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FRIEDLE v. BANK OF NEW YORK MELLON |  FL 4DCA – Bank failed to prove its standing at the filing of suit … We reverse and remand for vacation of the final judgment and entry of an involuntary dismissal of the complaint.

FRIEDLE v. BANK OF NEW YORK MELLON | FL 4DCA – Bank failed to prove its standing at the filing of suit … We reverse and remand for vacation of the final judgment and entry of an involuntary dismissal of the complaint.

 

JUSTIN FRIEDLE and SANDRA FRIEDLE, Appellants,
v.
THE BANK OF NEW YORK MELLON, f/k/a THE BANK OF NEW YORK, as successor-in-interest to JPMORGAN CHASE BANK, N.A., as trustee for STRUCTURED ASSET MORTGAGE INVESTMENTS II INC., BEAR STEARNS ALT-A TRUST, MORTGAGE PASSTHROUGH CERTIFICATES, SERIES 2005-10, Appellee.

No. 4D15-1750.
District Court of Appeal of Florida, Fourth District.
September 27, 2017.
Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County, L.T. Case No. CACE12-32115, Kathleen D. Ireland, Judge.

Thomas Erskine Ice of Ice Appellate, Royal Palm Beach, for appellants.

William L. Grimsley and N. Mark New, II of McGlinchey Stafford, Jacksonville, for appellee.

William P. Keller of Akerman LLP, Fort Lauderdale, and Nancy M. Wallace of Akerman LLP, Tallahassee, for Amicus Curiae Mortgage Bankers Association.

ON MOTION FOR REHEARING

WARNER, J.

We grant the motions for rehearing and clarification filed by appellee and amicus, withdraw the opinion, and substitute the following opinion in its place.

Appellants challenge a final judgment of foreclosure, contending that the Bank failed to prove standing. Because the appellee did not prove that the Bank had possession of the note and was thus a holder at the time of the filing of the complaint, we reverse.

The standard of review in determining whether a party has standing to bring an action is de novo. Boyd v. Wells Fargo Bank, N.A., 143 So. 3d 1128, 1129 (Fla. 4th DCA 2014). To prove standing in a mortgage foreclosure case, the plaintiff must prove its status as a holder of the note at the time of the filing of the complaint as well as at trial. See Rigby v. Wells Fargo Bank, N.A., 84 So. 3d 1195 (Fla. 4th DCA 2012). In this case, the foreclosing bank’s witness could not testify that the Bank had possession of the note prior to filing the complaint. The Bank conceded that it presented no testimony that its present servicer or its prior servicer had possession of the note at the inception of the foreclosure action.

At trial, the Bank attempted to prove possession of the note through a Pooling and Service Agreement (“PSA”). That document purports to show the transfer of the mortgage loan to the Bank as trustee. Appellant objected to the admission of this evidence, which the court allowed on the ground that it was self-authenticating under section 90.902, Florida Statutes (2016). While it was certified by the Securities and Exchange Commission (“SEC”) as being filed with that agency, and thus was self-authenticating, there is a difference between authentication and admissibility. Charles Ehrhardt explains the difference:

Documents must be authenticated before they are admissible evidence. . . . Even after a document is authenticated, it will not be admitted if another exclusionary rule is applicable. For example, when a document is hearsay, it is inadmissible even if it has been properly authenticated.

Charles W. Ehrhardt, Florida Evidence § 902.1 (2017 ed.). Here, the PSA purportedly establishes a trust of pooled mortgages, but this particular mortgage was not referenced in the documents filed with the SEC. Appellant objected that the document was hearsay, as none of the exceptions to the hearsay rule were established. The Bank did not present sufficient evidence through its witness to admit this unsigned document as its business record. While the witness testified that a mortgage loan schedule, which listed the subject mortgage, was part of the Bank’s business records, the mortgage loan schedule itself does not purport to show that the actual loan was physically transferred. And it is clear from the testimony that the witness had no knowledge of the workings of the PSA or MLS, nor did any other document or testimony show that the note was transferred to the Bank in accordance with the terms of the PSA. Therefore, the evidence in this case does not establish that this mortgage note was within the possession of the Bank as Trustee at the time suit was filed.[1]

In its answer brief, the Bank also relies on Ortiz v. PNC Bank, National Ass’n, 188 So. 3d 923 (Fla. 4th DCA 2016), to support the court’s rulings under a tipsy coachman analysis. In Ortiz, we created a presumption of standing if the note attached to the complaint was the same as the note introduced at trial. We said:

[I]f the Bank later files with the court the original note in the same condition as the copy attached to the complaint, then we agree that the combination of such evidence is sufficient to establish that the Bank had actual possession of the note at the time the complaint was filed and, therefore, had standing to bring the foreclosure action, absent any testimony or evidence to the contrary.

Id. at 925 (emphasis added). Here, the note attached to the complaint was not in the same condition as the original note introduced at trial, as pointed out by the appellants in their reply brief. Although the differences may seem minor, Ortizinfers possession at the time of filing suit where the copy attached to the complaint and the original are the same, as the copy must have been made from the original note at the time that the complaint was filed, without evidence to the contrary. Where the copy differs from the original, the copy could have been made at a significantly earlier time and does not carry the same inference of possession at the filing of the complaint. In this case, as Ortiz had not been decided at the time of the trial, no effort was made to explain the discrepancies in the condition of the note attached to the complaint or the original introduced into evidence. Thus, reliance on Ortiz under a tipsy coachman analysis is not appropriate on the record made in this case. Although appellate courts generally apply the law in effect at the time of the appellate court’s decision, Florida East Coast Railway Co. v. Rouse,194 So. 2d 260, 262 (Fla. 1966), the record must be sufficiently developed to support an alternative theory for affirmance. See State Farm Fire and Casualty Co v. Levine, 837 So. 2d 363 (Fla. 2002) (ruling that the court could not affirm a decision based on an alternative legal theory where the alternate ground had not been developed in the record, stating “The key to applying the tipsy coachman doctrine, permitting a reviewing court to affirm a decision from a lower tribunal that reaches the right result for the wrong reasons, is that the record before the trial court must support the alternative theory or principle of law.”).

Because the Bank failed to prove its standing at the filing of suit, the court erred in entering the final judgment of foreclosure. We reverse and remand for vacation of the final judgment and entry of an involuntary dismissal of the complaint.

TAYLOR and LEVINE, JJ., concur.

[1] We have held in past cases that the PSA together with a mortgage loan schedule are sufficient to prove standing, but in those cases the witness offering the evidence appears to have been able to testify to the relationship of the various documents and their workings, or that the documents were admitted into evidence without objection. See, e.g., Boulous v. U.S. Bank Nat’l Ass’n., 210 So. 3d 691 (Fla. 4th DCA 2016).

 

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TFH 8/20 | Foreclosure Workshop #40: The Bank of New York Mellon v. R. Onaga, Inc. — What Every Homeowner Needs To Know About How Courts Are Balancing the Appellate Rights of Foreclosed Homeowners Versus the Contract Rights of Subsequent Third-Party Purchasers

TFH 8/20 | Foreclosure Workshop #40: The Bank of New York Mellon v. R. Onaga, Inc. — What Every Homeowner Needs To Know About How Courts Are Balancing the Appellate Rights of Foreclosed Homeowners Versus the Contract Rights of Subsequent Third-Party Purchasers

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

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Sunday – August 20

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Foreclosure Workshop #40: The Bank of New York Mellon v. R. Onaga, Inc. — What Every Homeowner Needs To Know About How Courts Are Balancing the Appellate Rights of Foreclosed Homeowners Versus the Contract Rights of Subsequent Third-Party Purchasers

Homeowners facing foreclosure have a right to appeal, and in more and more situations foreclosure judgments are being reversed.

Meanwhile, before a foreclosure appeal may be reversed, an auction sale of property in foreclosure will be confirmed and foreclosed property will eventually be sold to third parties.

What happens to your property if you are foreclosed on and your property is sold to third parties and thereafter your foreclosure judgment is reversed on appeal?

This is this Sunday’s discussion topic.

If your foreclosure judgment is reversed based, for instance, on the foreclosing court having lacked jurisdiction, or summary judgment having been improperly granted, or due to fraud, can you get your property back?

The Bank of New York Mellon v. R. Onaga, Inc., a recently published opinion of the Hawaii Supreme Court, represents one of the few studied attempts to begin to definitively answer that perplexing question.

Listen to this Sunday’s radio show. Learn how the Hawaii Supreme Court, reversing the Hawaii Intermediate Court of Appeals, has begun to examine this increasingly important issue, and why its broad-sweeping conclusions are arguably faulty, favoring third-party purchasers.

Once again, here is another instance where The Rule Ritual is leading our Courts into error by failing to look to the reasoning behind rule statements, trampling on the rights of Homeowners in yet what is emerging as one of the next most important new areas in foreclosure defense.

And learn once again the inherent problems within the doctrine of stare decisis where the language of appellate decisions is crafted based entirely upon the arguments and narrow competence of the attorneys representing private litigants, as in Onaga, whose counsel along with the presiding judges overlooked equally relevant and equally controlling yet unaddressed issues.

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Host: Gary Dubin Co-Host: John Waihee

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CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

The Foreclosure Hour 12

 

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TFH 7/23 | Foreclosure Workshop #37: Rigby v. Bank of New York Mellon — The “Standing-at-Inception” Rule Versus the Question Whether “the Mortgage Follows the Note” or “the Note Follows the Mortgage”

TFH 7/23 | Foreclosure Workshop #37: Rigby v. Bank of New York Mellon — The “Standing-at-Inception” Rule Versus the Question Whether “the Mortgage Follows the Note” or “the Note Follows the Mortgage”

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

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Sunday –  July 23

TFH 7/23 | Foreclosure Workshop #37: Rigby v. Bank of New York Mellon — The “Standing-at-Inception” Rule Versus the Question Whether “the Mortgage Follows the Note” or “the Note Follows the Mortgage”
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This Sunday’s show tackles one of the most fundamental of all foreclosure issues underlying most of our foreclosure rules, yet the least understood despite its ever growing importance:

Ownership wise, does the mortgage follow the note or does the note follow the mortgage?

In the foreclosure field, how that underlying question is answered implicitly not explicitly often determines standing, jurisdiction, the burden of proof and the actual result in most foreclosure cases.

A full understanding by the judiciary and by foreclosure defense attorneys alike of the difference between the two approaches might well in the future control whether or not an individual homeowner (which could be you) loses his or her foreclosure case — it is that important.

Centuries ago when traditional real estate mortgages secured promissory notes, the mortgage was merely security for the debt and the two rarely separated in ownership, both placed one on top of the other in the same local bank vault, undisturbed until either the mortgage loan was paid in full or in default.

The “inseparability” concept, for instance, was cemented in American law by the U.S. Supreme Court in the later celebrated case of Carpenter v. Logan decided in 1872, and by the N.Y. Court of Appeals five years earlier in Merritt v. Bartholick decided in 1867.

Yet, with the advent of securitized trusts, where mortgages seemingly wildly became separated from notes in secondary market casinos, mortgages usually without recorded assignments started to be passed back and forth like basketballs in the NBA.

At first, facing foreclosure, homeowners latching on to Carpenter and its inseparability rule demanded in court that foreclosing plaintiffs “show me the note, but courts enforcing state foreclosure laws written exclusively in terms of mortgage foreclosures understandably universally rejected requiring foreclosing plaintiffs to prove note ownership, and foreclosing plaintiffs seemed rarely to have kept the original notes, preferring instead the convenience of digitizing tens of millions of them if they should later be needed.

Then, after the robo-signing scandal of the early 2010’s and the problems uncovered with the sloppy if not fraudulent handling of mortgage assignments, in recent years foreclosing plaintiffs suddenly were forced to reverse themselves, now almost in unison gleefully announcing that courts should ignore mortgage assignment and ownership irregularities altogether, proudly stating in summary judgment hearings nationally to the presiding judge that “here is the note.”

This insincere about face, but largely effective tactic until recently, has in turn seemingly backfired on pretender lenders, now leading the majority of state courts to announce a “standing-at-inception” rule requiring proof of ownership of the note at the time a foreclosure complaint is filed, completely ignoring irregularities with photoshopped or robo-signed and robo-notarized mortgage assignments, as the Hawaii Supreme Court did recently in Toledo discussed in depth on an earlier show, available on the “past broadcast” section of our website at www.foreclosurehour.com.

In Rigby v. Bank of New York Mellon, the Florida First District Court of Appeal has just recently asked counsel surprisingly for further briefing, even though not contested in the parties’ briefs, regarding whether the “standing-at-inception” rule, long adopted in Florida, one of the first States to do so, should be abandoned or substantially altered despite stare decisis.

Now more than ever a better understanding therefore of the underlying mortgage/note issue in terms of “which follows which” is vitally needed to head off any erroneous abandonment of the “standing-at-inception” rule.

On this Sunday’s Foreclosure Hour, John and I will present listeners with surprising answers to “which follows which,” another example regarding how the Rule Ritual and its word robots, as discussed on our past shows, have erroneously enslaved American law.

We will provide not only a better understanding of the underlying “which follows which” controversy, never before revealed anywhere, but explain why the “standing-at-inception” rule should be maintained in Florida and adopted throughout the rest of the United States as, in effect, the “Miranda Rule” protecting homeowners facing foreclosure and which as a beginning step will enable courts upon its further application and development to finally begin to better examine, understand, and unravel the hidden, corrupt, and unregulated world of securitized trusts.

Listen live or on the past broadcast section of our website at www.foreclosurehour.com when this Sunday’s show is posted for the answers, only available on The Foreclosure Hour.

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Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

The Foreclosure Hour 12

 

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD2 Comments

VERIZZO v. BANK OF NEW YORK MELLON | FL 2DCA – We are again required to reverse a final judgment of foreclosure because of the plaintiff’s failure to prove at trial the existence of standing at the inception of the case

VERIZZO v. BANK OF NEW YORK MELLON | FL 2DCA – We are again required to reverse a final judgment of foreclosure because of the plaintiff’s failure to prove at trial the existence of standing at the inception of the case

DAVID VERIZZO, Appellant,
v.
THE BANK OF NEW YORK MELLON F/K/A THE BANK OF NEW YORK, AS SUCCESSOR TRUSTEE FOR JPMORGAN CHASE BANK, N.A., AS TRUSTEE FOR NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2006-3 NOVASTAR HOME EQUITY LOAN ASSET-BACKED CERTIFICATES 2006-3, Appellee.

Case No. 2D15-2508.
District Court of Appeal of Florida, Second District.

Opinion filed June 21, 2017.
Appeal from the Circuit Court for Sarasota County; Nancy K. Donnellan, Senior Judge.

David Verizzo, pro se.

Diana B. Matson and Joshua R. Levine, of Baker, Donelson, Bearman, Caldwell and Berkowitz, PC, Fort Lauderdale, for Appellee.

SALARIO, Judge.

We are again required to reverse a final judgment of foreclosure because of the plaintiff’s failure to prove at trial the existence of standing at the inception of the case. See Stoltz v. Aurora Loan Servs., LLC, 194 So. 3d 1097, 1098 (Fla. 2d DCA 2016) (“We are again required to reverse a final judgment of foreclosure because of the plaintiff’s failure to prove at trial the existence of standing at inception of the case.”). We remand for entry of an order of involuntary dismissal under Florida Rule of Civil Procedure 1.420(b).

The proceedings leading to the judgment on review span many years, but the facts relevant to our decision are few. On April 24, 2008, The Bank of New York, as successor trustee for Novastar Mortgage Funding Trust Series 2006-3, filed a complaint against David Verizzo to reestablish a lost note and to foreclose a mortgage securing the debt the note evidenced.[1] The bank attached a copy of the mortgage but not a copy of the note.[2] The mortgage stated that the borrower and mortgagor was Mr. Verizzo, that the lender was Novastar Mortgage, Inc., and that the mortgagee was Mortgage Electronic Registration Systems, Inc., as Novastar’s nominee.

Mr. Verizzo filed an answer containing an affirmative defense that the bank lacked standing to enforce the note. That answer put the bank on notice that its standing was at issue and imposed upon it the burden to prove at trial that it had standing to enforce the note and mortgage. See Dickson v. Roseville Props., LLC, 198 So. 3d 48, 50 (Fla. 2d DCA 2015); see also May v. PHH Mortg. Corp., 150 So. 3d 247, 248 (Fla. 2d DCA 2014) (holding that the plaintiff in a foreclosure action has the burden to prove standing at trial). That burden included proving not only its standing at the time the case was tried but also when the case was filed. May, 150 So. 3d at 248-49.

In the mine-run foreclosure case that comes to this court, the plaintiff’s standing to enforce the note and mortgage hinges on whether the plaintiff is the holder of the note. See § 673.3011(1), Fla. Stat. (2008); see, e.g., Russell v. Aurora Loan Servs., LLC, 163 So. 3d 639, 642 (Fla. 2d DCA 2015). That is the issue in this case as well.[3] Because the bank was not the original lender on the note—Novastar was—it could prove standing as a holder by presenting the note with a blank indorsement or special indorsement naming it as the holder, an assignment of the note to it, or other admissible evidence sufficient to prove that it is in fact the noteholder. See Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308, 310 (Fla. 2d DCA 2013).

After lengthy pretrial litigation—including two bankruptcies and a pit stop in this court—the case went to trial in July 2015.[4] The bank presented the testimony of an employee of a mortgage servicer engaged by the bank and five documents: (1) a copy of a power of attorney dated April 14, 2014, through which “The Bank of New York Mellon f/k/a the Bank of New York as successor in interest to JPMorgan Chase Bank, N.A.,” granted the servicer the right to act on the bank’s behalf with respect to loans in the trust for which the bank purports to act as trustee here; (2) a copy of the note dated May 11, 2006; (3) a copy of the mortgage; (4) a copy of Mr. Verizzo’s payment history; and (5) a copy of a default notice dated January 14, 2008, which was sent to Mr. Verizzo by a different servicer that identified “US Bank” as the “creditor.” The copy of the note showed Novastar as the lender and contained no blank or special indorsement. Rather, it showed that Novastar was the original owner and holder of a note that had not been negotiated. See §§ 673.1101(1) (identifying the party to whom an instrument is initially payable), .2011(2) (defining the steps Novastar was required to take to negotiate the instrument as transfer of possession and indorsement).[5]

The bank did not introduce any evidence at trial explaining how it became the noteholder. The representative of the servicer did not testify about what happened to the note after Novastar made the loan or how it came to the bank. The bank’s trial evidence thus left significant evidentiary gaps concerning whether the note was negotiated—and, if so, when and by whom—and whether the bank became the holder—and, if so, when and how. There was also no testimony or documentary evidence showing that Mr. Verizzo’s loan was actually a part of the trust for which the bank purports to serve as trustee.

