bank’s foreclosure complaint was filed, a separate
foreclosure action by the Association against Guerra was pending. The
Association’s action sought to foreclose the Association’s lien for unpaid
condominium assessments. On August 22, 2013, CWELT was issued a certificate
of title to the unit after placing the winning bid in the sale held in the Association
foreclosure action.
On May 5, 2015, a bench trial was held in the Bank’s foreclosure action, and
a final judgment of foreclosure was entered in the Bank’s favor. The judgment set
a foreclosure sale for June 29, 2015.
On May 20, 2015, Petitioners (defendants in the Bank’s action) timely filed
a rule 1.530 motion for rehearing directed toward the Bank’s judgment. On June
26, 2015, the trial court cancelled the June 29, 2015 foreclosure sale date pursuant
to Petitioners’ motion to cancel the sale on the basis that the final judgment had not
yet rendered. The trial court rescheduled the foreclosure sale for August 10, 2015.
Because Petitioners’ motion for rehearing remained pending on the
rescheduled August 10, 2015 sale date, Petitioners filed a second motion to cancel
the foreclosure sale. This motion to cancel the sale was heard by the trial court on
the morning of the scheduled sale. The trial court summarily denied the motion and
the foreclosure sale proceeded. Respondent Tania Cienfuegos was named the
winning bidder of the unit at the foreclosure sale. The Petitioners’ rule 1.530
motion has not been adjudicated and remains pending.
Petitioners’ seek certiorari review of the trial court’s summary order denying
their motion to cancel the foreclosure sale.1
It is well settled that a foreclosure sale cannot be held while a timely motion
for rehearing is pending because enforcement of a final judgment is suspended by
the filing of the rehearing motion. United Invs. Ltd. P’ship v. Resolution Tr. Corp.,
566 So. 2d 370, 370 (Fla. 3d DCA 1990) (Mem). Accordingly, the trial court erred
by not cancelling the August 10, 2015 foreclosure sale, and the foreclosure sale
must be set aside. See Hoffman v. BankUnited, N.A., 137 So. 3d 1039 (Fla. 2d
DCA 2014) (Mem).
1 We consider the Bank’s decision not to file a response to the petition as the
equivalent of a confession of error.
Based on the foregoing, we grant the petition, quash the order denying
Petitioners’ motion to cancel the sale of foreclosure, direct the trial court to set
aside the foreclosure sale to Cienfuegos, and remand for proceedings consistent
herewith.
The U.S. District Court for the Eastern District of Pennsylvania granted a mortgage fund summary judgment in a foreclosure action on Tuesday, due to claim preclusion under the Rooker-Feldman doctrine.
Judge Thomas N. O’Neill Jr. reached this decision in the lawsuit brought by Troy Slaffey against PNMAC Mortgage Opportunity Fund Investors (PNMAC) and PennyMac Loan Services – who averred in an amended complaint the defendant committed four violations of the Fair Debt Collection Practices Act, 15 U.S.C. Section 1692(e), all of which are connected to a mortgage held by the defendants.
“On May 29, 2013, defendant PNMAC filed a foreclosure complaint against Slaffey in the Philadelphia County Court of Common Pleas, due to his default on a Jan. 26, 2007 mortgage and note. On Sept. 17, 2013, the state court entered an in rem default judgment in favor of PNMAC,” O’Neill said. “On Oct. 16, 2014, Slaffey filed a petition to open the default judgment in the state foreclosure proceeding.”
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