Assuming for argument’s sake that even with these evidentiary gaps, the bank made a prima facie case of its standing at the time of trial, it was nonetheless insufficient to show its standing at the time it filed the foreclosure complaint. On the record the bank made, we know that Novastar was the noteholder when the loan was made in May 2006, but who had authority to enforce the note when the complaint was filed in April 2008 is anybody’s guess. We might speculate based on the bank’s documents that after the loan was made it was put into the trust, that JPMorgan was originally appointed trustee, that the bank became the successor trustee prior to filing, and that the note was negotiated in accord with those transactions. But speculation is all that is. The bank presented no direct or circumstantial evidence to take these assumptions from the level of speculation to the level of prima facie proof that it held the note or otherwise had standing at the time it filed the foreclosure complaint. See Stone v. BankUnited, 115 So. 3d 411, 413 (Fla. 2d DCA 2013) (“[P]laintiff may demonstrate standing by submitting the note bearing a special endorsement in favor of the plaintiff or a blank endorsement, evidence of an assignment from the payee to the plaintiff, evidence of equitable transfer, or other evidence . . . proving the plaintiff’s status as the holder of the note.” (citing McLean v. JP Morgan Chase Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012))).

The bank says that we can find the missing links in two assignments that transferred the mortgage—but not the note—from MERS to the bank dated May 12, 2008, and July 6, 2010, which Mr. Verizzo had admitted into evidence during his defense case. There are two problems here. First of all, the assignments do not purport to transfer the note, and our court has held that an assignment of mortgage that does not also transfer the note, at least standing alone, does not prove that a foreclosure plaintiff has the rights to enforce the note. Caballero v. U.S. Bank Nat’l Ass’n, 189 So. 3d 1044, 1046 (Fla. 2d DCA 2016) (“[T]he assignment was insufficient to show standing because it only purported to assign the mortgage, not the note.”); see also Eaddy v. Bank of Am., N.A., 197 So. 3d 1278, 1280 (Fla. 2d DCA 2016) (holding that plaintiff failed to prove standing where “the assignment of mortgage attached to [the] amended complaint reflects only the transfer of the mortgage and not the note”). Furthermore, even if an assignment of mortgage could, taken with other facts, constitute some quantum of circumstantial evidence that any rights related to the note were also transferred, the assignments here are dated after the filing of the bank’s complaint. Because the assignments came after the bank initiated these proceedings, they do not say anything about whether the bank had standing when it initiated them. See Dickson, 198 So. 3d at 51 (“[P]ostfiling assignments of mortgage . . . could establish only that [the plaintiff] acquired standing in some manner after it filed the complaint.”); see also Russell, 163 So. 3d at 643 (holding that postfiling power of attorney did not establish standing at the time of filing).

The bank also asserts that excerpts of a pooling and servicing agreement dated May 2006 among Novastar, U.S. Bank, and JPMorgan prove its standing at the inception of the case. Even if we agreed with the bank about the import of these excerpts—we do not, but further explanation is unnecessary here—it would be a moot point because they were not admitted into evidence at the trial. See Stoltz, 194 So. 3d at 1098-99 (declining to affirm foreclosure judgment on the basis of an assignment in the court file where assignment had not been admitted into evidence). They were not admitted into evidence because the bank objected to their being admitted, and the trial court sustained that objection. Having invited the trial court to exclude the excerpts of the pooling and servicing agreement from evidence, the bank is in no position to treat them as though they had been admitted into evidence for purposes of appeal. Cf. Tate v. Tate, 91 So. 3d 199, 204 (Fla. 2d DCA 2012) (“[T]he invited error rule prevents [a party] from complaining on appeal about a ruling [it] invited the trial court to make.”).

Mr. Verizzo made a motion for involuntary dismissal based on the bank’s failure to prove standing, which the trial court treated as part of his closing argument. Because the bank failed to make a prima facie case that it had standing at the inception of the case, that motion should have been granted. See Russell, 163 So. 3d at 643; May, 150 So. 3d at 249. Accordingly, we reverse the final judgment of foreclosure and remand the case to the trial court with instructions to enter an order of involuntary dismissal. This resolution renders Mr. Verizzo’s other appellate arguments moot, and we therefore decline to address them.

Reversed; remanded with instructions.

KELLY and BLACK, JJ., Concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED.

[1] On the day of trial, the trial court substituted “The Bank of New York Mellon” for “The Bank of New York” as the plaintiff. For purposes of determining whether the foreclosing plaintiff had standing at inception, any difference between these two entities is not material because a substituted plaintiff acquires only such standing as the original plaintiff had at the inception of the case. See Corrigan v. Bank of Am., N.A., 189 So. 3d 187, 189 (Fla. 2d DCA 2016) (en banc) (quoting Russell v. Aurora Loan Servs., LLC, 163 So. 3d 639, 642 (Fla. 2d DCA 2015)). For ease of reference, we refer to the appellee here (plaintiff below) as “the bank.”

[2] The lost note was discovered and filed with the court prior to trial. See Verizzo v. Bank of N.Y., 28 So. 3d 976, 977 (Fla. 2d DCA 2010). Although the complaint was not amended to remove the lost note count or to more accurately assert the purported basis for the bank’s standing on the foreclosure count once the note was found, it is clear from the record that the count for reestablishment of a lost note by its owner was not an issue by the time of trial.

[3] The bank has not specifically contended that it was a nonholder in possession with the rights of a holder under section 673.3011(2) for the purposes of standing. We do, however, note that some of its arguments regarding its evidence of proof of standing alternatively might be construed as such. See, e.g., St. Clair v. U.S. Bank Nat’l Ass’n, 173 So. 3d 1045, 1046-47 (Fla. 2d DCA 2015). Regardless, as discussed in this opinion, the evidence was not sufficient to prove when the bank acquired possession of the note or the requisite rights of enforcement.

[4] The trial court originally granted the bank a summary judgment of foreclosure. We reversed that judgment both because the bank failed to comply with the procedural requirements of rule 1.510(c)—it did not serve its summary judgment evidence twenty days before the summary judgment hearing—and because the summary judgment record left genuine issues of material fact as to the bank’s standing to enforce the note and mortgage. See Verizzo, 28 So. 3d at 977-78.

[5] Several years prior to trial, the bank filed a document purporting to be the original note. That document contained an undated special indorsement from Novastar to “J.P. Morgan Chase Bank, as Trustee.” The bank made no effort to have the original or a copy of the note bearing the indorsement admitted into evidence, however, and the trial court thus had before it at trial only a copy of the note without any indorsement. We need not address what this undated, indorsed note may have proved about whether the bank had standing to enforce the note at the time of trial by way of either a second indorsement or as a successor trustee. See § 673.1101(3)(b)(1) (indicating that holdership of a note specially endorsed to a trustee may become payable to a successor trustee). Whatever it may have proved, it would not, without other direct or circumstantial evidence showing that the bank came into possession of the note before the complaint was filed, have proved the bank’s standing at inception. That is because an undated indorsement that is not presented to the court until after the original complaint is filed does not show whether the plaintiff who filed the case held the note at the time it was filed. See Corrigan, 189 So. 3d at 189 (holding that a note with an undated, blank indorsement did not establish that plaintiff had possession of the note at the inception of the case); see also Sorrell v. U.S. Bank Nat’l Ass’n, 198 So. 3d 845, 847 (Fla. 2d DCA 2016) (“Standing cannot be established by simply filing a note with an undated indorsement or allonge months after the original complaint was filed.”).

 

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Peters v. THE BANK OF NEW YORK MELLON | FL 2DCA – Because the Bank failed to prove its ownership of the lost note that it attempted to reestablish and enforce, we reverse

Peters v. THE BANK OF NEW YORK MELLON | FL 2DCA – Because the Bank failed to prove its ownership of the lost note that it attempted to reestablish and enforce, we reverse

 

HAZEL N. PETERS a/k/a HAZEL N. JOHNSON; and UNKNOWN TENANT 1 n/k/a DAVE PETERS, Appellants,
v.
THE BANK OF NEW YORK MELLON, f/k/a THE BANK OF NEW YORK, AS TRUSTEE FOR BEAR STEARNS ASSET BACKED SECURITIES TRUST 2006-4, ASSET BACKED CERTIFICATES, SERIES 2006-4, and LEO JOHNSON, Appellees.

Case No. 2D15-2222.
District Court of Appeal of Florida, Second District.
Opinion filed May 26, 2017.
Appeal from the Circuit Court for Lee County; James H. Seals, Senior Judge.

Mark P. Stopa of Stopa Law Firm, Tampa, for Appellant Hazel N. Peters a/k/a Hazel N. Johnson.

Kristen M. Crescenti, Christopher C. O’Brien, and Ronnie J. Bitman, of Pearson Bitman LLP, Maitland, for Appellee The Bank of New York Mellon.

No appearance for Appellee Leo Johnson.

WALLACE, Judge.

Hazel N. Peters, a/k/a Hazel N. Johnson (Ms. Peters), challenges a final judgment of foreclosure in favor of The Bank of New York Mellon (the Bank) entered after a bench trial. Because the Bank failed to prove its ownership of the lost note that it attempted to reestablish and enforce, we reverse.

I. THE FACTS AND THE PROCEDURAL BACKGROUND

On March 13, 1998, Ms. Peters and Leo Johnson executed a note in favor of ContiMortgage Corporation as the Lender. The note was secured by a standard residential mortgage on real property in Lee County, Florida. The mortgage also named ContiMortgage Corporation as the Lender.

On January 28, 2013, the Bank filed the underlying action to foreclose the mortgage and for the reestablishment of the note, which the Bank alleged had been lost. The Bank’s complaint alleged September 18, 2008, as the date that the note went into default. The Bank filed a lost note affidavit dated on October 31, 2006, and executed on behalf of EMC Mortgage Corporation (EMC), a prior holder of the mortgage. In the affidavit, the affiant merely asserted that the note “was lost and has not been paid, satisfied, assigned, pledged, transferred or hypothecated in any way.” The affidavit did not provide any details regarding the date or circumstances of the asserted loss of the note. A copy of the note was attached to the affidavit. The copy of the note did not reflect any indorsements or allonges. The Bank subsequently filed another lost note affidavit executed on behalf of Select Portfolio Servicing, Inc. (SPS), the current servicer for the loan. The copy of the note attached to the SPS affidavit was identical to the copy attached to the EMC affidavit.

Ms. Peters filed an answer and affirmative defenses to the complaint. In her answer, Ms. Peters denied the material allegations of the complaint and asserted numerous affirmative defenses. In pertinent part, Ms. Peters denied that the Bank had standing to enforce the note and mortgage, asserted that the Bank’s action to reestablish the lost note was barred by the applicable statute of limitations, and claimed that the Bank had failed to comply with a condition precedent to foreclosure because it had not notified the borrower of the claimed assignment of the loan within thirty days of the assignment in accordance with section 559.715, Florida Statutes (2012).

The lost note was payable to ContiMortgage Corporation; it had not been indorsed in blank or payable to the order of the Bank. At trial, the Bank sought to establish its ownership of the lost note with a series of four assignments of mortgage. The first assignment, dated April 8, 1998, was from ContiMortgage Corporation to ContiWest Corporation. The second assignment, dated April 7, 1998, was from ContiWest Corporation to Manufacturers and Traders Trust Company. Although the second assignment was dated one day before the first one, it was recorded after the recording of the first one. The third assignment, dated June 28, 2010, was from Manufacturers and Traders Trust Company to EMC. Each of the first three assignments expressly assigned both the mortgage and the note that was secured by it.

The fourth assignment, dated December 7, 2012, was from EMC to the Bank. In pertinent part, the fourth assignment assigned “all of Assignor’s right, title and interest all beneficial interest under a certain Mortgage, dated March 13, 1998, made and executed by Leo Johnson and Hazel N. Johnson fka Hazel N. Peters to ContiMortgage Corporation. …”[1] At trial, Ms. Peters argued that the fourth assignment was insufficient to establish the Bank’s ownership of the lost note because it assigned only the mortgage, not the note. The trial court ruled that the fourth assignment was sufficient to assign the note as well as the mortgage and rejected Ms. Peters’ argument. The trial court admitted the certified copies of the four assignments into evidence over Ms. Peters’ objection.

Counsel for the Bank conceded that the note and mortgage at issue had been the subject of two prior foreclosure actions filed in the Lee County Circuit Court. The first action was filed in 2001; the second was filed in 2004. Notably, both actions, which were subsequently dismissed, included a count for the reestablishment of a lost note. Based on the filing of the prior actions and the first lost note affidavit executed in 2006, Ms. Peters argued that the Bank’s action to reestablish the lost note was barred because it had not been brought within the bar of the five-year statute of limitations set forth in section 95.11(2)(b), Florida Statutes (1997). The trial court rejected this argument, reasoning as follows:

The purpose of the statute of limitations is to try to prevent stale claims, okay, but my belief—and this is going to be the ruling of the Court—that the loss or discovery of the lost instrument is not a claim. It’s an event. It’s nothing that gives rise to a claim that would give rise to [a] cause of action. The only time that there’s going to be a claim resulting from a lost instrument is when it needs to be enforced and that is when it goes into default. So the ruling of the Court . . . is going to be that there is no need once a lost negotiable instrument is discovered as being lost, that they have to file a cause of action to reestablish that note when that note is not being sought to be enforced.

Upon inquiry by counsel as to the effect of the filing of the two prior actions to enforce the lost note on the accrual of the cause of action, the trial court reiterated its ruling that the statute of limitations had not run so as to bar the current action to reestablish the lost note.

The Bank called a single witness at trial, Cynthia Stevens. At the conclusion of the presentation of Ms. Stevens’s testimony, the trial court rejected all of Ms. Peters’ other arguments, including those based on the Bank’s asserted lack of standing and noncompliance with the requirements of section 559.715. The trial court entered the final judgment of foreclosure on April 17, 2015. This appeal followed.

II. MS. PETERS’ APPELLATE ARGUMENTS

On appeal, Ms. Peters raises three points. First, she argues that the Bank failed to prove its standing to enforce the lost note. Second, Ms. Peters contends that the Bank’s claim to reestablish the lost note is barred by the applicable statute of limitations. Third, she asserts that the Bank failed to prove that it gave Ms. Peters written notice of the assignment of the loan at least thirty days before the filing of the underlying action as required by section 559.715.

Ms. Peters’ third point is without merit. See Brindise v. U.S. Bank Nat’l Ass’n, 183 So. 3d 1215, 1219-20 (Fla. 2d DCA), review denied, No. SC16-300, (Fla. Mar. 22, 2016); Nationstar Mortg., LLC v. Summers, 198 So. 3d 1162, 1162 (Fla. 1st DCA 2016) (per curiam affirmance citing Brindise with approval); cf. Bank of Am., N.A. v. Siefker, 201 So. 3d 811, 817-18 (Fla. 4th DCA 2016) (holding that section 559.715 was applicable to the mortgage foreclosure action brought by Bank of America, but that the statute did not operate as a condition precedent to bringing a mortgage foreclosure action). Ms. Peters’ second point regarding the application of the statute of limitations to an action for the reestablishment of a lost promissory note raises an issue that is apparently one of first impression in Florida. Although the statute of limitations issue raises interesting questions, our resolution of Ms. Peters’ first issue makes it unnecessary to address her arguments regarding the statute of limitations. Accordingly, we turn now to the issue of the Bank’s standing to enforce the lost note.

III. DISCUSSION

Our review of a trial court’s ruling regarding whether a foreclosure plaintiff has standing is de novo. See Gonzalez v. BAC Home Loans Servicing, L.P., 180 So. 3d 1106, 1108 (Fla. 5th DCA 2015) (citing Schmidt v. Deutsche Bank, 170 So. 3d 938, 941 (Fla. 5th DCA 2015)). “A trial court’s determination of whether a party has reestablished a lost note is reviewed for sufficiency of the evidence.” Home Outlet, LLC v. U.S. Bank Nat’l Ass’n, 194 So. 3d 1075, 1077 (Fla. 5th DCA 2016) (citing Correa v. U.S. Bank Nat’l Ass’n, 118 So. 3d 952, 956 (Fla. 2d DCA 2013)).

In order to establish its standing, the Bank had to prove either that it was the holder or the owner of the note. See Sorrell v. U.S. Bank Nat’l Ass’n, 198 So. 3d 845, 847 (Fla. 2d DCA 2016). Here, the Bank was not in possession of the note. The note was lost at least as early as October 31, 2006. When the note was lost, it had not been indorsed by the original lender either in blank or to another party.

Section 673.3091, Florida Statutes (2012), sets forth the requirements for a person not in possession of an instrument to enforce it:

(1) A person not in possession of an instrument is entitled to enforce the instrument if:

(a) The person seeking to enforce the instrument was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;

(b) The loss of possession was not the result of a transfer by the person or a lawful seizure; and

(c) The person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.

(2) A person seeking enforcement of an instrument under subsection (1) must prove the terms of the instrument and the person’s right to enforce the instrument. If that proof is made, s. 673.3081 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

The Bank could not prove that it was entitled to enforce the note when the loss of possession occurred. Thus, it had to prove that it “ha[d] directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred.” § 673.3091(1)(a). Where, as in this case, the plaintiff cannot prove that it was entitled to enforce a note when it was lost, “the plaintiff may submit evidence of an assignment from the payee to the plaintiff or an affidavit of ownership.” Boumarate v. HSBC Bank USA, N.A., 172 So. 3d 535, 538 (Fla. 5th DCA 2015); see also Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308, 310 (Fla. 2d DCA 2013) (“A plaintiff who is not the original lender may establish standing to foreclose a mortgage loan by submitting a note with a blank or special [i]ndorsement, an assignment of the note, or an affidavit otherwise proving the plaintiff’s status as the holder of the note.”).

The Bank’s proof in this regard depended on the chain of four assignments of mortgage that began with the original lender. Each of the first three assignments expressly included an assignment of the note with the mortgage. However, the fourth assignment from EMC to the Bank omitted the critical language assigning the note along with the mortgage. Because the fourth assignment assigned only the mortgage and not the note, it was insufficient to transfer any interest in the note to the Bank. See Russell v. Aurora Loan Servs., LLC, 163 So. 3d 639, 641-42 (Fla. 2d DCA 2015); Kyser v. Bank of Am., N.A., 186 So. 3d 58, 60 (Fla. 1st DCA 2016); Jelic v. BAC Home Loans Servicing, LP, 178 So. 3d 523, 525 (Fla. 4th DCA 2015); see also Tilus v. AS Michai LLC, 161 So. 3d 1284, 1286 (Fla. 4th DCA 2015) (“[A]n assignment of mortgage, even if executed before the foreclosure action commenced, is insufficient to prove standing where the assignment reflects transfer of only the mortgage, not the note.”).

In support of its standing to enforce the lost note, the Bank asserts that the reference in the operative language of the fourth assignment to “beneficial interest” in the mortgage denotes an inclusion of the note in the assignment as well as the mortgage. The Bank relies on Johns v. Gillian, 184 So. 140 (Fla. 1938), as authority for this proposition. In Johns, the Florida Supreme Court said: “Any form of assignment of a mortgage, which transfers the real and beneficial interest in the securities unconditionally to the assignee, will entitle him to maintain an action for foreclosure.” Id. at 143 (emphasis added). According to the Bank’s reading of Johns, a reference in an assignment to the beneficial interest in a mortgage “actually assigns the Note as well.”

We conclude that the decision in Johns does not support the Bank’s argument regarding standing for two reasons. First, the Court’s recitation of the facts in Johns reflects that the note and other securities at issue had been assigned to the plaintiff in that case by means other than the assignment of mortgage under review. Id. at 141, 144. Thus, the facts in Johns are easily distinguishable from the facts of the case before us. Second, the isolated snippet from the Johns opinion upon which the Bank places its focus—read in the context of the opinion as a whole—does not support the Bank’s position. The Court’s opinion in Johns is consistent with well-established Florida law “that a mortgage is but an incident to the debt, the payment of which it secures, and its ownership follows the assignment of the debt”—not the other way around. Id. at 143.

The Bank also points to the testimony of its trial witness, Ms. Stevens, as being sufficient to establish its ownership of the lost note. Ms. Stevens was a “case manager” employed by SPS. It appeared that SPS took over the servicing of the loan in August 2013. Thus, SPS’s involvement with the loan began approximately six months after the filing of the underlying action in the trial court and almost five years after the loan went into default. After the four assignments of mortgage were admitted into evidence, Ms. Stevens testified that the Bank had acquired an ownership interest in the note “from a person [sic] who [was] entitled to enforce the note.” The Bank did not present any documentary evidence regarding how and when it acquired its claimed ownership interest in the note other than the fourth assignment.[2] Ms. Stevens conceded that when the loan was boarded into SPS’s records, the note had already been lost. Indeed, the first lost note affidavit indicated that the note was lost at least as early as 2006.

Here, Ms. Stevens’s testimony was insufficient to establish the ownership of the note. SPS did not begin servicing the note until August 2013. Obviously, Ms. Stevens had no personal knowledge about the Bank’s claim to have acquired ownership of the note in 2006. Moreover, Ms. Stevens’s testimony in this regard was not supported by the limited documentary evidence about the loan that was available. Because Ms. Stevens’s testimony was not based on personal knowledge and was not supported by any documentation, we conclude that the testimony was insufficient to establish the Bank’s ownership of the lost note. See Tomlinson v. GMAC Mortg., LLC, 173 So. 3d 1121, 1122-23 (Fla. 2d DCA 2015); Home Outlet, 194 So. 3d at 1078; Gonzalez 180 So. 3d at 1108-09; Dixon v. Express Equity Lending Grp., LLLP, 125 So. 3d 965, 967-68 (Fla. 4th DCA 2013).

IV. CONCLUSION

We have considered the Bank’s other arguments about standing, and we find them to be without merit. Because the Bank failed to establish its ownership of the lost note, the trial court erred in entering the final judgment of foreclosure. Under these circumstances, we must reverse the final judgment and remand this case to the trial court with directions to enter an involuntary dismissal of the Bank’s complaint. See Wolkoff v. Am. Home Mortg. Servicing, Inc., 153 So. 3d 280, 283 (Fla. 2d DCA 2014); Correa, 118 So. 3d at 956-57.

Reversed and remanded with directions.

SALARIO and ROTHSTEIN-YOUAKIM, JJ., Concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED.

[1] We understand that there appears to be one or more words missing from this operative language. But the quote is accurate; we have not inadvertently dropped any words from the quoted language.

[2] The lost note affidavit prepared on behalf of SPS and filed in the underlying action recited, in pertinent part, as follows: “The business records of [SPS] reflect that The Bank of New York, in trust for registered holders of Bear Stearns Asset Backed Securities 2006-4, Asset-Backed Certificates, Series 2006-4 (the “Noteholder”) acquired the Note on or about October 1, 2006. [SPS] services the Note and Mortgage on behalf of and as attorney in fact for the Noteholder.” The business records referenced here were not otherwise identified or described; nor were any copies of the business records attached as exhibits to the affidavit.

 

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Walsh v. BANK OF NEW YORK MELLON TRUST | FL 5DCA – Such proof was insufficient to demonstrate standing because “standing cannot be established by simply filing a note with an undated indorsement or allonge months after the original complaint was filed.”

Walsh v. BANK OF NEW YORK MELLON TRUST | FL 5DCA – Such proof was insufficient to demonstrate standing because “standing cannot be established by simply filing a note with an undated indorsement or allonge months after the original complaint was filed.”

 

PATRICK WALSH AND CATHERINE WALSH, Appellants,
v.
BANK OF NEW YORK MELLON TRUST, ETC., ET AL., Appellees.

Case No. 5D15-1898.
District Court of Appeal of Florida, Fifth District.
Opinion filed April 21, 2017.
Appeal from the Circuit Court for Lake County, Carven D. Angel, Judge.

Mark P. Stopa, of Stopa Law Firm, Tampa, for Appellants.

Matthew A. Ciccio, of Aldridge/Pite, LLP, Delray Beach, for Appellee, Bank of New York Mellon Trust.

No appearance for other appellees.

PALMER, J.

Patrick and Catherine Walsh (borrowers) appeal the trial court’s final judgment of foreclosure entered in favor of Bank of New York Trust (the bank). Determining that the bank failed to prove standing, we reverse and remand for the entry of an involuntary dismissal.

“A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012) (citations omitted). Additionally, a “party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing.” Venture Holdings & Acquisitions Grp., LLC v. A.I.M Funding Grp., LLC, 75 So. 3d 773, 776 (Fla. 4th DCA 2011). Thus, in order to prove standing, the bank was required to introduce admissible evidence that it (or its agent) possessed a properly-indorsed note at the inception of the case. Focht v. Wells Fargo Bank, N.A, 124 So. 3d 308, 310-11 (Fla. 2d DCA 2013).

Here, the copy of the note attached to the original complaint did not contain any indorsements, and the copy of the note attached to the amended complaint contained an undated blank indorsement. Such proof was insufficient to demonstrate standing because “standing cannot be established by simply filing a note with an undated indorsement or allonge months after the original complaint was filed.” Sorrell v. U.S. Bank Nat’l Ass’n, 198 So. 3d 845, 847 (Fla. 2d DCA 2016) (citing Focht, 124 So. 3d at 310; Cutler v. U.S. Bank Nat’l Ass’n, 109 So. 3d 224, 226 (Fla. 2d DCA 2012)). In addition to introducing the note, the bank presented a witness who testified that, based on his review of the business records, the bank had possession of the note at the time the bank filed its complaint. Yet, his testimony was not based on personal knowledge, but rather, on his review of a screenshot, which was not offered or admitted into evidence. Thus, that testimony was also insufficient to prove standing. Therefore, the trial court committed reversible error in entering final judgment of foreclosure in favor of the bank. See Gonzalez v. BAC Home Loans Servicing, L.P., 180 So. 3d 1106 (Fla. 5th DCA 2015) (holding that the testimony of a witness regarding business records that are not entered into evidence at trial is insufficient to prove standing in a foreclosure case).

Accordingly, we reverse and remand for the entry of an involuntary dismissal. REVERSED and REMANDED.

COHEN, C.J., and SAWAYA, J., concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED

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Bank of New York Mellon v. Citibank | Cal. Ct. App. – We reverse the judgment because appellant has stated a claim for equitable subrogation, which is not subject to that statute.

Bank of New York Mellon v. Citibank | Cal. Ct. App. – We reverse the judgment because appellant has stated a claim for equitable subrogation, which is not subject to that statute.

Thanks to Dubin Law Offices

Filed 2/16/17

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR

BANK OF NEW YORK MELLON,
Plaintiff and Appellant,

v.

CITIBANK, N.A.,
Defendant and Respondent.

Bank of New York Melon appeals from the judgment of
dismissal of its lawsuit against respondent Citibank, N.A.
The case arose out of the simultaneous refinancing of a home
equity line of credit by two different lenders in 2006, which
resulted in a dispute over the priority of their recorded deeds
of trust. Appellant challenges the orders sustaining
respondent’s demurrers to appellant’s first and second
amended complaints. The demurrers alleged that all of
appellant’s causes of action were barred by the three-year
statute of limitations in Code of Civil Procedure section 338
(hereafter, section 338). We reverse the judgment because
appellant has stated a claim for equitable subrogation, which
is not subject to that statute.

[…]

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SOUTHWART v. THE BANK OF NEW YORK | FL 4DCA- The bank submitted an unauthenticated notice of default in support of its motion

SOUTHWART v. THE BANK OF NEW YORK | FL 4DCA- The bank submitted an unauthenticated notice of default in support of its motion

KATHLEEN ANN SOUTHWART a/k/a KATHLEEN SOUTHWART, Appellant,
v.
THE BANK OF NEW YORK, AS INDENTURE, TRUSTEE FOR THE ENCORE CREDIT RECEIVABLES TRUST 2005-2, and DONALD SOUTHWART, SEMINOLE LAKES HOMEOWNER’S ASSOCIATION, INC., and DAVID SOUTHWART, Appellees.

No. 4D14-3462.
District Court of Appeal of Florida, Fourth District.

November 16, 2016.
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Roger B. Colton, Judge; L.T. Case No. 502012CA013490XXXXMB.

Kathleen Southwart, Royal Palm Beach, pro se.

Joseph A. Apatov of McGlinchey Stafford, Fort Lauderdale, for appellee The Bank of New York, as Indenture, Trustee for the Encore Credit Receivables Trust 2005-2.

PER CURIAM.

The Bank of New York filed a foreclosure complaint against appellant. In appellant’s answer, appellant denied the bank had complied with the conditions precedent. Specifically, appellant alleged that the bank had failed to mail the notice of default, mail a timely notice of default, and include the requisite language within the notice of default. Additionally, appellant raised failure to comply with the conditions precedent as well as lack of standing as affirmative defenses.

The bank moved to strike appellant’s affirmative defenses. The trial court granted the bank’s motion. Subsequently, the bank moved for summary judgment. The bank stated it had complied with the conditions precedent of the mortgage, and attached an unauthenticated default letter as well as a copy of the envelope addressed to appellant with a tracking number. The lower court granted summary judgment. Appellant appeals.

We review an order granting summary judgment de novo. See Volusia Cty. v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000).

We conclude that the bank did not meet its burden for summary judgment. The bank submitted an unauthenticated notice of default in support of its motion. This is insufficient. See DiSalvo v. SunTrust Mortg., Inc., 115 So. 3d 438, 339-40 (Fla. 2d DCA 2013); see also BiFulco v. State Farm Mut. Auto. Ins. Co., 693 So. 2d 707, 709 (Fla. 4th DCA 1997) (“Merely attaching documents which are not `sworn to or certified’ to a motion for summary judgment does not, without more, satisfy the procedural strictures inherent in Fla. R. Civ. P. 1.510(e).”).

The bank argues that appellant’s affirmative defenses were not properly before the lower court because the court had previously struck them. However, the lower court had not struck appellant’s answer, which denied that the bank complied with the conditions precedent. Furthermore, appellant’s denial was adequate under Florida Rule of Civil Procedure 1.120(c). Thus, the matter was properly before the trial court. See DiSalvo, 115 So. 3d at 440.

Finally, we also conclude the lower court erred in striking appellant’s affirmative defenses that alleged failure to comply with conditions precedent and lack of standing. Appellant’s affirmative defenses were legally sufficient, and “[w]here . . . a defense is legally sufficient on its face and presents a bona fide issue of fact, it is improper to grant a motion to strike.” Seale v. Regions Bank, 121 So. 3d 649, 650 (Fla. 4th DCA 2013) (quoting Gonzalez v. NAFH Nat’l Bank, 93 So. 3d 1054, 1057 (Fla. 3d DCA 2012)).

We therefore reverse and remand for further proceedings consistent with this opinion. As for the remaining issues on appeal, we find them to be without merit and affirm without comment.

Reversed and remanded.

MAY, GERBER and LEVINE, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

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STROMINGER v. Bank of New York | FL2DCA – The first document was an assignment that the trial court previously determined was fraudulent and “not entitled to introduction in evidence for any purpose.”…

STROMINGER v. Bank of New York | FL2DCA – The first document was an assignment that the trial court previously determined was fraudulent and “not entitled to introduction in evidence for any purpose.”…

 

LAWRENCE STROMINGER and ADRIANA STROMINGER, Appellants,
v.
THE BANK OF NEW YORK, as Trustee for the Certificateholders of the CWABS Inc. Asset-Based Certificates, Series 2006-IMI, Appellee.

Case No. 2D15-2788.
District Court of Appeal of Florida, Second District.
Opinion filed August 3, 2016.
Appeal from the Circuit Court for Hillsborough County; Sandra Taylor, Judge.

Robert E. Biasotti and Christine R. O’Neil of Biasotti and Associates, St. Petersburg, for Appellants.

Allyson L. Smith of Albertelli Law, Tampa, for Appellee.

CRENSHAW, Judge.

Lawrence and Adriana Strominger appeal the final judgment of mortgage foreclosure entered against them and in favor of the Bank of New York, as Trustee for the Certificateholders of the CWABS Inc. Asset-based Certificates, Series 2006-IMI (the Bank). Because the Bank failed to prove it had standing to foreclose at the inception of the case, we reverse and remand for dismissal.

This court employs a de novo standard of review to determine whether a party has standing to bring a mortgage foreclosure action. St. Clair v. U.S. Bank Nat’l Ass’n, 173 So. 3d 1045, 1046 (Fla. 2d DCA 2015). A plaintiff seeking to foreclose must prove it had standing at the time the foreclosure complaint was filed. Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308, 310 (Fla. 2d DCA 2013). “A plaintiff who is not the original lender may establish standing to foreclose a mortgage loan by submitting a note with a blank or special endorsement, an assignment of the note, or an affidavit otherwise proving the plaintiff’s status as the holder of the note.” Id.

At a February 2015 trial, the Bank of New York relied on two documents to prove it had standing. The first document was an assignment that the trial court previously determined was fraudulent and “not entitled to introduction in evidence for any purpose.” The second document was a bailee letter dated October 6, 2005. The bailee letter acknowledges an agreement between Countrywide Home Loans and Impac Funding, and it identifies a wiring account number to the Bank of New York, where Countrywide has an account. Both documents fail to prove that the Bank had possession of the note at the time it filed the original complaint in November 2007. Because the Bank failed to prove it had standing to enforce the note at the time the initial complaint was filed, we reverse the final judgment of mortgage foreclosure and remand for dismissal.

Reversed and remanded.

CASANUEVA and KELLY, JJ., Concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED.

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MORGAN v THE BANK OF NEW YORK MELLON | FL 1DCA – Because the Bank already had the burden to present evidence establishing its standing, it cannot claim it is prejudiced by Appellant’s defense challenging the sufficiency of that evidence.

MORGAN v THE BANK OF NEW YORK MELLON | FL 1DCA – Because the Bank already had the burden to present evidence establishing its standing, it cannot claim it is prejudiced by Appellant’s defense challenging the sufficiency of that evidence.

IN THE DISTRICT COURT OF APPEAL

FIRST DISTRICT, STATE OF FLORIDA

NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED

CASE NO. 1D15-2401

LINDA G. MORGAN,

Appellant,

v.

THE BANK OF NEW YORK MELLON,
f/k/a THE BANK OF NEW YORK,

AS TRUSTEE FOR THE
CERTIFICATEHOLDERS OF

CWALT 2400-25CB,

Appellee.

_____________________________/

Opinion filed June 28, 2016.

An appeal from the Circuit Court for Walton County.

William P. White, Jr., Judge.

Louis C. Arslanian, Hollywood, for Appellant.

J. Kirby McDonough and S. Douglas Knox of Quarles & Brady, LLP, Tampa, for
Appellee.

B.L. THOMAS, J.

Appellant Linda G. Morgan appeals the trial court’s order denying her pre-
trial motion for leave to amend her answer to raise affirmative defenses. Appellant
is a defendant in the instant foreclosure action initiated by Appellee, The Bank of
New York Mellon (the Bank), acting as trustee. After the trial court denied

Appellant’s motion to amend, the case proceeded to trial, and a final judgment of
foreclosure was entered in favor of the Bank. We hold that the trial court abused
its discretion in denying Appellant’s motion to amend and vacate the trial court’s
final judgment. We remand the case with instructions that Appellant be permitted
to file an amended answer raising affirmative defenses.

Background

On December 17, 2009, the Bank filed a two-count complaint in the trial
court seeking to reestablish a lost promissory note and foreclose a mortgage on real
property owned by Appellant. The Bank alleged that Appellant stopped making
mortgage payments on August 1, 2009, and thus sought the full amount due under
the note secured by the mortgage. In January 2010, Appellant retained counsel to
represent her in the matter. Appellant’s counsel filed several motions in 2010 and
2011, but never filed an answer to the Bank’s complaint.

Forward progress on the case stalled, and no significant action was taken
until February 2014. That month, Appellant filed a pro se motion seeking to
dismiss her counsel, alleging that she had not spoken to her counsel in over two
years. Also in February, the Bank found the original promissory note and filed it
with the court. The original note named First Magnus Financial Corporation as
payee. The note had two special endorsements, first to Countrywide Document
Custody Services and then to Countrywide Home Loans; the third endorsement

was blank; and none of the endorsements were dated. After finding the original
note, the Bank dropped Count I of its complaint that sought to reestablish the note.

In March 2014, Appellant’s counsel was discharged, and Appellant was
ordered to retain new counsel. Appellant also filed two pro se answers.

The case was eventually set to be tried on January 28, 2015. On January 15
(13 days before trial), Appellant’s newly-retained counsel filed a motion seeking
leave to amend Appellant’s answer. The proposed amended answer raised
affirmative defenses for the first time and was the only pleading prepared by an
attorney on Appellant’s behalf. The trial court denied the motion to amend as
“untimely” and also denied Appellant’s motion for reconsideration. The case
proceeded to trial, and a final judgment of foreclosure in favor of the Bank was
entered. This appeal followed.

Analysis

The ruling on a motion to amend a pleading is within the discretion of the
trial court, and the court’s decision will not be overturned on appeal unless abuse
of discretion is demonstrated. Holy Temple Church of God in Christ, Inc. v.
Maxwell, 578 So. 2d 877, 878 (Fla. 1st DCA 1991). The Florida Rules of Civil
Procedure encourage a policy of liberality in allowing litigants to amend their
pleadings, especially prior to trial; this policy exists so that cases will be tried on
their merits. Fla. R. Civ. P. 1.190(a); Hatcher v. Chandler, 589 So. 2d 428, 429

(Fla.1st DCA1991).Broad discretion is given to thetrial court to grant ordeny amotion to amend;as such,there is no bright-line rule as to when a motion to amendis “untimely.”SeeGreenburg v.Johnston, 367 So. 2d 229, 231 (Fla. 2d DCA1979). Instead, “[t]he relevant inquiry iswhether‘allowingthe amendment would
prejudice the opposingparty,the privilegeto amend has been abused,or
amendment would befutile.’”Cedar MountainEstates,LLCv.LoanOne,LLC, 4So.3d 15, 16 (Fla. 5th DCA 2009)(quoting State Farm Fire & Cas. Co. v. FleetFin. Corp., 724 So.2d 1218,1219 (Fla. 5th DCA 1998)). Absentexceptionalcircumstances, motions for leave to amend should be granted,and refusal to do soconstitutes an abuse of discretion.Thompson v. Jared KaneCo., Inc., 872 So.2d356, 360 (Fla. 2d DCA 2004).

Appellant has not abused the privilege to amend, because the denied motion
at issue was thefirst time shesought to amend her answer. SeeThompson v.
Publix Supermarkets,Inc., 615 So.2d 796, 797 (Fla.1st DCA 1993).Therefore,
thequestionis whetherAppellant’s proposed amended answerwould prejudicetheBankor would be futile.

Whethergranting the proposed amendmentwould prejudicethe opposing
party is analyzed primarilyin thecontext oftheopposing party’s abilityto preparefor the newallegationsor defensesprior to trial.Dimick v.Ray, 774 So. 2d 830,833 (Fla.4th DCA2000). Accordingly, rule1.190’s liberal amendment policy

4

diminishes as acaseprogresses to trial.Ohio Cas. Ins. Co. v. MRK Constr., Inc.,
602 So. 2d 976,978 (Fla. 2d DCA 1992).

Appellant filed hermotion to amend 13 days beforetrial.Her proposed
amended answerraised eight affirmativedefenses, three of which sheraises on
appeal: (1)failure to comply with a condition precedent, i.e. acceleration;

(2)failure tocomply witha condition precedent,i.e. noticepursuant to section
559.715, Florida Statutes (2016); and (3)lack of standing.The Bankcannot showthat it wouldbe prejudiced byAppellant’s defense thatit did not provide herwiththe 30-day notice requiredby paragraph22 of themortgage prior to acceleration,
because thedefense concernsthe Bank’sfailure to comply with its owndocuments.SeeCobbumv.Citimortgage,Inc.,158 So.3d 755,757 (Fla.2d DCA2015).The Bankalso cannot show prejudiceas to Appellant’s defensethat itdidnot complywiththenoticerequirement in section559.715beforefilingsuit. In itscomplaint,the Bankallegedthat all conditionsprecedentto filing suit had been
performed or had occurred, and courts haveheld that “requiringa plaintiff to proveits allegations is not prejudice to theplaintiff; it merelyoffers due process tothedefendants.”Thompson, 872 So.2d at 360. Finally,the Bankhas notdemonstrated prejudice as to Appellant’s defense that it lacked standing toforeclose. Under Florida law,“[t]he party seeking foreclosure must present
evidencethat it owns and holds the note and mortgageto establish standing to
5

proceed with a foreclosure action.”Mazine v. M & I Bank, 67So.3d 1129, 1131
(Fla.1st DCA 2011)(citing Servidio v.U.S. Bank Nat’l Ass’n, 46 So.3d 1105
(Fla. 4thDCA 2010)).Becausethe Bankalreadyhad the burden to presentevidenceestablishing its standing,it cannot claim it isprejudiced byAppellant’sdefense challenging the sufficiency of that evidence.

Courts haveheld that proposed amendments are futile when they are notpled with sufficient particularity or are “insufficient as a matter oflaw.”
Thompson v.Bank ofN.Y., 862 So.2d 768, 770 (Fla.4th DCA 2003). Defenses
are insufficient as amatter oflaw when they are“conclusory in their content,and
lacking in anyreal allegations ofultimatefact demonstrating agood defenseto thecomplaint.”Cady v. Chevy Chase Sav. &Loan, Inc.,528 So. 2d 136, 137-38 (Fla.
4th DCA 1988).

Appellant’s defensesthatthe Bankfailed to complywith theconditionsprecedent contained in her mortgageand section 559.715, Florida Statutes,arenotfutile.1Rule 1.120(c) of the Florida Rules of Civil Procedure requires denials ofperformance of conditions precedent be made “specifically and with particularity.”
A defendant must identify“both thenature ofthe condition precedent and the

1Thecaselaw inFlorida isunclearregardingsection559.715 andwhetheritcreates a condition precedent in foreclosure actions. However,theonlyissueaddressedhereis whetherthe defense was properly raised inaccordancewith theFloridaRules of Civil Procedure.SeeDeutsche Bank Nat’l Trust Co.v. Quinion,
41 Fla. L. Weekly D177 (Fla.2d DCA 2016).

6

natureof the alleged noncomplianceor nonoccurrence.”Deutsche Bank Nat’lTrust Co. v. Quinion,41 Fla. L. Weekly D177*3 (Fla.2d DCA2016).
Appellant’s proposed answer metthese requirements for both conditions
precedent.

Appellant’s proposed defensethat the Banklacked standing to foreclose isalso not futile.While possession of anotebearing a blank endorsement issufficientto establishthata plaintiffis thelawfulholder of the note and is entitledto enforceits terms,the Bank still needed to present evidence that it owned andheld thenote and mortgage at the timethe foreclosure complaint was filed toestablish standing to proceedwith theaction.Riggs v.Aurora Loan Servs., LLC,
36 So. 3d 932, 933 (Fla.4th DCA 2010);Mazine, 67 So. 3d at 1131.

We do not disagree with the cases cited by the dissent, but instead conclude that they are distinguishable from the case at bar.In Brown v. Montgomery Ward & Company, the plaintiff sought to amend his complaint two weeks before trial toraisedifferent issues of liability as grounds for relief.252 So.2d 817 (Fla.1stDCA 1971).This court held that it wasnot an abuse of discretion to denyplaintiff’s motion to amend becauseit clearly appeared that the amended pleading“would materially change and introduceinto the casenew issues.”Id.at 819.In
Levine v. United Companies Life Insurance Company, the supreme courtapprovedthe district court’s holding that the trial court did not abuseits discretion by

7

denying defendant’s motionto amend two weeks before trial;however, thecourtwrotemainlyto disapprove the portion ofthe district court’s opinionthat held ausurysavings clause precluded afinding of usury. 659 So. 2d 265,266-67 (Fla.
1995). Consequently,there was little discussion of theprocedural facts and no
discussion of thetrial court’s reasoning for denying the motion to amend, makingit difficult to compareLevineto the instant case.

We note that this foreclosure action has lasted more than six years; however,
wemust also recognize that thepurpose of rule1.190 is “to achieve justice andallow theparties to fully present their respectivepositions.”Walkerv. Senn, 340 So. 2d 975,976(Fla.1st DCA 1976). Here, where Appellant’s first attorney neverfiledananswer on her behalf and Appellant’sprose answers did notraiseanyaffirmative defenses,wehold that itwas an abuse ofdiscretionto denyAppellant’smotionto amendfiled bycounsel.Therefore,the final judgment of thetrial courtis vacated, and the caseis remanded with instructions that Appellant bepermittedto file an amended answer.

REVERSED and REMANDEDwith instructions.
LEWIS, J., CONCURS; MAKAR, J., DISSENTS WITH OPINION.

8

MAKAR, J., dissenting.

Filed in 2009, this case was initially set for trial in early 2014, but Morgan
fired her attorney just before trial, resulting in delays, a rescheduled trial date, and
the filing of two pro se answers. Thirteen calendar days before the third trial date,
Morgan’s newly-hired attorney sought to file an amended answer, which the trial
court denied. Affirmance is in order; no abuse of discretion is shown. Brown v.
Montgomery Ward & Co., 252 So. 2d 817, 819 (Fla. 1st DCA 1971) (“Under the
circumstances of this case we cannot say that the trial court abused its discretion in
denying appellant the right to file an amended complaint two weeks before the
scheduled trial and after several years of pendency in the court.”); see also Levine
v. United Co. Life Ins. Co., 659 So. 2d 265, 266-67 (Fla. 1995) (affirming denial of
motion to amend answer filed two weeks before trial; holding that trial court “had
not abused its discretion because the liberality typically associated with
amendments to pleadings diminishes as the case progresses”).

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PAIVA vs BANK OF NEW YORK MELLON | MASS DC – BONYM’s failure to strictly comply with the pre-foreclosure notice of default required by paragraph 22 of the mortgage and the post-foreclosure notice to the tax collector required by G.L. c. 244, § 15A.

PAIVA vs BANK OF NEW YORK MELLON | MASS DC – BONYM’s failure to strictly comply with the pre-foreclosure notice of default required by paragraph 22 of the mortgage and the post-foreclosure notice to the tax collector required by G.L. c. 244, § 15A.

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

DAVID PAIVA,

Plaintiff,

v.                               Civil Action No. 14-cv-14531-ADB

THE BANK OF NEW YORK MELLON,
Defendant.

MEMORANDUM AND ORDER

August 11, 2015

BURROUGHS, D.J.

I. Background
Plaintiff David Paiva (“Paiva”) seeks to void the foreclosure sale of his home in
Massachusetts (the “Property”), conducted by Defendant Bank of New York Mellon
(“BONYM”) on April 28, 2014. BONYM, the lender at the time of the foreclosure sale, also
purchased the Property in foreclosure. Paiva, who has continued to live in the Property since the
foreclosure, has not made a mortgage payment since 2008 and does not dispute that he is in
default on the mortgage.
In his two-count complaint, Paiva alleges two independent grounds for voiding the
foreclosure sale. [Dkt. 1-4.] Count I alleges that the foreclosure did not strictly comply with
paragraph 22 of the mortgage because the notice of default required by that paragraph was sent
by the servicer of the loan, rather than by the lender. Paiva claims that this violated the statutory
power of sale under Massachusetts law, which requires a foreclosing bank to “comply with the
terms of the mortgage,” G.L. c. 183, § 21. Controlling case law requires strict compliance with
paragraph 22 of the mortgage, and Paiva argues that this standard was not satisfied by the loan
Case 1:14-cv-14531-ADB Document 40 Filed 08/11/15 Page 1 of 8

2
servicer’s sending of the notice of default.
Count II alleges that BONYM failed to notify “the office of the assessor or collector of
taxes of the municipality in which the premises are located” within 30 days of conveying title, as
required by G.L. c. 244, § 15A (“§ 15A”). BONYM notified the tax collector by letter dated
February 12, 2015, more than nine months after the foreclosure sale. [Dkt. 20-1, Ex. 3.] Paiva
argues that § 15A is a “statute[] relating to the foreclosure of mortgages” pursuant to the
statutory power of sale, G.L. c. 183, § 21, and that, as with paragraph 22 of the mortgage, strict
compliance with § 15A is required. He further argues that the proper remedy under either count
of his complaint is to void the foreclosure.
In its counterclaim, BONYM alleges five counts, all of which turn on the validity of the
foreclosure. [Dkt. 8.] BONYM seeks a judgment for the difference between the total amount
owed by Paiva as of the date of the foreclosure sale and the sale price—a deficiency of
approximately $192,000.00. BONYM also seeks a judgment for possession and a writ of
assistance from the Court.
By agreement of the parties, Paiva and BONYM filed cross-motions for summary
judgment before conducting discovery in this case. Following careful consideration of the
parties’ briefs and further argument presented at a hearing conducted on August 6, 2015, the
Court concludes that there is no genuine dispute as to any material fact and that Paiva is entitled
to judgment as a matter of law on both counts of his complaint. The Court stated its reasons for
this ruling on the record at the hearing and supplements those reasons herein.
Case 1:14-cv-14531-ADB Document 40 Filed 08/11/15 Page 2 of 8

3
II. Discussion
A. Legal Standard – Summary Judgment
Summary judgment is appropriate only “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). A dispute is “genuine” if “the evidence is such that a reasonable jury could return a
verdict in favor of the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). A “material” fact is one that “might affect the outcome of the suit under the governing
law.” Id. The moving party has the burden of proving that there is no genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
B. Count I: Alleged Failure to Comply with Paragraph 22 of the Mortgage
The parties’ briefs identify only one purportedly disputed fact in this case, which relates
to Count I of the complaint: the controlling date of an assignment of the mortgage from the
original lender, MERS as nominee for Countrywide Home Loan Inc. (“Countrywide”), to
BONYM. [Dkt. 22, ¶ 4.] The Court, however, finds that this is not a genuine issue of material
fact that would preclude summary judgment because at the hearing, BONYM acknowledged that
as of May 19, 2008—the date of Countrywide’s notice of default to Paiva—BONYM was the
lender and Countrywide was the servicer of the loan.1
Paragraph 22 of the mortgage sets forth, in relevant part, the following requirements for a
notice of default:
Lender shall give notice to Borrower prior to acceleration following Borrower’s
breach of any covenant or agreement in this Security Instrument . . . . The notice
shall specify: (a) the default; (b) the action required to cure the default; (c) a date,
not less than 30 days from the date the notice is given to Borrower, by which the
default must be cured; and (d) that failure to cure the default on or before the date
1 If Countrywide were still the lender as of May 19, 2008, then there would be no violation of the
requirement in paragraph 22 of the mortgage that the lender send the notice of default.
Case 1:14-cv-14531-ADB Document 40 Filed 08/11/15 Page 3 of 8

4
specified in the notice may result in acceleration of the sums secured by this
Security Instrument and sale of the Property. The notice shall further inform
Borrower of the right to reinstate after acceleration and the right to bring a court
action to assert the non-existence of a default or any other defense of Borrower to
acceleration and sale. If the default is not cured on or before the date specified in
the notice, Lender at its option may require immediate payment in full of all sums
secured by this Security Instrument without further demand and may invoke the
STATUTORY POWER OF SALE and any other remedies permitted by Applicable
Law.
[Dkt. 19-1, ¶ 22.]
Paiva submits that Countrywide’s notice of default did not satisfy the requirements of
paragraph 22 of the mortgage, not because any of the required substance was missing from the
notice, but because the notice should have come from BONYM as the lender, rather than from
Countrywide as the servicer of the loan. BONYM responds that the word “Lender” in paragraph
22 should be read to include the servicer of the loan, and thus, the fact that Countrywide sent the
notice of default to Paiva did, in fact, comply with the requirement that “Lender shall give notice
to Borrower” of the default and action required to cure the default. [Dkt. 19-1, ¶ 22 (emphasis
added).]
The language of paragraph 22 is clear and unequivocal as to who must give the required
notice of default to the borrower: “Lender” must do so. The Court agrees with Paiva that
Countrywide’s notice of default did not strictly comply with paragraph 22 of the mortgage, as
required under the statutory power of sale and under the Massachusetts Supreme Judicial Court’s
(“SJC”) case law. See G.L. c. 183, § 21 (requiring a foreclosing bank to “comply with the terms
of the mortgage”); U.S. Bank Nat. Ass’n v. Ibanez, 458 Mass. 637, 647 (2011) (the terms of the
power of sale, G.L. c. 183, § 21, must be strictly adhered to); see also Pinti v. Emigrant
Mortgage Company, Inc., 33 N.E.3d 1213, 1226 (2015) (strict compliance with the notice of
default required by paragraph 22 is necessary in order for a foreclosure sale to be valid).
Case 1:14-cv-14531-ADB Document 40 Filed 08/11/15 Page 4 of 8

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Paragraph 22 specifically states that “Lender shall give notice to Borrower . . . .” Significantly, it
does not say that “Lender or the servicer of the loan shall give notice to Borrower . . . .” Nor is
the term “Lender” defined in the mortgage to include the servicer of the loan. Rather, the
mortgage defines “Lender” only as “Countrywide Home Loans, Inc.” [Dkt. 19-1, at 6.] As
discussed above, although Countrywide was the original lender under the mortgage, the parties
agree that by the time Countrywide sent the notice of default to Paiva, Countrywide had assigned
its interest to BONYM, which thereby became the lender. Thus, strictly construing paragraph 22
of the mortgage, BONYM, and not Countryside, had to send the notice of default to Paiva.
Further, this approach is consistent with the SJC’s recent decision in Pinti, which held
that a foreclosing bank’s “strict compliance with the notice of default required by paragraph 22
was necessary in order for the foreclosure sale to be valid,” and that the bank’s “failure to strictly
comply rendered the sale void.” 33 N.E.3d at 1226. The Court cites Pinti despite the SJC’s
decision to give it only prospective effect. Id. at 1227. Given that BONYM purchased the
Property in foreclosure, and that the Property has not changed hands to any third parties, the
SJC’s concern over the “possible impact that our decision may have on the validity of titles” is
attenuated here. Additionally, the cross-motions for summary judgment were fully briefed before
Pinti was issued on July 17, 2015. As Paiva was already advancing the same argument regarding
strict compliance with the paragraph 22 requirements that the SJC adopted in Pinti, it would be
inequitable to deny him the benefit of that decision. Further, the Court reads Pinti as a statutory
interpretation of the power of sale, G.L. c. 183, § 21, and an extension of the SJC’s prior ruling
in Ibanez, rather than a reversal of course.
Case 1:14-cv-14531-ADB Document 40 Filed 08/11/15 Page 5 of 8

6
Because the Court finds that Countrywide’s notice of default did not strictly comply with
the requirements of paragraph 22 of the mortgage, the foreclosure sale is void.2
C. Count II: Failure to Comply with G.L. c. 244, § 15A
There are no disputed facts pertaining to Count II of the complaint. The parties agree that
BONYM did not strictly comply with § 15A, which requires a foreclosing bank to notify the tax
collector (among other third parties) of a foreclosure sale within 30 days of conveying title. G.L.
c. 244, § 15A. Here, BONYM did not make the required notification until more than nine months
after the foreclosure sale. [Dkt. 20-1, Ex. 3.] Paiva argues that this lapse invalidates the
foreclosure. BONYM responds that it does not because, in its view, § 15A is not among the
“statutes relating to the foreclosure of mortgages” pursuant to the statutory power of sale, G.L. c.
183, § 21, with which strict compliance is required for a foreclosure to be valid, largely because
the notification under § 15A isn’t required until after the foreclosure is complete.
The Court concludes that under several SJC decisions, strict compliance with § 15A is
required, and the consequence of non-compliance is the invalidation of the foreclosure sale. See
U.S. Bank Nat. Ass’n v. Schumacher, 467 Mass. 421, 432 (Gants, J., concurring) (“Where a
2 In reaching its conclusion that the notice of default did not strictly comply with the paragraph 22
requirements, the Court declines to follow the unreported holding in Federal National Mortgage
Association v. Rogers, No. 13-ADMS-10025, 2015 WL 2000845 (Mass. App. Div. Apr. 7, 2015). In
Rogers, the appellate division for the state district court held that a mortgage servicer’s sending of a
notice to cure satisfied the requirements of paragraph 22 of the mortgage. However, Rogers pre-dated, by
several months, the SJC’s decision in Pinti, in which the SJC mandated strict compliance with the notice
of default required by paragraph 22. It is not at all clear that the appellate division in Rogers applied the
same standard of strict compliance that was announced in Pinti. For example, the court in Rogers
explained that “[t]he obvious purpose of . . . paragraph 22 of the mortgage . . . is to allow the borrower
opportunity to cure default and avoid foreclosure. . . . This purpose was fulfilled by the loan servicer,
which was acting on behalf of the mortgagee, giving Rogers the required information.” 2015 WL
2000845, at *4 (emphasis added). Thus, the court in Rogers appears to have focused more on the purpose
of paragraph 22 than on its strict requirements. To the extent that Rogers applied a standard other than
strict compliance, that decision is at odds with Pinti, as well as with the clear language of the mortgage in
the instant case, and the Court therefore declines to follow Rogers.
Case 1:14-cv-14531-ADB Document 40 Filed 08/11/15 Page 6 of 8

7
defendant in the summary process action claims that the mortgage holder failed strictly to adhere
to the requirements under the statutory power of sale set forth in G.L. c. 183, § 21, and the
related requirements in G.L. c. 244, §§ 11-17C, proof of any violation of these requirements will
void the foreclosure sale and, therefore, defeat the eviction.”) (emphasis in original); see also
Pinti, 33 N.E.3d at 1224; Eaton v. Fed. Nat. Mortgage Ass’n, 462 Mass. 569, 581 (2012);
Ibanez, 458 Mass. at 646. BONYM points to no contrary case or other authority for the
proposition that strict compliance with the requirements of § 15A is not required, and the Court
is not aware of any such authority. Further, the language of § 15A itself supports the holding that
it is a “statute[] relating to the foreclosure of mortgages” with which strict compliance is
required. Section 15A employs the mandatory language “shall,” corresponds to a particular
property (namely, the “mortgaged premises”), and sets a specific deadline of 30 days for
compliance. G.L. c. 244, § 15A.3
3 At the hearing, BONYM pointed out that there are a number of provisions within G.L. c. 244, §§ 11-
17C (the range of statutes cited by Justice Gants in his concurring opinion in Schumacher), where noncompliance
clearly could not void an individual foreclosure. For example, G.L. c. 244, § 14A, requires
the commissioner of the division of banks to maintain a foreclosure database to be used to generate an
annual report. It does not seem likely that a failure to maintain the database or to produce the annual
report would be construed as a “strict compliance” failure that would require the invalidation of an
otherwise proper foreclosure. See also G.L. c. 244, § 17A (establishing a two-year limitations period for
certain actions relating to foreclosure sales). BONYM reconciles these sorts of provisions and Justice
Gants’s language regarding strict compliance by pointing to his use of the words “related requirements”
and arguing that strict compliance is only required with regard to those portions of G.L. c. 244, §§ 11-
17C, that are “related” to the statutory power of sale set forth in G.L. c. 183, § 21. Even assuming,
arguendo, that BONYM is correct that Justice Gants did not mean to require strict compliance with every
provision within G.L. c. 244, §§ 11-17C, it would still be left to this Court to determine whether § 15A is
“related” to the statutory power of sale and therefore must be strictly adhered to for a valid foreclosure.
The Court concludes, given the absolute nature of the language used by Justice Gants, the mandatory
language of § 15A (“shall”), the fact that § 15A is specific to each individual foreclosure rather than a
more general directive such as the requirement to maintain a database, and the fact that § 15A sets forth a
specific deadline of 30 days, that, at least until further guidance from the state courts, strict adherence
with § 15A is required.
Case 1:14-cv-14531-ADB Document 40 Filed 08/11/15 Page 7 of 8

8
All of this being said, the Court acknowledges the apparent unfairness to BONYM of
voiding the foreclosure sale, given that Paiva has now been living in the Property for many years
without making any payments on his mortgage. Under the relevant Massachusetts statutes and
case law governing foreclosure sales, however, this result is mandated by BONYM’s failure to
strictly comply with the pre-foreclosure notice of default required by paragraph 22 of the
mortgage and the post-foreclosure notice to the tax collector required by G.L. c. 244, § 15A.
III. Conclusion
For the above reasons, BONYM’s Motion for Summary Judgment [Dkt. 16] is DENIED,
and Paiva’s Cross-Motion for Summary Judgment [Dkt. 21] is GRANTED. The Clerk is directed
to enter judgment for Paiva pursuant to Fed. R. Civ. P. 58(a) on both counts of his complaint and
to close this action. The foreclosure sale is void for the reasons discussed in this opinion and at
the hearing. As Paiva has not demonstrated that any additional relief is warranted, however, his
request for damages, costs, interest, and attorney fees, is denied.

SO ORDERED.

Dated: August 11, 2015

/s/ Allison D. Burroughs
ALLISON D. BURROUGHS
DISTRICT JUDGE

Case 1:14-cv-14531-ADB Document 40 Filed 08/11/15 Page 8 of 8

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Knowles v. The Bank of New York Mellon | FL 4dca – Contrary to the bank’s request that we remand this case for a new trial, the proper remedy, as in both Jelic and Balch, is remand for entry of an involuntary dismissal

Knowles v. The Bank of New York Mellon | FL 4dca – Contrary to the bank’s request that we remand this case for a new trial, the proper remedy, as in both Jelic and Balch, is remand for entry of an involuntary dismissal

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

LAVERIA ANN KNOWLES a/k/a LAVERIA KNOWLES,
Appellant,

v.

THE BANK OF NEW YORK MELLON f/k/a THE BANK OF NEW YORK,
AS TRUSTEE FOR THE CERTIFICATEHOLDERS CWALT, INC.
ALTERNATIVE LOAN TRUST 2006-OA6 MORTGAGE
PASS-THROUGH CERTIFICATES SERIES 2006-OA6,
LAKE SHORE VILLAGE NEIGHBORHOOD ASSOCIATION, INC.,
UNKNOWN TENANT NO. 1, and UNKNOWN TENANT NO. 2,
Appellees.

No. 4D15-630

[March 30, 2016]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Catherine M. Brunson, Judge; L.T. Case No.
502009CA042015XXXXMB.

Thomas Erskine Ice of Ice Appellate, Royal Palm Beach, for appellant.
Heidi J. Bassett of Robertson, Anschutz & Schneid, P.L., Boca Raton,
for appellee The Bank of New York Mellon.

ON CONCESSION OF ERROR
PER CURIAM.

The bank properly concedes that the trial court erred in entering a final
judgment of foreclosure. The bank’s concession is based upon case law
which this court issued after the trial. See Jelic v. LaSalle Bank, Nat’l
Ass’n, 160 So. 3d 127, 130 (Fla. 4th DCA 2015) (reversing a final judgment
of foreclosure, in part because there was no evidence that the party
transferring the note into the trust had any intent to transfer an interest
to the trustee); and Balch v. LaSalle Bank N.A., 171 So. 3d 207, 209 (Fla.
4th DCA 2015) (reversing a final judgment of foreclosure, in part because
“evidence that the note was transferred into the trust prior to the
foreclosure action is insufficient by itself to confer standing because there
was no evidence that the indorsee had the intent to transfer any interest
to the trustee”).
Contrary to the bank’s request that we remand this case for a new trial,
the proper remedy, as in both Jelic and Balch, is remand for entry of an
involuntary dismissal. Jelic, 160 So. 3d at 130; Balch, 171 So. 3d at 209.

Reversed and remanded for entry of involuntary dismissal.
CIKLIN, C.J., MAY and GERBER, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.

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SOSA v THE BANK OF NEW YORK MELLON | FL 4DCA – the witness’s entire body of knowledge on the subject was limited to what the witness learned from a search on “the internet.” Such evidence is not competent to establish the Bank’s standing as nonholder in possession with the rights of a holder.

SOSA v THE BANK OF NEW YORK MELLON | FL 4DCA – the witness’s entire body of knowledge on the subject was limited to what the witness learned from a search on “the internet.” Such evidence is not competent to establish the Bank’s standing as nonholder in possession with the rights of a holder.

H/T CORONA LAW FIRM

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA

FOURTH DISTRICT

JORGE SOSA and JEANETTE SOSA,

Appellants,

v.

THE BANK OF NEW YORK MELLON, f/k/a THE BANK OF NEW YORK
AS SUCCESSOR IN INTEREST TO JP MORGAN CHASE BANK, N.A.,
AS TRUSTEE FOR STRUCTURED ASSET MORTGAGE INVESTMENTS
II, INC., BEAR STEARNS ALT-A TRUST 2005-2, MORTGAGE PASS-
THROUGH CERTIFICATES, SERIES 2005-2,

Appellee.

No. 4D14-810

[March 23, 2016]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; John J. Murphy, III, Judge; L.T. Case No. 09-321 (11).

Krista Bordatto and Ricardo Corona of Corona Law Firm, P.A, Miami,
for appellants.

Donna L. Eng, Michael K. Winston and Dean A. Morande of Carlton
Fields Jorden Burt, P.A., West Palm Beach, for appellee.

DAMOORGIAN, J.

This is an appeal from a residential foreclosure which ended in
judgment in favor of Bank of New York Mellon (“the Bank”). On appeal,
Jorge and Jeanette Sosa (“Homeowners”) argue, inter alia, that the Bank
failed to prove it had standing to bring the action. We agree and reverse.

The following facts are pertinent to the standing issue. The Bank filed
a mortgage foreclosure complaint against Homeowners alleging one count
of foreclosure and one count for reestablishment of a lost note. Although
it was not the original lender, the Bank alleged that it was the owner and
holder of the Note and Mortgage and, in support, attached a copy of the
Note containing a blank indorsement.

The matter proceeded to a bench trial. At the onset, the Bank
announced it had located the original Note and intended to submit it as

evidence. The Bank then called a loan verification analyst for its purported
servicer, Wells Fargo Bank, N.A., as its only witness. Through the analyst,
the Bank introduced the original Note which, unlike the copy of the Note
attached to its complaint, was specially indorsed to JP Morgan Bank as
Trustee (“JP Morgan”). When asked about her knowledge of how the Bank
acquired the Note from JP Morgan, the witness testified that she learned
about the transfer through general research she did “on the internet” and
that “the internet will illustrate the transfer occurred in 2006.” The Bank
did not present any additional evidence establishing that it acquired the
Note prior to filing the foreclosure action.

At the conclusion of the witness’ testimony, the Bank rested. At that
point, Homeowners moved for an involuntary dismissal, arguing that the
Bank failed to establish it had standing. Homeowners pointed out that
the Note was indorsed to JP Morgan and there was no evidence
establishing a relationship between JP Morgan and the Bank. The Bank
countered that it identified itself as the successor in interest to JP Morgan
in the style of the complaint. The court denied Homeowners’ motion and
ultimately entered judgment in favor of the Bank. This appeal follows.

It is axiomatic that in a foreclosure case, “the plaintiff must prove that
it had standing to foreclose when the complaint was filed.” McLean v. JP
Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012).
“A plaintiff who is not the original lender may establish standing to
foreclose a mortgage loan by submitting a note with a blank or special
[i]ndorsement, an assignment of the note, or an affidavit otherwise proving
the plaintiff’s status as the holder of the note.” Focht v. Wells Fargo Bank,
N.A., 124 So. 3d 308, 310 (Fla. 2d DCA 2013). A plaintiff can also establish
standing by submitting evidence that an equitable transfer of the mortgage
and note occurred before the filing of a foreclosure complaint. See McLean,
79 So. 3d at 173.

In the case of a note bearing a special indorsement, under section
673.2051(1), Florida Statutes (2014), the “instrument becomes payable to
the identified person and may be negotiated only by the indorsement of
that person.” See also Dixon v. Express Equity Lending Grp., LLP, 125 So.
3d 965, 967–68 (Fla. 4th DCA 2013) (holding the bank which filed the
foreclosure complaint did not have standing to foreclose when the original
note contained a special indorsement in favor of another party). “Where a
bank is seeking to enforce a note which is specially indorsed to another,
the bank is a nonholder in possession.” Bank of New York Mellon Trust
Co., N.A. v. Conley, 41 Fla. L. Weekly D127, D127 (Fla. 4th DCA Jan. 6,
2016). “A nonholder in possession may prove its right to enforce the note
through: (1) evidence of an effective transfer; (2) proof of purchase of the

debt; or (3) evidence of a valid assignment.” Id. “A nonholder in possession
must account for its possession of the instrument by proving the
transaction (or series of transactions) through which it acquired the note.”
Id.

Here, the Bank claims that it presented through its witness’s testimony
substantial, competent evidence that the Bank was the successor trustee
to JP Morgan and, thus, had standing to sue under the Note. The Bank’s
position is patently overstated. The witness did not work for the Bank or
JP Morgan and was unable to describe the relationship between the two.
Moreover, the witness’s entire body of knowledge on the subject was
limited to what the witness learned from a search on “the internet.” Such
evidence is not competent to establish the Bank’s standing as nonholder
in possession with the rights of a holder. Accordingly, we reverse and
remand for entry of an order of involuntary dismissal of the action. See
Balch v. LaSalle Bank N.A., 171 So. 3d 207, 209 (Fla. 4th DCA 2015)
(reversing and remanding for entry of an order of involuntary dismissal
when the bank failed to provide sufficient evidence of its standing).

Reversed and remanded.

MAY and GERBER, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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Miller v. THE BANK OF NEW YORK MELLON | Bank failed to send proper notice of acceleration as required by the mortgage. Under such circumstances, the proper remedy was a complete dismissal.

Miller v. THE BANK OF NEW YORK MELLON | Bank failed to send proper notice of acceleration as required by the mortgage. Under such circumstances, the proper remedy was a complete dismissal.

 

DONALD MILLER and MARY T. MILLER, Appellants,
v.
THE BANK OF NEW YORK MELLON f/k/a THE BANK OF NEW YORK, as TRUSTEE FOR THE CERTIFICATE HOLDERS OF CWMBS, INC., CHL MORTGAGE PASS-THROUGH TRUST 2006-8, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-8, BANK OF AMERICA, N.A., successor by merger to COUNTRYWIDE BANK, FSB f/k/a COUNTRYWIDE BANK, N.A., OCEAN PEARL II HOMEOWNER’S ASSOCIATION, INC., UNKNOWN TENANT #1, and UNKNOWN TENANT #2, Appellees.

No. 4D15-36.
District Court of Appeal of Florida, Fourth District.
March 2, 2016.
Shirlarian N. Williams, Peter Ticktin and Kendrick Almaguer of The Ticktin Law Group, P.A., Deerfield Beach, for appellants.

J. Kirby McDonough and S. Douglas Knox of Quarles & Brady LLP, Tampa, for appellees The Bank of New York Mellon f/k/a The Bank of New York Mellon As Trustee for the certificate holders of CWMBS, Inc., CHL Mortgage Pass-Through Trust 2006-8, Mortgage Pass Through Certificates, Series 2006-8.

DAMOORGIAN, J.

Appellants, Donald and Mary Miller, appeal a final judgment of foreclosure in favor of The Bank of New York Mellon (the “Bank”). Appellants argue that the judgment should be reversed because the Bank failed to establish that it complied with conditions precedent to filing suit. Based on the trial court’s finding to the same, we reverse.

Following a bench trial in front of a magistrate in a routine mortgage foreclosure action, the trial court entered judgment in favor of the Bank for past due amounts under the subject note. However, the trial court declined to award the accelerated amount due under the note based upon its finding that the Bank did not send proper notice of acceleration as required by paragraph twenty-two of the mortgage. In awarding the past due amounts, the court reasoned that “failure to comply with paragraph [twenty-two] does not affect entitlement to foreclose on past due installments.”

Our holding in Holt v. Calchas, LLC, 155 So. 3d 499 (Fla. 4th DCA 2015) dictates otherwise. In Holt, we explained on rehearing:

Although in our previous opinion, which is now withdrawn[[1]], we construed paragraph twenty-two as relating to acceleration remedies and not past due amounts, upon consideration of Holt’s motion for rehearing, we are satisfied that failure to prove compliance with paragraph twenty-two at trial requires dismissal of the case due to the requirements imposed by paragraph twenty of the mortgage, which provides:

Neither Borrower nor Lender may commence … any judicial action pursuant to this Security Instrument or that alleges that the other party has breached any provision of, or any duty owed by reason of, this Security Instrument, until such Borrower or Lender has notified the other party … of such alleged breach and afforded the other party hereto a reasonable period after the giving of such notice to take corrective action….. The notice of acceleration and opportunity to cure given to Borrower pursuant to [paragraph] 22 … shall be deemed to satisfy the notice and opportunity to take corrective action provisions of this [paragraph] 20.

Id. at 507 n.4.

Paragraph twenty of the mortgage at issue contains identical language to that quoted in Holt. Accordingly, Holt compels us to conclude that the trial court erred in entering judgment of foreclosure in favor of the Bank in light of its finding that the Bank failed to send proper notice of acceleration as required by the mortgage. Under such circumstances, the proper remedy was a complete dismissal. Id. In arriving at this conclusion, we note that the merits of the court’s finding regarding the Bank’s failure to comply with conditions precedent is not properly before this court as the Bank did not file a cross-appeal.

Reversed.

TAYLOR and GERBER, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

[1] The final judgment appealed was rendered before we issued our opinion in Holt on rehearing and as such, the trial court relied on the withdrawn version of Holt in awarding the Bank past due amounts.

 

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DARWICHE v. THE BANK OF NEW YORK MELLON | FL 4DCA- The original note contained the undated blank indorsement by the original lender. The assignment of mortgage, notarized August 5, 2009 (after suit was filed), reflected a transfer of the note and mortgage from MERS to the bank, effective June 22, 2009 (before suit was filed).

DARWICHE v. THE BANK OF NEW YORK MELLON | FL 4DCA- The original note contained the undated blank indorsement by the original lender. The assignment of mortgage, notarized August 5, 2009 (after suit was filed), reflected a transfer of the note and mortgage from MERS to the bank, effective June 22, 2009 (before suit was filed).

 

ABDEL (DARWISH) DARWICHE and BATOUL (DARWISH) DARWICHE, Appellants,
v.
THE BANK OF NEW YORK MELLON f/k/a THE BANK OF NEW YORK, AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF CWMBS 2003-60, Appellee.

No. 4D13-4395.
District Court of Appeal of Florida, Fourth District.
February 24, 2016.
Vanessa Jaleh Bravo of Neustein Law Group, P.A., Aventura, for appellants.

Tahirah R. Payne and Kristen M. Gottfried of Morris Schneider Wittstadt, LLC, Tampa, for appellee.

CONNER, J.

Abdel and Batoul Darwiche appeal the trial court’s entry of a final summary judgment of foreclosure in favor of Appellee, Bank of New York Mellon, and the denial of their motion for rehearing and relief from judgment. Although Appellants raise several issues on appeal, we find merit in only one of their arguments. Appellants argue that the trial court erred in entering final summary judgment in favor of the bank where genuine issues of material fact remained regarding the bank’s standing. We agree, and reverse and remand for further proceedings.

Factual Background and Trial Court Proceedings

The bank initiated this mortgage foreclosure action against Appellants on July 28, 2009. The copy of the note attached to the complaint states that the original lender was America’s Wholesale Lender and did not contain any indorsements. In its complaint, the bank alleged that the mortgage was transferred to it by virtue of “an assignment to be recorded” and that it “owns and holds the Note and Mortgage.”[1] The mortgage also stated that “`MERS’ is Mortgage Electronic Registration Systems, Inc. MERS . . . is acting solely as a nominee for Lender and Lender’s successors and assigns.”

After Appellants filed a motion to dismiss challenging the bank’s standing, the bank filed a copy of the note reflecting an undated blank indorsement signed by Countrywide Home Loans, Inc., doing business under the fictitious name of America’s Wholesale Lender, the original lender. The bank also maintained in its response to Appellants’ motion that it was in possession of the original note and mortgage and that it came into ownership of the same through a valid assignment of mortgage. Appellants’ motion was denied, and Appellants filed their answer to the complaint, in which they maintained their challenge to the bank’s standing.

Thereafter, the bank filed its motion for summary judgment of foreclosure. In support of its motion, the bank filed an affidavit attesting that it “has possession of the promissory note,” and that it is “the assignee of the security instrument for the referenced loan.” The bank also filed the original note and mortgage, along with a copy of the recorded assignment of mortgage. The original note contained the undated blank indorsement by the original lender. The assignment of mortgage, notarized August 5, 2009 (after suit was filed), reflected a transfer of the note and mortgage from MERS to the bank, effective June 22, 2009 (before suit was filed). Although a hearing was held on the bank’s motion for summary judgment, it appears Appellants failed to attend, and a transcript of the hearing has not been included in the record on appeal. After the hearing, the trial court entered a final summary judgment in favor of the bank. Appellants gave notice of appeal after the trial court denied their motion for rehearing and relief from judgment.

Appellate Analysis

Appellants argue that the trial court erred in entering final summary judgment in favor of the bank where genuine issues of material fact remained regarding the bank’s standing.

The granting of a motion for summary judgment is reviewed de novo. Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000). “When reviewing a ruling on summary judgment, an appellate court must examine the record in the light most favorable to the non-moving party.” Frost v. Regions Bank, 15 So. 3d 905, 906 (Fla. 4th DCA 2009) (citing Allenby & Assocs., Inc. v. Crown St. Vincent Ltd., 8 So. 3d 1211, 1213 (Fla. 4th DCA 2009)). Summary judgment is appropriate only where “there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law.” Fla. R. Civ. P. 1.510(c). The burden is on the moving party to show “conclusively the absence of any genuine issue of material fact and the court must draw every possible inference in favor of the party against whom a summary judgment is sought.” Moore v. Morris, 475 So. 2d 666, 668 (Fla. 1985). “If the evidence raises any issue of material fact, if it is conflicting, if it will permit different reasonable inferences, or if it tends to prove the issues, it should be submitted to the jury as a question of fact to be determined by it.” Id. “If the `slightest doubt’ exists, then summary judgment must be reversed.” Sierra v. Shevin, 767 So. 2d 524, 525 (Fla. 3d DCA 2000).

It is well settled that standing of the plaintiff to foreclose on a mortgage must be established at the time the plaintiff files suit. See McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012); Rigby v. Wells Fargo Bank, N.A., 84 So. 3d 1195, 1196 (Fla. 4th DCA 2012). Here, Appellants assert that the bank failed to establish that it possessed the blank-indorsed note at the inception of the suit. While the original note contained an undated blank indorsement, and while the bank ultimately filed the original note with the trial court, reflecting possession of the note at the time the original was filed, there was nevertheless insufficient evidence to establish that the bank held the blank-indorsed note, and was thus entitled to enforce it, at the time suit was filed.

The affidavits in support of the bank’s motion for summary judgment did not specifically state when the bank came into possession of the note, nor did the bank otherwise indicate that it owned or possessed the note at the time suit was filed. Though the bank filed the original note and mortgage prior to the summary judgment hearing, its bare assertion in its supporting affidavit that it “has possession of the promissory note” fails to clarify at what point the bank obtained possession of the blank-indorsed note, and is therefore insufficient evidence of whether the bank possessed the note from the inception of the suit. See Cromarty v. Wells Fargo Bank, NA, 110 So. 3d 988, 989 (Fla. 4th DCA 2013) (“While the note introduced had a blank [i]ndorsement and was sufficient to prove ownership by appellee, who possessed the note, nothing in the record shows that the note was acquired prior to the filing of the complaint. The [i]ndorsement did not contain a date, nor did the affidavit filed in support of the motion for summary judgment contain any sworn statement that the note was owned by the plaintiff on the date that the complaint was filed.” (emphasis added and internal quotation marks omitted) (quoting Hall v. REO Asset Acquisitions, LLC, 84 So. 3d 388 (Fla. 4th DCA 2012))).

As to the assignment of mortgage, upon which the bank relied to establish its standing, we agree with Appellants that genuine issues of material fact remained as to whether the assignment of mortgage was sufficient to establish the bank’s standing at the inception of the suit. The complaint was filed on July 28, 2009. Although the assignment transferring the note and mortgage to the bank states an “effective date” of June 22, 2009, the assignment appears to have been notarized and executed on August 5, 2009, which was clearly after the complaint was filed. We have held that “two inferences can be drawn from the `effective date’ language.” Vidal v. Liquidation Props., Inc., 104 So. 3d 1274, 1277 (Fla. 4th DCA 2013). One inference is that ownership of the note and mortgage was equitably transferred to the bank on June 22, 2009 (prior to suit), but another inference is that the parties to the transfer were attempting to backdate an event to their benefit. Id. We have previously warned that “[a]llowing assignments to be retroactively effective would be inimical to the requirements of pre-suit ownership for standing in foreclosure cases.” Id. at 1277 n.1. “Because the language yields two possible inferences, proof is needed as to the meaning of the language, and a disputed fact exists.” Id. at 1277.

Accordingly, we hold that the trial court erred in entering summary judgment in favor of the bank, where the record does not reflect as a matter of law that the bank had standing on the date the complaint was filed. We therefore reverse the entry of summary judgment and remand for further proceedings consistent with this opinion.

Reversed and remanded.

CIKLIN, C.J., and BOORAS, TED, Associate Judge, concur.

Not final until disposition of timely filed motion for rehearing.

[1] The copy of the assignment of mortgage filed in the court file states the note was assigned and transferred as well.

 

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BANK OF NEW YORKMELLON TRUST COMPANY v. CONLEY | Borrower’s Motion for Involuntary Dismissal Upheld in Foreclosure Case

BANK OF NEW YORKMELLON TRUST COMPANY v. CONLEY | Borrower’s Motion for Involuntary Dismissal Upheld in Foreclosure Case

District Court of Appeal of Florida,Fourth District.

BANK OF NEW YORKMELLON TRUST COMPANY, N.A., Appellant, v. Dennis M. CONLEY, et al., Appellees.

No. 4D14–2430.

    Decided: January 6, 2016

Melissa A. Giasi of Kass Shuler, P.A., Tampa, for appellant. Brian K. Korte and Scott J. Wortman of Korte & Wortman, P.A., West Palm Beach, for appellee Dennis M. Conley.

In this foreclosure case, the trial court granted the borrower’s motion for involuntary dismissal because the bank did not present competent substantial evidence of its standing to foreclose. We affirm.

The record in this case reveals that, at one time or another, at least six different banking entities claimed ownership of the borrower’s note. The problem is not the number of entities claiming ownership, but the similarities of their names. Two of the entities are:

• JP Morgan Chase Bank; and

• JP Morgan Chase & Co.

Two others are:

• Bank of New York Company, Inc.; and

• The Bank of New York Mellon Trust Company, National Association

We write to emphasize that when a nonholder in possession attempts to establish its right to enforce a note, and thus its standing to foreclose, the precise identity of each entity in the chain of transfers is crucial.

At bar, the plaintiff is:

The Bank of New York Mellon Trust Company, National Association fka The Bank of New York Trust Company, N.A. as Successor to JPMorgan Chase Bank N.A. as Trustee for RASC 2004KS4 [hereinafter “the Bank of New York Mellon”].

In pursuit of this foreclosure, the Bank of New York Mellon presented an original note bearing a special indorsement in favor of “JP Morgan Chase Bank, as Trustee.”1 At trial, a witness for the Bank of New York Mellon testified that the note was deposited into a trust with JP Morgan Chase Bank as the original trustee. The witness also testified that the Bank of New York Mellon became the successor trustee in April of 2006.

An excerpt of a Pooling and Servicing Agreement (PSA) was placed into evidence. The PSA created the Residential Asset Securities Corporation Series 2004–KS4 Trust and listed JPMorgan Chase Bank as the trustee. The witness agreed that the PSA did not establish that the Bank of New York Mellon had any interest in the note.

A 200+ page document was placed into evidence entitled “Purchase and Assumption Agreement by and between the Bank of New York Company, Inc. and JPMorgan Chase & Co.” (emphasis added). This purchase agreement was dated April 7, 2006. The witness was under the impression that the agreement established that the plaintiff purchased the trust assets of JP Morgan Chase Bank. However, the document contradicts his testimony. Neither the plaintiff (the “Bank of New York Mellon Trust Company, N.A.”) nor the indorsee on the note and trustee of the RASC 2004KS4 Trust (“JP Morgan Chase Bank ”) are parties to the purchase and assumption agreement.

“When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person.” § 673.2051(1), Fla. Stat. (2014). Where a bank is seeking to enforce a note which is specially indorsed to another, the bank is a nonholder in possession. Murray v. HSBC Bank USA, 157 So.3d 355, 358 (Fla. 4th DCA), review dismissed, 171 So.3d 117 (Fla.2015). A nonholder in possession may prove its right to enforce the note through:

(1) evidence of an effective transfer;

(2) proof of purchase of the debt; or

(3) evidence of a valid assignment.

See Lamb v. Nationstar Mortg., LLC, 174 So.3d 1039, 1040 (Fla. 4th DCA 2015). A nonholder in possession must account for its possession of the instrument by proving the transaction (or series of transactions) through which it acquired the note. Murray, 157 So.3d at 358.

At bar, the plaintiff attempted to prove its right to enforce the note through proof of purchase of the debt. The plaintiff’s proof of purchase, however, is an agreement between two entities that have no relationship to either the plaintiff or the indorsee. At most, the agreement establishes that somehow JP Morgan Chase & Co. became the trustee for the RASC 2004KS4 Trust and transferred/sold its interest in the trust to a company called The Bank of New York Company. The Agreement does not connect the indorsee of the note (JP Morgan Chase Bank) to the plaintiff (the Bank of New York Mellon).

This issue was discussed in Verizzo v. Bank of New York, 28 So.3d 976 (Fla. 2d DCA 2010). There, the Bank of New York attempted to foreclose on a note indorsed to JPMorgan Chase Bank, as Trustee. Id. at 977. At summary judgment, the Bank of New York produced an assignment between MERS and the Bank of New York. Reversing summary judgment, the court found:

The promissory note shows that Novastar endorsed the note to “JPMorgan Chase Bank, as Trustee.” Nothing in the record reflects assignment or endorsement of the note by JPMorgan Chase Bank to the Bank of New York or MERS. Thus, there is a genuine issue of material fact as to whether the Bank of New York owns and holds the note and has standing to foreclose the mortgage.

Id. at 978 (emphasis added).

At bar, there is nothing in the record connecting the indorsee, JP Morgan Chase Bank, to the plaintiff, the Bank of New York Mellon.2 The plaintiff thus failed to prove the series of transactions through which it acquired the note from the original lender. Murray, 157 So.3d at 358–59. For this reason, the Bank of New York Mellon did not establish its standing as nonholder in possession with the rights of a holder, and the defendant’s motion for involuntary dismissal was properly granted.

Affirmed.

FOOTNOTES

1.  The original lender was Home Loan Corporation dba Expanded Mortgage Credit. The note bears two special indorsements: (1) Home Loan Corporation ? Residential Funding Corporation; (2) Residential Funding Corporation ? JP Morgan Chase Bank, as Trustee.

2.  We have not overlooked the plaintiff’s other evidence (an “officer’s certificate” and an assignment). The officer’s certificate incorrectly identifies the parties to the purchase and assumption agreement and cannot be relied on by the plaintiff to establish the chain of transfers. The assignment, which purports to assign the mortgage from MERS to the plaintiff in May of 2009, is ineffective because according to the testimony and the PSA, MERS had no interest to assign after 2004 when the loan was placed in the trust.

STEVENSON, J.

WARNER and FORST, JJ., concur.

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Amstone v. The Bank of New York Mellon | Therefore, genuine issues of material fact remained, summary judgment should not have been entered, and we must reverse for further proceedings. …. We conclude that the Bank did prove standing but failed to refute the Amstones’ affirmative defenses

Amstone v. The Bank of New York Mellon | Therefore, genuine issues of material fact remained, summary judgment should not have been entered, and we must reverse for further proceedings. …. We conclude that the Bank did prove standing but failed to refute the Amstones’ affirmative defenses

 Amstone v. The Bank of New York Mellon (Fla. Dist. Ct. App. 2016)

View original: From the court   |   Our backup

 

. . .

Charles and Carolyn Amstone appeal the final summary judgment of

foreclosure entered against them and in favor of The Bank of New York Mellon. The

Amstones argue that the Bank failed to show that it had standing to foreclose and failed

to refute their affirmative defenses. They claim that summary judgment should have

been granted in their favor. We conclude that the Bank did prove standing but failed to

refute the Amstones’ affirmative defenses. Therefore, genuine issues of material fact

remained, summary judgment should not have been entered, and we must reverse for

further proceedings.

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BANK OF NEW YORK MELLON v. LEMAY, Haw: Intermediate Court of Appeals 2015 – BNYM’s “doctored” responses to their discovery requests | BNYM relied almost exclusively on the Declaration. Without the Declaration, there was no basis for the circuit court to grant summary judgment

BANK OF NEW YORK MELLON v. LEMAY, Haw: Intermediate Court of Appeals 2015 – BNYM’s “doctored” responses to their discovery requests | BNYM relied almost exclusively on the Declaration. Without the Declaration, there was no basis for the circuit court to grant summary judgment

H/T Gary Dubin

THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK, AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF THE CHL MORTGAGE PASS-THROUGH TRUST 2006-OA5, MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2006-OA5, Plaintiff-Appellee,

v.

RICHARD ARTHUR LEMAY; BAY THI LEMAY; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., SOLELY AS NOMINEE FOR COUNTRYWIDE HOME LOANS, INC.; ASSOCIATION OF APARTMENT OWNERS OF KAPIOLANI TERRACE, Defendants-Appellees, and
DERMABELLE PRODUCTS, LLC, Intervenor-Defendant-Appellant, and
JOHN DOES 1-20, JANE DOES 1-20, DOE CORPORATIONS 1-20, DOE ENTITIES 1-20, AND DOE GOVERNMENTAL UNITS 1-20, Defendants.

No. CAAP-14-0001339.
Intermediate Court of Appeals of Hawai`i.
December 7, 2015.
Colin B. Sakumoto, for Intervenor-Defendant-Appellant.

Peter T. Stone, Daisy Lynn B. Hartsfield, (TMLF Hawaii), for Plaintiff-Appellee.

FOLEY, PRESIDING J., LEONARD AND REIFURTH, JJ.

OPINION OF THE COURT BY FOLEY, J.

Intervenor-Defendant-Appellant Dermabelle Products, LLC (Dermabelle) appeals from:

(1) the “Order Denying [Dermabelle’s] Motion to Compel Responses to Discovery Requests and Motion for Attorney Fees” (Order Denying Dermabelle’s First Motion to Compel), entered September 5, 2014;

(2) the denial of “[Dermabelle’s] Second Motion to Compel Discovery Requests and Motion for Attorney’s Fees” (Denial of Dermabelle’s Second Motion to Compel);[1]and

(3) the “Findings of Fact [(FOFs)], Conclusions of Law and Order Granting Plaintiff’s Motion for Summary Judgment for Foreclosure Against All Defendants and for Interlocutory Decree of Foreclosure” (FOFs/COLs/Order), entered December 16, 2014 in the Circuit Court of the First Circuit[2] (circuit court).[3]

On appeal, Dermabelle contends the circuit court erred in: (1) denying it the opportunity to conduct discovery; (2) not excluding the Declaration of Indebtedness (Declaration) as inadmissible hearsay; and (3) granting the motion for summary judgment in favor of Plaintiff-Appellee the Bank of New York Mellon fka the Bank of New York, as Trustee for the Certificateholders of the CHL Mortgage Pass-Through Trust 2006-OA5, Mortgage Pass Through Certificates, Series 2006-OA5 (BNYM).

I. BACKGROUND[4]

[FOFs]

. . . .

3. On or about 01/19/2006, for value received, Defendants [-Appellees] Richard Lemay and Bay Thi Lemay [(collectively, the Lemays)] made, executed and delivered to Countrywide Home Loans, Inc. a promissory note (“Note”) in the principal amount of $280,000.00

4. For the purposes of securing payment on the Note of the principal sum, interest thereon, and all other changes as provided for in the Note, [the Lemays] made, executed, and delivered to Mortgage Electronic Registration Systems, Inc., solely as nominee for Countrywide Home Loans, Inc. that certain Mortgage (“Mortgage”), which encumbers the property located at 1560 Kanunu St #918, Honolulu, HI 96814, TMK X-X-X-XXX-XXX-XXXX (“Property”), more fully described in Exhibit “A” of the Mortgage. The Mortgage was filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii (“Land Court”) as Land Document No. 3382578.

5. [BNYM] is the owner and holder of the Note and Mortgage by virtue of that certain Assignment of Mortgage dated 04/16/2011, filed in the Land Court on 05/10/2011, as Land Court Document No. 4071740 (“Assignment”). The Note, Mortgage, and Assignment are collectively referred to as the “Loan Documents.”

. . . .

7. [The Lemays] stopped making monthly payments on 03/01/2010.

On January 27, 2012, BNYM filed their Complaint for Mortgage Foreclosure (Complaint) against the Lemays, alleging the Note and Mortgage had been assigned to BNYM on April 16, 2011. The Complaint named the Association of Apartment Owners of Kapiolani Terrance (AOAO) as a defendant based on its interest “by virtue of unpaid maintenance fees” and a notice of lien filed in Land Court.

Dermabelle moved to intervene as a defendant on July 2, 2013 on the grounds that Dermabelle “claims an interest in the Subject Property arising from the Quitclaim Deed from the [AOAO] executed on May 7, 2012. Furthermore, this interest in the Subject Property is subject to divestment should [BNYM] prevail in their foreclosure action.” The circuit court granted Dermabelle’s motion to intervene on November 8, 2013.

BNYM filed a motion for summary judgment on December 4, 2013 (MSJ). In support of its motion, BNYM relied primarily on the Declaration signed by Lyvonne Jones (Jones). The first paragraph of the declaration states, “I [Jones] am authorized to sign this Declaration on behalf of [BNYM], as an officer of Resurgent Capital Services, LP . . . [(Resurgent Capital)], which is [BNYM’s] servicing agent for the subject loan. . . .”

Dermabelle filed its first set of discovery requests to BNYM on or about December 12, 2013. Dermabelle filed a motion to compel responses to the first set of discovery requests on July 15, 2014 (First Motion to Compel). On August 12, 2014, the circuit court held a hearing on Dermabelle’s First Motion to Compel. At the hearing, the circuit court denied the motion on the grounds that the parties had failed to meet and confer in good faith.

Dermabelle filed its “Second Motion to Compel Responses to Discovery Requests and Motion for Attorney’s Fees” (Second Motion to Compel) on August 29, 2014. The circuit court held a hearing on the Second Motion to Compel on September 16, 2014. At the hearing, the circuit court did not make an oral ruling, and the record on appeal does not contain a written order on Dermabelle’s Second Motion to Compel.

On October 1, 2014, the circuit court held a hearing on BNYM’s December 4, 2013 MSJ. On December 16, 2014, the circuit court entered its FOFs/COLs/Order granting summary judgment in BNYM’s favor.

II. STANDARD OF REVIEW

A. Discovery

[The Hawai`i Rules of Civil Procedure (HRCP)] reflect a basic philosophy that a party to a civil action should be entitled to the disclosure of all relevant information in the possession of another person prior to trial, unless the information is privileged. However, the extent to which discovery is permitted under [HRCP] Rule 26 is subject to considerable latitude and the discretion of the trial court. Thus, the exercise of such discretion will not be disturbed in the absence of a clear abuse of discretion that results in substantial prejudice to a party. Accordingly, the applicable standard of review on a trial court’s ruling on a motion to compel discovery, brought pursuant to HRCP Rule 26, is abuse of discretion.

Hac v. Univ. of Hawai`i, 102 Hawai`i 92, 100-01, 73 P.3d 46, 54-55 (2003) (citations, internal quotation marks, brackets, and ellipsis omitted).

B. Summary Judgment

[An appellate] court reviews a trial court’s grant of summary judgment de novo. O’ahu Transit Servs., Inc. v. Northfield Ins. Co., 107 Hawai`i 231, 234, 112 P.3d 717, 720 (2005). The standard for granting a motion for summary judgment is well settled:

Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. A fact is material if proof of that fact would have the effect of establishing or refuting one of the essential elements of a cause of action or defense asserted by the parties. The evidence must be viewed in the light most favorable to the non-moving party. In other words, [the appellate court] must view all of the evidence and the inferences drawn therefrom in the light most favorable to the party opposing the motion.

Price v. AIG Hawai`i Ins. Co., 107 Hawai`i 106, 110, 111 P.3d 1, 5 (2005) (original brackets and citation omitted).

Kamaka v. Goodsill Anderson Quinn & Stifel, 117 Hawai`i 92, 104, 176 P.3d 91, 103 (2008). On a motion for summary judgment, “[a] fact is material if proof of that fact would have the effect of establishing or refuting one of the essential elements of a cause of action or defense asserted by the parties.” Crichfield v. Grand Wailea Co., 93 Hawai`i 477, 482-83, 6 P.3d 349, 354-55 (2000) (quoting Hulsman v. Hemmeter Dev. Corp., 65 Haw. 58, 61, 647 P.2d 713, 716 (1982)). “[A] `genuine issue as to any [material] fact’ . . . under a conflict in the affidavits as to a particular matter must be of such a nature that it would affect the result.” Richards v. Midkiff, 48 Haw. 32, 39, 396 P.2d 49, 54 (1964).

Affidavits in support of a summary judgment motion are scrutinized to determine whether the facts they aver are admissible at trial and are made on the personal knowledge of the affiant. Also, ultimate or conclusory facts or conclusions of law are not to be utilized in a summary judgment affidavit.

Miller v. Manuel, 9 Haw. App. 56, 66, 828 P.2d 286, 292 (1991) (citations omitted).

III. DISCUSSION

Dermabelle argues that the circuit court abused its discretion in denying both of Dermabelle’s motions to compel because the information Dermabelle requested was relevant to whether BNYM had satisfied the standing requirements to bring a judicial foreclosure action. Although Dermabelle lists the Order Denying Dermabelle’s First Motion to Compel in its notice of appeal, it does not challenge the circuit court’s dismissal of that motion in its substantive argument. Therefore, we do not address whether the circuit court erred in entering the Order Denying Dermabelle’s First Motion to Compel. See HRAP Rule 28(b)(7) (“Points not argued may be deemed waived.”).

Dermabelle also disputes the circuit court’s denial of its Second Motion to Compel. Dermabelle cites only to the transcript of the hearing in which the circuit court did not rule on the motion. There is no written order denying the Second Motion to Compel in the record on appeal. However, the Second Motion to Compel was effectively denied by the circuit court’s grant of BNYM’s motion for summary judgment. As such, we will address the merits of Dermabelle’s argument. See Morgan v. Planning Dept., Cnty. of Kauai, 104 Hawai`i 173, 180-81, 86 P.3d 982, 989-90 (2004) (“This court . . . has consistently adhered to the policy of affording litigants the opportunity to have their cases heard on the merits, where possible.” (citation and internal quotation mark omitted)).

Dermabelle argues on appeal:

[It was] wholly relevant for [Dermabelle] to question whether Resurgent Capital is in fact authorized to service the loan on behalf of [BNYM]. . . . [Dermabelle] must be allowed to ask for the documents establishing Resurgent Capital as the servicer of the loan for [BNYM] in order to determine whether or not [BNYM] has satisfied their basic standing requirements to bring a judicial foreclosure action.

At the hearing on Dermabelle’s Second Motion to Compel, the circuit court suggested to counsel for Dermabelle, “I’m not inclined, in your capacity, where you’re coming in as a purchaser of a foreclosure sale, [to allow Dermabelle] to come in and file this motion for discovery on a case in which your client doesn’t have any obligation on the note and mortgage.”

In FOF 13, which neither party disputes on appeal, the circuit court found:

13. [AOAO] may claim an interest in the Property by virtue of unpaid maintenance fees and, if applicable, on that certain Notice of Lien filed in the Land Court on 01/25/2006 as Document No. 3382579. Its interest in the Property, if any, is junior to [BNYM’s] lien.

Dermabelle had acquired the AOAO’s interest on April 27, 2012 as the result of a power of sale foreclosure, for which Dermabelle received a quitclaim deed. Dermabelle’s interest in defending the suit, therefore, was to protect its junior interest in the property. Under HRCP Rule 26(b)(1)(A),[5] Dermabelle is permitted to seek discovery of information relevant to defending its interest in the property.

The circuit court’s hesitation to grant Dermabelle’s Second Motion to Compel because it was not a party to the Note or Mortgage was unwarranted because the information Dermabelle sought was relevant to defending its junior interest in the property under HRCP Rule 26(b)(1)(A). The remaining question is whether the exclusion of Dermabelle’s requested information would have affected the circuit court’s grant of BNYM’s motion for summary judgment such that Dermabelle was substantially prejudiced by the exclusion. See Hac, 102 Hawai`i at 100-01, 73 P.3d at 54-55 (noting that the trial court’s denial of a motion to compel discovery “will not be disturbed in the absence of a clear abuse of discretion that results in substantial prejudice to a party.”).

In Dermabelle’s First Motion to Compel, arguments and analysis of which were adopted in its Second Motion to Compel, Dermabelle argues that BNYM’s allegedly inadequate responses to Dermabelle’s interrogatory requests suggest that Jones is “a foreclosure specialist with New Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing . . . [and] who has neither job responsibilities for [Resurgent Capital] nor familiarity with the records maintained by [Resurgent Capital], directly contradicting the [Declaration].” The information requested by Dermabelle’s Second Motion to Compel may have led to evidence contradicting the assertions of facts made in Jones’ declaration.[6] By denying Dermabelle’s Second Motion to Compel, the circuit court precluded Dermabelle from defending against the MSJ by denying discovery that may have led to the existence of genuine issues of material fact. See HRCP Rule 56(e) (“The court may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or further affidavits.”)

When moving for summary judgment in a foreclosure action, a plaintiff-movant has the initial burden of producing the documentation necessary to establish that a borrower had defaulted on her note and that the lender was entitled to foreclose on the mortgage securing the note. See Ocwen Fed. Bank, FSB v. Russell, 99 Hawai`i 173, 184, 53 P.3d 312, 323 (App. 2002). A declaration of indebtedness is one document that helps to prove that a borrower defaulted on her note and that the lender was entitled to foreclose on the mortgage. See id.

In BNYM’s MSJ, BNYM relied almost exclusively on the Declaration. Without the Declaration, there was no basis for the circuit court to grant summary judgment because BNYM did not rely on any source of information other than the Declaration to prove that the Lemays had defaulted on their loan and that BNYM was entitled to foreclose. In addition to effectively denying Dermabelle’s Second Motion to Compel, the circuit court granted BNYM’s MSJ before Dermabelle could depose Jones about her declaration, which may have ameliorated the prejudice resulting from the circuit court’s denial of Dermabelle’s Second Motion to Compel. See HRCP Rule 56(f) (“Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party’s opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.”). Therefore, effectively denying Dermabelle’s Second Motion to Compel was an abuse of discretion that substantially prejudiced Dermabelle. Hac, 102 Hawai`i at 100-01, 73 P.3d at 54-55.

Because we have concluded that the denial of Dermabelle’s Second Motion to Compel was reversible error, we do not need to address Dermabelle’s other points of error on appeal.

IV. CONCLUSION

Therefore, the following entered in the Circuit Court of the First Circuit are vacated and this case is remanded for further proceedings consistent with this Opinion:

(1) the “Order Denying Defendant’s Dermabelle Products LLC’s Motion to Compel Responses to Discovery Requests and Motion for Attorney Fees,” entered September 5, 2014;

(2) the denial of “Defendant Dermabelle Products, LLC’s Second Motion to Compel Responses to Discovery Requests and Motion for Attorney’s Fees”; and

(3) the “Findings of Fact, Conclusions of Law and Order Granting Plaintiff’s Motion for Summary Judgment for Foreclosure Against All Defendants and for Interlocutory Decree of Foreclosure,” entered December 16, 2014.

[1] Dermabelle’s notice of appeal noted that the Denial of Dermabelle’s Second Motion to Compel was not filed as of the date the notice of appeal was filed. The record on appeal does not include a copy of the order, and it is unclear to this court whether the order was ever entered by the circuit court. As discussed below, we treat the grant of BNYM’s Motion for Summary Judgment as a denial of Dermabelle’s Second Motion to Compel.

[2] The Honorable Bert I. Ayabe presided.

[3] Although Dermabelle does not designate the circuit court’s Judgment entered on December 16, 2014, we do not dismiss appeals “for informality of form or title of the notice of appeal.” Hawai`i Rules of Appellate Procedure (HRAP) Rule 3(c)(2); see State v. Graybeard, 93 Hawai`i 513, 516, 6 P.3d 385, 388 (App. 2000) (“[A] mistake in designating the judgment should not result in loss of the appeal as long as the intention to appeal from a specific judgment can be fairly inferred from the notice and the appellee is not misled by the mistake.” (citation, internal quotation marks, and ellipsis omitted)).

[4] This background is excerpted primarily from the undisputed circuit court’s FOFs. The background is augmented from other sources where indicated.

[5] HRCP Rule 26 provides in relevant part:

Rule 26. GENERAL PROVISIONS GOVERNING DISCOVERY.

. . . .

(b) Discovery Scope and Limits. Unless otherwise limited by order of the court in accordance with these rules, the scope of discovery is as follows:

(1) IN GENERAL.

(A) Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party, including the existence, description, nature, custody, condition and location of any books, documents, electronically stored information or tangible things and the identity and location of persons having knowledge of any discoverable matter. It is not ground for objection that the information sought will be inadmissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.

[6] This possibility is supported by Dermabelle’s evaluation of BNYM’s “doctored” responses to their discovery requests in its First Motion to Compel. For example, Dermabelle described its Interrogatory No. 8:

Interrogatory No. 8 of Dermabelle’s Discovery Requests specifically asks [BNYM] to:

Please explain the capacity in which [Jones] is employed by [Resurgent Capital]. Include in your answer the periods of employment for [Jones] and the title of the position held by [Jones].

Instead of providing a response, [BNYM] doctored Interrogatory No. 8 to state:

Please explain the capacity in which [Jones] is employed by New Penn Financial, LLC d/b/a/ Shellpoint Mortgage Servicing. Include in your answer the periods of employment for [Jones] and the title of the position held by [Jones], foreclosure specialist.

[BNYM] then refused to answer the Interrogatory they materially altered.

(brackets omitted and emphasis in original). This response suggests that Jones was not, as she declared under penalty of perjury in her declaration, “authorized to sign this Declaration on behalf of [BNYM], as an officer of [Resurgent Capital], which is [BNYM’s] servicing agent for the subject loan. . . .”

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Tran v. Bank of New York || ** U P D A T E ** || Commentary and Case Filings

Tran v. Bank of New York || ** U P D A T E ** || Commentary and Case Filings

Note: Cases such as these should only be attempted by an experienced attorney.

Tran v. Bank of New York

COMMENTARY

COMMENTARY Mortgage Securitization and Lender’s Ability to Foreclose
However, a simple “yes” answer to the question would ignore
recent case law concerning whether a borrower in a foreclosure
action can assert defenses founded upon alleged non-compliance
with documents governing the securitization of the underlying loan
—e. g., pooling and servicing agreements.
COMMENTARY Row Over Mortgage Transfers To MBS Trusts Hits High Court – Law360
Law360, New York (September 8, 2015, 8:33 PM ET) — Property owners have
asked the U.S. Supreme Court to review their suit against several banks, saying
the Second Circuit did not appropriately determine whether they had standing to
claim that mortgage-backed securities trusts managed by the banks did not own
the petitioners’ mortgages. (SEE Concurrent email for article. Link may not open.)

APPELLATE FILINGS

Tran v. Bank of New York, Court of Appeals, 2nd Circuit SUMMARY ORDER 2015 – Google Scholar
Here, Plaintiffs do not identify any basis for distinguishing their claim from the claim
at issue in Rajamin, where this Court recently held that mortgagors, who were not
trust beneficiaries, lacked constitutional and prudential standing to bring an action
based on trustee conduct that allegedly contravened the trust instrument.
Tran v. Bank of New York, Court of Appeals, 2nd Circuit SUMMARY ORDER 2015 – CourtListener.com
Tran v. Bank of New York, Court of Appeals, 2nd Circuit :: Justia DOCKET
They sued a BUNCH them.
DEFENDANTS:

Lehman Mortgage Trust,
Countrywide Alternative Loan Trust,
First Franklin MTG Loan Asset Bank,
GSAA Home Equity Trust,
Fremont Home Loan Trust,
Impac Secured Assets Corp.,
HSBC Bank USA National Association,US Bank National Association,
Chase Bank USA National Association,
Bank Of New York,
Deutsche Bank National Trust Company,
Bear Stearns ALT-A Trust,
Merrill Lynch Mortgage Investors Trust,
Securitized Asset Backed Receivables,
Credit Suisse Mtg Capital Certificate,
IXIS Real Estate Capital Trust,
Countrywide Home Loans,
Citigroup Mortgage Loan Trust Inc.,
Countrywide Asset-Backed Certificates,
Wells Fargo Bank National Association,
American Home Mortgage Assets and Merrill Lynch Alternative Note Asset
Tran v. Bank of New York, Court of Appeals, 2nd Circuit :: Case Docket | United States Courts Archive™
Tran v. Bank of New York, Court of Appeals, 2nd Circuit :: NOTICE OF EXPEDITED APPEAL Docket Item 51 | United States Courts Archive™
Tran v. Bank of New York, Court of Appeals, 2nd Circuit :: BRIEF OF APPELLANTS Docket Item 52.1 | United States Courts Archive™
Tran v. Bank of New York, Court of Appeals, 2nd Circuit :: BRIEF OF APPELLANTS_2 Docket Item 54 | United States Courts Archive™
Tran v. Bank of New York, Court of Appeals, 2nd Circuit :: NOTICE OF DEFECTIVE FILING Docket Item 73 | United States Courts Archive™
Tran v. Bank of New York, Court of Appeals, 2nd Circuit :: BRIEF FOR DEFENDANTS-APPELLEES Docket Item 76 | United States Courts Archive™

DISTRICT COURT FILINGS

Tran et al v. Bank Of New York et al, No. 1:2013cv00580 SDNY :: Justia DOCKET
Tran et al v. Bank Of New York et al, No. 1:2013cv00580 SDNY :: Plainsite DOCKET
Tran et al v. Bank of New York et al, No. 1:2013cv00580 SDNY OPINION and ORDER – Google Scholar
For the foregoing reasons, the Plaintiffs have no standing to bring any claim based on
alleged breaches of the PSAs, and, because the theory underlying the Plaintiffs’ claims
 is untenable, any amendment of the Amended Complaint would be futile. See Foman v.
Davis, 371 U.S. 178, 182 (1962). Therefore, the Amended Complaint is dismissed with
prejudice in its entirety. Furthermore, because the standing issue is dispositive, this
Court need not reach the other issues raised in the motion to dismiss or the issue of
severance.
Tran et al v. Bank Of New York et al, No. 1:2013cv00580 SDNY OPINION and ORDER – JUSTIA
Tran et al v. Bank Of New York et al, No. 1:2013cv00580 SDNY Federal Docket Search: “Tran et al v. Bank Of New York et al” PAYWALL | Docket Alarm
Tran et al v. Bank Of New York et al 

1:13-cv-00580, New York Southern District Court
9/5/2013 MEMORANDUM OF LAW in Opposition re: 39 JOINT MOTION to Dismiss the Amended Complaint Or, In The Alternative, To Sever Plaintiffs.. Document filed by Kay Ap…
4/15/2013 AMENDED COMPLAINT amending 1 Complaint, against Alternative Loan Trust CWALT 2006-29T1, Alternative Loan Trust CWALT 2006-OA19, Alternative Loan Trust CWALT 200…
1/25/2013 COMPLAINT against American Home Mortgage Assets, Bank Of New York, Bear StearnsALT-A Trust, Chase Bank USA National Association, Citigroup Mortgage Loa…

RESEARCH

“Tran v. Bank of New York” – Google Search

 

Row Over Mortgage Transfers To MBS Trusts Hits High Court

By John Kennedy

Law360, New York (September 8, 2015, 8:33 PM ET) — Property owners have asked the U.S. Supreme Court to review their suit against several banks, saying the Second Circuit did not appropriately determine whether they had standing to claim that mortgage-backed securities trusts managed by the banks did not own the petitioners’ mortgages.

In an Aug. 31 petition, the property owners said that their mortgages were transferred to 37 MBS trusts that the banks — Bank of New York Mellon Corp., HSBC Bank NA, US Bank NA, Deutsche Bank National Trust Co. and Wells Fargo Bank NA — were trustees for, but that those transactions were invalid.

The appeals courts are split on how to determine the standing of property owners who challenge mortgage transfers, and the Second Circuit conflated standing with the merits of the instant case by way of an analysis that “swallows its own tail and makes no sense,” according to the petition.

[…]

http://www.law360.com/articles/699755/row-over-mortgage-transfers-to-mbs-trusts-hits-high-court

 

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Tran Cert Pet-Final-rev

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Tran v. Bank of New York, Dist

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Anh N. Tran, et al. v. Bank of New York | Securitization FAIL || SCOTUS | Petition for a Writ of Certiorari …. FILED. (Response due October 2, 2015) |

Anh N. Tran, et al. v. Bank of New York | Securitization FAIL || SCOTUS | Petition for a Writ of Certiorari …. FILED. (Response due October 2, 2015) |

No. 15-260

Anh N. Tran, et al. v. Bank of New York, nka Bank of New York Mellon, et al.

from the United States Court of Appeals for the Second Circuit

See other cases from the Second Circuit.

Docket Entries

Petition for a writ of certiorari filed. (Response due October 2, 2015)

Application (14A1287) granted by Justice Ginsburg extending the time to file until August 31, 2015.

Application (14A1287) to extend the time to file a petition for a writ of certiorari from July 2, 2015 to August 31, 2015, submitted to Justice Ginsburg.

Parties

Anh N. Tran, et al., Petitioner, represented by Erik S. Jaffe

Last updated: September 21, 2015

Anh N. Tran, et al. v. Bank of New York Certiorari QUESTION PRESENTED red line

.

Anh N. Tran, et al. v. Bank of New York SCOTUS Certiorari

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The Bank of New York Mellon, v. Condo Assoc. La Mer Estates, Inc. | FL Supreme Court – default judgment is voidable when the complaint upon which a judgment is based on fails to state a cause of action

The Bank of New York Mellon, v. Condo Assoc. La Mer Estates, Inc. | FL Supreme Court – default judgment is voidable when the complaint upon which a judgment is based on fails to state a cause of action

Supreme Court of Florida
____________
No. SC14-1049
____________

THE BANK OF NEW YORK MELLON, etc.,
Petitioner,

vs.

CONDOMINIUM ASSOCIATION OF LA MER ESTATES, Inc.,
Respondent.

[September 17, 2015]

PERRY, J.
The Bank of New York Mellon Corporation (“BNY Mellon” or “the bank”)
seeks review of the decision of the Fourth District Court of Appeal in
Condominium Ass’n of La Mer Estates, Inc. v. Bank of New York Mellon Corp.,
137 So. 3d 396 (Fla. 4th DCA 2014), which certified conflict with Southeast Land
Developers, Inc. v. All Florida Site & Utilities, Inc., 28 So. 3d 166 (Fla. 1st DCA
2010), and Moynet v. Courtois, 8 So. 3d 377 (Fla. 3d DCA 2009), on the issue of
whether a default judgment is void when the complaint upon which a judgment is
based on fails to state a cause of action. We have jurisdiction. See art. V,
§ 3(b)(3), Fla. Const. For reasons provided below, we hold that a default judgment
is voidable, rather than void, when the complaint upon which the judgment is
based on fails to state a cause of action. We therefore approve the decision of the
Fourth District in La Mer Estates and disapprove of the conflict cases to the extent
they are inconsistent with this decision.

The Fourth District Court of Appeal summarized the case and underlying
facts as follows:
Owners of a condominium in La Mer Estates executed a
mortgage to BSM Financial in 2006. That mortgage went into default
in 2008, and the mortgagors also defaulted on their condominium
maintenance payments. Appellant, the Condominium Association of
La Mer Estates, recorded a claim of lien for the unpaid assessments,
filed an action to foreclose its lien, and obtained a final judgment of
foreclosure in July 2009. After the foreclosure judgment but before
the foreclosure sale, appellee, Bank of New York Mellon, was
assigned the mortgage securing the condominium unit. The
association was the only bidder at the sale and received a certificate of
title to the condominium unit.

Concerned about the continuing unpaid monthly assessments,
the association wrote to the bank offering to convey to it the title to
the condominium, but the bank did not respond. Several months later,
the association filed a complaint to quiet title to the property, alleging
its own title to the property; how it acquired its title; and that the
mortgage assigned to the bank constituted a cloud on the association’s
title. The association alleged that the bank had no bona fide interest
or claim to the property.

The association served the bank and obtained a default.
Although it also obtained a default final judgment, it moved to vacate
the final judgment because of concerns that service was not properly
made. The court vacated the judgment, and the complaint was served
again on the bank. Again the bank did not respond and the clerk
entered a new default. The association filed a new motion for entry of
final judgment quieting title. The bank was given notice and an
opportunity to be heard but failed to appear at the hearing. The court
entered a second judgment quieting title against the bank on February
10, 2011.

The bank took no action for over one and a half years. Finally,
on August 31, 2012, it moved pursuant to [Florida Rule of Civil
Procedure] 1.540(b) to vacate the quiet title judgment on grounds that
it was void because the complaint failed to state a cause of action to
quiet title. The bank argued that because it was void, the one year
limitation which applied to the other grounds for relief under rule
1.540(b), did not apply. The bank argued that a complaint to quiet
title must allege not only the association’s title to the property and
how it obtained title, but must also show why the bank’s claim of an
interest in the property is invalid and not well founded, citing Stark v.
Frayer, 67 So. 2d 237, 239 (Fla. 1953). The bank contended that it
had a title interest superior to that of the association and that the
association had not alleged facts which showed the bank’s title was
invalid.

The trial court conducted a hearing and granted the motion to
vacate on grounds that the judgment was void because the complaint
failed to state a cause of action.

La Mer Estates, 137 So. 3d at 397-98 (internal citations omitted). The
Condominium Association of La Mer Estates appealed to the Fourth District Court
of Appeal the order that vacated the final judgment.

The Fourth District reversed the order and remanded for the final judgment’s
reinstatement. In doing so, the district court followed this Court’s precedent and
receded from its own caselaw that adopted from the Third District the principle
that a default judgment based on a complaint that fails to state a cause of action is
void. Id. at 397, 400. The Fourth District held that although the complaint failed
to state a cause of action, the resulting default judgment was voidable, rather than
void. The district court explained that BNY Mellon was properly notified
throughout the proceedings and had ample opportunity to raise any pleading
defects, as well as an opportunity to raise the issue on direct appeal. Id. at 400-01.
“Because of the importance of this issue to the finality of judgments and the
stability of property titles,” id. at 401, the Fourth District certified conflict with the
Third District’s decision in Moynet and the First District’s decision in Southeast
Land Developers, which held that a default judgment is void and should be set
aside when the underlying complaint fails to state a cause of action. Se. Land
Developers, 28 So. 3d at 168; Moynet, 8 So. 3d at 378.

Construing and interpreting the Florida Rules of Civil Procedure and a trial
court’s inherent authority to protect judicial integrity in the litigation process is a
pure question of law, subject to de novo review. Pino v. Bank of N.Y., 121 So. 3d
23, 30-31 (Fla. 2013). We agree with the Fourth District that a default judgment,
which is based on a complaint that fails to state a cause of action, is voidable,
rather than void. See La Mer Estates, 137 So. 3d at 400. As we have previously
stated:

It is well settled that where a court is legally organized and has
jurisdiction of the subject matter and the adverse parties are given the
opportunity to be heard, then errors, irregularities or wrongdoing in
proceedings, short of illegal deprivation of opportunity to be heard,
will not render the judgment void.
Curbelo v. Ullman, 571 So. 2d 443, 445 (Fla. 1990).

First, the Fourth District properly recognized that the modern rules of civil
procedure, and particularly Florida Rule of Civil Procedure 1.540(b), do not
displace this Court’s prior caselaw that defines a judgment that is void. See
Curbelo, 571 So. 2d 443; State ex rel. Coleman v. Williams, 3 So. 2d 152 (Fla.
1941); Malone v. Meres, 109 So. 677 (Fla. 1926). Indeed, the purpose of rule
1.540(b) as recognized by this Court is to provide an exception to the rule of
absolute finality by allowing relief under a limited set of circumstances. See Bane
v. Bane, 775 So. 2d 938, 941 (Fla. 2000) (quoting Miller v. Fortune Ins. Co., 484
So. 2d 1221, 1223 (Fla. 1986)).

Second, failure to state a cause of action is a specific defense recognized by
Florida Rules of Civil Procedure 1.140(b) and (h)(1) and (2). Rule 1.140(h)
specifically provides in relevant part:
(1) A party waives all defenses and objections that the party
does not present either by motion under subdivisions (b), (e), or (f) of
this rule or, if the party has made no motion, in a responsive pleading
except as provided in subdivision (h)(2).
(2) The defenses of failure to state a cause of action . . . may be
raised . . . at the trial on the merits in addition to being raised either in
a motion under subdivision (b) or in the answer or reply.
Fla. R. Civ. P. 1.140(h). If a party is properly notified of pending proceedings, that
party has the opportunity to raise a defense, such as failure to state a cause of
action, in an answer, at trial, or at any time prior to final judgment. Otherwise, that
defense is deemed waived. Fla. R. Civ. P. 1.140(h)(1).

In Southeast Land Developers and Moynet, the subject complaints failed to
state a cause of action. Se. Land Developers, 28 So. 3d at 168; Moynet, 8 So. 3d at
378. Relying on Becerra v. Equity Imports, Inc., 551 So. 2d 486 (Fla. 3d DCA
1989), the First District in Southeast Land Developers and the Third District in
Moynet declared the default judgments void and reversed the trial courts’ orders
that denied the motions to set aside or vacate those judgments. Se. Land
Developers, 28 So. 3d at 168; Moynet, 8 So. 3d at 378.

The Fourth District correctly noted that Becerra never explicitly states that a
default judgment based on a complaint that fails to state a cause of action is void,
La Mer Estates, 137 So. 3d at 399, even though Southeast Land Developers and
Moynet cited to Becerra for that precise principle. In addition, Southeast Land
Developers and Moynet failed to demonstrate how rule 1.540(b) replaces this
Court’s precedent that defines a judgment as void.

In the present case, BNY Mellon was properly notified of the proceedings,
the hearing on final judgment, and the entry of the final judgment. Id. at 400.
Indeed, BNY Mellon was twice notified of the default judgment and failed to
respond or appear at any hearings. As such, the bank had ample opportunity to
raise the failure to state a cause of action either in an answer or at any time prior to
final judgment pursuant to the Florida Rules of Civil Procedure and did not do so.

Thereafter, the bank “could have raised the issue on direct appeal,” but similarly
elected not to do so. Id. at 401.

Thus, the Fourth District properly reversed the trial court’s order that
rendered the default judgment in the present case void. Because we agree that the
default judgment was voidable, Florida Rule of Civil Procedure 1.540(b) was not
applicable, and therefore the default judgment could not be collaterally attacked
one and one-half years later when BNY Mellon finally decided to respond. See
Coleman, 3 So. 2d at 152-53 (“We do not think the judgment in this case was void.
The declaration had been upheld by the trial court and final judgment was entered
on the verdict of the jury after due notice and every opportunity the law affords
was given the defendants to amend, plead, or offer their defense. They did not
appear and let the time pass in which writ of error is available to them.”).
Accordingly, we approve the Fourth District’s decision in La Mer Estates
and disapprove Southeast Land Developers and Moynet to the extent that these
cases are inconsistent with this decision.

It is so ordered.

LABARGA, C.J., and PARIENTE, QUINCE, CANADY, and POLSTON, JJ.,
concur.

LEWIS, J., dissents with an opinion.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.

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FDIC vs THE BANK OF NEW YORK MELLON | BNY breached its duties as trustee of 12 RMBS trusts that issued approximately $2 billion in certificates

FDIC vs THE BANK OF NEW YORK MELLON | BNY breached its duties as trustee of 12 RMBS trusts that issued approximately $2 billion in certificates

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER FOR GUARANTY BANK
Plaintiff,

-against-

THE BANK OF NEW YORK MELLON,
Defendant.

NATURE OF ACTION

1. This is an action for damages against BNY Mellon for its breaches of contractual and statutory duties under the governing agreements, the New York Streit Act, N.Y. Real Property Law § 124, et seq. (the “Streit Act”), and under the federal Trust Indenture Act of 1939 (the “TIA”), 15 U.S.C. § 77aaa, et seq.1 as Trustee for 12 securitization trusts (the “Covered Trusts”), identified below, which issued residential mortgage-backed securities (“RMBS”) purchased by investors, including Guaranty Bank (“Guaranty”).

2. This action seeks to hold BNY Mellon accountable for abdicating its fundamental duties as the trustee to certificateholders such as Plaintiff. Under the agreements governing the Covered Trusts, BNY Mellon accepted virtually all of the powers designed to protect the certificateholders and was compensated for that role. BNY Mellon was essentially Plaintiff’s sole source of protection against breaches of the governing agreements by the other parties to those agreements, including the sponsors that sold the loans to the Covered Trusts and the servicers tasked with servicing the mortgage loans. BNY Mellon, however, shirked its duty to exercise its powers to protect Plaintiff and instead attempted to shorn itself of the responsibilities that trusteeship imports. While BNY Mellon stood idly for years, the sponsors kept defective mortgage loans in the Covered Trusts, servicers reaped excessive fees for servicing the defaulted loans from the Covered Trusts, and Plaintiff was left to suffer enormous losses.

3. The Covered Trusts were created to facilitate RMBS transactions sold to investors from 2005 to 2006. Eight of the RMBS transactions were sponsored by Countrywide Home Loans, Inc. (the “Countrywide Trusts”), and four were sponsored by EMC Mortgage Corporation (the “EMC Trusts”) (EMC Mortgage Corporation and Countrywide Home Loans, Inc., are referred to as “Countrywide” and “EMC” respectively, or collectively as the “Sponsors”).

[…]

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